Single Purpose Entity/Separateness. Borrower represents, warrants and covenants as follows: (a) Borrower has not and will not: (i) engage in any business or activity other than the ownership, operation and maintenance of the Properties, and activities incidental thereto; (ii) acquire or own any assets other than (A) the Properties, and (B) such incidental Personal Property as may be necessary for the ownership and operation of the Properties; (iii) merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure; (iv) (A) fail to observe all organizational formalities necessary to maintain its separate existence, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender; (v) own any subsidiary, or make any investment in, any Person; (vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its assets with the assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts; (vii) incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)), other than the Debt and Permitted Debt and prior loans that have been satisfied in full as of the date hereof; (viii) fail to maintain its records, books of account, bank accounts, financial statements, accounting records and other entity documents separate and apart from those of any other Person; except that Borrower’s financial position, assets, liabilities, net worth and operating results may be included in the consolidated financial statements of an Affiliate, provided that (A) appropriate notation shall be made on such consolidated financial statements to indicate the separate identity of Borrower from such Affiliate and that Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate or any other Person, and (B) Borrower’s assets, liabilities and net worth shall also be listed on Borrower’s own separate balance sheet; (ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, or any Affiliate of the foregoing, except upon terms and conditions that are intrinsically fair, commercially reasonable and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties; (x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person; (xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure the obligations of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person; (xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other Person; (xiii) fail to (A) file its own tax returns separate from those of any other Person, except to the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under applicable Legal Requirements and (B) pay any taxes required to be paid under applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrower; (xiv) fail to (A) hold itself out to the public as a legal entity separate and distinct from any other Person, (B) conduct its business solely in its own name or (C) correct any known misunderstanding regarding its separate identity; (xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower; (xvi) without the unanimous written consent of all of its partners or members, as applicable, and the written consent of all directors or managers of Borrower or each SPE Component Entity, as applicable including, without limitation, each Independent Director, take any Material Action or action that is intended to cause such entity to become insolvent; (xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space and services performed by an employee of an Affiliate) among the Persons sharing such expenses; (xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, pay its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower; (xix) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable; (xx) violate or cause to be violated the assumptions made with respect to Borrower and its principals in the Non-Consolidation Opinion or any New Non-Consolidation Opinion; (xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations; (xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name; (xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or (xxiv) identify itself as a department or division of any other Person. (i) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner in the case of a partnership, or the managing member in the case of a limited liability company (each an “SPE Component Entity”) of Borrower, as applicable, shall be an Acceptable DE LLC. Each SPE Component Entity (A) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iii) through (vi) and (viii) through (xxiv) inclusive, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (B) will not engage in any business or activity other than owning an interest in Borrower; (C) will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (D) will not own any subsidiary, or make any investment in any Person other than its investment in Borrower; (E) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (F) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is substantially similar to that of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors. (ii) In the event Borrower or SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”), the limited liability company agreement of the Company (the “LLC Agreement”) shall provide that (A) upon the occurrence of any event that causes the sole member of the Company (“Member”) to cease to be the member of the Company (other than (1) upon an assignment by Member of all of its limited liability company interest in the Company and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2) the resignation of Member and the admission of an additional member of the Company in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of the Company and executing the LLC Agreement (“Special Member”) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the Company, automatically be admitted to the Company and shall continue the existence of the Company without dissolution, and (B) Special Member may not resign from the Company or transfer its rights as Special Member unless (1) a successor Special Member has been admitted to the Company as Special Member in accordance with the requirements of the Act and (2) after giving effect to such resignation, such successor Special Member has also accepted its appointment as an Independent Director. The LLC Agreement shall further provide that (v) Special Member shall automatically cease to be a member of the Company upon the admission to the Company of a substitute Member, (w) Special Member shall be a member of the Company that has no interest in the profits, losses and capital of the Company and has no right to receive any distributions of the assets of the Company, (x) pursuant to Section 18-301 of the Act, Special Member shall not be required to make any capital contributions to the Company and shall not receive a limited liability company interest in the Company, (y) Special Member, in its capacity as Special Member, may not bind the Company, and (z) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Company, including, without limitation, the merger, consolidation or conversion of the Company; provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. Prior to its admission to the Company as Special Member, Special Member shall not be a member of the Company, but the Special Member may serve as an Independent Director of the Company. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company and upon the occurrence of such an event, the existence of the Company shall continue without dissolution. The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the Company. (c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents. (d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 5 contracts
Sources: Loan Agreement (Ashford Hospitality Trust Inc), Loan Agreement (Ashford Hospitality Trust Inc), Loan Agreement (Ashford Hospitality Trust Inc)
Single Purpose Entity/Separateness. Borrower represents, warrants and covenants as follows:
(a) Borrower has not and will not:
(i) engage in any business or activity other than the ownership, operation and maintenance of the PropertiesProperty, and activities incidental thereto;
(ii) acquire or own any assets other than (A) the PropertiesProperty, and (B) such incidental Personal Property as may be necessary for the ownership ownership, leasing, maintenance and operation of the PropertiesProperty;
(iii) merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existenceformalities, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;
(v) own any subsidiary, or make any investment in, any PersonPerson (other than, with respect to any SPE Component Entity, in Borrower);
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its funds or assets with the funds or assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;
(vii) incur any debtIndebtedness, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than (A) the Debt, (B) trade and operational indebtedness incurred in the ordinary course of business with trade creditors, provided such indebtedness is (1) unsecured, (2) not evidenced by a note, (3) on commercially reasonable terms and conditions, and (4) due not more than sixty (60) days past the date incurred and paid on or prior to such date, and/or (C) Permitted Equipment Leases; provided however, the aggregate amount of the indebtedness described in (B) and (C) shall not exceed at any time two percent (2%) of the outstanding principal amount of the Debt. No Indebtedness other than the Debt and Permitted Debt and prior loans that have been satisfied in full as of may be secured (subordinate or pari passu) by the date hereofProperty;
(viii) fail to maintain all of its books, records, books of account, financial statements and bank accounts, financial statements, accounting records and other entity documents accounts separate and apart from those of any other Person (including, without limitation, any Affiliates). Borrower’s assets have not and will not be listed as assets on the financial statement of any other Person; except provided, however, that Borrower’s financial position, assets, liabilities, net worth and operating results assets may be included in the a consolidated financial statements statement of an Affiliate, its Affiliates provided that (Ai) appropriate notation shall be made on such consolidated financial statements to indicate the separate identity separateness of Borrower from and such Affiliate Affiliates and to indicate that Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate Affiliates or any other Person, Person and (Bii) Borrower’s assets, liabilities and net worth such assets shall also be listed on Borrower’s own separate balance sheet. Borrower has maintained and will maintain its books, records, resolutions and agreements as official records;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, principal or any Affiliate of the foregoingAffiliate, except upon terms and conditions that are intrinsically fair, commercially reasonable fair and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure for the obligations benefit of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other Person;
(xiii) fail to (A) file its own tax returns separate from those of any other Person, except to the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under (unless prohibited by applicable Legal Requirements and (B) pay any taxes required to be paid under applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrowerfrom doing so);
(xiv) fail to (A) hold itself out to the public and identify itself, in each case, as a legal entity separate and distinct from any other Person and not as a division or part of any other Person, (B) conduct its business solely in its own name, (C) hold its assets in its own name or (CD) correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, that operations (to the foregoing shall not require Borrower’s members, partners or shareholders extent there exists sufficient cash flow from the Property to make additional capital contributions to Borrowerdo so);
(xvi) without the prior unanimous written consent of all of its partners or members, as applicable, and the prior written consent of all directors or managers each Independent Director (regardless of whether such Independent Director is engaged at the Borrower or each SPE Component EntityEntity level), as applicable including(a) file or consent to the filing of any petition, without limitationeither voluntary or involuntary, each Independent Directorto take advantage of any Creditors Rights Laws, (b) seek or consent to the appointment of a receiver, liquidator or any similar official, (c) take any Material Action or action that is intended to might cause such entity to become insolvent, or (d) make an assignment for the benefit of creditors;
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space space) or fail to use separate stationery, invoices and services performed by an employee of an Affiliate) among the Persons sharing such expenseschecks;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, pay its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; provided, however, that funds or fail to maintain a sufficient number of employees in light of its contemplated business operations (in each case to the foregoing shall not require Borrower’s members, partners or shareholders extent there exists sufficient cash flow from the Property to make additional capital contributions to Borrowerdo so);
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliatesAffiliates, as applicable;; or
(xx) violate identify its partners, members, shareholders or cause to be violated the assumptions made with respect to Borrower and its principals in the Non-Consolidation Opinion or any New Non-Consolidation Opinion;
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other Person.
(i) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner in the case of a partnership, or the managing member in the case of a limited liability company (each an “SPE Component Entity”) of BorrowerAffiliates, as applicable, shall be an Acceptable DE LLC. Each SPE Component Entity (A) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iii) through (vi) and (viii) through (xxiv) inclusive, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (B) will not engage in any business or activity other than owning an interest in Borrower; (C) will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (D) will not own any subsidiary, or make any investment in any Person other than its investment in Borrower; (E) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (F) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is substantially similar to that of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors.
(ii) In the event Borrower or SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”), the limited liability company agreement of the Company (the “LLC Agreement”) shall provide that (A) upon the occurrence of any event that causes the sole member of the Company (“Member”) to cease to be the member of the Company (other than (1) upon an assignment by Member of all of its limited liability company interest in the Company and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2) the resignation of Member and the admission of an additional member of the Company in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member division or part of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of the Company and executing the LLC Agreement (“Special Member”) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the Company, automatically be admitted to the Company and shall continue the existence of the Company without dissolution, and (B) Special Member may not resign from the Company or transfer its rights as Special Member unless (1) a successor Special Member has been admitted to the Company as Special Member in accordance with the requirements of the Act and (2) after giving effect to such resignation, such successor Special Member has also accepted its appointment as an Independent Director. The LLC Agreement shall further provide that (v) Special Member shall automatically cease to be a member of the Company upon the admission to the Company of a substitute Member, (w) Special Member shall be a member of the Company that has no interest in the profits, losses and capital of the Company and has no right to receive any distributions of the assets of the Company, (x) pursuant to Section 18-301 of the Act, Special Member shall not be required to make any capital contributions to the Company and shall not receive a limited liability company interest in the Company, (y) Special Member, in its capacity as Special Member, may not bind the Company, and (z) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Company, including, without limitation, the merger, consolidation or conversion of the Company; provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. Prior to its admission to the Company as Special Member, Special Member shall not be a member of the Company, but the Special Member may serve as an Independent Director of the Company. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company and upon the occurrence of such an event, the existence of the Company shall continue without dissolution. The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the Company.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents.
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.it;
Appears in 4 contracts
Sources: Loan Agreement (Independence Realty Trust, Inc), Loan Agreement (Independence Realty Trust, Inc), Loan Agreement (Independence Realty Trust, Inc)
Single Purpose Entity/Separateness. Borrower represents, warrants and covenants as follows:
(a) Borrower has not and will not:
(i) engage in any business or activity other than the ownership, operation ownership and maintenance management of the PropertiesCollateral, and activities incidental thereto;
(ii) acquire or own any assets other than (A) the PropertiesCollateral, and (B) such incidental Personal Property as may be necessary for the ownership and operation management of the PropertiesCollateral;
(iii) merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existence, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;
(v) own any subsidiary, or make any investment in, any PersonPerson other than the Mortgage Borrower and Mortgage Borrower SPE Component Entity;
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its assets with the assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;
(vii) incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than the Debt and Permitted Debt and prior loans that have been satisfied in full as of the date hereof;
(viii) fail to maintain its records, books of account, bank accounts, financial statements, accounting records and other entity documents separate and apart from those of any other Person; except that Borrower’s financial position, assets, liabilities, net worth and operating results may be included in the consolidated financial statements of an Affiliate, provided that (A) appropriate notation shall be made on such consolidated financial statements to indicate the separate identity of Borrower from such Affiliate and that Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate or any other Person, and (B) Borrower’s assets, liabilities and net worth shall also be listed on Borrower’s own separate balance sheet;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, or any Affiliate of the foregoing, except upon terms and conditions that are intrinsically fair, commercially reasonable and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure the obligations of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;
(xii) make any loans or advances to any Person, or own any stock or securities of, any PersonPerson (other than the Collateral), or buy or hold evidence of indebtedness issued by any other Person;
(xiii) fail to (A) file its own tax returns separate from those of any other Person, except to the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under applicable Legal Requirements and (B) pay any taxes required to be paid under applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrower;
(xiv) fail to (A) hold itself out to the public as a legal entity separate and distinct from any other Person, (B) conduct its business solely in its own name or (C) correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;
(xvi) without the unanimous written consent of all of its partners or members, as applicable, and the written consent of all directors or managers of Borrower or each SPE Component Entity, as applicable including, without limitation, each Independent Director, take any Material Action or action that is intended to cause such entity to become insolvent;
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space and services performed by an employee of an Affiliate) among the Persons sharing such expenses;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, or pay its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable, other than the Collateral;
(xx) violate or cause to be violated the assumptions made with respect to Borrower and its principals in the Non-Consolidation Opinion or any New Non-Consolidation Opinion;
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreementshereof; or
(xxiv) identify itself as a department or division of any other Person.
(i) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner in the case of a partnership, or the managing member in the case of a limited liability company (each an “SPE Component Entity”) of Borrower, as applicable, shall be an Acceptable DE LLC. Each SPE Component Entity (A) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iii) through (vi) and (viii) through (xxiv) inclusive, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (B) will not engage in any business or activity other than owning an interest in Borrower; (C) will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (D) will not own any subsidiary, or make any investment in any Person other than its investment in Borrower; (E) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); ) and (F) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is substantially similar to that of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors.
(ii) In the event Borrower or SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”), the limited liability company agreement of the Company (the “LLC Agreement”) shall provide that (A) upon the occurrence of any event that causes the sole member of the Company (“Member”) to cease to be the member of the Company (other than (1) upon an assignment by Member of all of its limited liability company interest in the Company and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2) the resignation of Member and the admission of an additional member of the Company in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of the Company and executing the LLC Agreement (“Special Member”) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the Company, automatically be admitted to the Company and shall continue the existence of the Company without dissolution, and (B) Special Member may not resign from the Company or transfer its rights as Special Member unless (1) a successor Special Member has been admitted to the Company as Special Member in accordance with the requirements of the Act and (2) after giving effect to such resignation, such successor Special Member has also accepted its appointment as an Independent Director. The LLC Agreement shall further provide that (v) Special Member shall automatically cease to be a member of the Company upon the admission to the Company of a substitute Member, (w) Special Member shall be a member of the Company that has no interest in the profits, losses and capital of the Company and has no right to receive any distributions of the assets of the Company, (x) pursuant to Section 18-301 of the Act, Special Member shall not be required to make any capital contributions to the Company and shall not receive a limited liability company interest in the Company, (y) Special Member, in its capacity as Special Member, may not bind the Company, and (z) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Company, including, without limitation, the merger, consolidation or conversion of the Company; provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. Prior to its admission to the Company as Special Member, Special Member shall not be a member of the Company, but the Special Member may serve as an Independent Director of the Company. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company and upon the occurrence of such an event, the existence of the Company shall continue without dissolution. The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the Company.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents.
(d) Borrower has executed shall cause Mortgage Borrower and delivered Mortgage Borrower SPE Component Entity to Lender comply with and to continue to comply with the certificate attached hereto as Exhibit D.provisions of Section 6.1 of the Mortgage Loan Agreement.
Appears in 3 contracts
Sources: Senior Mezzanine Loan Agreement (Ashford Hospitality Trust Inc), Senior Mezzanine Loan Agreement (Ashford Hospitality Trust Inc), Senior Mezzanine Loan Agreement (Ashford Hospitality Trust Inc)
Single Purpose Entity/Separateness. Borrower represents, warrants and covenants as follows:
(a) The purpose for which Borrower has not is organized is and will not:
shall be limited solely to (i) engage in any business or activity other than the ownershipowning, operation holding, selling, leasing, transferring, exchanging, operating and maintenance of managing the Properties, and activities incidental thereto;
(ii) acquire or entering into this Agreement with Lender, (iii) refinancing the Properties in connection with a permitted repayment of the Loan and (iv) transacting any and all lawful business for which a Borrower may be organized under its constitutive law that is incident, necessary and appropriate to accomplish the foregoing.
(b) Borrower does not own and will not own any assets asset or property other than (Ai) the Properties, and (Bii) such incidental Personal Property as may be personal property necessary for and used or to be used in connection with the ownership or operation of the Properties.
(c) Borrower will not engage in any business other than the ownership, management and operation of the Properties;.
(iiid) merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existence, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;
(v) own any subsidiary, or make any investment in, any Person;
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its assets with the assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;
(vii) incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)), other than the Debt and Permitted Debt and prior loans that have been satisfied in full as of the date hereof;
(viii) fail to maintain its records, books of account, bank accounts, financial statements, accounting records and other entity documents separate and apart from those of any other Person; except that Borrower’s financial position, assets, liabilities, net worth and operating results may be included in the consolidated financial statements of an Affiliate, provided that (A) appropriate notation shall be made on such consolidated financial statements to indicate the separate identity of Borrower from such Affiliate and that Borrower’s assets and credit are will not available to satisfy the debts and other obligations of such Affiliate or any other Person, and (B) Borrower’s assets, liabilities and net worth shall also be listed on Borrower’s own separate balance sheet;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partnerAffiliate of Borrower, memberany constituent party of Borrower, shareholder, principal, guarantor any guarantors of the obligations of Borrower, Borrower or any Affiliate of any constituent party, owner or guarantor (collectively, the foregoing“Related Parties”), 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 unaffiliated third parties;
(x) parties not so affiliated with Borrower or such Related Parties. Borrower will maintain its assets in an arm’s length relationship with such a manner that it will be costly Related Parties or difficult to segregate, ascertain or identify its individual assets from those of any other Person;.
(xie) except as contemplated by the Loan Documents with respect to co-borrowers under Borrower has not incurred and will not incur any Indebtedness other than (i) the Loan and prior loans that have been satisfied (ii) trade payables in full the ordinary course of business with trade creditors in amounts as are normal and reasonable under the circumstances, provided such debt is not evidenced by a note, does not exceed $4,000,000.00 in the aggregate, and is not in excess of sixty (60) days past due. No Indebtedness other than the date hereof and certain obligations of Operating Lessee Debt may be secured (senior, subordinate or a predecessor operating lesseepari passu) thereunder, assume or guaranty by the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure the obligations of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;Properties.
(xiif) Borrower has not made and will not make any loans or advances to any PersonPerson and shall not acquire obligations or securities of any Related Party. Borrower will not form, acquire or hold any subsidiaries, or own or acquire any stock or securities of, equity interest in any Person, Related Parties or buy or hold evidence of indebtedness issued by any other Person;Person (except that Borrower may invest in those investments permitted under the Loan Documents).
(xiiig) fail to Borrower is and will remain solvent and Borrower will pay its debts and liabilities (Aincluding, as applicable, shared personnel and overhead expenses) file from its own tax returns assets only, and as the same shall become due.
(h) Borrower has done or caused to be done and will do all things necessary to observe organizational formalities and preserve its existence, and Borrower will not, nor will Borrower permit any Related Party to, amend, modify or otherwise change the partnership certificate, partnership agreement, articles of incorporation and bylaws, operating agreement, trust or other organizational documents of Borrower or such Related Party without the prior written consent of Lender.
(i) Borrower will maintain all of its books, records, financial statements and bank accounts separate from those of any other Person, Person and Borrower’s assets will not be listed as assets on the financial statement of any other Person except as otherwise required in accordance with GAAP. Borrower will file its own tax returns to the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under by applicable Legal Requirements and (B) pay any taxes required to be paid under applicable Legal Requirementslaw; provided, however, that Borrower shall not have any obligation Borrower’s assets and income may be included in a consolidated tax return of its parent companies if inclusion on such a consolidated tax return is required to reimburse its equityholders comply with the requirements of applicable law or their Affiliates for any taxes that such equityholders or their Affiliates may incur by reason of Borrower’s being treated as a result of any profits or losses of Borrower;disregarded entity for Federal income tax purposes.
(xivj) fail to (A) Borrower will be, and at all times will hold itself out to the public as as, a legal entity separate and distinct from any other PersonPerson (including any Affiliate or other Related Party), (B) conduct its business solely in its own name or (C) shall correct any known misunderstanding regarding its status as a separate identity;entity, shall conduct business in its own name, shall not identify itself or any of its Affiliates as a division or part of the other and shall maintain and utilize separate stationery, invoices and checks.
(xvk) fail to intend to Borrower will maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, except that the foregoing no constituent party of Borrower shall not require Borrower’s members, partners or shareholders be required to make any additional capital contributions to Borrower;.
(xvil) without Neither Borrower nor any Related Party will seek the unanimous written consent dissolution, winding up, liquidation, consolidation or merger in whole or in part, or the sale of material assets of Borrower.
(m) Borrower will not commingle its assets with those of any other Person and will hold all of its partners or members, as applicable, and the written consent of all directors or managers of Borrower or each SPE Component Entity, as applicable including, without limitation, each Independent Director, take any Material Action or action that is intended to cause such entity to become insolvent;
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space and services performed by an employee of an Affiliate) among the Persons sharing such expenses;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, pay its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable;
(xx) violate or cause to be violated the assumptions made with respect to Borrower and its principals assets in the Non-Consolidation Opinion or any New Non-Consolidation Opinion;
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;. Borrower will deposit all of its funds in checking accounts, savings accounts, time deposits or certificate deposits in its own name or invest such funds in its own name.
(xxiiin) have Borrower will not guarantee or become obligated for the debts of any of its other Person and does not and will not hold itself out as being responsible for the debts or obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other Person.
(io) If Unless Borrower is a partnership or limited liability company (other than a single-single member Delaware limited liability company formed under the Act which complies with laws of the requirements State of subsection (b)(ii) below) (Delaware, Borrower shall require that a Person holding an “Acceptable DE LLC”), each general partner interest in the case of Borrower be a partnership, corporation or the managing member in the case of a limited liability company (each an the “SPE Component EntitySPC Party”) of Borrower, as applicable, shall be an Acceptable DE LLC. Each SPE Component Entity (A) which will at all times comply comply, and will cause Borrower to comply, with each of the covenantsrepresentations, terms warranties, and provisions covenants contained in Sections 6.1(a)(iii) through (vi) and (viii) through (xxiv) inclusive, this Section 4.1.30 as if such representation, warranty or covenant was made directly by such SPE Component Entity; (B) will not engage in any business or activity other than owning an Person. The structure of Borrower and the interest in Borrower; (C) will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (D) will not own any subsidiary, or make any investment in any Person other than its investment in Borrower; (E) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (F) will cause Borrower to comply with of the provisions of this Section 6.1 and Section 6.4. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower SPC Party shall immediately appoint a new general partner or managing member whose limited liability company agreement is substantially similar to that of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter be reasonably acceptable to Lender and shall satisfy the requirements of the Rating Agencies for “single purpose, bankruptcy remote entities”. Notwithstanding the foregoing so long as Borrower is a single member limited liability company formed under the laws of the State of Delaware and the organizational documents of Borrower as delivered to Lender in connection with respect the Closing are not modified, Borrower shall not be required to have an SPC Party and all provisions of this Agreement and the new SPE Component Entity other Loan Documents pertaining to SPC Party shall be disregarded.
(p) Borrower shall at all times cause there to be at least one (1) duly appointed members of the board of directors of the SPC Party or if Borrower is a single member Delaware limited liability company, its board of managers (an “Independent Director”) reasonably satisfactory to Lender who shall not have been at the time of each such individual’s respective appointment, and shall not be at any time while serving as a Independent Director and may not have been at any time during the preceding five years (i) a shareholder of, or an officer, director, partner or employee of, Borrower or any of its equity ownersor their shareholders, subsidiaries or Affiliates, (ii) a customer of, or supplier to, or who derives any of its purchases or revenues from its activities with Borrower or SPC Party (if applicable) or any Affiliate of either of them any of its or their shareholders, subsidiaries or Affiliates, (iii) a Person controlling or under common control with any such shareholder, partner supplier or customer, or (iv) a member of the immediate family of any such shareholder, officer, director, partner, employee, supplier or customer of any other director of Borrower or the SPC Party (if applicable). Notwithstanding the foregoing, to an individual that otherwise satisfies the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section foregoing shall not be applicabledisqualified 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 Borrower. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors.
(ii) In the event Borrower or SPE Component Entity is an Acceptable DE LLC (as referred to As used in this clause (iip), the term “Company”)special purpose entity” shall mean an entity whose organizational documents contain restrictions on its activities and impose requirements intended to preserve 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 limited liability company agreement consent of the Company independent managers or independent directors and (the “LLC Agreement”d) shall provide that (A) upon the occurrence of any event that causes the sole member of the Company (“Member”) to cease to be the member of the Company (other than (1) upon an assignment by Member of all of its limited liability company interest in the Company and the admission of the transferee conduct itself in accordance with the Loan Documents and the LLC Agreementcertain “separateness covenants”, or (2) the resignation of Member and the admission of an additional member of the Company in accordance with the terms of the Loan Documents and the LLC Agreement)including, but not limited to, the personal representative maintenance of Member shallits books, within ninety (90) daysrecords, agree in writing to continue the existence of the Company bank accounts and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of the Company and executing the LLC Agreement (“Special Member”) shall, without any action assets separate from those of any other Person and simultaneously with the Member ceasing to be the member of the Company, automatically be admitted to the Company and shall continue the existence of the Company without dissolution, and (B) Special Member may not resign from the Company or transfer its rights as Special Member unless (1) a successor Special Member has been admitted to the Company as Special Member in accordance with the requirements of the Act and (2) after giving effect to such resignation, such successor Special Member has also accepted its appointment as an Independent Director. The LLC Agreement shall further provide that (v) Special Member shall automatically cease to be a member of the Company upon the admission to the Company of a substitute Member, (w) Special Member shall be a member of the Company that has no interest in the profits, losses and capital of the Company and has no right to receive any distributions of the assets of the Company, (x) pursuant to Section 18-301 of the Act, Special Member shall not be required to make any capital contributions to the Company and shall not receive a limited liability company interest in the Company, (y) Special Member, in its capacity as Special Member, may not bind the Company, and (z) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Company, including, without limitation, the merger, consolidation or conversion of the Company; provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. Prior to its admission to the Company as Special Member, Special Member shall not be a member of the Company, but the Special Member may serve as an Independent Director of the Company. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company and upon the occurrence of such an event, the existence of the Company shall continue without dissolution. The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the CompanyPerson.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents.
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 3 contracts
Sources: Loan Agreement (U-Store-It Trust), Loan Agreement (U-Store-It Trust), Loan Agreement (U-Store-It Trust)
Single Purpose Entity/Separateness. Until the Debt has been paid in full, Borrower representsrepresents and warrants, warrants and covenants as follows:
(a) : Borrower has not and will shall not:
(i) engage in any business or activity other than the ownership, operation and maintenance ownership of the Properties, Project and any activities incidental thereto;
(ii) acquire or own any assets other than (A) the PropertiesProject, and (B) such incidental Personal Property personal property as may be necessary for the ownership and operation of the PropertiesProject;
(iii) merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existence, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of LenderOrganizational Documents;
(v) form or own any subsidiary, Subsidiary or make any investment in, in any Person;
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its assets with the assets of any other Person, or permit any Affiliate or constituent party independent access except as required under this Loan Agreement to its bank accountskeep the TI/LC Reserve Account and the Capital Reserve Account;
(vii) incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation (obligation) other than certain obligations (A) the Loan and/or (B) trade and operational indebtedness incurred in the ordinary course of Operating Lessee or business with trade creditors, provided such indebtedness is (1) unsecured, (2) not evidenced by a predecessor operating lessee))note, other (3) on commercially reasonable terms and conditions, (4) due not more than the Debt and Permitted Debt and prior loans that have been satisfied in full as of ninety (90) days past the date hereofincurred and paid on or prior to such date and (5) does not exceed in aggregate more than $250,000 to any debtor or Affiliate thereof; (For purposes of this paragraph “debt” shall not include security deposits or obligations for tenant improvements, tenant improvement allowances or leasing commissions that are not yet due and payable);
(viii) fail to maintain its records, books of account, bank accounts, financial statements, accounting records and other entity documents separate and apart from those of any other Person; except that Borrower’s financial position, assets, liabilities, net worth and operating results may be included in the consolidated financial statements of an Affiliate, provided that (A) appropriate notation shall be made on such consolidated financial statements to indicate the separate identity of Borrower from such Affiliate and that Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate or any other Person, and (B) Borrower’s assets, liabilities and net worth shall also be listed on Borrower’s own separate balance sheet;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, Borrower or any Affiliate of the foregoing, except upon terms and conditions that are intrinsically fair, commercially reasonable and substantially similar to those that would be available on an arm’s-arm’s length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure for the obligations benefit of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person, provided however, that this subsection (xi) shall not be deemed to prohibit Borrower from pledging assets to secure its own obligations as required or permitted by the Loan Documents;
(xii) make (A) any loans or (B) any advances (except with respect to distributions to its shareholders, partners or members, as applicable) to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other Person;
(xiii) fail to (A) file its own tax returns separate from those of or file a consolidated federal income tax return with any other PersonPerson (in each case, except solely to the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under applicable Legal Requirements and (B) pay any taxes required to be paid under by applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrower);
(xiv) fail either to (A) hold itself out to the public as a legal entity separate and distinct from any other Person, (B) Person or to conduct its business solely in its own name or (C) fail to correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, that to the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrowerextent of available net operating revenue from the Project;
(xvia) without file or consent to the unanimous written filing of any petition, either voluntary or involuntary, to take advantage of any Creditors’ Rights Laws, (b) seek or consent to the appointment of all of its partners a receiver, liquidator or membersany similar official, as applicable, and the written consent of all directors or managers of Borrower or each SPE Component Entity, as applicable including, without limitation, each Independent Director, (c) take any Material Action or action that is intended to might cause such entity to become insolvent, or (d) make an assignment for the benefit of creditors;
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space and services performed by an employee of an Affiliate) among the Persons sharing such expensesexpenses and to use separate invoices and checks;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, or pay its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; provided, however, that funds to the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrowerextent of available net operating revenue from the Project;
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable;; and
(xx) violate or cause to be violated the assumptions made with respect to Borrower and its principals in the Non-Consolidation Opinion or any New Non-Consolidation Opinion;
(xxi) fail to maintain a sufficient number of employees (if any) in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other Person.
(i) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner in the case of a partnership, or the managing member in the case of a limited liability company (each an “SPE Component Entity”) of Borrower, as applicable, shall be an Acceptable DE LLC. Each SPE Component Entity (A) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iii) through (vi) and (viii) through (xxiv) inclusive, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (B) will not engage in any business or activity other than owning an interest in Borrower; (C) will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (D) will not own any subsidiary, or make any investment in any Person other than its investment in Borrower; (E) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (F) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is substantially similar to that of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors.
(ii) In the event Borrower or SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”), the limited liability company agreement of the Company (the “LLC Agreement”) shall provide that (A) upon the occurrence of any event that causes the sole member of the Company (“Member”) to cease to be the member of the Company (other than (1) upon an assignment by Member of all of its limited liability company interest in the Company and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2) the resignation of Member and the admission of an additional member of the Company in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of the Company and executing the LLC Agreement (“Special Member”) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the Company, automatically be admitted to the Company and shall continue the existence of the Company without dissolution, and (B) Special Member may not resign from the Company or transfer its rights as Special Member unless (1) a successor Special Member has been admitted to the Company as Special Member in accordance with the requirements of the Act and (2) after giving effect to such resignation, such successor Special Member has also accepted its appointment as an Independent Director. The LLC Agreement shall further provide that (v) Special Member shall automatically cease to be a member of the Company upon the admission to the Company of a substitute Member, (w) Special Member shall be a member of the Company that has no interest in the profits, losses and capital of the Company and has no right to receive any distributions of the assets of the Company, (x) pursuant to Section 18-301 of the Act, Special Member shall not be required to make any capital contributions to the Company and shall not receive a limited liability company interest in the Company, (y) Special Member, in its capacity as Special Member, may not bind the Company, and (z) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Company, including, without limitation, the merger, consolidation or conversion of the Company; provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. Prior to its admission to the Company as Special Member, Special Member shall not be a member of the Company, but the Special Member may serve as an Independent Director of the Company. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company and upon the occurrence of such an event, the existence of the Company shall continue without dissolution. The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the Company.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents.
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 3 contracts
Sources: Loan Agreement (City Office REIT, Inc.), Loan Agreement (City Office REIT, Inc.), Loan Agreement (City Office REIT, Inc.)
Single Purpose Entity/Separateness. Borrower represents, warrants and covenants as follows:
(a) Since its formation, Borrower has not and will not:
(i) engage in any business or activity other than the ownership, operation and maintenance of the PropertiesProperty, and activities incidental theretothereto and those activities permitted under or necessary to comply with the Loan Documents;
(ii) acquire or own any assets other than (A) the PropertiesProperty, and (B) such incidental Personal Property as may be necessary or desirable for the ownership and operation of the PropertiesProperty;
(iii) merge into or consolidate with any Person, or take any action to dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existence, or fail to preserve its existence as an entity duly organized, organized and validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate amend or fail to comply with the single purpose entity provisions modify any of its organizational documents, in each case without the prior written consent of Lender, in any manner that violates the provisions of this Article 6;
(v) own any subsidiary, or make any investment in, any Person;
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its assets with the assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accountsaccounts other than such Persons accessing accounts on behalf of Borrower in connection with the operation of the Property;
(vii) incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than the Debt and Permitted Debt and prior loans that have been satisfied in full as of the date hereofDebt;
(viii) fail to maintain its records, books of account, bank accounts, financial statements, statements and accounting records and other entity documents separate and apart from those of any other Person; except that Borrower’s 's financial position, assets, liabilities, net worth and operating results may be included in the consolidated financial statements of an Affiliate, provided that (A) appropriate notation shall be made on such consolidated financial statements to indicate the separate identity of Borrower from such Affiliate and that Borrower’s 's assets and credit are not available to satisfy the debts and other obligations of such Affiliate or any other Person, and (B) Borrower’s 's assets, liabilities and net worth shall also be listed on Borrower’s 's own separate balance sheet;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of the Borrower’s 's organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, or any Affiliate of the foregoing, except in the ordinary course of business and upon terms and conditions that are intrinsically fair, commercially reasonable and substantially similar to those that would be available on an arm’sarm's-length basis with unaffiliated third parties;
(x) fail to maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunderDocuments, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure the obligations of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;
(xii) make any loans or advances to to, or buy or hold evidence of, indebtedness issued by any PersonPerson except in the ordinary course of business, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other Person;
(xiii) fail to (A) file its own tax returns separate from those of any other Person, except to the extent that Borrower is treated as a “"disregarded entity” " for tax purposes and is not required to file tax returns under applicable Legal Requirements Requirements, and (B) pay any taxes required to be paid under applicable Legal Requirements; provided, however, that the Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of the Borrower;
(xiv) fail to (A) hold itself out to the public as a legal entity separate and distinct from any other Person, (B) conduct its business solely in its own name or (C) correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, that Borrower's obligation to satisfy the foregoing shall (A) be contingent upon the receipt and release of Rents to Borrower for the twelve (12) month period prior to the date such obligations were due in an amount sufficient to pay such obligations after taking into account all other expenses of the Property and (B) not require Borrower’s 's members, partners or shareholders to make additional capital contributions to Borrower;
(xvi) without the unanimous written consent of all of its partners or members, as applicable, and the written consent of all directors or managers of Borrower or each SPE Component Entity, as applicable applicable, including, without limitation, each Independent Director, take any Material Action or action that is intended to might cause such entity to become insolvent;
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space and services performed by an employee of an Affiliate) among the Persons sharing such expenses;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect Documents, fail to co-borrowers under the Loan, pay its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; provided, however, that Borrower's obligation to satisfy the foregoing shall (A) be contingent upon the receipt and release of Rents to Borrower for the twelve (12) month period prior to the date such liabilities were due in an amount sufficient to pay such liabilities after taking into account all other expenses of the Property and (B) not require Borrower’s 's members, partners or shareholders to make additional capital contributions to Borrower;
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliatesAffiliates, as applicable;
(xx) violate or cause to be violated the assumptions made with respect to Borrower and its principals in the Non-Consolidation Opinion or any New Non-Consolidation Opinion;
(xxi) fail to maintain a sufficient number of employees in light hold all of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing assets solely in its own name;
(xxii) [intentionally omitted];
(xxiii) use the services of an employee of an Affiliate without providing fair compensation to such Affiliate for the use of such services;
(xxiv) use the stationary, invoices and checks bearing the name of an Affiliate or any other Person;
(xxv) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by in the Loan Documents Agreement, the Guaranty and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise AgreementsEnvironmental Indemnity; or
(xxivxxvi) identify itself as a department or division of any other Person.
(i) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner in the case of a partnership, or the managing member in the case of a limited liability company (each an “"SPE Component Entity”") of Borrower, as applicable, shall be an Acceptable DE LLCa corporation or a limited liability company whose sole asset is its interest in Borrower, provided that if such SPE Component Entity is a limited liability company (other than a Delaware limited liability company), each of its managing members shall also be a SPE Component Entity. Each SPE Component Entity (A) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iii) through (vi) and (viii) through (xxiv) inclusive, as well as the requirements of clause (ii) below if such SPE Component Entity is a limited liability company formed under the Act, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (B) will not engage in any business or activity other than owning an interest in Borrower; (C) will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (D) will not own any subsidiary, or make any investment in any Person other than its investment in Borrower; (E) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); ) and (F) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose articles of incorporation or limited liability company agreement is agreement, as applicable, are substantially similar to that those of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLCa Delaware limited liability company, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(iiii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors.
(ii) In the event Borrower or SPE Component Entity is an Acceptable DE LLC a limited liability company formed under the Act (as referred to in this clause (ii)applicable, the “"Company”"), the limited liability company agreement of the Company (the “"LLC Agreement”") shall provide that (A) upon the occurrence of any event that causes the sole last remaining member of the Company (“"Member”") to cease to be the member of the Company (other than (1) upon an assignment by Member of all of its limited liability company interest in the Company and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2) the resignation of Member and the admission of an additional member of the Company in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of the Company and executing the LLC Agreement (“"Special Member”") shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the Company, automatically be admitted to the Company and shall continue the existence of the Company without dissolution, and (B) Special Member may not resign from the Company or transfer its rights rights
(iii) as Special Member unless (1) a successor Special Member has been admitted to the Company as Special Member in accordance with the requirements of the Act and (2) after giving effect to such resignation, such successor Special Member has also accepted its appointment as an Independent Director. The LLC Agreement shall further provide that (v) Special Member shall automatically cease to be a member of the Company upon the admission to the Company of a substitute Member, (w) Special Member shall be a member of the Company that has no interest in the profits, losses and capital of the Company and has no right to receive any distributions of the assets of the Company, (x) pursuant to Section 18-301 of the Act, Special Member shall not be required to make any capital contributions to the Company and shall not receive a limited liability company interest in the Company, (y) Special Member, in its capacity as Special Member, may not bind the Company, and (z) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Company, including, without limitation, the merger, consolidation or conversion of the Company; provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. Prior to its admission to the Company as Special Member, Special Member shall not be a member of the Company, but the Special Member may serve as an Independent Director of the Company. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company and upon the occurrence of such an event, the existence of the Company shall continue without dissolution. The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the Company.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “"special purpose” " provisions of such organizational documents.
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 2 contracts
Sources: Loan Agreement (MVP REIT, Inc.), Loan Agreement (MVP REIT II, Inc.)
Single Purpose Entity/Separateness. Borrower represents, warrants and covenants as follows:
(a) Each Borrower has will not and will notwithout obtaining the prior written consent of Lender and, if requested by Lender, a Rating Agency Confirmation with respect thereto:
(i) engage in any business or activity other than unrelated to the acquisition, holding, ownership, operation operation, management, leasing, sale, transfer, exchange, financing, refinancing, improvement and maintenance of the Properties, Collateral and activities incidental theretoincidental, ancillary or related thereto or necessary or appropriate therefor;
(ii) acquire or own any assets other than (A) the Properties, and (B) such incidental Personal Property as may be necessary for the ownership and operation of the PropertiesCollateral;
(iii) (A) merge into or consolidate with any PersonPerson other than one or more other Borrowers, or (B) dissolve, terminateterminate or liquidate, liquidate in whole or in part, (C) transfer or otherwise dispose of all or substantially all of its assets except as permitted by the Loan Documents, or (D) change its legal structure;
(iv) (A) fail to observe observe, in all material respects, all organizational formalities necessary to maintain its separate existence, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single special purpose entity entity/bankruptcy remote provisions of its organizational documentsdocuments (provided, that, such organizational documents may be amended or modified to the extent that, in each case without addition to the satisfaction of the requirements related thereto set forth therein, Lender’s prior written consent of and, if required by Lender, a Rating Agency Confirmation are first obtained);
(v) own any subsidiary, or make any investment in, any PersonPerson other than Mezzanine B Borrower;
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its funds or assets with the funds or assets of any other Person, Person (except for one or permit any Affiliate or constituent party independent access to its bank accountsmore other Borrowers);
(vii) incur any debtIndebtedness, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than (A) the Debt Debt, (B) trade and operational indebtedness incurred in the ordinary course of business with trade creditors or in the routine administration of its affairs not to exceed $25,000, provided such indebtedness is (1) unsecured (it being understood that indebtedness secured only by Permitted Debt Encumbrances will be deemed unsecured), (2) not evidenced by a note, and prior loans that have been satisfied in full as of (3) due not more than ninety (90) days past the date hereofincurred and is either paid on or prior to such date or being contested in good faith, and/or (C) such other liabilities as are permitted pursuant to this Agreement;
(viii) fail to maintain all of its books, records, books of account, financial statements and bank accounts, financial statements, accounting records and other entity documents accounts separate and apart from those of any other PersonPerson (except for one or more other Borrowers). Borrower’s assets will not be listed as assets on the financial statement of any other Person (except for one or more other Borrowers); except provided, however, that Borrower’s financial position, assets, liabilities, net worth and operating results assets may be included in the a consolidated financial statements statement of an Affiliate, its Affiliates provided that (A) appropriate notation shall be made on any such consolidated financial statements to indicate statement contains a note indicating that the separate identity of Borrower from such Affiliate and that Borrower’s separate assets and credit are not available to satisfy pay the debts and other obligations of such Affiliate and that Borrower’s liabilities do not constitute obligations of the consolidated entity, except that one or more other Borrowers may be liable, and Guarantor may be liable (to the extent provided in the Guaranty and the Environmental Indemnity), for obligations of any other Person, Borrower and (B) Borrower’s assets, liabilities and net worth such assets shall also be listed on Borrower’s own separate the balance sheetsheet of one or more Borrowers, as applicable. Borrower has maintained and will maintain its books, records, resolutions and agreements as official records;
(ix) except for capital contributions or and capital distributions permitted under the terms and conditions of Borrower’s its organizational documents and properly reflected on in its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principalprincipal or Affiliate, guarantor of the obligations of Borrowerexcept, or any Affiliate of the foregoingin each case, except upon terms and conditions that are intrinsically fair, commercially reasonable and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other PersonPerson (it being acknowledged that assets of Borrowers may be commingled);
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure for the obligations benefit of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person, except (in each case) for one or more other Borrowers;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any Person other Personthan pursuant to Leases entered into in accordance with Section 4.14 hereof and in compliance with the provisions set forth in this Section 5.1;
(xiii) fail to (A) file its own tax returns returns, separate from those of any other Person, except (A) to the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file any tax returns under return by applicable Legal Requirements, or (B) if Borrower is prohibited by applicable Legal Requirements and (B) pay any taxes required to be paid under applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrowerfrom doing so;
(xiv) fail to (A) hold itself out to the public and identify itself, in each case, as a legal entity separate and distinct from any other Person and not as a division or part of any other Person, (B) conduct its business solely in its own name or in a name franchised or licensed to it or a fictitious name registered with each applicable Governmental Authority (it being understood that such Borrower’s business may be conducted on its behalf by another Person under a management or other agreement pursuant to which the counterparty holds itself out as an agent or contractor of such Borrower), (C) hold its assets in its own name (provided that it may commingle its assets with one or more other Borrowers) or (D) correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, that operations (to the foregoing shall not require Borrower’s members, partners or shareholders extent there exists sufficient cash flow from the applicable Individual Property to make additional capital contributions to Borrowerdo so);
(xvi) without the prior unanimous written consent of all of its partners partners, shareholders or members, as applicable, and the prior unanimous written consent of all its board of directors or managers managers, as applicable, and the prior written consent of each Independent Director (regardless of whether such Independent Director is engaged at the Borrower or each SPE Component Entity, as applicable including, without limitation, each Independent DirectorEntity level), take any Material Action with respect to Borrower or action that is intended any SPE Component Entity (provided, that, none of any member, shareholder or partner (as applicable) of Borrower or any SPE Component Entity or any board of directors or managers (as applicable) of Borrower or any SPE Component Entity may vote on or otherwise authorize the taking of any of the foregoing actions unless, in each case, there are at least two (2) Independent Directors then serving in such capacity in accordance with the terms of the applicable organizational documents and each of such Independent Directors has consented to cause such entity to become insolventforegoing action);
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space space) or fail to use separate stationery, invoices and services performed by an employee of an Affiliate) among the Persons sharing such checks, except in each case for expenses, stationery, invoices and checks shared with one or more other Borrowers;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, pay its own liabilities (including, without limitation, salaries of its own employeesemployees and a fairly allocated portion of any personnel and overhead expenses that it shares with any Affiliate) only from its own funds; provided, however, that funds or fail to maintain a sufficient number of employees in light of its contemplated business operations (in each case to the foregoing shall not require extent there exists sufficient cash flow from the applicable Individual Property to do so and except for payment of any Borrower’s membersliabilities by one or more other Borrowers and sharing of employees, partners personnel or shareholders to make additional capital contributions to Borroweroverhead expenses by one or more Borrowers);
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliatesAffiliates, as applicable, except (A) any SPE Component Entity may acquire securities in any applicable Borrower, (B) any Borrower may be liable for obligations of one or more other Borrowers and (C) Borrower may own securities as permitted in clause (v) above;
(xx) identify its partners, members, shareholders or other Affiliates, as applicable, as a division or part of it; or
(xxi) violate or cause to be violated the assumptions made with respect to Borrower and its principals in the Non-Consolidation Opinion or in any New Non-Consolidation Opinion;
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other Person.
(ib) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner (in the case of a partnership, or the managing ) and at least one member (in the case of a limited liability company company) of Borrower, as applicable, shall be a corporation or an Acceptable LLC (each an “SPE Component Entity”) whose sole asset is its interest in Borrower (and personal property incidental, ancillary or related to, or necessary or appropriate for, its ownership of Borrower, as applicable, shall be an Acceptable DE LLCsuch interest). Each SPE Component Entity (Ai) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iiiSection 5.1(a)(iii) through - (vi) (inclusive) and (viii) through – (xxivxxi) (inclusive) and, if such SPE Component Entity is an Acceptable LLC, Section 5.1(c) and (d) hereof, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (Bii) will not engage in any business or activity other than unrelated to owning an interest in BorrowerBorrower (and personal property incidental, ancillary or related to, or necessary or appropriate for, its ownership of such interest); (Ciii) will not acquire or own any assets other than its partnership, membership, or other equity interest in BorrowerBorrower (and personal property incidental, ancillary or related to, or necessary or appropriate for, its ownership of such interest); (Div) will not at all times continue to own any subsidiary, or make any investment in any Person other no less than its investment a 0.01% direct equity ownership interest in Borrower; (Ev) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation), except for trade payables not to exceed $10,000 which are incurred in the routine administration of its affairs, are unsecured, are not evidenced by a note and are due not more than ninety (90) days past the date incurred and are either paid on or prior to such date or are being contested in good faith; and (Fvi) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is substantially similar to that of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors5.1.
(iic) In the event Borrower or the SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”)LLC, the limited liability company agreement of Borrower or the Company SPE Component Entity (as applicable) (the “LLC Agreement”) shall provide that (Ai) upon the occurrence of any event that causes the sole last remaining member of Borrower or the Company SPE Component Entity (as applicable) (“Member”) to cease to be the member of Borrower or the Company SPE Component Entity (as applicable) (other than (1A) upon an assignment by Member of all of its limited liability company interest in Borrower or the Company SPE Component Entity (as applicable) and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2B) the resignation of Member and the admission of an additional member of Borrower or the Company SPE Component Entity (as applicable) in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any one person acting as Independent Director of Borrower or the Company and executing the LLC Agreement SPE Component Entity (“Special Member”as applicable) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of Borrower or the Company, SPE Component Entity (as applicable) automatically be admitted to Borrower or the Company SPE Component Entity (as applicable) as a member with a 0% economic interest (“Special Member”) and shall continue Borrower or the existence of the Company SPE Component Entity (as applicable) without dissolution, dissolution and (Bii) Special Member may not resign from Borrower or the Company SPE Component Entity (as applicable) or transfer its rights as Special Member unless (1A) a successor Special Member has been admitted to Borrower or the Company SPE Component Entity (as applicable) as a Special Member in accordance with the requirements of the Act Delaware law and (2B) after giving effect to such resignationresignation or transfer, such successor Special Member has also accepted its appointment there remain at least two (2) Independent Directors of the SPE Component Entity or Borrower (as an Independent Directorapplicable) in accordance with Section 5.2 below. The LLC Agreement shall further provide that (vi) Special Member shall automatically cease to be a member of Borrower or the Company SPE Component Entity (as applicable) upon the admission to Borrower or the Company SPE Component Entity (as applicable) of a the first substitute Membermember, (wii) Special Member shall be a member of Borrower or the Company SPE Component Entity (as applicable) that has no interest in the profits, losses and capital of Borrower or the Company SPE Component Entity (as applicable) and has no right to receive any distributions of the assets of Borrower or the CompanySPE Component Entity (as applicable), (xiii) pursuant to Section 18-301 the applicable provisions of the limited liability company act of the State of Delaware (the “Act”), Special Member shall not be required to make any capital contributions to Borrower or the Company SPE Component Entity (as applicable) and shall not receive a limited liability company interest in Borrower or the CompanySPE Component Entity (as applicable), (yiv) Special Member, in its capacity as Special Member, may not bind Borrower or the Company, SPE Component Entity (as applicable) and (zv) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, Borrower or the Company, SPE Component Entity (as applicable) including, without limitation, the merger, consolidation or conversion of Borrower or the CompanySPE Component Entity (as applicable); provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. In order to implement the admission to Borrower or the SPE Component Entity (as applicable) of Special Member, Special Member shall execute a counterpart to the LLC Agreement. Prior to its admission to Borrower or the Company SPE Component Entity (as applicable) as Special Member, Special Member shall not be a member of Borrower or the CompanySPE Component Entity (as applicable), but the Special Member may serve as an Independent Director of Borrower or the Company. Any SPE Component Entity (as applicable).
(d) The LLC Agreement shall further provide that, to the fullest extent permitted by law (i) upon the occurrence of any event that causes the Member to cease to be a member of Borrower or the SPE Component Entity (as applicable) the personal representative of Member shall, within ninety (90) days after the occurrence of the event that terminated the continued membership of Member in Borrower or the SPE Component Entity (as applicable) agree in writing (A) to continue Borrower or the SPE Component Entity (as applicable) and (B) to the admission of the personal representative or its nominee or designee, as the case may be, as a substitute member of Borrower or the SPE Component Entity (as applicable) effective as of the occurrence of the event that terminated the continued membership of Member in Borrower or the SPE Component Entity (as applicable), (ii) any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of Borrower or the Company SPE Component Entity (as applicable) and upon the occurrence of such an event, the existence business of Borrower or the Company SPE Component Entity (as applicable) shall continue without dissolution. The LLC Agreement shall also provide that dissolution and (iii) each of Member and Special Member waives any right it might have to agree in writing to dissolve Borrower or the Company SPE Component Entity (as applicable) upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of Borrower or the Company.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents(as applicable).
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 2 contracts
Sources: Mezzanine Loan Agreement (Northstar Realty Finance Corp.), Mezzanine Loan Agreement (NorthStar Healthcare Income, Inc.)
Single Purpose Entity/Separateness. Borrower represents, warrants and covenants as follows:
(a) Borrower has not and will not:
(i) engage in any business or activity other than the ownership, operation operation, development, leasing, management and maintenance of the PropertiesProperty, and activities incidental thereto;
(ii) acquire or own any assets other than (A) the PropertiesProperty, and (B) such incidental Personal Property as may be necessary for the ownership ownership, leasing, maintenance and operation of the PropertiesProperty;
(iii) merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all material organizational formalities necessary to maintain its separate existenceformalities, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements Applicable Law of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;
(v) own any subsidiary, or make any investment in, any Person;
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its assets with the assets of any other Person; however, or permit any Affiliate or constituent party independent access to its bank accountsdistributions made by Borrower that are not in violation of the Loan Documents shall not be considered assets of Borrower for the purpose of this Subsection (vi);
(vii) incur any debtIndebtedness, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than (A) the Debt, (B) trade and operational indebtedness incurred in the ordinary course of business with trade creditors, provided such indebtedness is (1) unsecured, (2) not evidenced by a note, (3) on commercially reasonable terms and conditions, and (4) due not more than sixty (60) days past the date incurred and paid on or prior to such date, and/or (C) Permitted Equipment Leases; provided however, the aggregate amount of the indebtedness described in (B) and (C) shall not exceed at any time two percent (2%) of the outstanding principal amount of the Debt. No Indebtedness other than the Debt and Permitted Debt and prior loans that have been satisfied in full as of may be secured (subordinate or pari passu) by the date hereofProperty;
(viii) fail to maintain all of its books, records, books of account, financial statements and bank accounts, financial statements, accounting records and other entity documents accounts separate and apart from those of its affiliates and any constituent party. Borrower’s assets have not and will not be listed as assets on the financial statement of any other Person; except provided, however, that Borrower’s financial position, assets, liabilities, net worth and operating results assets may be included in the a consolidated financial statements statement of an Affiliate, its affiliates provided that (Ai) appropriate notation shall be made on such consolidated financial statements to indicate the separate identity separateness of Borrower from and such Affiliate affiliates and to indicate that Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate affiliates or any other Person, Person and (Bii) Borrower’s assets, liabilities and net worth such assets shall also be listed on Borrower’s own separate balance sheet. Borrower has maintained and will maintain its books, records, resolutions and agreements as official records;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, principal or any Affiliate of the foregoingaffiliate, except upon terms and conditions that are intrinsically fair, commercially reasonable fair and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure for the obligations benefit of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence Person (this limitation shall not include distributions to the members of indebtedness issued by any other PersonBorrower);
(xiii) fail to (A) file its own tax returns separate unless prohibited by Applicable Law from those doing so (except that Borrower may file or may include its filing as part of any other Persona consolidated federal tax return, except to the extent required and/or permitted by Applicable Law, provided that there shall be an appropriate notation indicating the separate existence of Borrower is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under applicable Legal Requirements its assets and (B) pay any taxes required to be paid under applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrowerliabilities);
(xiv) fail either to (A) hold itself out to the public as a legal entity separate and distinct from any other Person, (B) Person and not as a division or part of any other Person or to conduct its business solely in its own name or (C) fail to correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, that operations (to the foregoing extent there exists sufficient cash flow from the Property to do so after the payment of all operating expenses and Debt Service and shall not require Borrower’s members, partners or shareholders any equity owner to make additional capital contributions to Borrower);
(xvi) without the unanimous written consent of all of its partners or members, as applicable, and the written consent of all directors or managers each Independent Director (regardless of whether such Independent Director is engaged at the Borrower or each SPE Component EntityEntity level), as applicable including(a) file or consent to the filing of any petition, without limitationeither voluntary or involuntary, each Independent Directorto take advantage of any Creditors Rights Laws, (b) seek or consent to the appointment of a receiver, liquidator or any similar official, (c) take any Material Action or action that is intended to might cause such entity to become insolvent, or (d) make an assignment for the benefit of creditors;
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space space) or fail to use separate stationery, invoices and services performed by an employee of an Affiliate) among the Persons sharing such expenseschecks;
(xviii) fail to intend remain solvent, to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, pay its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; providedfunds or fail to maintain a sufficient number of employees in light of its contemplated business operations (in each case, however, that to the foregoing extent there exists sufficient cash flow from the Property to do so and shall not require Borrower’s members, partners or shareholders any equity owner to make additional capital contributions to Borrower);
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable;, or identify its partners, members or shareholders or other Affiliates, as applicable, as a division or part of it; or
(xx) violate or cause to be violated the assumptions made with respect to Borrower and its principals in the Non-Consolidation Opinion or in any New Non-Consolidation Opinion;
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other Person.
(ib) If Borrower is a limited partnership or a limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner in the case of a partnership, or the managing member in the case of a limited liability company (each each, an “SPE Component Entity”) of shall be a corporation or an Acceptable LLC (I) whose sole asset is its interest in Borrower, as applicable, (II) which has not been and shall not be an Acceptable DE LLC. Each SPE Component Entity (A) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iii) through (vi) and (viii) through (xxiv) inclusive, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (B) will not permitted to engage in any business or activity other than owning an interest in Borrower; (CIII) will which has not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (D) will been and shall not own any subsidiary, or make any investment in any Person other than its investment in Borrower; (E) will not be permitted to incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (FIV) which has and will at all times own at least a 0.5% direct equity ownership interest in Borrower. Each such SPE Component Entity will at all times comply, and will cause Borrower to comply comply, with each of the provisions of representations, warranties, and covenants contained in this Section 6.1 and Section 6.4Article 5 (to the extent applicable) as if such representation, warranty or covenant was made directly by such SPE Component Entity. Prior to Upon the withdrawal or the disassociation of any an SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner SPE Component Entity whose articles of incorporation or managing member whose limited liability company agreement is organization are substantially similar to that those of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, and deliver a new opinion letter acceptable New Non-Consolidation Opinion to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors.
(iic) In the event Borrower or the SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”)LLC, the limited liability company agreement of Borrower or the Company SPE Component Entity (as applicable) (the “LLC Agreement”) shall provide that (Ai) upon the occurrence of any event that causes the sole last remaining member of Borrower or the Company SPE Component Entity (as applicable) (“Member”) to cease to be the member of Borrower or the Company SPE Component Entity (as applicable) (other than (1A) upon an assignment by Member of all of its limited liability company interest in Borrower or the Company SPE Component Entity (as applicable) and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2B) the resignation of Member and the admission of an additional member of Borrower or the Company SPE Component Entity (as applicable) in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as the designated special member or Independent Director Director, as applicable, of Borrower or the Company and executing the LLC Agreement SPE Component Entity (“Special Member”as applicable) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of Borrower or the Company, SPE Component Entity (as applicable) automatically be admitted to Borrower or the Company SPE Component Entity (as applicable) as a member with a 0% economic interest (“Special Member”) and shall continue Borrower or the existence of the Company SPE Component Entity (as applicable) without dissolution, dissolution and (Bii) Special Member may not resign from Borrower or the Company SPE Component Entity (as applicable) or transfer its rights as Special Member unless (1A) a successor Special Member has been admitted to Borrower or the Company SPE Component Entity (as applicable) as a Special Member in accordance with the requirements of the Act Delaware or Maryland law (as applicable) and (2B) after giving effect to such resignationresignation or transfer, such successor Special Member has also accepted its appointment there remains at least one (1) Independent Director of the SPE Component Entity or Borrower (as an Independent Directorapplicable) in accordance with Section 5.2 below. The LLC Agreement shall further provide that (vi) Special Member shall automatically cease to be a member of Borrower or the Company SPE Component Entity (as applicable) upon the admission to Borrower or the Company SPE Component Entity (as applicable) of a the first substitute Membermember, (wii) Special Member shall be a member of Borrower or the Company SPE Component Entity (as applicable) that has no interest in the profits, losses and capital of Borrower or the Company SPE Component Entity (as applicable) and has no right to receive any distributions of the assets of Borrower or the CompanySPE Component Entity (as applicable), (xiii) pursuant to Section 18-301 the applicable provisions of the limited liability company act of the State of Delaware or Maryland (as applicable, the “Act”), Special Member shall not be required to make any capital contributions to Borrower or the Company SPE Component Entity (as applicable) and shall not receive a limited liability company interest in Borrower or the CompanySPE Component Entity (as applicable), (yiv) Special Member, in its capacity as Special Member, may not bind Borrower or the Company, SPE Component Entity (as applicable) and (zv) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, Borrower or the Company, SPE Component Entity (as applicable) including, without limitation, the merger, consolidation or conversion of Borrower or the CompanySPE Component Entity (as applicable); provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. In order to implement the admission to Borrower or the SPE Component Entity (as applicable) of Special Member, Special Member shall execute a counterpart to the LLC Agreement. Prior to its admission to Borrower or the Company SPE Component Entity (as applicable) as Special Member, Special Member shall not be a member of Borrower or the CompanySPE Component Entity (as applicable), but the Special Member may serve as an Independent Director of Borrower or the Company. Any SPE Component Entity (as applicable).
(d) The LLC Agreement shall further provide that, (i) upon the occurrence of any event that causes the Member to cease to be a member of Borrower or the SPE Component Entity (as applicable) to the fullest extent permitted by law, the personal representative of Member shall, within ninety (90) days after the occurrence of the event that terminated the continued membership of Member in Borrower or the SPE Component Entity (as applicable) agree in writing (A) to continue Borrower or the SPE Component Entity (as applicable) and (B) to the admission of the personal representative or its nominee or designee, as the case may be, as a substitute member of Borrower or the SPE Component Entity (as applicable) effective as of the occurrence of the event that terminated the continued membership of Member in Borrower or the SPE Component Entity (as applicable), (ii) any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of Borrower or the Company SPE Component Entity (as applicable) and upon the occurrence of such an event, the existence business of Borrower or the Company SPE Component Entity (as applicable) shall continue without dissolution. The LLC Agreement shall also provide that , and (iii) each of Member and Special Member waives any right it might have to agree in writing to dissolve Borrower or the Company SPE Component Entity (as applicable) upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of Borrower or the CompanySPE Component Entity (as applicable).
(ce) The Borrower hereby represents that, from the date of its formation to the date of this Agreement, Borrower:
(i) is and always has been duly formed, validly existing, and in good standing in the state of its incorporation and in all other jurisdictions where it is qualified to do business;
(ii) has no judgments or liens of any nature against it except for tax liens not yet due;
(iii) is in compliance with all laws, regulations, and orders applicable to it and, except as otherwise disclosed in this Agreement, has received all permits necessary for it to operate;
(iv) is not involved in any dispute with any taxing authority (excluding tax appeals in accordance with the requirements of the Loan Documents);
(v) has paid all taxes which it owes;
(vi) has never owned any real property other than the Property and personal property necessary or incidental to its ownership or operation of the Property and has never engaged in any business other than the ownership and operation of the Property;
(vii) is not now, nor has ever been, party to any lawsuit, arbitration, summons, or legal proceeding that is still pending or that resulted in a judgment against it that has not been paid in full;
(viii) has provided Lender with complete financial statements that reflect a fair and accurate view of the entity’s financial condition;
(ix) has passed a Phase One environmental audit for the Property;
(x) has no material contingent or actual obligations not related to the Property;
(xi) has not entered into any contract or agreement with any of its Affiliates, constituents, or owners, or any guarantors of any of its obligations or any Affiliate of any of the foregoing (each, a “Related Party”), except upon terms and conditions that are commercially reasonable and substantially similar to those available in an arm’s-length transaction with an unrelated party;
(xii) has paid all of its debts and liabilities from its assets;
(xiii) has done or caused to be done all things necessary to observe all organizational documents formalities applicable to it and to preserve its existence;
(xiv) has maintained all of its books, records, financial statements and bank accounts separate from those of any other Person;
(xv) has not had its assets listed as assets on the financial statement of any other Person, except that Borrower’s assets may be included in consolidated financial statements of its affiliates, provided that (1) appropriate notation shall be made on such consolidated financial statements to indicate the separateness of Borrower and each SPE Component Entity shall provide an express acknowledgment such affiliates and to indicate that Lender is an intended third-party beneficiary of Borrower’s assets and credit are not available to satisfy the “special purpose” provisions debts and other obligations of such organizational documents.
affiliates or any other Person and (d2) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.such assets shall be l
Appears in 2 contracts
Sources: Loan Agreement, Loan Agreement (Consolidated Tomoka Land Co)
Single Purpose Entity/Separateness. Until the Debt has been paid in full, each Borrower represents, warrants and covenants as follows:
(a) Each Borrower has not and will not:
(i) engage in any business or activity other than the ownership, operation operation, leasing and maintenance of the PropertiesProperty, and activities incidental thereto;
(ii) acquire or own any assets other than (A) the PropertiesProperty, and (B) such incidental Personal Property as may be necessary for the ownership and operation of the PropertiesProperty;
(iii) merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existence, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity material provisions of its organizational documents, in each case without the prior written consent of Lender;
(v) own any subsidiary, or make any investment in, any Person;
(vi) except as contemplated by the Loan Documents with respect to co-borrowers co‑borrowers under the Loan and prior loans that have been satisfied in full as of the date hereofLoan, commingle its assets with the assets of any other Person, or permit any Affiliate or constituent party party, except for SCOLP, in its capacity as property manager, independent access to its bank accounts;
(vii) incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than (A) the Debt Debt, (B) trade and Permitted Debt operational indebtedness incurred in the ordinary course of business with trade creditors, provided such indebtedness is (1) unsecured, (2) not evidenced by a note, (3) on commercially reasonable terms and conditions, and (4) due not more than ninety (90) days past the date invoiced and paid on or prior loans that have been satisfied to such date, and/or (C) financing leases and purchase money indebtedness incurred in full as the ordinary course of business relating to Personal Property on commercially reasonable terms and conditions; provided, however, the aggregate amount of the date hereofindebtedness described in (B) and (C) shall not exceed at any time three percent (3%) of the outstanding principal amount of the Note;
(viii) (A) fail to maintain its records, books of account, bank accounts, financial statements, accounting records and other entity documents for each Individual Property separate and apart from those of any other Personshowing such Individual Property’s assets and liabilities separate and apart from those of any other Person and (B) include it assets listed on any financial statement of any other person; except provided, however, that Borrower’s financial position, assets, liabilities, net worth and operating results assets may be included in the a consolidated operating or financial statements statement of an Affiliate, its Affiliate provided that (A) an appropriate notation shall be made on such consolidated operating or financial statements to indicate the separate identity separateness of Borrower from such Affiliate and that to indicate Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate or any other Person, and (B) Borrower’s assets, liabilities and net worth shall also be listed on Borrower’s own separate balance sheet;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of the Borrower’s organizational documents and properly reflected on its books and recordsrecords and its respective Community Operations Agreement between the Borrower and SCOLP, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, or any Affiliate of the foregoing, except upon terms and conditions that are intrinsically fair, commercially reasonable and substantially similar to those that would be available on an arm’s-length arm’s‑length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers co‑borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunderLoan, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure the obligations of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person, except for the Debt;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other Person;
(xiii) fail to (A) file its own tax returns separate from those of any other Person, except to the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under applicable Legal Requirements Requirements, and (B) pay any taxes required to be paid under applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrower;
(xiv) fail either to (A) hold itself out to the public as a legal entity separate and distinct from any other Person, (B) Person or to conduct its business solely in its own name or (C) fail to correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; operations provided, however, that there exists sufficient cash flow from the Borrower’s Property to do so and the foregoing shall not require the Borrower’s members, partners members or shareholders their constituent owners to make additional any capital contributions or advances to the Borrower;
(xvi) if it is a partnership or limited liability company, without the unanimous written consent of all of its partners or members, as applicable, and the written consent of all 100% of the directors or managers of Borrower or each SPE Component EntityEntity (if any), as applicable including, without limitation, each Independent Director, take any Material Action or action that is intended to might cause such entity to become insolvent;
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space and services performed by an employee of an Affiliate) ), if any, among the Persons sharing such expensesexpenses and to use separate stationery, invoices and checks;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers co‑borrowers under the Loan, pay its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; funds (except for certain of the Borrower’s expenses paid by SCOLP pursuant to the Community Operations Agreement for which SCOLP shall be reimbursed by Borrower) provided, however, that there exists sufficient cash flow from the Borrower’s Property to do so and the foregoing shall not require the Borrower’s members, partners members or shareholders their constituent owners to make additional any capital contributions or advances to the Borrower;
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable;
(xx) violate or cause to be violated the assumptions made with respect to Borrower Borrower, SPE Component Entity and its principals in any opinion letter pertaining to substantive consolidation delivered to Lender in connection with the Non-Consolidation Opinion or any New Non-Consolidation OpinionLoan;
(xxi) fail to maintain a sufficient number of employees employees, if any, in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers co‑borrowers under the Loan or guarantees relating the Borrower Principal with respect to certain obligations under the Management Agreements or Franchise AgreementsSection 12.6 and Section 15.1 hereof; or
(xxivxxiii) identify itself as a department or division of any other Person. Notwithstanding anything contained in this Section 6.1(a) and Section 6.5 to the contrary, whether express or implied, Lender and Borrower agree that the following operations and activities of Borrower, SPE Component Entity (if any) and their Affiliates shall not be considered a violation of any obligation set forth in this Section 6.1(a): (i) offering goods or services to residents of the Property through Affiliates or other third parties for which fees and charges may be collected by Borrower or the Affiliate and paid to such Affiliate or third party, which may include, without limitation, cable and internet services, landscaping, snow removal, lease or sale of manufactured homes (for cash or pursuant to an installment agreement), and child care; provided that such Affiliates do not conduct their business in the name of the Borrower and that any agreements between the Borrower and its Affiliates relating to such services are on commercially reasonable terms similar to those of an arm’s-length transaction; (ii) provided no Cash Sweep Period is then in effect, causing all gross revenue, whether cash, cash equivalents or similar assets, to be transferred from the Lockbox Account to an Account maintained by Borrower or SCOLP for the purpose of paying expenses of the Borrower or causing SCOLP to pay such expense solely on behalf of the Borrower (provided that SCOLP will separately account for all such amounts for Borrower), and subject to the provisions of the applicable Borrower’s organizational documents, distributing such remaining cash to SCOLP or at the direction of SCOLP, as applicable, to any other Affiliate, and in any case, distributing such remaining cash that does not belong to the Borrower promptly to such entities; (iii) paying all payables, debts and other liabilities arising from or in connection with the operation of the Property from an Account maintained for the Borrower, or causing SCOLP to pay such liabilities on behalf of Borrower after receipt of distributions from the Lockbox Account (provided that SCOLP will separately account for all such amounts for Borrower); (iv) subject to the provisions of the applicable Borrower’s organizational documents, using ancillary assets in connection with the operation of the Property held in the name of SCOLP or any Affiliates, such as vehicles and office and maintenance equipment; (v) treating the Property for all purposes as part of and within the portfolio of manufactured housing communities and/or recreational vehicle communities owned by SCOLP or any Affiliate, for marketing, promotion and providing information and reports to the public, including a common website, or as required by any Legal Requirements; provided, however, that the Borrower shall conduct business in its own name or its assumed or trade name; and (vi) allocating general overhead and administrative costs incurred by SCOLP and/or other Affiliates to the Borrower in a fair and equitable manner.
(ib) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”)company, each general partner in the case of a partnership, or the managing member in the case of a limited liability company (each an “SPE Component Entity”) of Borrower, as applicable, shall be an Acceptable DE LLCa corporation or a limited liability company whose sole asset is its interest in Borrower, provided that if such SPE Component Entity is a limited liability company, each of its managing members shall also be a SPE Component Entity. Each SPE Component Entity (Ai) will at all times comply with each of the covenants, terms and provisions contained in Sections Section 6.1(a)(iii) through – (vi) and (viii) through – (xxiv) inclusivexxi), as if such representation, warranty or covenant was made directly by such SPE Component Entity; (Bii) will not engage in any business or activity other than owning an interest in Borrower and acting as the managing member or general partner of Borrower; (Ciii) will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (Div) will not own any subsidiary, or make any investment in any Person other than its investment in Borrower; (Ev) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (Fvi) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is articles of incorporation or organization, as applicable, are substantially similar to that those of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLCa single member Delaware limited liability company, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(iic) below, the no SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directorsrequired.
(iic) In the event Borrower or SPE Component Entity is an Acceptable DE LLC a single member limited liability company formed under the Act (as referred to in this clause (ii)applicable, the “Company”), the limited liability company agreement of the Company (the “LLC Agreement”) shall provide that (A) upon the occurrence of any event that causes the sole member of the Company (“Member”) to cease to be the member of the Company (other than (1) upon an assignment by Member of all of its limited liability company interest in the Company and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2) the resignation of Member and the admission of an additional member of the Company in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of the Company and executing the LLC Agreement (“Special Member”) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the Company, automatically be admitted to the Company and shall continue the existence of the Company without dissolution, and (B) Special Member may not resign from the Company or transfer its rights as Special Member unless (1) a successor Special Member has been admitted to the Company as Special Member in accordance with the requirements of the Act and (2) after giving effect to such resignation, such successor Special Member has also accepted its appointment as an Independent Director. The LLC Agreement shall further provide that (v) Special Member shall automatically cease to be a member of the Company upon the admission to the Company of a substitute Member, (w) Special Member shall be a member of the Company that has no interest in the profits, losses and capital of the Company and has no right to receive any distributions of the assets of the Company, (x) pursuant to Section 18-301 of the Act, Special Member shall not be required to make any capital contributions to the Company and shall not receive a limited liability company interest in the Company, (y) Special Member, in its capacity as Special Member, may not bind the Company, and (z) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Company, including, without limitation, the merger, consolidation or conversion of the Company; provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. Prior to its admission to the Company as Special Member, Special Member shall not be a member of the Company, but the Special Member may serve as an Independent Director of the Company. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company and upon the occurrence of such an event, the existence of the Company shall continue without dissolution. The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the Company.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents.
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.in
Appears in 2 contracts
Sources: Loan Agreement (Sun Communities Inc), Loan Agreement (Sun Communities Inc)
Single Purpose Entity/Separateness. Borrower represents, warrants and covenants as follows:
(a) (I) Each Borrower (other than a Recycled SPE Borrower/SPE Component Entity), each SPE Component Entity, Additional Obligor and each Pledgor has not since its formation, (II) each Recycled SPE Borrower/SPE Component Entity has complied with clauses (i)(A), (ii)(A) and (vii) below since its formation and (III) each Borrower, each SPE Component Entity, Additional Obligor and each Pledgor will not, except as may be provided for in this Agreement or as set forth in Section 5.5:
(i) (A) with respect to Borrower, except with respect to the Previously-Owned Properties, engage in any business or activity other than the ownership, operation operation, management, leasing and maintenance of the Propertiesapplicable Individual Property, and activities related or incidental thereto, and refinancing the Properties in connection with a repayment of the Loan or any subsequent or other Loan, (B) with respect to Pledgor, own its interest in the Collateral and engage in activities related or incidental thereto, (C) with respect to SPE Component Entity, act as a general partner of the limited partnership that owns the related Individual Property or as member of the limited liability company that owns the related Individual Property and transact lawful business that is incident, necessary and appropriate to accomplish the foregoing and (D) with respect to Additional Obligor, act as the account holder under the Cash Management Account for the benefit of each Borrower;
(ii) (A) with respect to Borrower, except with respect to the Previously-Owned Properties, acquire or own any assets other than (Ax) the Propertiesapplicable Individual Property, and (By) such incidental Personal Property as may be necessary for the ownership ownership, leasing, maintenance and operation of such applicable Individual Property and activities related or incidental thereof, (B) with respect to Pledgor, own its interest in the PropertiesCollateral and engage in activities related or incidental thereto, (C) with respect to SPE Component Entity and Pledgor, own the limited partnership or limited liability company interests in the related Borrower and personal property necessary or incidental to its ownership of such interests and (D) with respect to Additional Obligor, act as the account holder under the Cash Management Account for the benefit of each Borrower;
(iii) merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer (other than with respect to any transfer permitted pursuant to Section 6.3(iii) hereof) or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existenceformalities, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documentsdocuments (provided, that, such organizational documents may be amended or modified to the extent that, in each case without addition to the satisfaction of the requirements related thereto set forth therein, Lender’s prior written consent, such consent of not to be unreasonably withheld, conditioned or delayed and, if required by Lender, a Rating Agency Confirmation are first obtained);
(v) own any subsidiary, or make any investment in, any PersonPerson (other than, with respect to any SPE Component Entity or Pledgor (as applicable), in the applicable Borrower);
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its funds or assets with the funds or assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accountsPerson (other than another Person comprising Borrower hereunder);
(vii) other than as permitted by this Agreement, and except with respect to debt that has been paid in full prior to the date of this Agreement, incur any debtIndebtedness, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than, with respect to Borrower (A) the Debt, (B) trade and operational indebtedness incurred in the ordinary course of business with trade creditors, provided such indebtedness is (1) unsecured, (2) not evidenced by a note, (3) on commercially reasonable terms and conditions, and (4) due not more than ninety (90) days past the date incurred and paid on or prior to such date, and/or (C) Permitted Equipment Leases, (D) obligations pursuant to the Ground Leases, (E) obligations pursuant to the Previously-Owned Property Sale Agreements; (F) real estate taxes not yet delinquent, (G) Capital Expenditures spent and completed in accordance with this Agreement and paid when due, and (H) tenant allowances and tenant improvements incurred pursuant to Leases entered into in accordance with this Agreement and paid when due; provided however, the aggregate amount of the indebtedness described in (B) and (C) shall not exceed at any time (I) with respect to any individual Continental Borrower, three percent (3%) of the outstanding aggregate Allocated Loan Amounts associated with the Individual Continental Property owned by such Continental Borrower, and (II) with respect to all of the Borrowers, in the aggregate, three percent (3%) of the outstanding principal amount of the Loan. No Indebtedness other than the Debt and Permitted Debt and prior loans that have been satisfied in full as of may be secured (senior, subordinate or pari passu) by the date hereofProperty or Collateral;
(viii) fail to maintain all of its books, records, books of account, financial statements and bank accounts, financial statements, accounting records and other entity documents accounts separate and apart from those of any other Person; Person (including, without limitation, any Affiliates), except that Borrower’s, Pledgor’s, Additional Obligor’s financial position, assets, liabilities, net worth or SPE Component Entity’s assets and operating results liabilities may be included in the a consolidated financial statements statement of an Affiliate, provided that (A) its Affiliates so long as appropriate notation shall be is made on such consolidated financial statements to indicate the separate identity separateness of Borrower Borrower, Pledgor, Additional Obligor or SPE Component Entity from such Affiliate Affiliates and to indicate that Borrower’s, Pledgor, Additional Obligor or SPE Component Entity’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate Affiliates or any other Person. Borrower’s, Pledgor’s, Additional Obligor’s or SPE Component Entity’s assets have not and will not be listed as assets on the financial statement of any other Person; provided, however, that Borrower’s, Pledgor’s, Additional Obligor’s or SPE Component Entity’s assets may be included in a consolidated financial statement of its Affiliates provided that (i) appropriate notation shall be made on such consolidated financial statements to indicate the separateness of Borrower, Pledgor, Additional Obligor or SPE Component Entity and such Affiliates and to indicate that Borrower’s, Pledgor’s, Additional Obligor’s or SPE Component Entity’s assets and credit are not available to satisfy the debts and other obligations of such Affiliates or any other Person and (Bii) Borrower’s assets, liabilities and net worth such assets shall also be listed on Borrower’s, Pledgor’s, Additional Obligor’s or SPE Component Entity’s own separate balance sheet. Borrower, Pledgor, Additional Obligor or SPE Component Entity has maintained and will maintain its books, records, resolutions and agreements as official records;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principalprincipal or Affiliate including the Management Agreement, guarantor except, in each case in the ordinary course of the obligations of Borrower, or any Affiliate of the foregoing, except business and upon terms and conditions that are intrinsically fair, commercially reasonable fair and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person, except for the other Persons comprising Borrower hereunder;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure for the obligations benefit of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person, except in each case for the other Persons comprising Borrower, Additional Obligor or Pledgor hereunder in connection with this Agreement and the other Loan Documents;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other Person;
(xiii) fail to (A) file its own tax Tax returns separate from those of any other Person, Person (unless prohibited by applicable Legal Requirements from doing so or except to the extent that Borrower Borrower, SPE Component Entity, Additional Obligor or Pledgor is treated as a “disregarded entity” for tax purposes and is not required to file tax such Tax returns under applicable Legal Requirements and (B) pay any taxes required to be paid under applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrower);
(xiv) fail to (A) hold itself out to the public and identify itself, in each case, as a legal entity separate and distinct from any other Person and not as a division or part of any other Person, (B) conduct its business solely in its own name, (C) hold its assets solely in its own name (or the name of other Persons comprising Borrower hereunder) or (CD) correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; operations (to the extent there exists sufficient cash flow from the applicable Individual Property to do so), provided, however, that the foregoing no Person shall not require Borrower’s members, partners or shareholders be required to make additional any direct or indirect capital contributions to Borrower, Pledgor, Additional Obligor or SPE Component Entity in order to comply with the foregoing;
(xvi) without the prior unanimous written consent of all of its partners partners, shareholders or members, as applicable, and the prior unanimous written consent of all its board of directors or managers managers, as applicable, and the prior written consent of Borrower each Independent Director (regardless of whether such Independent Director is engaged at the Borrower, Pledgor, Additional Obligor or each SPE Component EntityEntity level), as applicable including(a) file or consent to the filing of any petition, without limitationeither voluntary or involuntary, each Independent Directorto take advantage of any Creditors Rights Laws, (b) seek or consent to the appointment of a receiver, liquidator or any similar official, (c) take any Material Action or action that is intended with the intent to cause such entity to become insolvent, (d) make an assignment for the benefit of creditors or (e) take any Material Action with respect to Borrower, Pledgor, Additional Obligor or any SPE Component Entity (provided, that, none of any member, shareholder or partner (as applicable) of Borrower, Pledgor or any SPE Component Entity or any board of directors or managers (as applicable) of Borrower, Pledgor, Additional Obligor or any SPE Component Entity may vote on or otherwise authorize the taking of any of the foregoing actions unless, in each case, there are at least two (2) Independent Directors then serving in such capacity in accordance with the terms of the applicable organizational documents and each of such Independent Directors have consented to such foregoing action);
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space space) or fail to use separate invoices and services performed checks bearing its own name; provided, however, that it is acknowledged and agreed that the Accounts and the Borrower’s operating account may be opened in the name of one Borrower (on behalf of the other Borrowers) or Additional Obligor (with respect to the Cash Management Account) and that it shall not be a breach of this Agreement if checks on behalf of any Borrower entity are issued by an employee the name of an Affiliate) among the Persons sharing such expensesaccount-holding Borrower entity or, with respect to the Cash Management Account, the Additional Obligor;
(xviii) fail to intend pay (or cause to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, pay be paid) its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; funds or fail to maintain a sufficient number of employees (if any) in light of its contemplated business operations (in each case to the extent there exists sufficient cash flow from the applicable Individual Property to do so), provided, however, that the foregoing no Person shall not require Borrower’s members, partners or shareholders be required to make any direct or indirect additional capital contributions to BorrowerBorrower in order to comply with the foregoing;
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliatesAffiliates, as applicable;
(xx) identify its partners, members, shareholders or other Affiliates, as applicable, as a division or part of it; or
(xxi) violate or cause to be violated the assumptions made with respect to Borrower Borrower, Pledgor, Additional Obligor and its principals each SPE Component Entity in the Non-Consolidation Opinion or in any New Non-Consolidation Opinion;
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other Person.
(ib) If Borrower Borrower, Additional Obligor or Pledgor is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner (in the case of a partnership, ) or the managing at least one member (in the case of a limited liability company company) of Borrower, Additional Obligor or Pledgor, as applicable, shall be a corporation or an Acceptable LLC (each each, an “SPE Component Entity”) of whose sole asset is its interest in Borrower, Additional Obligor or Pledgor, as applicable, shall be an Acceptable DE LLC. Each SPE Component Entity Entity, Additional Obligor and Pledgor (Ai) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iiiSection 5.1(a)(iii) through – (vi) (inclusive) and (viii) through – (xxivxxi) (inclusive) and, if such SPE Component Entity, Additional Obligor or Pledgor is an Acceptable LLC, Section 5.1(c) and (d) hereof, as if such representation, warranty or covenant was made directly by such SPE Component Entity, Additional Obligor or Pledgor, as applicable; (Bii) will not engage in any business or activity other than owning an interest in Borrower; (Ciii) will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (Div) will not at all times continue to own any subsidiary, or make any investment in any Person other no less than its investment a 0.5% direct equity ownership interest in Borrower; (Ev) other than as permitted by this Agreement, will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (Fvi) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is substantially similar to that of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors5.1.
(iic) In the event Borrower Borrower, Pledgor, Additional Obligor or any SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”)LLC, the limited liability company agreement of the Company Borrower, Pledgor, Additional Obligor or such SPE Component Entity (as applicable) (the “LLC Agreement”) shall provide that (Ai) upon the occurrence of any event that causes the sole last remaining member of the Company Borrower, Pledgor, Additional Obligor or such SPE Component Entity (as applicable) (“Member”) to cease to be the member of the Company Borrower, Pledgor, Additional Obligor or such SPE Component Entity (as applicable) (other than upon the continuation of such Borrower, Pledgor, Additional Obligor or SPE Component Entity without dissolution upon (1A) upon an assignment by Member of all of its limited liability company interest in the Company Borrower, Pledgor, Additional Obligor or such SPE Component Entity (as applicable) and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2B) the resignation of Member and the admission of an additional member of the Company Borrower, Pledgor, Additional Obligor or such SPE Component Entity (as applicable) in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of the Company and executing the LLC Agreement Borrower, Pledgor, Additional Obligor or such SPE Component Entity (“Special Member”as applicable) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the CompanyBorrower, Pledgor, Additional Obligor or such SPE Component Entity (as applicable) automatically be admitted to the Company Borrower, Pledgor, Additional Obligor or such SPE Component Entity (as applicable) as a member with a 0% economic interest (“Special Member”) and shall continue the existence of the Company Borrower, Pledgor, Additional Obligor or such SPE Component Entity (as applicable) without dissolution, dissolution and (Bii) Special Member may not resign from the Company Borrower, Pledgor, Additional Obligor or such SPE Component Entity (as applicable) or transfer its rights as Special Member unless (1A) a successor Special Member has been admitted to the Company Borrower, Pledgor, Additional Obligor or such SPE Component Entity (as applicable) as a Special Member in accordance with the requirements of the Act Delaware law and (2B) after giving effect to such resignationresignation or transfer, such successor Special Member has also accepted its appointment as an there remains at least Independent Director. The LLC Agreement shall further provide that (v) Special Member shall automatically cease to be a member of the Company upon the admission to the Company of a substitute Member, (w) Special Member shall be a member of the Company that has no interest in the profits, losses and capital of the Company and has no right to receive any distributions of the assets of the Company, (x) pursuant to Section 18-301 of the Act, Special Member shall not be required to make any capital contributions to the Company and shall not receive a limited liability company interest in the Company, (y) Special Member, in its capacity as Special Member, may not bind the Company, and (z) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Company, including, without limitation, the merger, consolidation or conversion of the Company; provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. Prior to its admission to the Company as Special Member, Special Member shall not be a member of the Company, but the Special Member may serve as an Independent Director of the Company. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company and upon the occurrence Directors of such an eventBorrower, the existence of the Company shall continue without dissolution. The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights LawsPledgor, or the occurrence of an event that causes Member or Special Member to cease to be a member of the Company.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents.
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.Addit
Appears in 2 contracts
Sources: Loan Agreement (Retail Value Inc.), Loan Agreement (Retail Value Inc.)
Single Purpose Entity/Separateness. Borrower represents, warrants and covenants as follows:
(a) Each Borrower has will not and will notwithout obtaining the prior written consent of Lender and, if requested by Lender, a Rating Agency Confirmation with respect thereto:
(i) engage in any business or activity other than unrelated to the acquisition, holding, ownership, operation operation, management, leasing, sale, transfer, exchange, financing, refinancing, improvement and maintenance of the Properties, Collateral and activities incidental theretoincidental, ancillary or related thereto or necessary or appropriate therefor;
(ii) acquire or own any assets other than (A) the Properties, and (B) such incidental Personal Property as may be necessary for the ownership and operation of the PropertiesCollateral;
(iii) (A) merge into or consolidate with any PersonPerson other than one or more other Borrowers, or (B) dissolve, terminateterminate or liquidate, liquidate in whole or in part, (C) transfer or otherwise dispose of all or substantially all of its assets except as permitted by the Loan Documents, or (D) change its legal structure;
(iv) (A) fail to observe observe, in all material respects, all organizational formalities necessary to maintain its separate existence, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single special purpose entity entity/bankruptcy remote provisions of its organizational documentsdocuments (provided, that, such organizational documents may be amended or modified to the extent that, in each case without addition to the satisfaction of the requirements related thereto set forth therein, Lender’s prior written consent of and, if required by Lender, a Rating Agency Confirmation are first obtained);
(v) own any subsidiary, or make any investment in, any PersonPerson other than Mezzanine A Borrower;
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its funds or assets with the funds or assets of any other Person, Person (except for one or permit any Affiliate or constituent party independent access to its bank accountsmore other Borrowers);
(vii) incur any debtIndebtedness, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than (A) the Debt Debt, (B) trade and operational indebtedness incurred in the ordinary course of business with trade creditors or in the routine administration of its affairs not to exceed $25,000, provided such indebtedness is (1) unsecured (it being understood that indebtedness secured only by Permitted Debt Encumbrances will be deemed unsecured), (2) not evidenced by a note, and prior loans that have been satisfied in full as of (3) due not more than ninety (90) days past the date hereofincurred and is either paid on or prior to such date or being contested in good faith, and/or (C) such other liabilities as are permitted pursuant to this Agreement;
(viii) fail to maintain all of its books, records, books of account, financial statements and bank accounts, financial statements, accounting records and other entity documents accounts separate and apart from those of any other PersonPerson (except for one or more other Borrowers). Borrower’s assets will not be listed as assets on the financial statement of any other Person (except for one or more other Borrowers); except provided, however, that Borrower’s financial position, assets, liabilities, net worth and operating results assets may be included in the a consolidated financial statements statement of an Affiliate, its Affiliates provided that (A) appropriate notation shall be made on any such consolidated financial statements to indicate statement contains a note indicating that the separate identity of Borrower from such Affiliate and that Borrower’s separate assets and credit are not available to satisfy pay the debts and other obligations of such Affiliate and that Borrower’s liabilities do not constitute obligations of the consolidated entity, except that one or more other Borrowers may be liable, and Guarantor may be liable (to the extent provided in the Guaranty and the Environmental Indemnity), for obligations of any other Person, Borrower and (B) Borrower’s assets, liabilities and net worth such assets shall also be listed on Borrower’s own separate the balance sheetsheet of one or more Borrowers, as applicable. Borrower has maintained and will maintain its books, records, resolutions and agreements as official records;
(ix) except for capital contributions or and capital distributions permitted under the terms and conditions of Borrower’s its organizational documents and properly reflected on in its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principalprincipal or Affiliate, guarantor of the obligations of Borrowerexcept, or any Affiliate of the foregoingin each case, except upon terms and conditions that are intrinsically fair, commercially reasonable and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other PersonPerson (it being acknowledged that assets of Borrowers may be commingled);
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure for the obligations benefit of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person, except (in each case) for one or more other Borrowers;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any Person other Personthan pursuant to Leases entered into in accordance with Section 4.14 hereof and in compliance with the provisions set forth in this Section 5.1;
(xiii) fail to (A) file its own tax returns returns, separate from those of any other Person, except (A) to the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file any tax returns under return by applicable Legal Requirements, or (B) if Borrower is prohibited by applicable Legal Requirements and (B) pay any taxes required to be paid under applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrowerfrom doing so;
(xiv) fail to (A) hold itself out to the public and identify itself, in each case, as a legal entity separate and distinct from any other Person and not as a division or part of any other Person, (B) conduct its business solely in its own name or in a name franchised or licensed to it or a fictitious name registered with each applicable Governmental Authority (it being understood that such Borrower’s business may be conducted on its behalf by another Person under a management or other agreement pursuant to which the counterparty holds itself out as an agent or contractor of such Borrower), (C) hold its assets in its own name (provided that it may commingle its assets with one or more other Borrowers) or (D) correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, that operations (to the foregoing shall not require Borrower’s members, partners or shareholders extent there exists sufficient cash flow from the applicable Individual Property to make additional capital contributions to Borrowerdo so);
(xvi) without the prior unanimous written consent of all of its partners partners, shareholders or members, as applicable, and the prior unanimous written consent of all its board of directors or managers managers, as applicable, and the prior written consent of each Independent Director (regardless of whether such Independent Director is engaged at the Borrower or each SPE Component Entity, as applicable including, without limitation, each Independent DirectorEntity level), take any Material Action with respect to Borrower or action that is intended any SPE Component Entity (provided, that, none of any member, shareholder or partner (as applicable) of Borrower or any SPE Component Entity or any board of directors or managers (as applicable) of Borrower or any SPE Component Entity may vote on or otherwise authorize the taking of any of the foregoing actions unless, in each case, there are at least two (2) Independent Directors then serving in such capacity in accordance with the terms of the applicable organizational documents and each of such Independent Directors has consented to cause such entity to become insolventforegoing action);
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space space) or fail to use separate stationery, invoices and services performed by an employee of an Affiliate) among the Persons sharing such checks, except in each case for expenses, stationery, invoices and checks shared with one or more other Borrowers;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, pay its own liabilities (including, without limitation, salaries of its own employeesemployees and a fairly allocated portion of any personnel and overhead expenses that it shares with any Affiliate) only from its own funds; provided, however, that funds or fail to maintain a sufficient number of employees in light of its contemplated business operations (in each case to the foregoing shall not require extent there exists sufficient cash flow from the applicable Individual Property to do so and except for payment of any Borrower’s membersliabilities by one or more other Borrowers and sharing of employees, partners personnel or shareholders to make additional capital contributions to Borroweroverhead expenses by one or more Borrowers);
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliatesAffiliates, as applicable, except (A) any SPE Component Entity may acquire securities in any applicable Borrower, (B) any Borrower may be liable for obligations of one or more other Borrowers and (C) Borrower may own securities as permitted in clause (v) above;
(xx) identify its partners, members, shareholders or other Affiliates, as applicable, as a division or part of it; or
(xxi) violate or cause to be violated the assumptions made with respect to Borrower and its principals in the Non-Consolidation Opinion or in any New Non-Consolidation Opinion;
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other Person.
(ib) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner (in the case of a partnership, or the managing ) and at least one member (in the case of a limited liability company company) of Borrower, as applicable, shall be a corporation or an Acceptable LLC (each an “SPE Component Entity”) whose sole asset is its interest in Borrower (and personal property incidental, ancillary or related to, or necessary or appropriate for, its ownership of Borrower, as applicable, shall be an Acceptable DE LLCsuch interest). Each SPE Component Entity (Ai) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iiiSection 5.1(a)(iii) through - (vi) (inclusive) and (viii) through – (xxivxxi) (inclusive) and, if such SPE Component Entity is an Acceptable LLC, Section 5.1(c) and (d) hereof, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (Bii) will not engage in any business or activity other than unrelated to owning an interest in BorrowerBorrower (and personal property incidental, ancillary or related to, or necessary or appropriate for, its ownership of such interest); (Ciii) will not acquire or own any assets other than its partnership, membership, or other equity interest in BorrowerBorrower (and personal property incidental, ancillary or related to, or necessary or appropriate for, its ownership of such interest); (Div) will not at all times continue to own any subsidiary, or make any investment in any Person other no less than its investment a 0.01% direct equity ownership interest in Borrower; (Ev) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation), except for trade payables not to exceed $10,000 which are incurred in the routine administration of its affairs, are unsecured, are not evidenced by a note and are due not more than ninety (90) days past the date incurred and are either paid on or prior to such date or are being contested in good faith; and (Fvi) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is substantially similar to that of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors5.1.
(iic) In the event Borrower or the SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”)LLC, the limited liability company agreement of Borrower or the Company SPE Component Entity (as applicable) (the “LLC Agreement”) shall provide that (Ai) upon the occurrence of any event that causes the sole last remaining member of Borrower or the Company SPE Component Entity (as applicable) (“Member”) to cease to be the member of Borrower or the Company SPE Component Entity (as applicable) (other than (1A) upon an assignment by Member of all of its limited liability company interest in Borrower or the Company SPE Component Entity (as applicable) and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2B) the resignation of Member and the admission of an additional member of Borrower or the Company SPE Component Entity (as applicable) in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any one person acting as Independent Director of Borrower or the Company and executing the LLC Agreement SPE Component Entity (“Special Member”as applicable) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of Borrower or the Company, SPE Component Entity (as applicable) automatically be admitted to Borrower or the Company SPE Component Entity (as applicable) as a member with a 0% economic interest (“Special Member”) and shall continue Borrower or the existence of the Company SPE Component Entity (as applicable) without dissolution, dissolution and (Bii) Special Member may not resign from Borrower or the Company SPE Component Entity (as applicable) or transfer its rights as Special Member unless (1A) a successor Special Member has been admitted to Borrower or the Company SPE Component Entity (as applicable) as a Special Member in accordance with the requirements of the Act Delaware law and (2B) after giving effect to such resignationresignation or transfer, such successor Special Member has also accepted its appointment there remain at least two (2) Independent Directors of the SPE Component Entity or Borrower (as an Independent Directorapplicable) in accordance with Section 5.2 below. The LLC Agreement shall further provide that (vi) Special Member shall automatically cease to be a member of Borrower or the Company SPE Component Entity (as applicable) upon the admission to Borrower or the Company SPE Component Entity (as applicable) of a the first substitute Membermember, (wii) Special Member shall be a member of Borrower or the Company SPE Component Entity (as applicable) that has no interest in the profits, losses and capital of Borrower or the Company SPE Component Entity (as applicable) and has no right to receive any distributions of the assets of Borrower or the CompanySPE Component Entity (as applicable), (xiii) pursuant to Section 18-301 the applicable provisions of the limited liability company act of the State of Delaware (the “Act”), Special Member shall not be required to make any capital contributions to Borrower or the Company SPE Component Entity (as applicable) and shall not receive a limited liability company interest in Borrower or the CompanySPE Component Entity (as applicable), (yiv) Special Member, in its capacity as Special Member, may not bind Borrower or the Company, SPE Component Entity (as applicable) and (zv) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, Borrower or the Company, SPE Component Entity (as applicable) including, without limitation, the merger, consolidation or conversion of Borrower or the CompanySPE Component Entity (as applicable); provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. In order to implement the admission to Borrower or the SPE Component Entity (as applicable) of Special Member, Special Member shall execute a counterpart to the LLC Agreement. Prior to its admission to Borrower or the Company SPE Component Entity (as applicable) as Special Member, Special Member shall not be a member of Borrower or the CompanySPE Component Entity (as applicable), but the Special Member may serve as an Independent Director of Borrower or the Company. Any SPE Component Entity (as applicable).
(d) The LLC Agreement shall further provide that, to the fullest extent permitted by law (i) upon the occurrence of any event that causes the Member to cease to be a member of Borrower or the SPE Component Entity (as applicable) the personal representative of Member shall, within ninety (90) days after the occurrence of the event that terminated the continued membership of Member in Borrower or the SPE Component Entity (as applicable) agree in writing (A) to continue Borrower or the SPE Component Entity (as applicable) and (B) to the admission of the personal representative or its nominee or designee, as the case may be, as a substitute member of Borrower or the SPE Component Entity (as applicable) effective as of the occurrence of the event that terminated the continued membership of Member in Borrower or the SPE Component Entity (as applicable), (ii) any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of Borrower or the Company SPE Component Entity (as applicable) and upon the occurrence of such an event, the existence business of Borrower or the Company SPE Component Entity (as applicable) shall continue without dissolution. The LLC Agreement shall also provide that dissolution and (iii) each of Member and Special Member waives any right it might have to agree in writing to dissolve Borrower or the Company SPE Component Entity (as applicable) upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of Borrower or the Company.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents(as applicable).
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 2 contracts
Sources: Mezzanine Loan Agreement (NorthStar Healthcare Income, Inc.), Mezzanine Loan Agreement (Northstar Realty Finance Corp.)
Single Purpose Entity/Separateness. Borrower represents, warrants and covenants as follows:
(a) Borrower has not and will not:
(i) engage in any business or activity other than the ownership, operation ownership and maintenance management of the PropertiesCollateral, and activities incidental thereto;
(ii) acquire or own any assets other than (A) the PropertiesCollateral, and (B) such incidental Personal Property as may be necessary for the ownership and operation management of the PropertiesCollateral;
(iii) merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existence, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;
(v) own any subsidiary, or make any investment in, any PersonPerson other than the Senior Mezzanine Borrower;
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its assets with the assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;
(vii) incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than the Debt and Permitted Debt and prior loans that have been satisfied in full as of the date hereof;
(viii) fail to maintain its records, books of account, bank accounts, financial statements, accounting records and other entity documents separate and apart from those of any other Person; except that Borrower’s financial position, assets, liabilities, net worth and operating results may be included in the consolidated financial statements of an Affiliate, provided that (A) appropriate notation shall be made on such consolidated financial statements to indicate the separate identity of Borrower from such Affiliate and that Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate or any other Person, and (B) Borrower’s assets, liabilities and net worth shall also be listed on Borrower’s own separate balance sheet;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, or any Affiliate of the foregoing, except upon terms and conditions that are intrinsically fair, commercially reasonable and substantially similar to those that would be available on an arm’s-arm’s length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure the obligations of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;
(xii) make any loans or advances to any Person, or own any stock or securities of, any PersonPerson (other than the Collateral), or buy or hold evidence of indebtedness issued by any other Person;
(xiii) fail to (A) file its own tax returns separate from those of any other Person, except to the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under applicable Legal Requirements and (B) pay any taxes required to be paid under applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrower;
(xiv) fail to (A) hold itself out to the public as a legal entity separate and distinct from any other Person, (B) conduct its business solely in its own name or (C) correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;
(xvi) without the unanimous written consent of all of its partners or members, as applicable, and the written consent of all directors or managers of Borrower or each SPE Component Entity, as applicable including, without limitation, each Independent Director, take any Material Action or action that is intended to cause such entity to become insolvent;
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space and services performed by an employee of an Affiliate) among the Persons sharing such expenses;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, or pay its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable, other than the Collateral;
(xx) violate or cause to be violated the assumptions made with respect to Borrower and its principals in the Non-Consolidation Opinion or any New Non-Consolidation Opinion;
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreementshereof; or
(xxiv) identify itself as a department or division of any other Person.
(i) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner in the case of a partnership, or the managing member in the case of a limited liability company (each an “SPE Component Entity”) of Borrower, as applicable, shall be an Acceptable DE LLC. Each SPE Component Entity (A) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iii) through (vi) and (viii) through (xxiv) inclusive, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (B) will not engage in any business or activity other than owning an interest in Borrower; (C) will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (D) will not own any subsidiary, or make any investment in any Person other than its investment in Borrower; (E) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); ) and (F) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is substantially similar to that of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors.
(ii) In the event Borrower or SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”), the limited liability company agreement of the Company (the “LLC Agreement”) shall provide that (A) upon the occurrence of any event that causes the sole member of the Company (“Member”) to cease to be the member of the Company (other than (1) upon an assignment by Member of all of its limited liability company interest in the Company and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2) the resignation of Member and the admission of an additional member of the Company in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of the Company and executing the LLC Agreement (“Special Member”) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the Company, automatically be admitted to the Company and shall continue the existence of the Company without dissolution, and (B) Special Member may not resign from the Company or transfer its rights as Special Member unless (1) a successor Special Member has been admitted to the Company as Special Member in accordance with the requirements of the Act and (2) after giving effect to such resignation, such successor Special Member has also accepted its appointment as an Independent Director. The LLC Agreement shall further provide that (v) Special Member shall automatically cease to be a member of the Company upon the admission to the Company of a substitute Member, (w) Special Member shall be a member of the Company that has no interest in the profits, losses and capital of the Company and has no right to receive any distributions of the assets of the Company, (x) pursuant to Section 18-301 of the Act, Special Member shall not be required to make any capital contributions to the Company and shall not receive a limited liability company interest in the Company, (y) Special Member, in its capacity as Special Member, may not bind the Company, and (z) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Company, including, without limitation, the merger, consolidation or conversion of the Company; provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. Prior to its admission to the Company as Special Member, Special Member shall not be a member of the Company, but the Special Member may serve as an Independent Director of the Company. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company and upon the occurrence of such an event, the existence of the Company shall continue without dissolution. The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the Company.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-third party beneficiary of the “special purpose” provisions of such organizational documents.
(d) Borrower has executed shall cause Senior Mezzanine Borrower to cause Mortgage Borrower and delivered Mortgage Borrower SPE Component Entity to Lender comply with and to continue to comply with the certificate attached hereto as Exhibit D.provisions of Section 6.1 of the Mortgage Loan Agreement.
Appears in 2 contracts
Sources: Junior Mezzanine Loan Agreement (Ashford Hospitality Trust Inc), Junior Mezzanine Loan Agreement (Ashford Hospitality Trust Inc)
Single Purpose Entity/Separateness. Borrower represents, warrants and covenants as follows:
(a) Borrower has not since its formation and will not:
(i) engage in any business or activity other than the leasing, ownership, operation and maintenance of the PropertiesProperty, and activities incidental thereto;
(ii) acquire or own any assets other than (A) the PropertiesProperty, and (B) such incidental Personal Property as may be necessary for the ownership ownership, leasing, maintenance and operation of the PropertiesProperty;
(iii) merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary formalities, or fail to maintain comply with the provisions of its separate existenceorganizational documents from time to time in effect, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single special purpose entity entity/bankruptcy remote provisions of its organizational documentsdocuments (provided, that such may be amended or modified after the Closing Date if, in each case without addition to the satisfaction of the requirements related thereto set forth therein, Lender’s prior written consent of and, if required by Lender, a Rating Agency Confirmation are first obtained and provided further that Lender acknowledges that on and prior to the Closing Date Borrower’s organizational documents were amended from time to time);
(v) own any subsidiary, or make any investment in, any PersonPerson (other than, with respect to any SPE Component Entity, in the applicable Borrower);
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its funds or assets with the funds or assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;
(vii) incur any debtIndebtedness, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than (A) the Debt, and/or (B) trade and operational indebtedness incurred in the ordinary course of business with trade creditors or in the routine administration of its affairs, provided such indebtedness is (1) unsecured, (2) not evidenced by a note and (3) due not more than sixty (60) days past the date incurred and paid on or prior to such date and/or (C) such other liabilities as are permitted pursuant to this Agreement; provided however, the aggregate amount of the indebtedness described in (B) shall not exceed two percent (2%) of the aggregate outstanding principal amount of the Loan and of any mezzanine loan entered into pursuant to an exercise by Lender of the Mezzanine Option in accordance with the terms and provisions of Section 11.6 hereof. No Indebtedness other than the Debt and Permitted Debt and prior loans that have been satisfied in full as of may be secured (senior, subordinate or pari passu) by the date hereofProperty;
(viii) fail to maintain all of its books, records, books of account, financial statements and bank accounts, financial statements, accounting records and other entity documents accounts separate and apart from those of any other Person. Borrower’s assets will not be listed as assets on the financial statement of any other Person; except provided, however, that Borrower’s financial position, assets, liabilities, net worth and operating results assets may be included in the a consolidated financial statements statement of an Affiliateits Affiliates. Borrower has maintained and will maintain its books, provided that (A) appropriate notation shall be made on such consolidated financial statements to indicate the separate identity of Borrower from such Affiliate records, resolutions and that Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate or any other Person, and (B) Borrower’s assets, liabilities and net worth shall also be listed on Borrower’s own separate balance sheetagreements as official records;
(ix) except for capital contributions or capital and distributions permitted under the terms and conditions of Borrower’s its organizational documents and properly reflected on in its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principalprincipal or Affiliate, guarantor of the obligations of Borrowerexcept, or any Affiliate of the foregoingin each case, except upon terms and conditions that are intrinsically fair, commercially reasonable and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure for the obligations benefit of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;
(xii) make any loans or advances under any loan to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other Person;
(xiii) fail to (A) file its own tax returns returns, separate from those of any other Person, except (A) to the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file any tax returns under return by applicable Legal Requirements and Requirements, or (B) pay any taxes if Borrower is required to be paid under file consolidated tax returns by applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrower;
(xiv) fail to (A) hold itself out to the public and identify itself, in each case, as a legal entity separate and distinct from any other Person and not as a division or part of any other Person, (B) conduct its business solely in its own name, (C) hold its assets in its own name or (CD) correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operationsoperations (to the extent there exists sufficient cash flow from the Property to do so); provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders any owners of Borrower to make additional capital contributions to Borrower;
(xvi) without the prior unanimous written consent of all of its partners partners, shareholders or members, as applicable, and the prior unanimous written consent of all its board of directors or managers, as applicable, and the prior written consent of each Independent Director (regardless of whether such Independent Director is engaged at the Borrower or SPE Component Entity level), take any Bankruptcy Action with respect to Borrower or any SPE Component Entity (provided, that, none of any member, shareholder or partner (as applicable) of Borrower or any SPE Component Entity or any board of directors or managers (as applicable) of Borrower or each any SPE Component EntityEntity may vote on or otherwise authorize the taking of any of the foregoing actions unless, as in each case, there are at least two (2) Independent Directors then serving in such capacity in accordance with the terms of the applicable including, without limitation, organizational documents and each of such Independent Director, take any Material Action or action that is intended Directors has consented to cause such entity to become insolventforegoing action);
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space space) or fail to use separate stationery, invoices and services performed by an employee of an Affiliate) among the Persons sharing such expenseschecks;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, pay its own liabilities (including, without limitation, salaries of its own employeesemployees and a fairly allocated portion of any personnel and overhead expenses that it shares with any Affiliate) only from its own fundsfunds or fail to maintain a sufficient number of employees in light of its contemplated business operations (in each case to the extent there exists sufficient cash flow from the Property to do so); provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders any owners of Borrower to make additional capital contributions to Borrower;
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliatesAffiliates, as applicable;
(xx) violate identify its partners, members, shareholders or cause other Affiliates, as applicable, as a division or part of it; or
(xxi) fail to be violated conduct its business so that the material factual assumptions made with respect to Borrower and its principals in the Non-Consolidation Opinion or in any New Non-Consolidation Opinion;
(xxi) fail Opinion cease to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other Personbe materially true.
(ib) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner (in the case of a partnership, or the managing ) and at least one member (in the case of a limited liability company company) of Borrower, as applicable, shall be a corporation or an Acceptable LLC (each an “SPE Component Entity”) whose sole asset is its interest in Borrower (and personal property incidental, ancillary or related to, or necessary or appropriate for, its ownership of Borrower, as applicable, shall be an Acceptable DE LLCsuch interest). Each SPE Component Entity (Ai) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iiiSection 5.1(a)(iii) through - (vi) (inclusive) and (viii) through – (xxivxxi) (inclusive) and, if such SPE Component Entity is an Acceptable LLC, Section 5.1(c) and (d) hereof, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (Bii) will not engage in any business or activity other than unrelated to owning an interest in BorrowerBorrower (and personal property incidental, ancillary or related to, or necessary or appropriate for, its ownership of such interest); (Ciii) will not acquire or own any assets other than its partnership, membership, or other equity interest in BorrowerBorrower (and personal property incidental, ancillary or related to, or necessary or appropriate for, its ownership of such interest); (Div) will not at all times continue to own any subsidiary, or make any investment in any Person other no less than its investment a 0.5% direct equity ownership interest in Borrower; (Ev) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation), except for trade payables not to exceed $10,000 which are incurred in the routine administration of its affairs, are unsecured, are not evidenced by a note and are due not more than ninety (90) days past the date incurred and are either paid on or prior to such date or are being contested in good faith; and (Fvi) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.45.1. Prior to Lender acknowledges that, as of the withdrawal or the disassociation of any SPE Component Entity from BorrowerClosing Date, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is substantially similar to that of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status LLC and complies with the requirements set forth in subsection (b)(ii) below, the there are no SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent DirectorsEntities.
(iic) In the event Borrower or the SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”)LLC, the limited liability company agreement of Borrower or the Company SPE Component Entity (as applicable) (the “LLC Agreement”) shall provide that (Ai) upon the occurrence of any event that causes the sole last remaining member of Borrower or the Company SPE Component Entity (as applicable) (“Member”) to cease to be the member of Borrower or the Company SPE Component Entity (as applicable) (other than (1A) upon an assignment by Member of all of its limited liability company interest in Borrower or the Company SPE Component Entity (as applicable) and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2B) the resignation of Member and the admission of an additional member of Borrower or the Company SPE Component Entity (as applicable) in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of Borrower or the Company and executing the LLC Agreement SPE Component Entity (“Special Member”as applicable) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of Borrower or the Company, SPE Component Entity (as applicable) automatically be admitted to Borrower or the Company SPE Component Entity (as applicable) as a member with a 0% economic interest (“Special Member”) and shall continue Borrower or the existence of the Company SPE Component Entity (as applicable) without dissolution, dissolution and (Bii) Special Member may not resign from Borrower or the Company SPE Component Entity (as applicable) or transfer its rights as Special Member unless (1A) a successor Special Member has been admitted to Borrower or the Company SPE Component Entity (as applicable) as a Special Member in accordance with the requirements of the Act Delaware law and (2B) after giving effect to such resignationresignation or transfer, such successor Special Member has also accepted its appointment there remains at least two (2) Independent Directors of the SPE Component Entity or Borrower (as an Independent Directorapplicable) in accordance with Section 5.2 below. The LLC Agreement shall further provide that (vi) Special Member shall automatically cease to be a member of Borrower or the Company SPE Component Entity (as applicable) upon the admission to Borrower or the Company SPE Component Entity (as applicable) of a the first substitute Membermember, (wii) Special Member shall be a member of Borrower or the Company SPE Component Entity (as applicable) that has no interest in the profits, losses and capital of Borrower or the Company SPE Component Entity (as applicable) and has no right to receive any distributions of the assets of Borrower or the CompanySPE Component Entity (as applicable), (xiii) pursuant to Section 18-301 the applicable provisions of the limited liability company act of the State of Delaware (the “Act”), Special Member shall not be required to make any capital contributions to Borrower or the Company SPE Component Entity (as applicable) and shall not receive a limited liability company interest in Borrower or the CompanySPE Component Entity (as applicable), (yiv) Special Member, in its capacity as Special Member, may not bind Borrower or the Company, SPE Component Entity (as applicable) and (zv) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, Borrower or the Company, SPE Component Entity (as applicable) including, without limitation, the merger, consolidation or conversion of Borrower or the CompanySPE Component Entity (as applicable); provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. In order to implement the admission to Borrower or the SPE Component Entity (as applicable) of Special Member, Special Member shall execute a counterpart to the LLC Agreement. Prior to its admission to Borrower or the Company SPE Component Entity (as applicable) as Special Member, Special Member shall not be a member of Borrower or the CompanySPE Component Entity (as applicable), but the Special Member may serve as an Independent Director of Borrower or the Company. Any SPE Component Entity (as applicable).
(d) The LLC Agreement shall further provide that (i) upon the occurrence of any event that causes the Member to cease to be a member of Borrower or the SPE Component Entity (as applicable) to the fullest extent permitted by law, the personal representative of Member shall, within ninety (90) days after the occurrence of the event that terminated the continued membership of Member in Borrower or the SPE Component Entity (as applicable) agree in writing (A) to continue Borrower or the SPE Component Entity (as applicable) and (B) to the admission of the personal representative or its nominee or designee, as the case may be, as a substitute member of Borrower or the SPE Component Entity (as applicable) effective as of the occurrence of the event that terminated the continued membership of Member in Borrower or the SPE Component Entity (as applicable), (ii) any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of Borrower or the Company SPE Component Entity (as applicable) and upon the occurrence of such an event, the existence business of Borrower or the Company SPE Component Entity (as applicable) shall continue without dissolution. The LLC Agreement shall also provide that dissolution and (iii) each of Member and Special Member waives any right it might have to agree in writing to dissolve Borrower or the Company SPE Component Entity (as applicable) upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of Borrower or the CompanySPE Component Entity (as applicable).
(ci) The organizational documents of Borrower is and each SPE Component Entity shall provide an express acknowledgment that Lender always has been duly formed, validly existing and in good standing in the state in which it was formed and in any other jurisdictions where it is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents.
qualified to do business; (dii) Borrower has executed no outstanding judgments or liens of any nature against it (other than liens that have either been bonded to the satisfaction of Lender, been fully insured to the satisfaction of Lender by the title company issuing the Title Insurance Policy or have otherwise been addressed in a manner approved by Lender); (iii) Borrower is in compliance in all material respects with all laws, regulations and delivered orders applicable to Lender Borrower and has received all material permits necessary for Borrower to operate and for which a failure to possess would materially and adversely affect the certificate attached hereto as Exhibit D.condition, financial or otherwise, of Borrower; (iv) Borrower is not aware of any pending or threatened litigation involving Borrower that, if adversely determined, might materially adversely affect the condition (financial or otherwise) of Borrower, or the condition or ownership of the property owned by Borrower; (v) Borrower is not involved in any material dispute with any taxing authority; (vi) Borrower has paid or has ca
Appears in 2 contracts
Sources: Loan Agreement (American Realty Capital New York City REIT, Inc.), Loan Agreement (American Realty Capital New York City REIT, Inc.)
Single Purpose Entity/Separateness. Borrower represents, warrants and covenants as follows:
(a) Borrower has not and will not:
(i) engage in any business or activity other than the ownership, operation and maintenance of the PropertiesProperty, and activities incidental thereto;
(ii) acquire or own any assets other than (A) the PropertiesProperty, and (B) such incidental Personal Property as may be necessary for the ownership ownership, leasing, maintenance and operation of the PropertiesProperty;
(iii) merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existenceformalities, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;
(v) own any subsidiary, or make any investment in, any PersonPerson (other than, with respect to any SPE Component Entity, in Borrower);
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its funds or assets with the funds or assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;
(vii) incur any debtIndebtedness, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than (A) the Debt, (B) trade and operational indebtedness incurred in the ordinary course of business with trade creditors, provided such indebtedness is (1) unsecured, (2) not evidenced by a note, (3) on commercially reasonable terms and conditions, and (4) due not more than ninety (90) days past the date incurred and paid on or prior to such date, and/or (C) Permitted Equipment Leases; provided however, the aggregate amount of the indebtedness described in (B) and (C) shall not exceed at any time two percent (3%) of the outstanding principal amount of the Debt. No Indebtedness other than the Debt and Permitted Debt and prior loans that have been satisfied in full as of may be secured (subordinate or pari passu) by the date hereofProperty;
(viii) fail to maintain all of its books, records, books of account, financial statements and bank accounts, financial statements, accounting records and other entity documents accounts separate and apart from those of any other Person (including, without limitation, any Affiliates). Borrower’s assets have not and will not be listed as assets on the financial statement of any other Person; except provided, however, that Borrower’s financial position, assets, liabilities, net worth and operating results assets may be included in the a consolidated financial statements statement of an Affiliate, its Affiliates provided that (A) appropriate i)appropriate notation shall be made on such consolidated financial statements to indicate the separate identity separateness of Borrower from and such Affiliate Affiliates and to indicate that Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate Affiliates or any other Person, Person and (Bii) Borrower’s assets, liabilities and net worth such assets shall also be listed on Borrower’s own separate balance sheet. Borrower has maintained and will maintain its books, records, resolutions and agreements as official records;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, principal or any Affiliate of the foregoingAffiliate, except upon terms and conditions that are intrinsically fair, commercially reasonable fair and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure for the obligations benefit of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other Person;
(xiii) fail to (A) file its own tax returns separate from those of any other Person, except to the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under (unless prohibited by applicable Legal Requirements and (B) pay any taxes required to be paid under applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrowerfrom doing so);
(xiv) fail to (A) hold itself out to the public and identify itself, in each case, as a legal entity separate and distinct from any other Person and not as a division or part of any other Person, (B) conduct its business solely in its own name, (C) hold its assets in its own name or (CD) correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, that operations (but only to the foregoing shall not require Borrower’s members, partners or shareholders extent there exists sufficient cash flow from the Property to make additional capital contributions to Borrowerdo so);
(xvi) without the prior unanimous written consent of all of its partners or members, as applicable, and the prior written consent of all directors or managers each Independent Director (regardless of whether such Independent Director is engaged at the Borrower or each SPE Component EntityEntity level), as applicable including(a) file or consent to the filing of any petition, without limitationeither voluntary or involuntary, each Independent Directorto take advantage of any Creditors Rights Laws, (b) seek or consent to the appointment of a receiver, liquidator or any similar official, (c) take any Material Action or action that is intended to might cause such entity to become insolvent, or (d) make an assignment for the benefit of creditors;
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space space) or fail to use separate stationery, invoices and services performed by an employee of an Affiliate) among the Persons sharing such expenseschecks;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, pay its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; provided, however, that funds or fail to maintain a sufficient number of employees in light of its contemplated business operations (in each case to the foregoing shall not require Borrower’s members, partners or shareholders extent there exists sufficient cash flow from the Property to make additional capital contributions to Borrowerdo so);
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliatesAffiliates, as applicable;
(xx) identify its partners, members, shareholders or other Affiliates, as applicable, as a division or part of it; or
(xxi) violate or cause to be violated the assumptions made with respect to Borrower and its principals in the Non-Consolidation Opinion or in any New Non-Consolidation Opinion;
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other Person.
(ib) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner (in the case of a partnership, or the managing ) and at least one member (in the case of a limited liability company company) of Borrower, as applicable, shall be a corporation or an Acceptable LLC (each an “SPE Component Entity”) of whose sole asset is its interest in Borrower, as applicable, shall be an Acceptable DE LLC. Each SPE Component Entity (Ai) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iiiSection 5.1(a)(iii) through – (vi) (inclusive) and (viii) through – (xxivxxi) (inclusive) and, if such SPE Component Entity is an Acceptable LLC, Section 5.1(c) and (d) hereof, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (Bii) will not engage in any business or activity other than owning an interest in Borrower; (Ciii) will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (Div) will not at all times continue to own any subsidiary, or make any investment in any Person other no less than its investment a 0.5% direct equity ownership interest in Borrower; (Ev) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (Fvi) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is substantially similar to that of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors5.1.
(iic) In the event Borrower or the SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”)LLC, the limited liability company agreement of Borrower or the Company SPE Component Entity (as applicable) (the “LLC Agreement”) shall provide that (Ai) upon the occurrence of any event that causes the sole last remaining member of Borrower or the Company SPE Component Entity (as applicable) (“Member”) to cease to be the member of Borrower or the Company SPE Component Entity (as applicable) (other than (1A) upon an assignment by Member of all of its limited liability company interest in Borrower or the Company SPE Component Entity (as applicable) and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2B) the resignation of Member and the admission of an additional member of Borrower or the Company SPE Component Entity (as applicable) in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of Borrower or the Company and executing the LLC Agreement SPE Component Entity (“Special Member”as applicable) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of Borrower or the Company, SPE Component Entity (as applicable) automatically be admitted to Borrower or the Company SPE Component Entity (as applicable) as a member with a 0% economic interest (“Special Member”) and shall continue Borrower or the existence of the Company SPE Component Entity (as applicable) without dissolution, dissolution and (Bii) Special Member may not resign from Borrower or the Company SPE Component Entity (as applicable) or transfer its rights as Special Member unless (1A) a successor Special Member has been admitted to Borrower or the Company SPE Component Entity (as applicable) as a Special Member in accordance with the requirements of the Act Delaware or Maryland law (as applicable) and (2B) after giving effect to such resignationresignation or transfer, such successor Special Member has also accepted its appointment there remains at least one Independent Director of the SPE Component Entity or Borrower (as an Independent Directorapplicable) in accordance with Section 5.2 below. The LLC Agreement shall further provide that (vi) Special Member shall automatically cease to be a member of Borrower or the Company SPE Component Entity (as applicable) upon the admission to Borrower or the Company SPE Component Entity (as applicable) of a the first substitute Membermember, (wii) Special Member shall be a member of Borrower or the Company SPE Component Entity (as applicable) that has no interest in the profits, losses and capital of Borrower or the Company SPE Component Entity (as applicable) and has no right to receive any distributions of the assets of Borrower or the CompanySPE Component Entity (as applicable), (xiii) pursuant to Section 18-301 the applicable provisions of the limited liability company act of the State of Delaware or Maryland (as applicable, the “Act”), Special Member shall not be required to make any capital contributions to Borrower or the Company SPE Component Entity (as applicable) and shall not receive a limited liability company interest in Borrower or the CompanySPE Component Entity (as applicable), (yiv) Special Member, in its capacity as Special Member, may not bind Borrower or the Company, SPE Component Entity (as applicable) and (zv) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, Borrower or the Company, SPE Component Entity (as applicable) including, without limitation, the merger, consolidation or conversion of Borrower or the CompanySPE Component Entity (as applicable); provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. In order to implement the admission to Borrower or the SPE Component Entity (as applicable) of Special Member, Special Member shall execute a counterpart to the LLC Agreement. Prior to its admission to Borrower or the Company SPE Component Entity (as applicable) as Special Member, Special Member shall not be a member of Borrower or the CompanySPE Component Entity (as applicable), but the Special Member may serve as an Independent Director of Borrower or the Company. Any SPE Component Entity (as applicable).
(d) The LLC Agreement shall further provide that (i) upon the occurrence of any event that causes the Member to cease to be a member of Borrower or the SPE Component Entity (as applicable) to the fullest extent permitted by law, the personal representative of Member shall, within ninety (90) days after the occurrence of the event that terminated the continued membership of Member in Borrower or the SPE Component Entity (as applicable) agree in writing (A) to continue Borrower or the SPE Component Entity (as applicable) and (B) to the admission of the personal representative or its nominee or designee, as the case may be, as a substitute member of Borrower or the SPE Component Entity (as applicable) effective as of the occurrence of the event that terminated the continued membership of Member in Borrower or the SPE Component Entity (as applicable), (ii)any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of Borrower or the Company SPE Component Entity (as applicable) and upon the occurrence of such an event, the existence business of Borrower or the Company SPE Component Entity (as applicable) shall continue without dissolution. The LLC Agreement shall also provide that dissolution and (iii) each of Member and Special Member waives any right it might have to agree in writing to dissolve Borrower or the Company SPE Component Entity (as applicable) upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of Borrower or the Company.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents(as applicable).
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 2 contracts
Sources: Loan Agreement (Clipper Realty Inc.), Loan Agreement (Clipper Realty Inc.)
Single Purpose Entity/Separateness. Borrower represents, warrants and covenants as follows:
(a) Each Borrower has will not and will notwithout obtaining the prior written consent of Lender and, if requested by Lender, a Rating Agency Confirmation with respect thereto:
(i) engage in any business or activity other than unrelated to the acquisition, holding, ownership, operation operation, management, leasing, sale, transfer, exchange, financing, refinancing, improvement and maintenance of the Propertiesapplicable Individual Property, and activities incidental theretoincidental, ancillary or related thereto or necessary or appropriate therefor;
(ii) acquire or own any assets other than (A) the Propertiesapplicable Individual Property, and (B) such incidental Personal Property personal property as may be necessary or appropriate for the ownership and operation purposes described in clause (i) of the Propertiesthis Section 5.1(a);
(iii) (A) merge into or consolidate with any PersonPerson other than one or more other Borrowers, or (B) dissolve, terminateterminate or liquidate, liquidate in whole or in part, (C) transfer or otherwise dispose of all or substantially all of its assets except as permitted by the Loan Documents, or (D) change its legal structure;
(iv) (A) fail to observe observe, in all material respects, all organizational formalities necessary to maintain its separate existence, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single special purpose entity entity/bankruptcy remote provisions of its organizational documentsdocuments (provided, that, such organizational documents may be amended or modified to the extent that, in each case without addition to the satisfaction of the requirements related thereto set forth therein, Lender’s prior written consent of and, if required by Lender, a Rating Agency Confirmation are first obtained);
(v) own any subsidiary, or make any investment in, any PersonPerson (other than, with respect to any SPE Component Entity, in the applicable Borrower);
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its funds or assets with the funds or assets of any other Person, Person (except for one or permit any Affiliate or constituent party independent access to its bank accountsmore other Borrowers);
(vii) incur any debtIndebtedness, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than (A) the Debt, (B) trade and operational indebtedness incurred in the ordinary course of business with trade creditors or in the routine administration of its affairs, provided such indebtedness is (1) unsecured (it being understood that indebtedness secured only by Permitted Encumbrances will be deemed unsecured), (2) not evidenced by a note, and (3) due not more than ninety (90) days past the date incurred and is either paid on or prior to such date or being contested in good faith, (C) Permitted Equipment Leases and/or (D) such other liabilities as are permitted pursuant to this Agreement; provided however, that the aggregate amount of the indebtedness described in (B) and (C), without taking into account any such indebtedness which is being contested in good faith or is to be paid from the Reserve Accounts or other collateral held by Lender, shall not exceed (I) at any time with respect to any Individual Property that does not include a RIDEA Facility, two percent (2%) of the Total Allocated Loan Amount for such Individual Property and (II) at any time with respect to an Individual Property that includes a RIDEA Facility, four percent (4%) of the Total Allocated Loan Amount for such Individual Property. No Indebtedness other than the Debt and Permitted Debt and prior loans that have been satisfied in full may be secured (subordinate or pari passu) by any Individual Property (or any portion thereof) except as of the date hereofpermitted under this Agreement;
(viii) fail to maintain all of its books, records, books of account, financial statements and bank accounts, financial statements, accounting records and other entity documents accounts separate and apart from those of any other PersonPerson (except for one or more other Borrowers). Borrower’s assets will not be listed as assets on the financial statement of any other Person (except for one or more other Borrowers); except provided, however, that Borrower’s financial position, assets, liabilities, net worth and operating results assets may be included in the a consolidated financial statements statement of an Affiliate, its Affiliates provided that (A) appropriate notation shall be made on any such consolidated financial statements to indicate statement contains a note indicating that the separate identity of Borrower from such Affiliate and that Borrower’s separate assets and credit are not available to satisfy pay the debts and other obligations of such Affiliate and that Borrower’s liabilities do not constitute obligations of the consolidated entity, except that one or more other Borrowers may be liable, and Guarantor may be liable (to the extent provided in the Guaranty and the Environmental Indemnity), for obligations of any other Person, Borrower and (B) Borrower’s assets, liabilities and net worth such assets shall also be listed on Borrower’s own separate the balance sheetsheet of one or more Borrowers, as applicable. Borrower has maintained and will maintain its books, records, resolutions and agreements as official records;
(ix) except for capital contributions or and capital distributions permitted under the terms and conditions of Borrower’s its organizational documents and properly reflected on in its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principalprincipal or Affiliate, guarantor of the obligations of Borrowerexcept, or any Affiliate of the foregoingin each case, except upon terms and conditions that are intrinsically fair, commercially reasonable and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other PersonPerson (it being acknowledged that assets of Borrowers may be commingled);
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure for the obligations benefit of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person, except (in each case) for one or more other Borrowers;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any Person other Personthan pursuant to Leases entered into in accordance with Section 4.14 hereof and in compliance with the provisions set forth in this Section 5.1;
(xiii) fail to (A) file its own tax returns returns, separate from those of any other Person, except (A) to the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file any tax returns under return by applicable Legal Requirements, or (B) if Borrower is prohibited by applicable Legal Requirements and (B) pay any taxes required to be paid under applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrowerfrom doing so;
(xiv) fail to (A) hold itself out to the public and identify itself, in each case, as a legal entity separate and distinct from any other Person and not as a division or part of any other Person, (B) conduct its business solely in its own name or in a name franchised or licensed to it or a fictitious name registered with each applicable Governmental Authority (it being understood that such Borrower’s business may be conducted on its behalf by another Person under a management or other agreement pursuant to which the counterparty holds itself out as an agent or contractor of such Borrower), (C) hold its assets in its own name (provided that it may commingle its assets with one or more other Borrowers) or (D) correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, that operations (to the foregoing shall not require Borrower’s members, partners or shareholders extent there exists sufficient cash flow from the applicable Individual Property to make additional capital contributions to Borrowerdo so);
(xvi) without the prior unanimous written consent of all of its partners partners, shareholders or members, as applicable, and the prior unanimous written consent of all its board of directors or managers managers, as applicable, and the prior written consent of each Independent Director (regardless of whether such Independent Director is engaged at the Borrower or each SPE Component Entity, as applicable including, without limitation, each Independent DirectorEntity level), take any Material Action with respect to Borrower or action that is intended any SPE Component Entity (provided, that, none of any member, shareholder or partner (as applicable) of Borrower or any SPE Component Entity or any board of directors or managers (as applicable) of Borrower or any SPE Component Entity may vote on or otherwise authorize the taking of any of the foregoing actions unless, in each case, there are at least two (2) Independent Directors then serving in such capacity in accordance with the terms of the applicable organizational documents and each of such Independent Directors has consented to cause such entity to become insolventforegoing action);
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space space) or fail to use separate stationery, invoices and services performed by an employee of an Affiliate) among the Persons sharing such checks, except in each case for expenses, stationery, invoices and checks shared with one or more other Borrowers;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, pay its own liabilities (including, without limitation, salaries of its own employeesemployees and a fairly allocated portion of any personnel and overhead expenses that it shares with any Affiliate) only from its own funds; provided, however, that funds or fail to maintain a sufficient number of employees in light of its contemplated business operations (in each case to the foregoing shall not require extent there exists sufficient cash flow from the applicable Individual Property to do so and except for payment of any Borrower’s membersliabilities by one or more other Borrowers and sharing of employees, partners personnel or shareholders to make additional capital contributions to Borroweroverhead expenses by one or more Borrowers);
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliatesAffiliates, as applicable, except that any SPE Component Entity may acquire securities in any applicable Borrower and that any Borrower may be liable for obligations of one or more other Borrowers;
(xx) identify its partners, members, shareholders or other Affiliates, as applicable, as a division or part of it; or
(xxi) violate or cause to be violated the assumptions made with respect to Borrower and its principals in the Non-Consolidation Opinion or in any New Non-Consolidation Opinion;
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other Person.
(ib) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner (in the case of a partnership, or the managing ) and at least one member (in the case of a limited liability company company) of Borrower, as applicable, shall be a corporation or an Acceptable LLC (each an “SPE Component Entity”) whose sole asset is its interest in Borrower (and personal property incidental, ancillary or related to, or necessary or appropriate for, its ownership of Borrower, as applicable, shall be an Acceptable DE LLCsuch interest). Each SPE Component Entity (Ai) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iiiSection 5.1(a)(iii) through - (vi) (inclusive) and (viii) through – (xxivxxi) (inclusive) and, if such SPE Component Entity is an Acceptable LLC, Section 5.1(c) and (d) hereof, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (Bii) will not engage in any business or activity other than unrelated to owning an interest in BorrowerBorrower (and personal property incidental, ancillary or related to, or necessary or appropriate for, its ownership of such interest); (Ciii) will not acquire or own any assets other than its partnership, membership, or other equity interest in BorrowerBorrower (and personal property incidental, ancillary or related to, or necessary or appropriate for, its ownership of such interest); (Div) will not at all times continue to own any subsidiary, or make any investment in any Person other no less than its investment a 0.01% direct equity ownership interest in Borrower; (Ev) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation), except for trade payables not to exceed $10,000 which are incurred in the routine administration of its affairs, are unsecured, are not evidenced by a note and are due not more than ninety (90) days past the date incurred and are either paid on or prior to such date or are being contested in good faith; and (Fvi) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is substantially similar to that of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors5.1.
(iic) In the event Borrower or the SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”)LLC, the limited liability company agreement of Borrower or the Company SPE Component Entity (as applicable) (the “LLC Agreement”) shall provide that (Ai) upon the occurrence of any event that causes the sole last remaining member of Borrower or the Company SPE Component Entity (as applicable) (“Member”) to cease to be the member of Borrower or the Company SPE Component Entity (as applicable) (other than (1A) upon an assignment by Member of all of its limited liability company interest in Borrower or the Company SPE Component Entity (as applicable) and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2B) the resignation of Member and the admission of an additional member of Borrower or the Company SPE Component Entity (as applicable) in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any one person acting as Independent Director of Borrower or the Company and executing the LLC Agreement SPE Component Entity (“Special Member”as applicable) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of Borrower or the Company, SPE Component Entity (as applicable) automatically be admitted to Borrower or the Company SPE Component Entity (as applicable) as a member with a 0% economic interest (“Special Member”) and shall continue Borrower or the existence of the Company SPE Component Entity (as applicable) without dissolution, dissolution and (Bii) Special Member may not resign from Borrower or the Company SPE Component Entity (as applicable) or transfer its rights as Special Member unless (1A) a successor Special Member has been admitted to Borrower or the Company SPE Component Entity (as applicable) as a Special Member in accordance with the requirements of the Act Delaware law and (2B) after giving effect to such resignationresignation or transfer, such successor Special Member has also accepted its appointment there remain at least two (2) Independent Directors of the SPE Component Entity or Borrower (as an Independent Directorapplicable) in accordance with Section 5.2 below. The LLC Agreement shall further provide that (vi) Special Member shall automatically cease to be a member of Borrower or the Company SPE Component Entity (as applicable) upon the admission to Borrower or the Company SPE Component Entity (as applicable) of a the first substitute Membermember, (wii) Special Member shall be a member of Borrower or the Company SPE Component Entity (as applicable) that has no interest in the profits, losses and capital of Borrower or the Company SPE Component Entity (as applicable) and has no right to receive any distributions of the assets of Borrower or the CompanySPE Component Entity (as applicable), (xiii) pursuant to Section 18-301 the applicable provisions of the limited liability company act of the State of Delaware (the “Act”), Special Member shall not be required to make any capital contributions to Borrower or the Company SPE Component Entity (as applicable) and shall not receive a limited liability company interest in Borrower or the CompanySPE Component Entity (as applicable), (yiv) Special Member, in its capacity as Special Member, may not bind Borrower or the Company, SPE Component Entity (as applicable) and (zv) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, Borrower or the Company, SPE Component Entity (as applicable) including, without limitation, the merger, consolidation or conversion of Borrower or the CompanySPE Component Entity (as applicable); provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. In order to implement the admission to Borrower or the SPE Component Entity (as applicable) of Special Member, Special Member shall execute a counterpart to the LLC Agreement. Prior to its admission to Borrower or the Company SPE Component Entity (as applicable) as Special Member, Special Member shall not be a member of Borrower or the CompanySPE Component Entity (as applicable), but the Special Member may serve as an Independent Director of Borrower or the Company. Any action initiated SPE Component Entity (as applicable).
(d) The LLC Agreement shall further provide that, to the fullest extent permitted by or brought against Member or Special Member under law (i) upon the occurrence of any Creditors Rights Laws shall not cause Member or Special event that causes the Member to cease to be a member of Borrower or the Company and upon SPE Component Entity (as applicable) the personal representative of Member shall, within ninety (90) days after the occurrence of such an event, the existence of event that terminated the Company shall continue without dissolution. The LLC Agreement shall also provide that each continued membership of Member and Special Member waives any right it might have to in Borrower or the SPE Component Entity (as applicable) agree in writing (A) to dissolve the Company upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, continue Borrower or the occurrence of an event that causes Member or Special Member to cease to be a member of the Company.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary (as applicable) and (B) to the admission of the “special purpose” provisions personal representative or its nominee or designee, as the case may be, as a substitute member of such organizational documents.
(d) Borrower has executed and delivered to Lender or the certificate attached hereto as Exhibit D.SPE Compon
Appears in 2 contracts
Sources: Loan Agreement (NorthStar Healthcare Income, Inc.), Loan Agreement (Northstar Realty Finance Corp.)
Single Purpose Entity/Separateness. Until the Debt has been paid in full, Borrower represents, warrants and covenants as follows:
(a) Borrower has not and will not:
(i) engage in any business or activity other than the ownership, operation and maintenance of the Properties, and activities incidental thereto;
(ii) acquire or own any assets other than (A) the Properties, Properties and (B) such incidental Personal Property as may be necessary for the ownership and operation of the Properties;
(iii) merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existenceformalities, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;
(v) own any subsidiary, or make any investment in, any Person;
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its assets with the assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;
(vii) incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than the Debt and Permitted Debt and prior loans that have been satisfied in full as of the date hereofDebt;
(viii) fail to maintain its records, books of account, bank accounts, financial statements, accounting records and other entity documents separate and apart from those of any other Person; except that Borrower’s 's financial position, assets, liabilities, net worth and operating results may be included in the consolidated financial statements of an Affiliate, provided that (A) appropriate notation shall be made on such consolidated financial statements to indicate the separate identity of Borrower from contain a footnote indicating that such Affiliate and that Borrower’s assets and credit are not available to satisfy the debts and other obligations financial statements include accounts of such Affiliate or any other PersonAffiliates, its subsidiaries and (B) Borrower’s assets, liabilities and net worth shall also be listed on Borrower’s own separate balance sheetcontrolling majority owned interests;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, or any Affiliate of the foregoing, except upon terms and conditions that are intrinsically fair, commercially reasonable and substantially similar to those that would be available on an arm’sarm's-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure for the obligations benefit of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other Person;
(xiii) fail to (A) file its own tax returns separate from those of or files a consolidated federal income tax return with any other PersonPerson (unless prohibited or required, except to as the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under applicable Legal Requirements and (B) pay any taxes required to be paid under case may be, by applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrower);
(xiv) fail either to (A) hold itself out to the public as a legal entity separate and distinct from any other Person, (B) Person or to conduct its business solely in its own name or (C) fail to correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;
(xvi) if it is a partnership or limited liability company, without the unanimous written consent of all of its partners or members, as applicable, and the written consent of all 100% of the directors or managers of Borrower or each SPE Component Entity, as applicable including, without limitation, each Independent Director, (a) file or consent to the filing of any petition, either voluntary or involuntary, to take advantage of any Creditors Rights Laws, (b) seek or consent to the appointment of a receiver, liquidator or any similar official, (c) take any Material Action or action that is intended to might cause such entity to become insolvent, or (d) make an assignment for the benefit of creditors;
(xvii) fail to fairly and reasonably allocate shared expenses expenses, if any (including, without limitation, shared office space and services performed by an employee of an Affiliate) ), among the Persons sharing such expensesexpenses and to use separate stationery, invoices and checks;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, or pay its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable;
(xx) violate or cause to be violated the assumptions made with respect to Borrower and its principals in any opinion letter pertaining to substantive consolidation delivered to Lender in connection with the Non-Consolidation Opinion or any New Non-Consolidation Opinion;Loan; or
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other Person.
(ib) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”)company, each general partner in the case of a general partnership, each general partner in the case of a limited partnership, or the managing member in the case of a limited liability company (each an “"SPE Component Entity”COMPONENT ENTITY") of Borrower, as applicable, shall be an Acceptable DE LLCa corporation whose sole asset is its interest in Borrower. Each SPE Component Entity (Ai) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iii) through (viSection 6.1(a)(iii)-(vi) and (viii) through (xxiv) inclusiveviii)-(xxi), as if such representation, warranty or covenant was made directly by such SPE Component Entity; (Bii) will not engage in any business or activity other than owning an interest in Borrower; (Ciii) will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (D) will not own any subsidiary, or make any investment in any Person other than its investment in Borrower; (Eiv) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (Fv) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is substantially similar to that of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors.
(ii) In the event Borrower or SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”), the limited liability company agreement of the Company (the “LLC Agreement”) shall provide that (A) upon the occurrence of any event that causes the sole member of the Company (“Member”) to cease to be the member of the Company (other than (1) upon an assignment by Member of all of its limited liability company interest in the Company and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2) the resignation of Member and the admission of an additional member of the Company in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of the Company and executing the LLC Agreement (“Special Member”) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the Company, automatically be admitted to the Company and shall continue the existence of the Company without dissolution, and (B) Special Member may not resign from the Company or transfer its rights as Special Member unless (1) a successor Special Member has been admitted to the Company as Special Member in accordance with the requirements of the Act and (2) after giving effect to such resignation, such successor Special Member has also accepted its appointment as an Independent Director. The LLC Agreement shall further provide that (v) Special Member shall automatically cease to be a member of the Company upon the admission to the Company of a substitute Member, (w) Special Member shall be a member of the Company that has no interest in the profits, losses and capital of the Company and has no right to receive any distributions of the assets of the Company, (x) pursuant to Section 18-301 of the Act, Special Member shall not be required to make any capital contributions to the Company and shall not receive a limited liability company interest in the Company, (y) Special Member, in its capacity as Special Member, may not bind the Company, and (z) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Company, including, without limitation, the merger, consolidation or conversion of the Company; provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. Prior to its admission to the Company as Special Member, Special Member shall not be a member of the Company, but the Special Member may serve as an Independent Director of the Company. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company and upon the occurrence of such an event, the existence of the Company shall continue without dissolution. The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the Company.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents.
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 2 contracts
Sources: Loan Agreement (Corporate Property Associates 15 Inc), Loan Agreement (Corporate Property Associates 16 Global Inc)
Single Purpose Entity/Separateness. Borrower represents, warrants and covenants as follows:
(a) Borrower has not and will not:
(i) engage in any business or activity other than the ownership, operation ownership and maintenance management of the PropertiesCollateral, and activities incidental thereto;
(ii) acquire or own any assets other than (A) the PropertiesCollateral, and (B) such incidental Personal Property as may be necessary for the ownership and operation management of the PropertiesCollateral;
(iii) merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existence, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;
(v) own any subsidiary, or make any investment in, any PersonPerson other than the Mortgage Borrower and Mortgage Borrower SPE Component Entity;
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its assets with the assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;
(vii) incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than the Debt and Permitted Debt and prior loans that have been satisfied in full as of the date hereof;
(viii) fail to maintain its records, books of account, bank accounts, financial statements, accounting records and other entity documents separate and apart from those of any other Person; except that Borrower’s financial position, assets, liabilities, net worth and operating results may be included in the consolidated financial statements of an Affiliate, provided that (A) appropriate notation shall be made on such consolidated financial statements to indicate the separate identity of Borrower from such Affiliate and that Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate or any other Person, and (B) Borrower’s assets, liabilities and net worth shall also be listed on Borrower’s own separate balance sheet;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, or any Affiliate of the foregoing, except upon terms and conditions that are intrinsically fair, commercially reasonable and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure the obligations of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;
(xii) make any loans or advances to any Person, or own any stock or securities of, any PersonPerson (other than the Collateral), or buy or hold evidence of indebtedness issued by any other Person;
(xiii) fail to (A) file its own tax returns separate from those of any other Person, except to the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under applicable Legal Requirements and (B) pay any taxes required to be paid under applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrower;
(xiv) fail to (A) hold itself out to the public as a legal entity separate and distinct from any other Person, (B) conduct its business solely in its own name or (C) correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;
(xvi) without the unanimous written consent of all of its partners or members, as applicable, and the written consent of all directors or managers of Borrower or each SPE Component Entity, as applicable including, without limitation, each Independent Director, take any Material Action or action that is intended to cause such entity to become insolvent;
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space and services performed by an employee of an Affiliate) among the Persons sharing such expenses;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, or pay its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable, other than the Collateral;
(xx) violate or cause to be violated the assumptions made with respect to Borrower and its principals in the Non-Consolidation Opinion or any New Non-Consolidation Opinion;
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreementshereof; or
(xxiv) identify itself as a department or division of any other Person.
(i) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner in the case of a partnership, or the managing member in the case of a limited liability company (each an “SPE Component Entity”) of Borrower, as applicable, shall be an Acceptable DE LLC. Each SPE Component Entity (A) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iii) through (vi) and (viii) through (xxiv) inclusive, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (B) will not engage in any business or activity other than owning an interest in Borrower; (C) will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (D) will not own any subsidiary, or make any investment in any Person other than its investment in Borrower; (E) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); ) and (F) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is substantially similar to that of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors.
(ii) In the event Borrower or SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”), the limited liability company agreement of the Company (the “LLC Agreement”) shall provide that (A) upon the occurrence of any event that causes the sole member of the Company (“Member”) to cease to be the member of the Company (other than (1) upon an assignment by Member of all of its limited liability company interest in the Company and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2) the resignation of Member and the admission of an additional member of the Company in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of the Company and executing the LLC Agreement (“Special Member”) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the Company, automatically be admitted to the Company and shall continue the existence of the Company without dissolution, and (B) Special Member may not resign from the Company or transfer its rights as Special Member unless (1) a successor Special Member has been admitted to the Company as Special Member in accordance with the requirements of the Act and (2) after giving effect to such resignation, such successor Special Member has also accepted its appointment as an Independent Director. The LLC Agreement shall further provide that (v) Special Member shall automatically cease to be a member of the Company upon the admission to the Company of a substitute Member, (w) Special Member shall be a member of the Company that has no interest in the profits, losses and capital of the Company and has no right to receive any distributions of the assets of the Company, (x) pursuant to Section 18-301 of the Act, Special Member shall not be required to make any capital contributions to the Company and shall not receive a limited liability company interest in the Company, (y) Special Member, in its capacity as Special Member, may not bind the Company, and (z) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Company, including, without limitation, the merger, consolidation or conversion of the Company; provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. Prior to its admission to the Company as Special Member, Special Member shall not be a member of the Company, but the Special Member may serve as an Independent Director of the Company. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company and upon the occurrence of such an event, the existence of the Company shall continue without dissolution. The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the Company.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents.
(d) Borrower has executed shall cause Mortgage Borrower and delivered Mortgage Borrower SPE Component Entity to Lender comply with and to continue to comply with the certificate attached hereto as Exhibit D.provisions of Section 6.1 of the Mortgage Loan Agreement.
Appears in 2 contracts
Sources: Senior Mezzanine Loan Agreement (Ashford Hospitality Trust Inc), Senior Mezzanine Loan Agreement (Ashford Hospitality Trust Inc)
Single Purpose Entity/Separateness. Borrower represents12.1 Notwithstanding anything to the contrary contained herein, warrants for so long as that certain first mortgage loan (“Loan”) with UBS AG, by and covenants through its branch office at 1▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ (together with its successors and assigns, collectively, “Lender”) to Company, pursuant to that certain Loan Agreement (the “Loan Agreement”) by and between Company and Lender, remains outstanding, in the event of any conflict between the provisions contained in this Section 12 and the other provisions of this Agreement, the provisions of this Section 12 shall control and govern. All capitalized terms within this Section 12 shall have the meaning ascribed to them in that certain Loan Agreement.
12.2 Company has complied since the date of its formation with the following requirements, and shall comply with such requirements for so long as followsthe Loan shall remain outstanding:
(a) Borrower has not and will not:
Company (i) has been organized solely for the purpose of acquiring, owning, managing and operating the Property, entering into and performing its obligations under the Loan Documents, refinancing the Property in connection with a permitted repayment of the Loan, and transacting lawful business that is incident, necessary and appropriate to accomplish the foregoing, and (ii) has not owned, does not own, and will not own any asset or property other than (A) the Property, and (B) incidental personal property necessary for the ownership, management or operation of the Property.
(b) Company has not engaged and will not engage in any business or activity other than the acquisition, ownership, management and operation and maintenance of the PropertiesProperty and Company will conduct and operate its business as presently conducted and operated.
(c) Company has not entered and will not enter into any contract or agreement with any Affiliate of Company, any constituent party of Company or any Affiliate of any constituent party, except upon terms and conditions that are intrinsically fair, commercially reasonable, and activities incidental thereto;no less favorable to it than those that would be available on an arm’s-length basis from an unrelated third party.
(d) Company has not incurred and will not incur any Indebtedness other than (i) the Debt and (ii) acquire or own 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 assets other than one time; provided that any Indebtedness incurred pursuant to clause (ii) shall be (A) the Properties, outstanding not more than sixty (60) days and (B) such incidental Personal Property as incurred in the ordinary course of business. No Indebtedness, other than the Debt, may be necessary for secured (senior, subordinate or pari passu) by the ownership and operation of the Properties;Property.
(iiie) merge into Company has not made and will not make any loans or consolidate with advances to any Personother Person (including any Affiliate of Company, any constituent party of Company or dissolveany Affiliate of any constituent party), terminate, liquidate in whole and has not acquired and shall not acquire obligations or in part, transfer or otherwise dispose of all or substantially all securities of its assets or change its legal structure;Affiliates.
(ivf) Company has been, is, and will remain solvent and Company has paid its debt and liabilities (Aincluding, as applicable, shared personnel and overhead expenses) fail from its assets as the same became due and will pay its debts and liabilities (including, as applicable, shared personnel and overhead expenses) from its assets as the same shall become due.
(i) Company has done or caused to be done, and will do and cause to be done, all things necessary to observe all its organizational formalities necessary to maintain and preserve its separate existence, (ii) Company has not terminated or fail failed to preserve its existence as an entity duly organizedcomply with, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, will not terminate or fail to comply with the single purpose entity provisions of its organizational documentsOrganizational Documents, (iii) Company has not amended, modified or otherwise changed its Organizational Documents and (iv) unless (A) Lender has consented in each case without writing and (B) following a Securitization of the prior written consent of Lender;Loan, the Rating Agencies have issued a Rating Agency Confirmation in connection therewith, Company will not amend, modify or otherwise change its Organizational Documents.
(vh) own any subsidiaryCompany has maintained and will maintain all of its books, or make any investment inrecords, any Person;
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan financial statements and prior loans that have been satisfied in full as bank accounts separate from those of the date hereof, commingle its assets with the assets of Affiliates and any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;
(vii) incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)), other than . Company’s assets have not been listed as assets on the Debt and Permitted Debt and prior loans that have been satisfied in full as of the date hereof;
(viii) fail to maintain its records, books of account, bank accounts, financial statements, accounting records and other entity documents separate and apart from those statement of any other Person; except provided, however, that BorrowerCompany’s assets may have been included in a consolidated financial positionstatement of its Affiliates; provided that, assetsif applicable, liabilities(i) appropriate notation were made on such consolidated financial statements to indicate the separateness of Company and such Affiliates and to indicate that Company’s assets and credit were not available to satisfy the debts and other obligations of such Affiliates or any other Person, net worth and operating results (ii) such assets were listed on Company’s own separate balance sheet. Company’s assets will not be listed as assets on the financial statement of any other Person; provided, however, that Company’s assets may be included in the a consolidated financial statements statement of an Affiliate, its Affiliates provided that (A) appropriate notation shall be made on such consolidated financial statements to indicate the separate identity separateness of Borrower from Company and such Affiliate Affiliates and to indicate that BorrowerCompany’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate Affiliates or any other Person, and (B) Borrower’s assets, liabilities and net worth such assets shall also be listed on BorrowerCompany’s own separate balance sheet;
(ix) except for capital contributions or capital distributions permitted under the terms . Company has filed and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, or any Affiliate of the foregoing, except upon terms and conditions that are intrinsically fair, commercially reasonable and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure the obligations of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other Person;
(xiii) fail to (A) shall file its own tax returns separate from those of (to the extent Company was or is required to file any tax returns) and has not filed and shall not file a consolidated federal income tax return with any other Person. Company has maintained and shall maintain its books, except to the extent that Borrower is treated records, resolutions and agreements as a “disregarded entity” for tax purposes and is not required to file tax returns under applicable Legal Requirements and (B) pay any taxes required to be paid under applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrower;official records.
(xivi) fail to Company (Ai) has been, will be, and at all times has held and will hold itself out to the public as as, a legal entity separate and distinct from any other Personentity (including any Affiliate of Company or any constituent party of Company), (Bii) conduct its business solely in its own name or (C) has corrected and shall correct any known misunderstanding regarding its status as a separate identity;entity, (iii) has conducted and shall conduct business in its own name, (iv) has not identified and shall not identify itself or any of its Affiliates as a division or department or part of the other and (v) has maintained and utilized and shall maintain and utilize separate stationery, invoices and checks bearing its own name.
(xvj) fail to intend to Company has maintained and will maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;.
(xvik) without Neither Company nor any constituent party of Company has sought or will seek or effect the unanimous written consent division, liquidation, dissolution, winding up, consolidation or merger, in whole or in part, of Company, any sale or other transfer of all or substantially all of its partners assets or members, as applicableany sale or other transfer outside the ordinary course of business.
(l) Company has not commingled and will not commingle funds or other assets of Company with those of any Affiliate or constituent party or any other Person, and the written consent of has held and will hold all directors or managers of Borrower or each SPE Component Entity, as applicable including, without limitation, each Independent Director, take any Material Action or action that is intended to cause such entity to become insolvent;
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space and services performed by an employee of an Affiliate) among the Persons sharing such expenses;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, pay its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable;
(xx) violate or cause to be violated the assumptions made with respect to Borrower and its principals assets in the Non-Consolidation Opinion or any New Non-Consolidation Opinion;
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;.
(xxiiim) have Company has maintained and will maintain its assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify its individual assets from those of any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan Affiliate or guarantees relating to obligations under the Management Agreements constituent party or Franchise Agreements; orany other Person.
(xxivn) identify Company did not assume, guarantee or become obligated for the debts or obligations of any other Person and did not hold itself as a department out to be responsible for or division have its credit available to satisfy the debts or obligations of any other Person. Company will not assume, guarantee or become obligated for the debts or obligations of any other Person and does not and will not hold itself out to be responsible for or have its credit available to satisfy the debts or obligations of any other Person.
(io) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner in the case of a partnership, or the managing member in the case of a limited liability company (each an “SPE Component Entity”) of Borrower, as applicable, shall be an Acceptable DE LLC. Each SPE Component Entity (A) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iii) through (vi) and (viii) through (xxiv) inclusive, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (B) will not engage in any business or activity other than owning an interest in Borrower; (C) will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (D) will not own any subsidiary, or make any investment in any Person other than its investment in Borrower; (E) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (F) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is substantially similar to that of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent DirectorsIntentionally omitted.
(ii) In the event Borrower or SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”), the limited liability company agreement of the Company (the “LLC Agreement”) shall provide that (A) upon the occurrence of any event that causes the sole member of the Company (“Member”) to cease to be the member of the Company (other than (1) upon an assignment by Member of all of its limited liability company interest in the Company and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2) the resignation of Member and the admission of an additional member of the Company in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of the Company and executing the LLC Agreement (“Special Member”) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the Company, automatically be admitted to the Company and shall continue the existence of the Company without dissolution, and (B) Special Member may not resign from the Company or transfer its rights as Special Member unless (1) a successor Special Member has been admitted to the Company as Special Member in accordance with the requirements of the Act and (2) after giving effect to such resignation, such successor Special Member has also accepted its appointment as an Independent Director. The LLC Agreement shall further provide that (v) Special Member shall automatically cease to be a member of the Company upon the admission to the Company of a substitute Member, (w) Special Member shall be a member of the Company that has no interest in the profits, losses and capital of the Company and has no right to receive any distributions of the assets of the Company, (x) pursuant to Section 18-301 of the Act, Special Member shall not be required to make any capital contributions to the Company and shall not receive a limited liability company interest in the Company, (y) Special Member, in its capacity as Special Member, may not bind the Company, and (z) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Company, including, without limitation, the merger, consolidation or conversion of the Company; provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. Prior to its admission to the Company as Special Member, Special Member shall not be a member of the Company, but the Special Member may serve as an Independent Director of the Company. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company and upon the occurrence of such an event, the existence of the Company shall continue without dissolution. The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the Company.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents.
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 2 contracts
Sources: Limited Liability Company Operating Agreement (Investment Grade R.E. Income Fund, L.P.), Limited Liability Company Operating Agreement (Investment Grade R.E. Income Fund, L.P.)
Single Purpose Entity/Separateness. Until the Debt has been paid in full, Borrower represents, warrants and covenants as follows:
(a) Borrower has not and will not:
(i) engage in any business or activity other than the leasing, ownership, operation and maintenance of the PropertiesProperty, and activities incidental theretothereto as more particularly set forth in Section 7 of Borrower’s limited liability company agreement;
(ii) acquire or own any assets other than (A) the PropertiesProperty, and (B) such incidental Personal Collateral Property as may be necessary for the ownership and or operation of the PropertiesProperty and (C) cash deposits disbursed to Borrower pursuant to Section 10.02(c)(x) or Section 9.07 hereof and not yet distributed to its members;
(iii) merge into or consolidate with any Person, or or, to the fullest extent permitted by law, dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all necessary, appropriate and customary organizational formalities necessary to maintain its separate existenceformalities, or fail to preserve its existence (including its separate existence) as an entity duly organizedformed, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply comply, in all material respects, with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;
(v) form acquire or hold any subsidiary (whether corporate, limited liability, partnership or other) or own any subsidiaryequity interest in, or make any investment in, any Person;
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its assets with the assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;
(vii) incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than (A) the Debt Debt, (B) trade and Permitted Debt operational indebtedness incurred in the ordinary course of business with trade creditors, provided such indebtedness is (1) unsecured (other than mechanics’ liens or other liens being properly contested in accordance with Section 5.04(b)), (2) not evidenced by a note, (3) on commercially reasonable terms and prior loans that have been satisfied conditions, and (4) paid not more than sixty (60) days past the date incurred (except to the extent such amounts are being contested in full accordance with the terms of Section 5.04(b) hereof), and/or (C) financing leases and purchase money indebtedness incurred in the ordinary course of business relating to Collateral Property; provided however, the aggregate amount of the indebtedness of Borrower described in (B) and (C) shall not exceed at any time three percent (3%) of the outstanding principal amount of the Note as of the date hereofClosing Date;
(viii) fail to maintain its records, books of account, bank accounts, financial statements, accounting records and other entity documents separate and apart from those of any other Person and fail to represent its assets and liabilities separate and apart from those of any other Person; except that Borrower’s financial position, assets, liabilities, net worth and operating results may be included in the consolidated financial statements of an Affiliate, provided that (A) appropriate notation shall be made on such consolidated financial statements to indicate the contain a footnote indicating that Borrower is a separate identity of Borrower from such Affiliate legal entity and that Borrower’s assets it maintains separate books and credit are not available to satisfy the debts and other obligations of such Affiliate or any other Person, and (B) Borrower’s assets, liabilities and net worth shall also be listed on Borrower’s own separate balance sheetrecords;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of BorrowerBorrower or Operating Lessee, or any Affiliate of the foregoing, except upon terms and conditions that are intrinsically fair, commercially reasonable and, except for capital contributions and distributions, substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure the obligations of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;
(xii) make or permit to remain outstanding any loans or advances to any Personto, or own or acquire any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other Person;
(xiii) except to the extent treated as a division of the sole member of Borrower, fail to (A) file its own tax returns separate from those of or file a consolidated federal income tax return with any other PersonPerson (unless prohibited or required, except to as the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under case may be, by applicable Legal Requirements Requirements), and (B) fail to pay any taxes (other than Taxes required to be paid by Lender hereunder) required to be paid under applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrowerlaw;
(xiv) fail either to (A) hold itself out to the public as a legal entity separate and distinct from any other Person, (B) Person or to conduct its business solely in its own name or (C) fail to correct any known misunderstanding regarding its separate identityidentity or identify itself as a department or division of any other Person;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations, transactions and liabilities; provided, howeverthat, that the foregoing shall not require Borrower’s members, partners or shareholders sole member to make additional capital contributions to Borrower;
(xvi) without the unanimous written consent of all of its partners or members, as applicable, members and the written consent of all 100% of the board of directors or managers of Borrower or each SPE Component Entity, as applicable including, without limitation, each Independent Director, (a) file or consent to the filing of any petition, either voluntary or involuntary, to take advantage of any Creditors Rights Laws, (b) seek or consent to the appointment of a receiver, liquidator or any similar official, (c) take any Material Action or action that is intended to might cause such entity to become insolvent, or (d) make an assignment for the benefit of creditors;
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space and services performed by an employee of an Affiliate) among the Persons sharing such expensesexpenses or to use separate stationery or invoices in blank or bearing its own name and checks bearing its own name;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, or pay its own liabilities and expenses (including, without limitation, salaries of its own employees) only from its own funds; provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable;
(xx) violate or cause to be violated the assumptions made with respect to Borrower and its principals in any opinion letter pertaining to substantive consolidation delivered to Lender in connection with the Non-Consolidation Opinion or any New Non-Consolidation OpinionLoan;
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations (it being understood that in light of Borrower’s contemplated business operations, Borrower may determine that no employees are required);
(xxii) fail hold out its credit or assets as being available to maintain and use separate stationerysatisfy the obligations of any other entity, invoices and checks bearing pledge its own nameassets to secure the obligations of any other entity;
(xxiii) fail to have any its own board of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreementsdirectors; or
(xxiv) identify itself as a department or division fail to cause its board of any directors to observe all other PersonDelaware limited liability company formalities.
(ib) If Borrower is a partnership or limited liability company (other than and not a single-single member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”company), each general partner in the case of a general partnership, each general partner in the case of a limited partnership, or the managing member in the case of a limited liability company (each an “SPE Component Entity”) of Borrower, as applicable, Borrower shall be an Acceptable DE LLCa corporation whose sole asset is its interest in Borrower. Each SPE Component Entity (Ai) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iiiSection 6.01(a)(iii) through - (vi) and (viii) through — (xxiv) inclusive), as if such representation, warranty or covenant was made directly by such SPE Component Entity; (Bii) will not engage in any business or activity other than owning an interest in Borrower; (Ciii) will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (D) will not own any subsidiary, or make any investment in any Person other than its investment in Borrower; (Eiv) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation)) other than in the ordinary course of business; and (Fv) will cause Borrower to comply with the provisions of this Section 6.1 6.01 and Section 6.46.04. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is articles of incorporation are substantially similar to that those of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter in the form acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLCa single member Delaware limited liability company, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) belowstatus, the no SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless required for such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directorssingle member Delaware limited liability company.
(iic) In the event Borrower or SPE Component Entity is an Acceptable DE LLC a single-member Delaware limited liability company (as referred to in this clause (ii), the “CompanySMLLC”), the limited liability company agreement of the Company such SMLLC (the “LLC Agreement”) shall provide that (Ai) upon the occurrence of any event that causes the sole member of such SMLLC (any such sole member, the Company (“Member”) to cease to be the member of the Company such SMLLC (other than (1A) upon an assignment by Member of all of its limited liability company interest in the Company such SMLLC and the admission of the transferee in accordance with the Loan Documents and the LLC Agreementtransferee, or (2B) the resignation of Member and the admission of an additional member of the Company in either case in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person Person acting as Independent Director of the Company and executing the LLC Agreement (“Special Member”) shall, such SMLLC shall without any action of any other Person and simultaneously with the Member ceasing to be the member of the Companysuch SMLLC, automatically be admitted to the Company such SMLLC (“Special Member”) and shall continue the existence of the Company such SMLLC without dissolution, dissolution and (Bii) Special Member may not resign from the Company such SMLLC or transfer its rights as Special Member unless (1A) a successor Special Member has been admitted to the Company such SMLLC as Special Member in accordance with the requirements of the Act Delaware law and (2B) after giving effect to such resignation, such successor Special Member has also accepted its appointment as an Independent Director. The LLC Agreement shall further provide that (vi) Special Member shall automatically cease to be a member of the Company such SMLLC upon the admission to the Company such SMLLC of a substitute Member, (wii) Special Member shall be a member of the Company such SMLLC that has no interest in the profits, losses and capital of the Company such SMLLC and has no right to receive any distributions of the assets of the Companysuch SMLLC assets, (xiii) pursuant to Section 18-301 of the Delaware Limited Liability Company Act (the “Act”), Special Member shall not be required to make any capital contributions to the Company such SMLLC and shall not receive a limited liability company interest in the Companysuch SMLLC, (yiv) Special Member, in its capacity as Special Member, may not bind the Companysuch SMLLC, and (zv) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Companysuch SMLLC, including, without limitation, the merger, consolidation or conversion of the Companysuch SMLLC; provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. In order to implement the admission to such SMLLC of Special Member, Special Member shall execute a counterpart to the LLC Agreement. Prior to its admission to the Company such SMLLC as Special Member, Special Member shall not be a member of such SMLLC.
(d) Upon the Companyoccurrence of any event that causes the Member to cease to be a member of such SMLLC, but to the Special fullest extent permitted by applicable law, the personal representative of Member may serve as an Independent Director shall, within ninety (90) days after the occurrence of the Companyevent that terminated the continued membership of Member in such SMLLC, agree in writing (i) to continue such SMLLC 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 SMLLC, effective as of the occurrence of the event that terminated the continued membership of Member of such SMLLC in such SMLLC. Any To the extent permitted by applicable law, any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company such SMLLC and upon the occurrence of such an event, the existence business of the Company such SMLLC shall continue without dissolution. The To the extent permitted by applicable law, the LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company such SMLLC upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the Companysuch SMLLC.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents.
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 2 contracts
Sources: Loan Agreement (Bon Ton Stores Inc), Loan Agreement (Bon Ton Stores Inc)
Single Purpose Entity/Separateness. (a) Borrower hereby represents, warrants and covenants as follows:
(a) that Borrower has not not, since its formation, and will shall not:
(i) engage in any business or activity other than the ownership, operation and maintenance of the PropertiesProperty, and activities incidental thereto;
(ii) acquire or own any assets other than (A) the PropertiesProperty, and (B) such incidental Personal Property as may be necessary for the ownership ownership, leasing, maintenance and operation of the PropertiesProperty;
(iii) merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existenceformalities, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documentsdocuments (provided, that, such organizational documents may be amended or modified to the extent that, in each case without addition to the satisfaction of the requirements related thereto set forth therein, Lender’s prior written consent of and, if required by Lender, a Rating Agency Confirmation are first obtained);
(v) own any subsidiary, or make any investment in, any PersonPerson (other than, with respect to any SPE Component Entity, in Borrower);
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its funds or assets with the funds or assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;
(vii) incur any debtIndebtedness, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than (A) the Debt, (B) trade and operational indebtedness incurred in the ordinary course of business with trade creditors, provided such indebtedness is (1) unsecured, (2) not evidenced by a note, (3) on commercially reasonable terms and conditions, and (4) due not more than sixty (60) days past the date incurred and paid on or prior to such date, and/or (C) Permitted Equipment Leases; provided however, the aggregate amount of the indebtedness described in (B) and (C) shall not exceed at any time two percent (2%) of the outstanding principal amount of the Debt. No Indebtedness other than the Debt and Permitted Debt and prior loans that have been satisfied in full as of may be secured (subordinate or pari passu) by the date hereofProperty;
(viii) fail to maintain all of its books, records, books of account, financial statements and bank accounts, financial statements, accounting records and other entity documents accounts separate and apart from those of any other Person (including, without limitation, any Affiliates). Borrower’s assets have not and will not be listed as assets on the financial statement of any other Person; except provided, however, that Borrower’s financial position, assets, liabilities, net worth and operating results assets may be included in the a consolidated financial statements statement of an Affiliate, its Affiliates provided that (Ai) appropriate notation shall be made on such consolidated financial statements to indicate the separate identity separateness of Borrower from and such Affiliate Affiliates and to indicate that Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate Affiliates or any other Person, Person and (Bii) Borrower’s assets, liabilities and net worth such assets shall also be listed on Borrower’s own separate balance sheet. Borrower has maintained and will maintain its books, records, resolutions and agreements as official records;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principalprincipal or Affiliate, guarantor of the obligations of Borrowerexcept, or any Affiliate of the foregoingexcept, except in each case, upon terms and conditions that are intrinsically fair, commercially reasonable fair and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure for the obligations benefit of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other Person;
(xiii) fail to (A) file its own tax returns separate from those of any other Person, except to the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under (unless prohibited by applicable Legal Requirements and (B) pay any taxes required to be paid under applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrowerfrom doing so);
(xiv) fail to (A) hold itself out to the public and identify itself, in each case, as a legal entity separate and distinct from any other Person and not as a division or part of any other Person, (B) conduct its business solely in its own name, (C) hold its assets in its own name or (CD) correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, that operations (to the foregoing shall not require Borrower’s members, partners or shareholders extent there exists sufficient cash flow from the Property to make additional capital contributions to Borrowerdo so);
(xvi) without the prior unanimous written consent of all of its partners partners, shareholders or members, as applicable, and the prior unanimous written consent of all its board of directors or managers managers, as applicable, and the prior written consent of each Independent Director (regardless of whether such Independent Director is engaged at the Borrower or each SPE Component EntityEntity level), as applicable including(a) file or consent to the filing of any petition, without limitationeither voluntary or involuntary, each Independent Directorto take advantage of any Creditors Rights Laws, (b) seek or consent to the appointment of a receiver, liquidator or any similar official, (c) take any Material Action or action that is intended to might cause such entity to become insolvent, (d) make an assignment for the benefit of creditors or (e) take any Material Action with respect to Borrower or any SPE Component Entity (provided, that, none of any member, shareholder or partner (as applicable) of Borrower or any SPE Component Entity or any board of directors or managers (as applicable) of Borrower or any SPE Component Entity may vote on or otherwise authorize the taking of any of the foregoing actions unless, in each case, there are at least two (2) Independent Directors then serving in such capacity in accordance with the terms of the applicable organizational documents and each of such Independent Directors have consented to such foregoing action);
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space space) or fail to use separate stationery, invoices and services performed by an employee of an Affiliate) among the Persons sharing such expenseschecks;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, pay its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; provided, however, that funds or fail to maintain a sufficient number of employees in light of its contemplated business operations (in each case to the foregoing shall not require Borrower’s members, partners or shareholders extent there exists sufficient cash flow from the Property to make additional capital contributions to Borrowerdo so);
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliatesAffiliates, as applicable;
(xx) identify its partners, members, shareholders or other Affiliates, as applicable, as a division or part of it; or
(xxi) violate or cause to be violated the assumptions made with respect to Borrower and its principals in the Non-Consolidation Opinion or in any New Non-Consolidation Opinion;
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other Person.
(ib) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner (in the case of a partnership, or the managing ) and at least one member (in the case of a limited liability company company) of Borrower, as applicable, shall be a corporation or an Acceptable LLC (each an “SPE Component Entity”) of whose sole asset is its interest in Borrower, as applicable, shall be an Acceptable DE LLC. Each SPE Component Entity (Ai) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iiiSection 5.1(a)(iii) through - (vi) (inclusive) and (viii) through – (xxivxxi) (inclusive) and, if such SPE Component Entity is an Acceptable LLC, Section 5.1(c) and (d) hereof, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (Bii) will not engage in any business or activity other than owning an interest in Borrower; (Ciii) will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (Div) will not at all times continue to own any subsidiary, or make any investment in any Person other no less than its investment a 0.5% direct equity ownership interest in Borrower; (Ev) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (Fvi) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is substantially similar to that of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors5.1.
(iic) In the event Borrower or the SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”)LLC, the limited liability company agreement of Borrower or the Company SPE Component Entity (as applicable) (the “LLC Agreement”) shall provide that (Ai) upon the occurrence of any event that causes the sole last remaining member of Borrower or the Company SPE Component Entity (as applicable) (“Member”) to cease to be the member of Borrower or the Company SPE Component Entity (as applicable) (other than (1A) upon an assignment by Member of all of its limited liability company interest in Borrower or the Company SPE Component Entity (as applicable) and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2B) the resignation of Member and the admission of an additional member of Borrower or the Company SPE Component Entity (as applicable) in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of Borrower or the Company and executing the LLC Agreement SPE Component Entity (“Special Member”as applicable) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of Borrower or the Company, SPE Component Entity (as applicable) automatically be admitted to Borrower or the Company SPE Component Entity (as applicable) as a member with a 0% economic interest (“Special Member”) and shall continue Borrower or the existence of the Company SPE Component Entity (as applicable) without dissolution, dissolution and (Bii) Special Member may not resign from Borrower or the Company SPE Component Entity (as applicable) or transfer its rights as Special Member unless (1A) a successor Special Member has been admitted to Borrower or the Company SPE Component Entity (as applicable) as a Special Member in accordance with the requirements of the Act Delaware law and (2B) after giving effect to such resignationresignation or transfer, such successor Special Member has also accepted its appointment there remains at least two (2) Independent Directors of the SPE Component Entity or Borrower (as an Independent Directorapplicable) in accordance with Section 5.2 below. The LLC Agreement shall further provide that (vi) Special Member shall automatically cease to be a member of Borrower or the Company SPE Component Entity (as applicable) upon the admission to Borrower or the Company SPE Component Entity (as applicable) of a the first substitute Membermember, (wii) Special Member shall be a member of Borrower or the Company SPE Component Entity (as applicable) that has no interest in the profits, losses and capital of Borrower or the Company SPE Component Entity (as applicable) and has no right to receive any distributions of the assets of Borrower or the CompanySPE Component Entity (as applicable), (xiii) pursuant to Section 18-301 the applicable provisions of the limited liability company act of the State of Delaware (the “Act”), Special Member shall not be required to make any capital contributions to Borrower or the Company SPE Component Entity (as applicable) and shall not receive a limited liability company interest in Borrower or the CompanySPE Component Entity (as applicable), (yiv) Special Member, in its capacity as Special Member, may not bind Borrower or the Company, SPE Component Entity (as applicable) and (zv) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, Borrower or the Company, SPE Component Entity (as applicable) including, without limitation, the merger, consolidation or conversion of Borrower or the CompanySPE Component Entity (as applicable); provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. In order to implement the admission to Borrower or the SPE Component Entity (as applicable) of Special Member, Special Member shall execute a counterpart to the LLC Agreement. Prior to its admission to Borrower or the Company SPE Component Entity (as applicable) as Special Member, Special Member shall not be a member of Borrower or the CompanySPE Component Entity (as applicable), but the Special Member may serve as an Independent Director of Borrower or the Company. Any SPE Component Entity (as applicable).
(d) The LLC Agreement shall further provide that (i) upon the occurrence of any event that causes the Member to cease to be a member of Borrower or the SPE Component Entity (as applicable) to the fullest extent permitted by law, the personal representative of Member shall, within ninety (90) days after the occurrence of the event that terminated the continued membership of Member in Borrower or the SPE Component Entity (as applicable) agree in writing (A) to continue Borrower or the SPE Component Entity (as applicable) and (B) to the admission of the personal representative or its nominee or designee, as the case may be, as a substitute member of Borrower or the SPE Component Entity (as applicable) effective as of the occurrence of the event that terminated the continued membership of Member in Borrower or the SPE Component Entity (as applicable), (ii) any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of Borrower or the Company SPE Component Entity (as applicable) and upon the occurrence of such an event, the existence business of Borrower or the Company SPE Component Entity (as applicable) shall continue without dissolution. The LLC Agreement shall also provide that dissolution and (iii) each of Member and Special Member waives any right it might have to agree in writing to dissolve Borrower or the Company SPE Component Entity (as applicable) upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of Borrower or the Company.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents(as applicable).
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 2 contracts
Sources: Loan Agreement (Clipper Realty Inc.), Loan Agreement (Clipper Realty Inc.)
Single Purpose Entity/Separateness. Borrower represents, warrants and covenants as follows:
(a) Each Borrower has will not and will notwithout obtaining the prior written consent of Lender and, if requested by Lender, a Rating Agency Confirmation with respect thereto:
(i) engage in any business or activity other than unrelated to the acquisition, holding, ownership, operation operation, management, leasing, sale, transfer, exchange, financing, refinancing, improvement and maintenance of the Properties, Collateral and activities incidental theretoincidental, ancillary or related thereto or necessary or appropriate therefor;
(ii) acquire or own any assets other than (A) the Properties, and (B) such incidental Personal Property as may be necessary for the ownership and operation of the PropertiesCollateral;
(iii) (A) merge into or consolidate with any PersonPerson other than one or more other Borrowers, or (B) dissolve, terminateterminate or liquidate, liquidate in whole or in part, (C) transfer or otherwise dispose of all or substantially all of its assets except as permitted by the Loan Documents, or (D) change its legal structure;
(iv) (A) fail to observe observe, in all material respects, all organizational formalities necessary to maintain its separate existence, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single special purpose entity entity/bankruptcy remote provisions of its organizational documentsdocuments (provided, that, such organizational documents may be amended or modified to the extent that, in each case without addition to the satisfaction of the requirements related thereto set forth therein, Lender’s prior written consent of and, if required by Lender, a Rating Agency Confirmation are first obtained);
(v) own any subsidiary, or make any investment in, any PersonPerson other than Mortgage Borrower or any SPE Component Entity (as defined in the Mortgage Loan Agreement);
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its funds or assets with the funds or assets of any other Person, Person (except for one or permit any Affiliate or constituent party independent access to its bank accountsmore other Borrowers);
(vii) incur any debtIndebtedness, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than (A) the Debt Debt, (B) trade and operational indebtedness incurred in the ordinary course of business with trade creditors or in the routine administration of its affairs not to exceed $25,000, provided such indebtedness is (1) unsecured (it being understood that indebtedness secured only by Permitted Debt Encumbrances will be deemed unsecured), (2) not evidenced by a note, and prior loans that have been satisfied in full as of (3) due not more than ninety (90) days past the date hereofincurred and is either paid on or prior to such date or being contested in good faith, and/or (C) such other liabilities as are permitted pursuant to this Agreement;
(viii) fail to maintain all of its books, records, books of account, financial statements and bank accounts, financial statements, accounting records and other entity documents accounts separate and apart from those of any other PersonPerson (except for one or more other Borrowers). Borrower’s assets will not be listed as assets on the financial statement of any other Person (except for one or more other Borrowers); except provided, however, that Borrower’s financial position, assets, liabilities, net worth and operating results assets may be included in the a consolidated financial statements statement of an Affiliate, its Affiliates provided that (A) appropriate notation shall be made on any such consolidated financial statements to indicate statement contains a note indicating that the separate identity of Borrower from such Affiliate and that Borrower’s separate assets and credit are not available to satisfy pay the debts and other obligations of such Affiliate and that Borrower’s liabilities do not constitute obligations of the consolidated entity, except that one or more other Borrowers may be liable, and Guarantor may be liable (to the extent provided in the Guaranty and the Environmental Indemnity), for obligations of any other Person, Borrower and (B) Borrower’s assets, liabilities and net worth such assets shall also be listed on Borrower’s own separate the balance sheetsheet of one or more Borrowers, as applicable. Borrower has maintained and will maintain its books, records, resolutions and agreements as official records;
(ix) except for capital contributions or and capital distributions permitted under the terms and conditions of Borrower’s its organizational documents and properly reflected on in its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principalprincipal or Affiliate, guarantor of the obligations of Borrowerexcept, or any Affiliate of the foregoingin each case, except upon terms and conditions that are intrinsically fair, commercially reasonable and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other PersonPerson (it being acknowledged that assets of Borrowers may be commingled);
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure for the obligations benefit of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person, except (in each case) for one or more other Borrowers;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any Person other Personthan pursuant to Leases entered into in accordance with Section 4.14 hereof and in compliance with the provisions set forth in this Section 5.1;
(xiii) fail to (A) file its own tax returns returns, separate from those of any other Person, except (A) to the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file any tax returns under return by applicable Legal Requirements, or (B) if Borrower is prohibited by applicable Legal Requirements and (B) pay any taxes required to be paid under applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrowerfrom doing so;
(xiv) fail to (A) hold itself out to the public and identify itself, in each case, as a legal entity separate and distinct from any other Person and not as a division or part of any other Person, (B) conduct its business solely in its own name or in a name franchised or licensed to it or a fictitious name registered with each applicable Governmental Authority (it being understood that such Borrower’s business may be conducted on its behalf by another Person under a management or other agreement pursuant to which the counterparty holds itself out as an agent or contractor of such Borrower), (C) hold its assets in its own name (provided that it may commingle its assets with one or more other Borrowers) or (D) correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, that operations (to the foregoing shall not require Borrower’s members, partners or shareholders extent there exists sufficient cash flow from the applicable Individual Property to make additional capital contributions to Borrowerdo so);
(xvi) without the prior unanimous written consent of all of its partners partners, shareholders or members, as applicable, and the prior unanimous written consent of all its board of directors or managers managers, as applicable, and the prior written consent of each Independent Director (regardless of whether such Independent Director is engaged at the Borrower or each SPE Component Entity, as applicable including, without limitation, each Independent DirectorEntity level), take any Material Action with respect to Borrower or action that is intended any SPE Component Entity (provided, that, none of any member, shareholder or partner (as applicable) of Borrower or any SPE Component Entity or any board of directors or managers (as applicable) of Borrower or any SPE Component Entity may vote on or otherwise authorize the taking of any of the foregoing actions unless, in each case, there are at least two (2) Independent Directors then serving in such capacity in accordance with the terms of the applicable organizational documents and each of such Independent Directors has consented to cause such entity to become insolventforegoing action);
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space space) or fail to use separate stationery, invoices and services performed by an employee of an Affiliate) among the Persons sharing such checks, except in each case for expenses, stationery, invoices and checks shared with one or more other Borrowers;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, pay its own liabilities (including, without limitation, salaries of its own employeesemployees and a fairly allocated portion of any personnel and overhead expenses that it shares with any Affiliate) only from its own funds; provided, however, that funds or fail to maintain a sufficient number of employees in light of its contemplated business operations (in each case to the foregoing shall not require extent there exists sufficient cash flow from the applicable Individual Property to do so and except for payment of any Borrower’s membersliabilities by one or more other Borrowers and sharing of employees, partners personnel or shareholders to make additional capital contributions to Borroweroverhead expenses by one or more Borrowers);
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliatesAffiliates, as applicable, except (A) any SPE Component Entity may acquire securities in any applicable Borrower, (B) any Borrower may be liable for obligations of one or more other Borrowers and (C) Borrower may own securities as permitted in clause (v) above;
(xx) identify its partners, members, shareholders or other Affiliates, as applicable, as a division or part of it; or
(xxi) violate or cause to be violated the assumptions made with respect to Borrower and its principals in the Non-Consolidation Opinion or in any New Non-Consolidation Opinion;
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other Person.
(ib) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner (in the case of a partnership, or the managing ) and at least one member (in the case of a limited liability company company) of Borrower, as applicable, shall be a corporation or an Acceptable LLC (each an “SPE Component Entity”) whose sole asset is its interest in Borrower (and personal property incidental, ancillary or related to, or necessary or appropriate for, its ownership of Borrower, as applicable, shall be an Acceptable DE LLCsuch interest). Each SPE Component Entity (Ai) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iiiSection 5.1(a)(iii) through - (vi) (inclusive) and (viii) through – (xxivxxi) (inclusive) and, if such SPE Component Entity is an Acceptable LLC, Section 5.1(c) and (d) hereof, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (Bii) will not engage in any business or activity other than unrelated to owning an interest in BorrowerBorrower (and personal property incidental, ancillary or related to, or necessary or appropriate for, its ownership of such interest); (Ciii) will not acquire or own any assets other than its partnership, membership, or other equity interest in BorrowerBorrower (and personal property incidental, ancillary or related to, or necessary or appropriate for, its ownership of such interest); (Div) will not at all times continue to own any subsidiary, or make any investment in any Person other no less than its investment a 0.01% direct equity ownership interest in Borrower; (Ev) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation), except for trade payables not to exceed $10,000 which are incurred in the routine administration of its affairs, are unsecured, are not evidenced by a note and are due not more than ninety (90) days past the date incurred and are either paid on or prior to such date or are being contested in good faith; and (Fvi) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is substantially similar to that of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors5.1.
(iic) In the event Borrower or the SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”)LLC, the limited liability company agreement of Borrower or the Company SPE Component Entity (as applicable) (the “LLC Agreement”) shall provide that (Ai) upon the occurrence of any event that causes the sole last remaining member of Borrower or the Company SPE Component Entity (as applicable) (“Member”) to cease to be the member of Borrower or the Company SPE Component Entity (as applicable) (other than (1A) upon an assignment by Member of all of its limited liability company interest in Borrower or the Company SPE Component Entity (as applicable) and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2B) the resignation of Member and the admission of an additional member of Borrower or the Company SPE Component Entity (as applicable) in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any one person acting as Independent Director of Borrower or the Company and executing the LLC Agreement SPE Component Entity (“Special Member”as applicable) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of Borrower or the Company, SPE Component Entity (as applicable) automatically be admitted to Borrower or the Company SPE Component Entity (as applicable) as a member with a 0% economic interest (“Special Member”) and shall continue Borrower or the existence of the Company SPE Component Entity (as applicable) without dissolution, dissolution and (Bii) Special Member may not resign from Borrower or the Company SPE Component Entity (as applicable) or transfer its rights as Special Member unless (1A) a successor Special Member has been admitted to Borrower or the Company SPE Component Entity (as applicable) as a Special Member in accordance with the requirements of the Act Delaware law and (2B) after giving effect to such resignationresignation or transfer, such successor Special Member has also accepted its appointment there remain at least two (2) Independent Directors of the SPE Component Entity or Borrower (as an Independent Directorapplicable) in accordance with Section 5.2 below. The LLC Agreement shall further provide that (vi) Special Member shall automatically cease to be a member of Borrower or the Company SPE Component Entity (as applicable) upon the admission to Borrower or the Company SPE Component Entity (as applicable) of a the first substitute Membermember, (wii) Special Member shall be a member of Borrower or the Company SPE Component Entity (as applicable) that has no interest in the profits, losses and capital of Borrower or the Company SPE Component Entity (as applicable) and has no right to receive any distributions of the assets of Borrower or the CompanySPE Component Entity (as applicable), (xiii) pursuant to Section 18-301 the applicable provisions of the limited liability company act of the State of Delaware (the “Act”), Special Member shall not be required to make any capital contributions to Borrower or the Company SPE Component Entity (as applicable) and shall not receive a limited liability company interest in Borrower or the CompanySPE Component Entity (as applicable), (yiv) Special Member, in its capacity as Special Member, may not bind Borrower or the Company, SPE Component Entity (as applicable) and (zv) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, Borrower or the Company, SPE Component Entity (as applicable) including, without limitation, the merger, consolidation or conversion of Borrower or the CompanySPE Component Entity (as applicable); provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. In order to implement the admission to Borrower or the SPE Component Entity (as applicable) of Special Member, Special Member shall execute a counterpart to the LLC Agreement. Prior to its admission to Borrower or the Company SPE Component Entity (as applicable) as Special Member, Special Member shall not be a member of Borrower or the CompanySPE Component Entity (as applicable), but the Special Member may serve as an Independent Director of Borrower or the Company. Any SPE Component Entity (as applicable).
(d) The LLC Agreement shall further provide that, to the fullest extent permitted by law (i) upon the occurrence of any event that causes the Member to cease to be a member of Borrower or the SPE Component Entity (as applicable) the personal representative of Member shall, within ninety (90) days after the occurrence of the event that terminated the continued membership of Member in Borrower or the SPE Component Entity (as applicable) agree in writing (A) to continue Borrower or the SPE Component Entity (as applicable) and (B) to the admission of the personal representative or its nominee or designee, as the case may be, as a substitute member of Borrower or the SPE Component Entity (as applicable) effective as of the occurrence of the event that terminated the continued membership of Member in Borrower or the SPE Component Entity (as applicable), (ii) any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of Borrower or the Company SPE Component Entity (as applicable) and upon the occurrence of such an event, the existence business of Borrower or the Company SPE Component Entity (as applicable) shall continue without dissolution. The LLC Agreement shall also provide that dissolution and (iii) each of Member and Special Member waives any right it might have to agree in writing to dissolve Borrower or the Company SPE Component Entity (as applicable) upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the Company.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents.
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 2 contracts
Sources: Mezzanine Loan Agreement (Northstar Realty Finance Corp.), Mezzanine Loan Agreement (NorthStar Healthcare Income, Inc.)
Single Purpose Entity/Separateness. Each Borrower represents, warrants and covenants as follows:
(a) Borrower has does not own and will not:
not own any asset or property other than (i) the applicable Project, and (ii) incidental Personal Property necessary for the ownership or operation of the applicable Project. Each Borrower will not engage in any business or activity other than the ownership, operation and maintenance of the Properties, and activities incidental thereto;
(ii) acquire or own any assets other than (A) the Properties, and (B) such incidental Personal Property as may be necessary for the ownership management and operation of the Properties;
applicable Project and such Borrower will continue to conduct and operate its business (iiii.e., renting its Project to On Stage Theaters, Inc. for the purpose of operating a dinner theater live production show) merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existence, or fail to preserve its existence as an entity duly organized, validly existing presently conducted and in good standing (if applicable) under operated. Other than the applicable Legal Requirements of the jurisdiction of its organization or formationOn Stage Lease, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;
(v) own any subsidiary, or make any investment in, any Person;
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its assets with the assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;
(vii) incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)), other than the Debt and Permitted Debt and prior loans that have been satisfied in full as of the date hereof;
(viii) fail to maintain its records, books of account, bank accounts, financial statements, accounting records and other entity documents separate and apart from those of any other Person; except that Borrower’s financial position, assets, liabilities, net worth and operating results may be included in the consolidated financial statements of an Affiliate, provided that (A) appropriate notation shall be made on such consolidated financial statements to indicate the separate identity of no Borrower from such Affiliate and that Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate or any other Person, and (B) Borrower’s assets, liabilities and net worth shall also be listed on Borrower’s own separate balance sheet;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, will enter into any transaction, contract or agreement with any general partnerAffiliated Parties of Borrower except if such Affiliated Parties have the requisite skills therefor, member, shareholder, principal, guarantor of the obligations of Borrower, or any Affiliate of the foregoing, except and then only upon terms and conditions that are intrinsically fair, commercially reasonable fair and substantially similar to those that would be available on an arm’sarms-length basis with unaffiliated third parties;
(x) maintain its assets in parties other than any such a manner that it party. No Borrower has made and will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure the obligations of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;
(xii) not make any loans or advances to any Personthird party (including any Affiliated Parties), or own any stock and shall not acquire obligations or securities ofof its Affiliated Parties. Each Borrower is and will remain solvent, any Personand each Borrower will pay its debts and liabilities (including, or buy or hold evidence as applicable, shared personnel and overhead expenses) from its assets as the same shall become due. Each Borrower will maintain all of indebtedness issued by any other Person;
(xiii) fail to (A) its books, records, financial statements and bank accounts separate from those of its Affiliated Parties and each Borrower will file its own tax returns separate from those of any other Personreturns, except to the extent that unless such Borrower is treated as a “disregarded entity” for tax purposes and is not required to file included within the consolidated tax returns under applicable Legal Requirements and (B) pay any taxes required to be paid under applicable Legal Requirements; provided, however, that of OSE. Each Borrower shall not have any obligation to reimburse maintain its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur books, records, resolutions and agreements as a result of any profits or losses of Borrower;
(xiv) fail to (A) official records. Each Borrower will be, and at all times will hold itself out to the public as as, a legal entity separate and distinct from any other Person, entity (Bincluding any Affiliated Parties of such Borrower) conduct its business solely in its own name or (C) shall correct any known misunderstanding regarding its status as a separate identity;
entity, shall conduct business in its own name, shall not identify itself or any of its Affiliated Parties as a division or part of the other (xvexcept as subsidiaries of OSE) fail to intend to and shall maintain and utilize a separate telephone number and separate invoices and checks. Each Borrower will maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided. Neither any Borrower nor any Affiliated Parties of any Borrower will seek the dissolution, howeverwinding up, liquidation, consolidation or merger in whole or in part, of such Borrower. No Borrower will commingle the funds and other assets of such Borrower with those of any Affiliated Parties or any other person. Each Borrower has and will maintain its assets in such a manner that the foregoing shall it will not require Borrower’s membersbe costly or difficult to segregate, partners ascertain or shareholders to make additional capital contributions to Borrower;
(xvi) without the unanimous written consent identify its individual assets from those of all of its partners any Affiliated Parties or members, as applicable, any other person. Each Borrower does not and the written consent of all directors or managers of Borrower or each SPE Component Entity, as applicable including, without limitation, each Independent Director, take any Material Action or action that is intended to cause such entity to become insolvent;
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space and services performed by an employee of an Affiliate) among the Persons sharing such expenses;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, pay its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; provided, however, that the foregoing shall will not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable;
(xx) violate or cause hold itself out to be violated responsible for the assumptions made with respect to Borrower and its principals in the Non-Consolidation Opinion debts or any New Non-Consolidation Opinion;
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other Personperson.
(i) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner in the case of a partnership, or the managing member in the case of a limited liability company (each an “SPE Component Entity”) of Borrower, as applicable, shall be an Acceptable DE LLC. Each SPE Component Entity (A) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iii) through (vi) and (viii) through (xxiv) inclusive, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (B) will not engage in any business or activity other than owning an interest in Borrower; (C) will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (D) will not own any subsidiary, or make any investment in any Person other than its investment in Borrower; (E) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (F) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is substantially similar to that of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors.
(ii) In the event Borrower or SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”), the limited liability company agreement of the Company (the “LLC Agreement”) shall provide that (A) upon the occurrence of any event that causes the sole member of the Company (“Member”) to cease to be the member of the Company (other than (1) upon an assignment by Member of all of its limited liability company interest in the Company and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2) the resignation of Member and the admission of an additional member of the Company in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of the Company and executing the LLC Agreement (“Special Member”) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the Company, automatically be admitted to the Company and shall continue the existence of the Company without dissolution, and (B) Special Member may not resign from the Company or transfer its rights as Special Member unless (1) a successor Special Member has been admitted to the Company as Special Member in accordance with the requirements of the Act and (2) after giving effect to such resignation, such successor Special Member has also accepted its appointment as an Independent Director. The LLC Agreement shall further provide that (v) Special Member shall automatically cease to be a member of the Company upon the admission to the Company of a substitute Member, (w) Special Member shall be a member of the Company that has no interest in the profits, losses and capital of the Company and has no right to receive any distributions of the assets of the Company, (x) pursuant to Section 18-301 of the Act, Special Member shall not be required to make any capital contributions to the Company and shall not receive a limited liability company interest in the Company, (y) Special Member, in its capacity as Special Member, may not bind the Company, and (z) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Company, including, without limitation, the merger, consolidation or conversion of the Company; provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. Prior to its admission to the Company as Special Member, Special Member shall not be a member of the Company, but the Special Member may serve as an Independent Director of the Company. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company and upon the occurrence of such an event, the existence of the Company shall continue without dissolution. The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the Company.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents.
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 1 contract
Single Purpose Entity/Separateness. Borrower represents, warrants and covenants as follows:
(a) Borrower has not and will not:
(i) engage in any business or activity other than the ownership, operation and maintenance of the Properties, and activities incidental thereto;
(ii) acquire or own any assets other than (A) the Properties, date of hereof and (Bexcept for items (f) such incidental Personal Property as may be necessary for the ownership and operation of the Properties;
(iii) merge into or consolidate with any Personm), or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existence, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;
(v) own any subsidiary, or make any investment in, any Person;
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full which are representations made only as of the date hereof, commingle its assets with and are not continuing covenants) until such time as the assets of any other PersonDebt is paid in full as follows: MORTGAGE, or permit any Affiliate or constituent party independent access to its bank accounts;SECURITY AGREEMENT AND FIXTURE FINANCING STATEMENT - Page 36
(viia) incur Borrower does not own and will not own any debt, secured asset or unsecured, direct or contingent (including guaranteeing any obligation (property other than certain obligations (i) the Security Property, and (ii) incidental personal property necessary for the ownership or operation of Operating Lessee or a predecessor operating lessee)), the Security Property.
(b) Borrower has not engaged in and will not engage in any business other than the Debt ownership, management and Permitted Debt and prior loans that have been satisfied in full as operation of the date hereof;Security Property and Borrower will conduct and operate its business as presently conducted and operated.
(viiic) fail to maintain its records, books of account, bank accounts, financial statements, accounting records and other entity documents separate and apart from those of any other Person; except that Borrower’s financial position, assets, liabilities, net worth and operating results may be included in the consolidated financial statements of an Affiliate, provided that (A) appropriate notation shall be made on such consolidated financial statements to indicate the separate identity of Borrower from such Affiliate and that Borrower’s assets and credit are will not available to satisfy the debts and other obligations of such Affiliate or any other Person, and (B) Borrower’s assets, liabilities and net worth shall also be listed on Borrower’s own separate balance sheet;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor affiliate of the obligations Borrower, any constituent party of Borrower, any guarantor (a "Guarantor") of the Debt or any Affiliate part thereof or any affiliate of any constituent party or Guarantor, except the foregoing, Management Agreement and otherwise except upon terms and conditions that are intrinsically fair, commercially reasonable fair and substantially similar to those that would be available on an arm’sarms-length basis with unaffiliated third parties;parties other than any such party.
(xd) maintain its assets 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 (i) the Debt, (ii) unsecured trade and operational debt and lease obligations incurred in such a manner that it will be costly or difficult the ordinary course of business not outstanding for more than sixty (60) days (subject to segregatethe provisions of Section 31 hereof) with trade creditors and in amounts as are normal and reasonable under the circumstances, ascertain or identify its individual assets from those but, in no event, to exceed three percent (3%) of any original principal balance, (iii) debt incurred in the financing of equipment and other Person;
personal property used on the Premises, but, in no event, to exceed $200,000.00, (xiiv) except as contemplated the Subordinate Debt, and (v) the first lien mortgage financing secured by the Loan Documents Security Property (with respect to co-borrowers under the Loan CTLLC only), which is being paid and prior loans that have been satisfied in full as with the proceeds of the date hereof indebtedness secured hereby. No indebtedness other than the Debt and certain obligations of Operating Lessee the Subordinate Debt may be secured (subordinate or a predecessor operating lesseepari passu) thereunder, assume or guaranty by the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure the obligations of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;Security Property.
(xiie) Borrower has not made and will not make any loans or advances to any Personthird party (including any 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.
(f) After giving effect to the Loan contemplated by the Loan Documents, including the effect of Section 5 of the Subordination and Standstill Agreement on Subordinate Lender's rights under the Subordinate Loan Documents, Borrower is solvent and reasonably expects to be able to pay its debts from its assets as the same shall become due.
(g) Borrower has done or caused to be done and will do all things necessary to observe organizational formalities and preserve its existence, and Borrower will at all times have provisions in its organizational documents imposing on it substantially the same requirements as are specified in this Section 12, and will not, nor will any partner, member, shareholder, trustee, Lender, or own principal amend, modify or otherwise change any stock or securities of, any Person, or buy or hold evidence provision of indebtedness issued by any other Person;such party's organizational documents which pertains to the subject matter of this Section 12.
(xiiih) fail Borrower shall continuously maintain its existence and right to do business in the state where the Security Property is located.
(Ai) Borrower will conduct and operate its business as presently conducted and operated.
(j) Borrower will maintain all of its books, records, financial statements and bank accounts separate from those of its affiliates and any constituent party and Borrower will file its own tax returns separate from those of any other Person, except to the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not unless required to file tax returns under otherwise by applicable Legal Requirements and (B) pay any taxes required to be paid under applicable Legal Requirements; provided, however, that law. Borrower shall not have any obligation to reimburse maintain its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur books, records, resolutions and agreements as a result of any profits or losses of Borrower;official records.
(xivk) fail to (A) Borrower will be, and at all times will hold itself out to the public as as, a legal entity separate and distinct from any other Personentity (including any affiliate of Borrower, (B) conduct its business solely in its own name any constituent party of Borrower, any Guarantor or (C) any affiliate of any constituent party or Guarantor), shall correct any known misunderstanding regarding its status as a separate identity;entity, shall conduct business in its own name, shall not identify itself or any of its affiliates as a division or part of the other and shall maintain and utilize a separate invoices and checks.
(xvl) fail to intend Neither Borrower nor any constituent party will seek the dissolution, winding up, liquidation, consolidation or merger in whole or in part, of the Borrower.
(m) Borrower has and reasonably expects to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;.
(xvin) without Borrower will not commingle the unanimous written consent of all of its partners or members, as applicable, funds and the written consent of all directors or managers other assets of Borrower with those of any affiliate or each SPE Component Entityconstituent party, as applicable includingany Guarantor, without limitationor any affiliate of any constituent party of Guarantor, each Independent Director, take or any Material Action or action that is intended to cause such entity to become insolvent;other person.
(xviio) fail Borrower has and will maintain its assets in such a manner that it will not be costly or difficult to fairly and reasonably allocate shared expenses (includingsegregate, without limitationascertain or identify its individual assets from those of any affiliate or constituent party, shared office space and services performed by an employee any Guarantor, or any affiliate of an Affiliate) among the Persons sharing such expenses;any constituent party or Guarantor, or any other person.
(xviiip) fail Borrower does not and will not guarantee, become obligated for, or hold itself out to intend be responsible for the debts or obligations of any other person or entity or the decisions or actions respecting the daily business or affairs of any other person or entity.
(q) Borrower will not permit any affiliate or constituent party (other than Manager) independent access to remain solvent or, except as contemplated by its bank accounts.
(r) Borrower shall pay the Loan Documents with respect to co-borrowers under the Loan, pay its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable;
(xx) violate or cause to be violated the assumptions made with respect to Borrower employees and its principals in the Non-Consolidation Opinion or any New Non-Consolidation Opinion;
(xxi) fail to maintain a sufficient number of employees employees, if any, in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other Person.
(is) If Borrower is a limited partnership or a limited liability company (other than a single-member Delaware limited liability company formed under company, the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner in the case of a partnership, or the managing member in (the case of "SPC Entity") shall be a limited liability company (each an “SPE Component Entity”) of Borrower, as applicable, shall be an Acceptable DE LLC. Each SPE Component whose sole asset is its interest in Borrower and the SPC Entity (A) will at all times comply comply, and will cause Borrower to comply, with each of the covenantsrepresentations, terms warranties, and provisions covenants contained in Sections 6.1(a)(iii) through (vi) and (viii) through (xxiv) inclusive, this Section 12 as if such representation, warranty or covenant was made directly by such SPE Component Entitygeneral partner or managing member. MORTGAGE, SECURITY AGREEMENT AND FIXTURE FINANCING STATEMENT - Page 38
(t) Borrower shall at all times cause there to be at least one duly appointed member of the board of directors or manager (an "Independent Director") of the SPC Entity reasonably satisfactory to Lender who shall not have been at the time of such individual's appointment, and may not have been at any time during the preceding five years (i) a shareholder of, or an officer, director, attorney, counsel, partner or employee of, Borrower, Guarantor or any of its shareholders, subsidiaries or affiliates, (ii) a customer of, or supplier to, Borrower, Guarantor or any of its shareholders, subsidiaries or affiliates, (iii) a person or other entity controlling or under common control with any such shareholder, partner, supplier or customer, or (iv) a member of the immediate family of any such shareholder, officer, director, partner, employee, supplier or customer of any other director of Borrower or Guarantor. As used herein, the term "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person or entity, whether through ownership of voting securities, by contract or otherwise.
(u) Borrower shall not cause or permit the managers of the SPC Entity to take any action which, under the terms of any certificate of organization or operating agreement with respect to any membership, requires a vote of the managers of the SPC Entity unless at the time of such action there shall be at least one member or manager who is an Independent Director.
(v) SPC Entity shall not, without the unanimous consent of its manager (including the Independent Manager), institute proceedings for itself or Borrower to be adjudicated bankrupt or insolvent; consent to the institution of a bankruptcy or insolvency proceedings against it or Borrower; file a petition seeking, or consent to, reorganization or relief under any applicable federal or state law relating to bankruptcy; consent to the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) for itself or Borrower or a substantial part of its or Borrower's property; make any assignment for the benefit of creditors; or admit in writing its inability to pay its debts generally as they become due.
(w) SPC Entity shall not, without the unanimous consent of its managers (including the Independent Manager), for itself or for Borrower (i) liquidate or dissolve, in whole or in part; (Bii) will not engage in consolidate, merge or enter into any business form of consolidation with or activity into any other than owning person or entity, nor convey, transfer or lease its or Borrower's assets substantially as an interest in entirety to any person or entity nor permit any person or entity to consolidate, merge or enter into any form of consolidation with or into itself or Borrower; or (Ciii) will not acquire amend any provisions of its or own any assets other than Borrower's organizational documents containing provisions similar to those contained in this Section 12.
(x) Borrower shall conduct its partnership, membership, or other equity interest business so that the assumptions made with respect to Borrower and its affiliates in Borrower; (D) will not own any subsidiary, or make any investment the opinions of their legal counsel that have been delivered to Lender in any Person other than its investment in Borrower; (E) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (F) will cause Borrower to comply connection with the Loan at all times shall be true and correct in all respects.
(y) The historical operations of CTLLC have been wholly consistent with the terms and provisions of this Section 6.1 and Section 6.4. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is substantially similar to that of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors12.
(ii) In the event Borrower or SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”), the limited liability company agreement of the Company (the “LLC Agreement”) shall provide that (A) upon the occurrence of any event that causes the sole member of the Company (“Member”) to cease to be the member of the Company (other than (1) upon an assignment by Member of all of its limited liability company interest in the Company and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2) the resignation of Member and the admission of an additional member of the Company in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of the Company and executing the LLC Agreement (“Special Member”) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the Company, automatically be admitted to the Company and shall continue the existence of the Company without dissolution, and (B) Special Member may not resign from the Company or transfer its rights as Special Member unless (1) a successor Special Member has been admitted to the Company as Special Member in accordance with the requirements of the Act and (2) after giving effect to such resignation, such successor Special Member has also accepted its appointment as an Independent Director. The LLC Agreement shall further provide that (v) Special Member shall automatically cease to be a member of the Company upon the admission to the Company of a substitute Member, (w) Special Member shall be a member of the Company that has no interest in the profits, losses and capital of the Company and has no right to receive any distributions of the assets of the Company, (x) pursuant to Section 18-301 of the Act, Special Member shall not be required to make any capital contributions to the Company and shall not receive a limited liability company interest in the Company, (y) Special Member, in its capacity as Special Member, may not bind the Company, and (z) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Company, including, without limitation, the merger, consolidation or conversion of the Company; provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. Prior to its admission to the Company as Special Member, Special Member shall not be a member of the Company, but the Special Member may serve as an Independent Director of the Company. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company and upon the occurrence of such an event, the existence of the Company shall continue without dissolution. The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the Company.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents.
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 1 contract
Sources: Mortgage, Security Agreement and Fixture Financing Statement (Prime Group Realty Trust)
Single Purpose Entity/Separateness. Until the Debt has been paid in full, each Borrower represents, warrants and covenants as follows:
(a) Each Borrower has not and will not:not (except as may be required or provided in this Agreement or the other Loan Documents):
(i) engage in any business or activity other than the ownership, operation and maintenance of the Propertiesapplicable Individual Property, and activities incidental thereto;
(ii) acquire or own any assets other than (A) the Propertiesapplicable Individual Property, and (B) such incidental Personal Property as may be necessary for the ownership and operation of the Propertiesapplicable Individual Property;
(iii) to the fullest extent permitted by applicable law, merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existence, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documentsdocuments or amend, modify or terminate its organizational documents in each case without the prior written consent of any material respect, or in a manner which adversely affects Borrower’s existence, except as required by Lender;
(v) own any subsidiary, or make any investment in, any PersonPerson (except that a SPE Component Entity may have an interest in Borrower pursuant to Section 6.1(b) hereof);
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as for past commingling of the date hereofaccounts, commingle its assets with the assets of any other Person, or permit any Affiliate (other than the Member (hereinafter defined) or an SPE Component Entity (hereinafter defined)) or constituent party independent access to its bank accounts;
(vii) incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than (A) the Debt Debt, (B) trade and Permitted Debt operational indebtedness incurred in the ordinary course of business with trade creditors, provided such indebtedness is (1) unsecured, (2) not evidenced by a note, (3) on commercially reasonable terms and conditions, and (4) due not more than sixty (60) days past the date incurred and paid on or prior loans that have to such date, (C) financing leases and purchase money indebtedness incurred in the ordinary course of business relating to Personal Property on commercially reasonable terms and conditions and/or (d) indebtedness, secured or otherwise, which has been satisfied paid in full as prior to the date of this Agreement (and no contingent liabilities have survived such payoff); provided however, the aggregate amount of the date hereofindebtedness described in (B) and (C) with respective to the applicable Individual Property shall not exceed at any time three percent (3%) of the outstanding principal amount of the Loan in the aggregate among the entities acting collectively as Borrower;
(viii) fail to maintain its records, books of account, bank accounts, financial statements, accounting records and other entity documents separate and apart from those of any other Person; except that Borrower’s financial position, assets, liabilities, net worth and operating results may be included in the consolidated financial statements of an Affiliate, provided that (A) appropriate notation shall be made on such consolidated financial statements to indicate the separate identity of Borrower from such Affiliate and that Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate or any other Person, and (B) Borrower’s assets, liabilities and net worth shall also be listed on Borrower’s own separate balance sheet;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, or any Affiliate of the foregoing, except upon terms and conditions that are intrinsically fair, commercially reasonable and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have for indebtedness which has been satisfied paid in full as of prior to the date hereof (and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunderno contingent liabilities have survived such payoff), assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure for the obligations benefit of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;
(xii) make any loans or advances to any PersonPerson except as may be required pursuant to the terms of Leases, Permitted Encumbrances or own any stock or securities of, any Person, or buy or hold evidence Section 18(c) of indebtedness issued by any other Personthe LLC Agreement (hereinafter defined);
(xiii) fail to (A) file either its own tax returns separate from those of or a consolidated federal income tax return with any other PersonPerson (unless prohibited or required, except to as the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under applicable Legal Requirements and (B) pay any taxes required to be paid under case may be, by applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrower);
(xiv) fail either to (A) hold itself out to the public as a legal entity separate and distinct from any other Person, (B) Person or to conduct its business solely in its own name or (C) fail to correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;
(xvi) if it is a partnership or limited liability company, without the unanimous written consent of all of its partners or members, as applicable, and the written consent of all 100% of the directors or managers of Borrower or each SPE Component EntityEntity (if any), as applicable including, without limitation, each the Independent DirectorDirectors, (a) file or consent to the filing of any petition, either voluntary or involuntary, to take advantage of any Creditors Rights Laws, (b) seek or consent to the appointment of a receiver, liquidator or any similar official, (c) take any Material Action or action that is intended to might cause such entity to become insolvent, or (d) make an assignment for the benefit of creditors;
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space and services performed by an employee of an Affiliate) among the Persons sharing such expensesexpenses or, except to the extent delegated to the Manager, to use separate stationery, invoices and checks;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, or pay its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable;; or
(xx) violate or cause to be violated the assumptions made with respect to Borrower and its principals in the Non-Consolidation Opinion or any New Non-Consolidation Opinion;
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other Person.
(ib) If any Borrower is a limited partnership or limited liability company (other than a single-springing member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”company), each general partner in the case of a limited partnership, or the managing member in the case of a limited liability company (each an “SPE Component Entity”) of Borrower, as applicable, shall be an Acceptable DE LLCa corporation whose sole asset is its interest in Borrower. Each SPE Component Entity (Ai) will at all times comply with each of the covenants, terms and provisions contained in Sections Section 6.1(a)(iii) through — (vi) and (viii) through — (xxiv) inclusivexx), as if such representation, warranty or covenant was made directly by such SPE Component Entity; (Bii) will not engage in any business or activity other than owning an interest in Borrower; (Ciii) will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (Div) will not own any subsidiaryexcept in connection with Guarantor’s General Corporate Borrowings, or make any investment in any Person other than its investment in Borrower; (E) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (Fv) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is articles of incorporation are substantially similar to that those of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity ownersEntity. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLCa springing member Delaware limited liability company acceptable to Lender, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) belowstatus, the no SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directorsrequired.
(iic) In the event a Borrower or SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”)a single member Delaware limited liability company, the limited liability company agreement of the Company Borrower (the “LLC Agreement”) shall provide that (Ai) upon the occurrence of any event that causes the sole member of the Company such Borrower (“Member”) to cease to be the member of the Company such Borrower (other than (1A) upon an assignment by Member of all of its limited liability company interest in the Company Borrower and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2B) the resignation of Member and the admission of an additional member of the Company such Borrower in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of the Company and executing the LLC Agreement (“Special Member”) such Borrower shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the Companysuch Borrower, automatically be admitted to the Company such Borrower (“Special Member”) and shall continue the existence of the Company such Borrower without dissolution, dissolution and (Bii) Special Member may not resign from the Company such Borrower or transfer its rights as Special Member unless (1A) a successor Special Member has been admitted to the Company such Borrower as Special Member in accordance with the requirements of the Act Delaware law and (2B) after giving effect to such resignation, such successor Special Member has also accepted its appointment as an Independent Director. The LLC Agreement shall further provide that (vi) Special Member shall automatically cease to be a member of the Company such Borrower upon the admission to the Company such Borrower of a substitute Member, (wii) Special Member shall be a member of the Company such Borrower that has no interest in the profits, losses and capital of the Company such Borrower and has no right to receive any distributions of the assets of the Companysuch Borrower assets, (xiii) pursuant to Section 18-301 of the Delaware Limited Liability Company Act (the “Act”), Special Member shall not be required to make any capital contributions to the Company Borrower and shall not receive a limited liability company interest in the Companysuch Borrower, (yiv) Special Member, in its capacity as Special Member, may not bind the Company, such Borrower and (zv) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Companysuch Borrower, including, without limitation, the merger, consolidation or conversion of the Companysuch Borrower; provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. In order to implement the admission to such Borrower of Special Member, Special Member shall execute a counterpart to the LLC Agreement. Prior to its admission to the Company such Borrower as Special Member, Special Member shall not be a member of such Borrower. Upon the Companyoccurrence of any event that causes the Member to cease to be a member of such Borrower, but to the Special fullest extent permitted by law, the personal representative of Member may serve as an Independent Director shall, within ninety (90) days after the occurrence of the Companyevent that terminated the continued membership of Member in such Borrower, agree in writing (i) to continue 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 Member of such Borrower in such Borrower. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company such Borrower and upon the occurrence of such an event, the existence business of the Company such Borrower shall continue without dissolution. The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company Borrower upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the Companysuch Borrower.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents.
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 1 contract
Sources: Term Loan Agreement (Developers Diversified Realty Corp)
Single Purpose Entity/Separateness. Until the Debt has been paid in full, Borrower represents, warrants and covenants as follows:
(a) Borrower has not and will not:
(i) engage in any business or activity other than the ownership, operation and maintenance of the PropertiesProperty, and activities incidental thereto;
(ii) acquire or own any assets other than (A) the PropertiesProperty, and (B) such incidental Personal Property as may be necessary for the ownership and operation of the PropertiesProperty;
(iii) except as expressly provided in Article 7 hereof, merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existenceformalities, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;
(v) own any subsidiary, or make any investment in, any Person;
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its assets with the assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;
(vii) incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than (A) the Debt Debt, (B) trade and Permitted Debt operational indebtedness incurred in the ordinary course of business with trade creditors, provided such indebtedness is (1) unsecured, (2) not evidenced by a note, (3) on commercially reasonable terms and conditions, and (4) due not more than sixty (60) days past the date incurred and paid on or prior loans that have been satisfied to such date, and/or (C) financing leases and purchase money indebtedness incurred in full as the ordinary course of business relating to Personal Property on commercially reasonable terms and conditions; provided however, the aggregate amount of the date hereofindebtedness described in (B) and (C) shall not exceed at any time three percent (3%) of the outstanding principal amount of the Note;
(viii) fail to maintain permit its records, books of account, bank accounts, financial statements, statements and accounting records and other entity documents separate and apart from those of any other Person; except that Borrower’s (including with respect to financial position, assets, liabilities, net worth and operating results may results) to be included in shown on the consolidated financial statements of an Affiliate, provided that (A) appropriate notation shall be made on any holder of a beneficial interest in Borrower unless such consolidated financial statements to indicate shall contain a footnote indicating that Borrower is a separate legal entity and the separate identity assets of Borrower from such Affiliate and that Borrower’s assets and credit are not available as collateral to satisfy the debts and other obligations creditors of such Affiliate or any other Person, and (B) Borrower’s assets, liabilities and net worth shall also be listed on Borrower’s own separate balance sheetholder;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, or any Affiliate of the foregoing, except upon terms and conditions that are intrinsically fair, commercially reasonable and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty guarantee the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure for the obligations benefit of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other Person;
(xiii) fail to (A) file its own tax returns separate from those of or files a consolidated federal income tax return with any other PersonPerson (unless prohibited or required, except to as the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under applicable Legal Requirements and (B) pay any taxes required to be paid under case may be, by applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrower);
(xiv) fail either to (A) hold itself out to the public as a legal entity separate and distinct from any other Person, (B) Person or to conduct its business solely in its own name or (C) fail to correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, operations (provided that the foregoing shall not require Borrower’s membersfailure to do so solely because of a shortfall in cash flow derived from the operation of the Property shall not, partners or shareholders to make additional capital contributions to Borrowerby itself, constitute a breach of this covenant);
(xvi) without Without the unanimous written consent of all of its partners or members, as applicable, and the written consent of all directors or 100% of the managers of Borrower or each SPE Component EntityBorrower, as applicable including, without limitation, each the Independent Director, (a) file or consent to the filing of any petition, either voluntary or involuntary, to take advantage of any Creditors Rights Laws, (b) seek or consent to the appointment of a receiver, liquidator or any similar official, (c) take any Material Action or action that is intended to might cause such entity to become insolvent, or (d) make an assignment for the benefit of creditors;
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space and services performed by an employee of an Affiliate) among the Persons sharing such expensesexpenses and to use separate stationery, invoices and checks;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, or pay its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; provided, however, funds (provided that the foregoing shall not require Borrower’s membersfailure to do so solely because of a shortfall in cash flow derived from the operation of the Property shall not, partners or shareholders to make additional capital contributions to Borrowerby itself, constitute a breach of this covenant);
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable;
(xx) violate or cause to be violated the assumptions made with respect to Borrower Borrower, Manager (if applicable) and its principals their respective direct and/or indirect owners in any opinion letter pertaining to substantive consolidation delivered to Lender in connection with the Non-Consolidation Opinion or any New Non-Consolidation Opinion;Loan; or
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other Person.
(ib) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner in the case of a partnership, or the managing member in the case of a limited liability company (each an “SPE Component Entity”) of Borrower, as applicable, shall be an Acceptable DE LLC. Each SPE Component Entity (A) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iii) through (vi) and (viii) through (xxiv) inclusive, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (B) will not engage in any business or activity other than owning an interest in Borrower; (C) will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (D) will not own any subsidiary, or make any investment in any Person other than its investment in Borrower; (E) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (F) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is substantially similar to that of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors.
(ii) In the event Borrower or SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”), the The limited liability company agreement of the Company Borrower (the “LLC Agreement”) shall provide that (Ai) upon the occurrence of any event that causes the sole member of the Company Borrower (“Member”) to cease to be the member of the Company Borrower (other than (1A) upon an assignment by Member of all of its limited liability company interest in the Company Borrower and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2B) the resignation of Member and the admission of an additional member of the Company Borrower in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of the Company and executing the LLC Agreement (“Special Member”) Borrower shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the CompanyBorrower, automatically be admitted to the Company Borrower (“Special Member”) and shall continue the existence of the Company Borrower without dissolution, dissolution and (Bii) Special Member may not resign from the Company Borrower or transfer its rights as Special Member unless (1A) a successor Special Member has been admitted to the Company Borrower as Special Member in accordance with the requirements of the Act Delaware law and (2B) after giving effect to such resignation, such successor Special Member has also accepted its appointment as an Independent Director. The LLC Agreement shall further provide that (vi) Special Member shall automatically cease to be a member of the Company Borrower upon the admission to the Company Borrower of a substitute Member, (wii) Special Member shall be a member of the Company Borrower that has no interest in the profits, losses and capital of the Company Borrower and has no right to receive any distributions of the assets of the CompanyBorrower assets, (xiii) pursuant to Section 18-301 of the Delaware Limited Liability Company Act (the “Act”), Special Member shall not be required to make any capital contributions to the Company Borrower and shall not receive a limited liability company interest in the CompanyBorrower, (yiv) Special Member, in its capacity as Special Member, may not bind the Company, Borrower and (zv) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the CompanyBorrower, including, without limitation, the merger, consolidation or conversion of the CompanyBorrower; provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. In order to implement the admission to Borrower of Special Member, Special Member shall execute a counterpart to the LLC Agreement. Prior to its admission to the Company Borrower as Special Member, Special Member shall not be a member of Borrower. Upon the Companyoccurrence of any event that causes the Member to cease to be a member of Borrower, but to the Special fullest extent permitted by law, the personal representative of Member may serve as an Independent Director shall, within ninety (90) days after the occurrence of the Companyevent that terminated the continued membership of Member in Borrower, agree in writing (i) to continue 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 Borrower, effective as of the occurrence of the event that terminated the continued membership of Member of Borrower in Borrower. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company Borrower and upon the occurrence of such an event, the existence business of the Company Borrower shall continue without dissolution. The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company Borrower upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the CompanyBorrower.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents.
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 1 contract
Sources: Loan Agreement (Inland Western Retail Real Estate Trust Inc)
Single Purpose Entity/Separateness. Until the Debt has been paid in full, Borrower represents, warrants and covenants as follows:
(a) Borrower has not and will not:
(i) engage in any business or activity other than the ownership, operation and maintenance of the PropertiesProperty, and activities incidental thereto;
(ii) acquire or own any assets other than (A) the PropertiesProperty, and (B) such incidental Personal Property as may be necessary for the ownership and operation of the PropertiesProperty;
(iii) merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all applicable organizational formalities necessary to maintain its separate existenceformalities, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;
(v) own any subsidiary, or make any investment in, any Person;
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its assets with the assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;
(vii) incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than (A) the Debt Debt, (B) trade and Permitted Debt operational indebtedness incurred in the ordinary course of business with trade creditors, provided such indebtedness is (1) unsecured, (2) not evidenced by a note, (3) on commercially reasonable terms and conditions, and (4) due not more than sixty (60) days past the date incurred and paid on or prior loans that have been satisfied to such date, and/or (C) financing leases and purchase money indebtedness incurred in full as the ordinary course of business relating to Personal Property on commercially reasonable terms and conditions; provided however, the aggregate amount of the date hereofindebtedness described in (B) and (C) shall not exceed at any time three percent (3%) of the outstanding principal amount of the Note;
(viii) fail to maintain its records, books of account, bank accounts, financial statements, accounting records and other entity documents separate and apart from those of any other Person; except that Borrower’s financial position, assets, liabilities, net worth and operating results may be included in the consolidated financial statements of an Affiliate, provided that (A) appropriate notation shall be made on such consolidated financial statements to indicate the contain a footnote indicating that Borrower is a separate identity of Borrower from such Affiliate legal entity and that Borrower’s assets it maintains separate books and credit are not available to satisfy the debts and other obligations of such Affiliate or any other Person, and (B) Borrower’s assets, liabilities and net worth shall also be listed on Borrower’s own separate balance sheetrecords;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, or any Affiliate of the foregoing, except upon terms and conditions that are intrinsically fair, commercially reasonable and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure for the obligations benefit of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other Person;
(xiii) fail to (A) file its own tax returns separate from those of or files a consolidated federal income tax return with any other PersonPerson (unless prohibited or required, except to as the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under applicable Legal Requirements and (B) pay any taxes required to be paid under case may be, by applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrower);
(xiv) fail either to (A) hold itself out to the public as a legal entity separate and distinct from any other Person, (B) Person or to conduct its business solely in its own name or (C) fail to correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;
(xvi) if it is a partnership or limited liability company, without the unanimous written consent of all of its partners or members, as applicable, and the written consent of all directors 100% of the members of Borrower, (a) file or managers consent to the filing of Borrower any petition, either voluntary or each SPE Component Entityinvoluntary, as applicable includingto take advantage of any Creditors Rights Laws, without limitation(b) seek or consent to the appointment of a receiver, each Independent Directorliquidator or any similar official, (c) take any Material Action or action that is intended to might cause such entity to become insolvent, or (d) make an assignment for the benefit of creditors;
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space and services performed by an employee of an Affiliate) among the Persons sharing such expensesexpenses or to use separate stationery, invoices and checks;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, or pay its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable;
(xx) violate or cause to be violated the assumptions made with respect to Borrower and its principals in any opinion letter pertaining to substantive consolidation delivered to Lender in connection with the Non-Consolidation Opinion or any New Non-Consolidation Opinion;Loan; or
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other Person.
(ib) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”)company, each general partner in the case of a partnership, or the managing member in the case of a limited liability company (each an “SPE Component Entity”) of Borrower, as applicable, shall be an Acceptable DE LLC. Each a corporation whose sole asset is its interest in Borrower and each SPE Component Entity which (Ai) will at all times comply with each of the covenants, terms and provisions contained in Sections Section 6.1(a)(iii) through - (vi) and (viii) through - (xxiv) inclusivexxi), as if such representation, warranty or covenant was made directly by such SPE Component Entity; (Bii) will not engage in any business or activity other than owning an interest in Borrower; (Ciii) will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (D) will not own any subsidiary, or make any investment in any Person other than its investment in Borrower; (Eiv) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (Fv) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.46.1. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is articles of incorporation are substantially similar to that those of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLCa single member Delaware limited liability company, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) belowstatus, the no SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directorsrequired.
(iic) In the event Borrower or SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”)a single member Delaware limited liability company, the limited liability company agreement of the Company Borrower (the “LLC Agreement”) shall provide that (Ai) upon the occurrence of any event that causes the sole member of the Company Borrower (“Member”) to cease to be the member of the Company Borrower (other than (1A) upon an assignment by Member of all of its limited liability company interest in the Company Borrower and the admission of the transferee in accordance with the Loan Documents and the LLC Agreementtransferee, or (2B) the resignation of Member and the admission of an additional member of the Company member, in either case in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of the Company and executing the LLC Agreement as a “Special Member” (as such term is defined in the LLC Agreement) (“Special Member”) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the CompanyBorrower, automatically be admitted to the Company Borrower and shall continue the existence of the Company Borrower without dissolution, dissolution and (Bii) Special Member may not resign from the Company Borrower or transfer its rights as Special Member unless (1) a successor Special Member has been admitted to the Company Borrower as Special Member in accordance with the requirements of the Act and (2) after giving effect to such resignation, such successor Special Member has also accepted its appointment as an Independent DirectorDelaware law. The LLC Agreement shall further provide that (vi) Special Member shall automatically cease to be a member of the Company Borrower upon the admission to the Company Borrower of a substitute Member, (wii) Special Member shall be a member of the Company Borrower that has no interest in the profits, losses and capital of the Company Borrower and has no right to receive any distributions of the assets of the CompanyBorrower assets, (xiii) pursuant to Section 18-301 of the Delaware Limited Liability Act (the “Act”), Special Member shall not be required to make any capital contributions to the Company Borrower and shall not receive a limited liability company interest in the CompanyBorrower, (yiv) Special Member, in its capacity as Special Member, may not bind the CompanyBorrower, and (zv) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the CompanyBorrower, including, without limitation, the merger, consolidation or conversion of Borrower. In order to implement the Company; provided, however, such prohibition shall not limit the obligations admission to Borrower of Special Member, in its capacity as Independent Director, Special Member shall execute a counterpart to vote on such matters required by the Loan Documents or the LLC Agreement. Prior to its admission to the Company Borrower as Special Member, Special Member shall not be a member of Borrower. Upon the Companyoccurrence of any event that causes the Member to cease to be a member of Borrower, but to the Special fullest extent permitted by law, the personal representative of Member may serve as an Independent Director shall, within ninety (90) days after the occurrence of the Companyevent that terminated the continued membership of Member in Borrower, agree in writing (i) to continue 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 Borrower, effective as of the occurrence of the event that terminated the continued member ship of Member of Borrower in Borrower. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws Law shall not cause Member or Special Member to cease to be a member of the Company Borrower and upon the occurrence of such an event, the existence business of the Company Borrower shall continue without dissolution. dissolution The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company Borrower upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the CompanyBorrower.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents.
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 1 contract
Single Purpose Entity/Separateness. Until the Debt has been paid in full, Borrower represents, represents warrants and covenants as follows:
(a) Borrower has not and will not:
(i) with respect to Borrower, engage in any business or activity other than the ownership, operation and maintenance of the Properties, and activities incidental thereto and with respect to Operating Lessee, engage in any business or activity other than the leasehold ownership, operation and maintenance of the Properties, and activities incidental thereto;
(ii) acquire or own any assets other than (A) the PropertiesProperties or leasehold estate pursuant to the Operating Leases, and (B) such incidental Personal Property property as may be necessary for the ownership and operation of the Properties;
(iii) merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existenceformalities, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;
(v) except with respect to Maryland Guarantor’s ownership interest in Maryland Maker, own any subsidiary, or make any investment in, any Person;
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its assets with the assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;
(vii) with respect to Maker and Maryland Guarantor, will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than (A) with respect to the Maker, the Debt and Permitted Debt with respect to Maryland Guarantor, the Maryland Guaranty, (B) trade and prior loans that have been satisfied operational indebtedness incurred in full as the ordinary course of business with trade creditors, provided such indebtedness with respect to each Maker and Maryland Guarantor is (1) unsecured, (2) not evidenced by a note, (3) on commercially reasonable terms and conditions, and (4) are paid within sixty (60) days of the date hereofincurred or the agreed date of repayment, whichever occurs later, (C) financing leases and purchase money indebtedness incurred in the ordinary course of business relating to Personal Property on commercially reasonable terms and conditions, (D) any contractual obligations incurred by Borrower in connection with the performance of any Alterations on any Individual Property and/or (E) Utility Bonds; provided however, the aggregate amount of the indebtedness described in (B), (C), (D) and (E) shall not exceed at any time five percent (5%) of the combined outstanding principal amount of the Note and the Mezzanine Note; provided further, however, that any debt or obligation for which sums sufficient to pay such debt or obligation (or other security or a Letter of Credit) have been deposited in escrow with Lender pursuant to the terms hereof and for which there exists no impediment to Lender’s utilization thereof shall be disregarded for purposes of determining Borrower’s compliance with the terms of this subsection (vii);
(viii) fail to maintain its records, books of account, bank accounts, financial statements, accounting records and other entity documents separate and apart from those of any other Person; except that Borrower’s financial position, assets, liabilities, net worth and operating results may be included in the consolidated financial statements of an Affiliate, provided that (A) appropriate notation shall be made on such consolidated financial statements to indicate the contain a footnote indicating that Borrower is a separate identity of Borrower from such Affiliate legal entity and that Borrower’s assets it maintains separate books and credit are not available to satisfy the debts and other obligations of such Affiliate or any other Person, and (B) Borrower’s assets, liabilities and net worth shall also be listed on Borrower’s own separate balance sheetrecords;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, Borrower or any Affiliate of the foregoing, except upon terms and conditions that are intrinsically fair, commercially reasonable and substantially similar to to, or better than, those that would be available on an arm’s-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) assume or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunderMaryland Guaranty, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or or, except with respect to the Maryland Guaranty, otherwise pledge its assets to secure for the obligations benefit of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other Person;
(xiii) fail to (A) file its own tax returns separate from those of or files a consolidated federal income tax return with any other PersonPerson (unless prohibited or required, except to as the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under applicable Legal Requirements and (B) pay any taxes required to be paid under case may be, by applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrower);
(xiv) fail either to (A) hold itself out to the public as a legal entity separate and distinct from any other Person, (B) Person or to conduct its business solely in its own name or (C) fail to correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower[Reserved];
(xvi) if it is a partnership or limited liability company, without the unanimous written consent of all of its partners or members, as applicable, and the written consent of all directors or 100% of the managers of Borrower or each SPE Component EntityEntity (if any) (and if it is a corporation, as applicable without the unanimous written consent of 100% of its directors) in each instance, including, without limitation, each Independent Director, (a) file or consent to the filing of any petition, either voluntary or involuntary, to take advantage of any Creditors Rights Laws, (b) seek or consent to the appointment of a receiver, liquidator or any similar official, (c) take any Material Action or action that is intended to might cause such entity to become insolvent, or (d) make an assignment for the benefit of creditors;
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space and services performed by an employee of an Affiliate) among the Persons sharing such expensesexpenses and to use separate invoices and checks;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, pay its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower[Reserved];
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable;
(xx) violate or cause to be violated the assumptions made with respect to Borrower and its principals in any opinion letter pertaining to substantive consolidation delivered to Lender in connection with the Non-Consolidation Opinion or any New Non-Consolidation Opinion;Loan; or
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other Person.
(b) Borrower has not failed (i) to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations and (ii) to remain solvent or pay its own liabilities (including, without limitation, salaries of its own employees) from its own funds. Borrower will not make any distributions to its equity owners if such distribution would render (i) Borrower inadequately capitalized for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations or (ii) Borrower insolvent or make Borrower unable to pay its own liabilities (including, without limitation, salaries of its own employees) from its own funds.
(c) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”)company, each general partner in the case of a general partnership, each general partner in the case of a limited partnership, or the managing member in the case of a limited liability company (each an “SPE Component Entity”) of Borrower, as applicable, Borrower shall be an Acceptable DE LLCa corporation or Delaware single member limited liability company whose sole asset is its interest in Borrower. Each SPE Component Entity (Ai) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iii) through (viSection 6.1(a)(iii)—(vi) and (viii) through (xxiv) inclusiveviii)—(xxi), as if such representation, warranty or covenant was made directly by such SPE Component Entity; (Bii) will not engage in any business or activity other than owning an interest in Borrower; (Ciii) will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (D) will not own any subsidiary, or make any investment in any Person other than its investment in Borrower; (Eiv) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (Fv) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose articles of incorporation (or operating agreement in the case of a Delaware single member limited liability company agreement is company) are substantially similar to that those of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLCa single member Delaware limited liability company, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) belowstatus, the no SPE Component Entity requirement shall be required with respect to Borrower, as set forth in this section shall not be applicable. Furthermore, in no .
(d) In the event shall Borrower or any SPE Component Entity be is a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors.
(ii) In the event Borrower or SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”)single member Delaware limited liability company, the limited liability company agreement of the Company such Person (the “LLC Agreement”) shall provide that (Ai) upon the occurrence of any event that causes the sole member of the Company such Person (“Member”) to cease to be the member of the Company such Person (other than (1A) upon an assignment by Member of all of its limited liability company interest in the Company such Person and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2B) the resignation of Member and the admission of an additional member of the Company such Person in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of the Company and executing the LLC Agreement (“Special Member”) such Person shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the Companysuch Person, automatically be admitted to the Company such Person (“Special Member”) and shall continue the existence of the Company such Person without dissolution, dissolution and (Bii) Special Member may not resign from the Company such Person or transfer its rights as Special Member unless (1A) a successor Special Member has been admitted to the Company such Person as Special Member in accordance with the requirements of the Act Delaware law and (2B) after giving effect to such resignation, such successor Special Member has also accepted its appointment as an Independent Director. The LLC Agreement shall further provide that (vi) Special Member shall automatically cease to be a member of the Company such Person upon the admission to the Company such Person of a substitute Member, (wii) Special Member shall be a member of the Company such Person that has no interest in the profits, losses and capital of the Company such Person and has no right to receive any distributions of the assets of the Companysuch Person assets, (xiii) pursuant to Section 18-301 of the Delaware Limited Liability Company Act (the “Act”), Special Member shall not be required to make any capital contributions to the Company such Person and shall not receive a limited liability company interest in the Companysuch Person, (yiv) Special Member, in its capacity as Special Member, may not bind the Company, such Person and (zv) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Companysuch Person, including, without limitation, the merger, consolidation or conversion of the Companysuch Person; provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. In order to implement the admission to such Person of Special Member, Special Member shall execute a counterpart to the LLC Agreement. Prior to its admission to the Company such Person as Special Member, Special Member shall not be a member of such Person. Upon the Companyoccurrence of any event that causes the Member to cease to be a member of such Person, but to the Special fullest extent permitted by law, the personal representative of Member may serve as an Independent Director shall, within ninety (90) days after the occurrence of the Companyevent that terminated the continued membership of Member in such Person, agree in writing (i) to continue such Person 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 Person, effective as of the occurrence of the event that terminated the continued membership of Member of such Person in such Person. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company such Person and upon the occurrence of such an event, the existence business of the Company such Person shall continue without dissolution. The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company such Person upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the Companysuch Person.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents.
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 1 contract
Sources: Loan Agreement (Capital Lodging)
Single Purpose Entity/Separateness. Borrower represents▇▇▇▇▇▇ hereby represents and warrants to, warrants and covenants with, Lender that as followsof the date hereof and until such time as the Loan shall be paid in full:
(a) Borrower has ▇▇▇▇▇▇ does not own and will not:
not own any asset or property other than (i) the Property, and (ii) incidental personal property necessary for the ownership or operation of the Property.
(b) ▇▇▇▇▇▇ will not engage in any business or activity other than the ownership, operation and maintenance of the Properties, and activities incidental thereto;
(ii) acquire or own any assets other than (A) the Properties, and (B) such incidental Personal Property as may be necessary for the ownership management and operation of the Properties;
(iii) merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or Property and activities incidental thereto and ▇▇▇▇▇▇ will conduct and operate its business substantially all of as presently conducted and operated. ▇▇▇▇▇▇ shall not pledge its assets or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existence, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under for the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;
(v) own any subsidiary, or make any investment in, any Person;
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its assets with the assets benefit of any other Person, person or permit any Affiliate or constituent party independent access to its bank accounts;entity.
(viic) incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)), other than the Debt and Permitted Debt and prior loans that have been satisfied in full as of the date hereof;
(viii) fail to maintain its records, books of account, bank accounts, financial statements, accounting records and other entity documents separate and apart from those of any other Person; except that Borrower’s financial position, assets, liabilities, net worth and operating results may be included in the consolidated financial statements of an Affiliate, provided that (A) appropriate notation shall be made on such consolidated financial statements to indicate the separate identity of Borrower from such Affiliate and that Borrower’s assets and credit are ▇▇▇▇▇▇ will not available to satisfy the debts and other obligations of such Affiliate or any other Person, and (B) Borrower’s assets, liabilities and net worth shall also be listed on Borrower’s own separate balance sheet;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partneraffiliate of ▇▇▇▇▇▇, memberany constituent party of ▇▇▇▇▇▇, shareholder, principal, guarantor of the obligations of Borrower, any Guarantor or any Affiliate affiliate of the foregoingany constituent party or Guarantor, 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 unaffiliated third parties;parties other than any such party. ▇▇▇▇▇▇ will allocate fairly and reasonably any overhead expenses that are shared with an affiliate, including paying for office space and services performed by any employee of an affiliate.
(xd) maintain its assets ▇▇▇▇▇▇ has not incurred and will not incur any indebtedness, secured or unsecured, direct or indirect, absolute or contingent (including guaranteeing any obligation), other than (i) the Loan or (ii) unsecured trade and operational debt customarily payable within thirty (30) days incurred in such a manner that it will be costly or difficult to segregatethe ordinary course of business with trade creditors and in amounts and upon terms of repayment as are normal and reasonable under the circumstances, ascertain or identify its individual assets from those of any other Person;and (iii) indebtedness permitted under Section 3.01(f) hereof.
(xie) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan ▇▇▇▇▇▇ has not made and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure the obligations of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;
(xii) will not make any loans or advances to any Personthird party (including any affiliate or constituent party, any Guarantor or own any stock affiliate of any constituent party or Guarantor), and shall not acquire obligations or securities of, of its affiliates or any Person, or buy or constituent party and shall not hold evidence of indebtedness issued by any other Person;person or entity (other than cash and investment-grade securities).
(xiiif) fail ▇▇▇▇▇▇ is and will remain solvent and ▇▇▇▇▇▇ will pay its debts and liabilities (including, as applicable, shared personnel and overhead expenses) from its assets as the same shall become due.
(g) ▇▇▇▇▇▇ has done or caused to be done and will do all things necessary to observe organizational formalities and preserve its existence, and ▇▇▇▇▇▇ will not, nor will ▇▇▇▇▇▇, except as specifically permitted under Section 3.03 hereof, permit any constituent party or Guarantor to amend, modify or otherwise change in any material respect the partnership certificate, partnership agreement, articles of incorporation and bylaws, operating agreement, trust or other organizational documents of ▇▇▇▇▇▇, or such constituent party or Guarantor without the prior written consent of Mortgagee.
(Ah) ▇▇▇▇▇▇ will maintain books, records, financial statements and bank accounts separate from those of its affiliates and any constituent party and ▇▇▇▇▇▇ will file its own tax returns separate from those of any other Personreturns. ▇▇▇▇▇▇ shall maintain its books, except to the extent that Borrower is treated records, resolutions and agreements as a “disregarded entity” for tax purposes and is not required to file tax returns under applicable Legal Requirements and (B) pay any taxes required to be paid under applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrower;official records.
(xivi) fail to (A) ▇▇▇▇▇▇ will be, and at all times will hold itself out to the public as as, a legal entity separate and distinct from any other Personentity (including any affiliate of ▇▇▇▇▇▇, (B) conduct its business solely in its own name any constituent party of ▇▇▇▇▇▇, any Guarantor or (C) any affiliate of any constituent party or Guarantor), shall correct any known misunderstanding regarding its status as a separate identity;entity, shall conduct business in its own name, shall not identify itself or any of its affiliates as a division or part of the other and shall maintain and utilize separate stationery, invoices and checks.
(xvj) fail to intend to ▇▇▇▇▇▇ will maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided.
(k) Neither ▇▇▇▇▇▇ nor any constituent party will seek or effect the dissolution, howeverwinding up, sale of assets, liquidation, consolidation or merger, in whole or in part, of ▇▇▇▇▇▇.
(l) ▇▇▇▇▇▇ will not commingle the funds and other assets of ▇▇▇▇▇▇ with those of any affiliate or constituent party, any Guarantor, or any affiliate of any constituent party or Guarantor, or any other person.
(m) ▇▇▇▇▇▇ has and will maintain its assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify 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.
(n) ▇▇▇▇▇▇ does not and will not hold itself out to be responsible for the foregoing debts or obligations of any other person or entity and does not and will not guarantee the debts or obligations of any other person or entity.
(o) ▇▇▇▇▇▇ shall not require Borrower’s members, partners hold out its credit as being available to satisfy the obligations of any other person or shareholders to make additional capital contributions to Borrower;entity.
(xvip) without ▇▇▇▇▇▇ shall pay the unanimous written consent of all of its partners or members, as applicable, and the written consent of all directors or managers of Borrower or each SPE Component Entity, as applicable including, without limitation, each Independent Director, take any Material Action or action that is intended to cause such entity to become insolvent;
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space and services performed by an employee of an Affiliate) among the Persons sharing such expenses;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, pay its own liabilities (including, without limitation, salaries of its own employees) only employees from its own funds; provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable;
(xx) violate or cause to be violated the assumptions made with respect to Borrower and its principals in the Non-Consolidation Opinion or any New Non-Consolidation Opinion;
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other Person.
(iq) If Borrower ▇▇▇▇▇▇ is a limited partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner in the case of a partnership, or the managing member in the case of a limited liability company company, a general partner or a member (an "SPC Member"), of ▇▇▇▇▇▇ is and shall at all times be a corporation whose sole asset is its interest in ▇▇▇▇▇▇, and each an “SPE Component Entity”) of Borrower, as applicable, shall be an Acceptable DE LLC. Each SPE Component Entity (A) such general partner or SPC Member will at all times comply comply, and will cause ▇▇▇▇▇▇ to comply, with each of the covenantsrepresentations, terms warranties and provisions covenants contained in Sections 6.1(a)(iii) through (vi) and (viii) through (xxiv) inclusive, this Section 3.15 as if such representation, warranty or covenant was made directly by such SPE Component Entity; (B) will not engage in any business or activity other than owning an interest in Borrower; (C) will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (D) will not own any subsidiary, or make any investment in any Person other than its investment in Borrower; (E) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (F) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing SPC Member.
(r) ▇▇▇▇▇▇ shall at all times cause there to be at least one (or two if required by the Rating Agencies) duly appointed member whose limited liability company agreement is substantially similar of the board of directors (an "Independent Director") of each SPC Member of ▇▇▇▇▇▇, as applicable, reasonably satisfactory to that Mortgagee who shall not have been at the time of such SPE Component Entity andindividual's appointment, if and may not have been at any time during the preceding five years (i) a shareholder of, or an opinion letter pertaining officer, director, partner, attorney or counsel or employee of, ▇▇▇▇▇▇ or any of its shareholders, subsidiaries or affiliates, (ii) a customer of, or supplier to, ▇▇▇▇▇▇ or any of its shareholders, subsidiaries or affiliates which derives more than 10% of its revenues from its activities with Mortgagor or such shareholders, subsidiaries or affiliates, (iii) a person or other entity controlling or under common control with any such shareholder, partner, supplier or customer, or (iv) a Family Member of any such shareholder, officer, director, partner, employee, supplier or customer. As used in this Section 3.15, the term "control" means the possession, directly or indirectly, of the power to substantive consolidation was required at closingdirect or cause the direction of the management and policies of a person or entity, deliver a new opinion letter acceptable whether through ownership of voting securities, by contract or otherwise.
(s) ▇▇▇▇▇▇ shall not cause or permit the board of directors of the SPC Member to Lender and take any action which, under the Rating Agencies terms of any certificate of incorporation, by-laws or any voting trust agreement with respect to any common stock, requires the new SPE Component Entity and its equity owners. Notwithstanding vote of the foregoingboard of directors of the SPC Member, to unless at the extent Borrower time of such action there shall be at least one member who is an Acceptable DE LLC, Independent Director.
(t) ▇▇▇▇▇▇ shall conduct its business so long as Borrower maintains such formation status and complies with that the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken assumptions made with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors.
(ii) In the event Borrower or SPE Component Entity is an Acceptable DE LLC (as referred to ▇▇▇▇▇▇ in this clause (ii), the “Company”), the limited liability company agreement of the Company that certain opinion letter (the “LLC Agreement”"Non-Consolidation Opinion") shall provide that (A) upon dated the occurrence of any event that causes the sole member of the Company (“Member”) to cease to be the member of the Company (other than (1) upon an assignment date hereof delivered by Member of all of its limited liability company interest ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ in the Company and the admission of the transferee in accordance connection with the Loan Documents and the LLC Agreement, or (2) the resignation of Member and the admission of an additional member of the Company in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of the Company and executing the LLC Agreement (“Special Member”) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the Company, automatically be admitted to the Company and shall continue the existence of the Company without dissolution, and (B) Special Member may not resign from the Company or transfer its rights as Special Member unless (1) a successor Special Member has been admitted to the Company as Special Member in accordance with the requirements of the Act and (2) after giving effect to such resignation, such successor Special Member has also accepted its appointment as an Independent Director. The LLC Agreement shall further provide that (v) Special Member shall automatically cease to be a member of the Company upon the admission to the Company of a substitute Member, (w) Special Member this Mortgage shall be a member of the Company that has no interest true and correct in the profits, losses and capital of the Company and has no right to receive any distributions of the assets of the Company, (x) pursuant to Section 18-301 of the Act, Special Member shall not be required to make any capital contributions to the Company and shall not receive a limited liability company interest in the Company, (y) Special Member, in its capacity as Special Member, may not bind the Company, and (z) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Company, including, without limitation, the merger, consolidation or conversion of the Company; provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. Prior to its admission to the Company as Special Member, Special Member shall not be a member of the Company, but the Special Member may serve as an Independent Director of the Company. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company and upon the occurrence of such an event, the existence of the Company shall continue without dissolution. The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the Companyall respects.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents.
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 1 contract
Sources: Leasehold Mortgage, Security Agreement and Fixture Financing Statement (Overseas Partners LTD)
Single Purpose Entity/Separateness. Until the Debt has been paid in full, each Borrower represents, warrants and covenants as follows:
(a) Each Borrower has not and will not:
(i) engage in any business or activity other than the ownership, operation operation, leasing and maintenance of the PropertiesProperty, and activities incidental thereto;
(ii) acquire or own any assets other than (A) the PropertiesProperty, and (B) such incidental Personal Property as may be necessary for the ownership and operation of the PropertiesProperty;
(iii) merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existenceformalities, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity material provisions of its organizational documents, in each case without the prior written consent of Lender;
(v) own any subsidiary, or make any investment in, any Person;
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereofLoan, commingle its assets with the assets of any other Person, or permit any Affiliate or constituent party party, except for Sun Communities, Inc., in its capacity as property manager, independent access to its bank accounts;
(vii) incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than (A) the Debt Debt, (B) trade and Permitted Debt operational indebtedness incurred in the ordinary course of business with trade creditors, provided such indebtedness is (1) unsecured, (2) not evidenced by a note, (3) on commercially reasonable terms and conditions, and (4) due not more than ninety (90) days past the date invoiced and paid on or prior loans that have been satisfied to such date, and/or (C) financing leases and purchase money indebtedness incurred in full as the ordinary course of business relating to Personal Property on commercially reasonable terms and conditions; provided, however, the aggregate amount of the date hereofindebtedness described in (B) and (C) shall not exceed at any time three percent (3%) of the outstanding principal amount of the Note;
(viii) (A) fail to maintain its records, books of account, bank accounts, financial statements, accounting records and other entity documents for each Parcel separate and apart from those of any other Personshowing such Parcel’s assets and liabilities separate and apart from those of any other Person and (B) include it assets listed on any financial statement of any other person; except provided, however, that Borrower’s financial position, assets, liabilities, net worth and operating results assets may be included in the a consolidated operating or financial statements statement of an Affiliate, its Affiliate provided that (A) an appropriate notation shall be made on such consolidated operating or financial statements to indicate the separate identity separateness of Borrower from such Affiliate and that to indicate Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate or any other Person, and (B) Borrower’s assets, liabilities and net worth shall also be listed on Borrower’s own separate balance sheet;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of the Borrower’s organizational documents and properly reflected on its books and recordsrecords and its respective Community Operations Agreement between the Borrower and Sun Communities, Inc., enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, or any Affiliate of the foregoing, except upon terms and conditions that are intrinsically fair, commercially reasonable and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunderLoan, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure the obligations of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person, except for the Debt;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other Person;
(xiii) fail to (A) file its own tax returns separate from those of any other Person, except to the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under applicable Legal Requirements Requirements, and (B) pay any taxes required to be paid under applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrower;
(xiv) fail either to (A) hold itself out to the public as a legal entity separate and distinct from any other Person, (B) Person or to conduct its business solely in its own name or (C) fail to correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; operations provided, however, that there exists sufficient cash flow from the Borrower’s Property to do so and the foregoing shall not require the Borrower’s members, partners members or shareholders their constituent owners to make additional any capital contributions or advances to the Borrower;
(xvi) if it is a partnership or limited liability company, without the unanimous written consent of all of its partners or members, as applicable, and the written consent of all 100% of the directors or managers of Borrower or each SPE Component EntityEntity (if any), as applicable including, without limitation, each Independent Director, take any Material Action or action that is intended to might cause such entity to become insolvent;
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space and services performed by an employee of an Affiliate) ), if any, among the Persons sharing such expensesexpenses and to use separate stationery, invoices and checks;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, pay its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; funds provided, however, that there exists sufficient cash flow from the Borrower’s Property to do so and the foregoing shall not require the Borrower’s members, partners members or shareholders their constituent owners to make additional any capital contributions or advances to the Borrower;
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable;
(xx) violate or cause to be violated the assumptions made with respect to Borrower and its principals in any opinion letter pertaining to substantive consolidation delivered to Lender in connection with the Non-Consolidation Opinion or any New Non-Consolidation OpinionLoan;
(xxi) fail to maintain a sufficient number of employees employees, if any, in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;; or
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan Loan. Notwithstanding anything contained in this Section 6.1(a) to the contrary, whether express or guarantees implied, Lender and Borrower agree that the following operations and activities of Borrower, SPE Component Entity (if any) and their Affiliates shall not be considered a violation of any obligation set forth in this Section 6.1(a): (i) offering services to residents of the Property through Affiliates or other third parties for which fees and charges may be collected by Borrower or the Affiliate and paid to such Affiliate or third party, which may include, without limitation, cable and internet services, landscaping, snow removal, lease or sale of manufactured homes (for cash or pursuant to an installment agreement), and child care; provided that such Affiliates do not conduct their business in the name of the Borrower and that any agreements between the Borrower and its Affiliates relating to obligations under such services are on commercially reasonable terms similar to those of an arm’s-length transaction; (ii) provided no Cash Sweep Period is then in effect, causing all gross revenue, whether cash, cash equivalents or similar assets, to be transferred from the Management Agreements Lockbox Account to an Account maintained by Borrower or Franchise Agreements; or
SCOLP or SCI for the purpose of paying expenses of the Borrower or causing SCOLP and/or SCI to pay such expenses on behalf of the Borrower (xxiv) identify itself provided that SCOLP or SCI, as a department applicable, will separately account for all such amounts for Borrower), and subject to the provisions of the applicable Borrower’s organizational documents, distributing such remaining cash to SCI, SCOLP or division at the direction of SCI or SCOLP, as applicable, to any other PersonAffiliate, and in any case, distributing such remaining cash that does not belong to the Borrower promptly to such entities; (iii) paying all payables, debts and other liabilities arising from or in connection with the operation of the Property from an Account maintained for the Borrower, or causing SCOLP and/or SCI to pay such liabilities on behalf of Borrower after receipt of distributions from the Lockbox Account (provided that SCOLP or SCI, as applicable, will separately account for all such amounts for Borrower); (iv) subject to the provisions of the applicable Borrower’s organizational documents, using ancillary assets in connection with the operation of the Property held in the name of SCI, SCOLP or any Affiliates, such as vehicles and office and maintenance equipment; (v) treating the Property for all purposes as part of and within the portfolio of manufactured housing communities owned by the SCOLP or any Affiliate, for marketing, promotion and providing information and reports to the public, including a common website, or as required by any Legal Requirements; provided, however, that the Borrower shall conduct business in its own name or its assumed or trade name; and (vi) allocating general overhead and administrative costs incurred by SCI and SCOLP and/or other Affiliates to the Borrower in a fair and equitable manner.
(ib) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”)company, each general partner in the case of a partnership, or the managing member in the case of a limited liability company (each an “SPE Component Entity”) of Borrower, as applicable, shall be an Acceptable DE LLCa corporation or a limited liability company whose sole asset is its interest in Borrower, provided that if such SPE Component Entity is a limited liability company, each of its managing members shall also be a SPE Component Entity. Each SPE Component Entity (Ai) will at all times comply with each of the covenants, terms and provisions contained in Sections Section 6.1(a)(iii) through – (vi) and (viii) through – (xxiv) inclusivexxi), as if such representation, warranty or covenant was made directly by such SPE Component Entity; (Bii) will not engage in any business or activity other than owning an interest in Borrower and acting as the managing member or general partner of Borrower; (Ciii) will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (D) will not own any subsidiary, or make any investment in any Person other than its investment in Borrower; (Eiv) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (Fv) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is articles of incorporation or organization, as applicable, are substantially similar to that those of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLCa single member Delaware limited liability company, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection subsections (b)(iic) and (d) below, the no SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors.
(ii) In the event Borrower or SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”), the limited liability company agreement of the Company (the “LLC Agreement”) shall provide that (A) upon the occurrence of any event that causes the sole member of the Company (“Member”) to cease to be the member of the Company (other than (1) upon an assignment by Member of all of its limited liability company interest in the Company and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2) the resignation of Member and the admission of an additional member of the Company in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of the Company and executing the LLC Agreement (“Special Member”) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the Company, automatically be admitted to the Company and shall continue the existence of the Company without dissolution, and (B) Special Member may not resign from the Company or transfer its rights as Special Member unless (1) a successor Special Member has been admitted to the Company as Special Member in accordance with the requirements of the Act and (2) after giving effect to such resignation, such successor Special Member has also accepted its appointment as an Independent Director. The LLC Agreement shall further provide that (v) Special Member shall automatically cease to be a member of the Company upon the admission to the Company of a substitute Member, (w) Special Member shall be a member of the Company that has no interest in the profits, losses and capital of the Company and has no right to receive any distributions of the assets of the Company, (x) pursuant to Section 18-301 of the Act, Special Member shall not be required to make any capital contributions to the Company and shall not receive a limited liability company interest in the Company, (y) Special Member, in its capacity as Special Member, may not bind the Company, and (z) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Company, including, without limitation, the merger, consolidation or conversion of the Company; provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. Prior to its admission to the Company as Special Member, Special Member shall not be a member of the Company, but the Special Member may serve as an Independent Director of the Company. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company and upon the occurrence of such an event, the existence of the Company shall continue without dissolution. The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the Companyrequired.
(c) Intentionally deleted.
(d) Intentionally deleted.
(e) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents.
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 1 contract
Sources: Loan Agreement (Sun Communities Inc)
Single Purpose Entity/Separateness. Borrower represents, warrants and covenants as follows:
(a) Each Borrower has not and will not:
(i) engage in any business or activity other than the ownership, operation and maintenance of the PropertiesProperty, and activities incidental thereto;
(ii) acquire or own any assets other than (A) the PropertiesProperty, and (B) such incidental Personal Property as may be necessary for the ownership ownership, leasing, maintenance and operation of the PropertiesProperty;
(iii) merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existenceformalities, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements Applicable Law of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;
(v) own any subsidiary, or make any investment in, any Person;
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its assets with the assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;
(vii) incur any debtIndebtedness, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than (A) the Debt and the Prior Loan, (B) trade and operational indebtedness incurred in the ordinary course of business with trade creditors, provided such indebtedness is (1) unsecured, (2) not evidenced by a note, (3) on commercially reasonable terms and conditions, and (4) due not more than sixty (60) days past the date incurred and paid on or prior to such date, and/or (C) Permitted Debt and prior loans that have been satisfied in full as Equipment Leases; provided however, the aggregate amount of the date hereofindebtedness described in (B) and (C) shall not 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 or pari passu) by the Property;
(viii) fail to maintain all of its books, records, books of account, financial statements and bank accounts, financial statements, accounting records and other entity documents accounts separate and apart from those of its affiliates and any constituent party. Borrower’s assets have not and will not be listed as assets on the financial statement of any other Person; except provided, however, that Borrower’s financial position, assets, liabilities, net worth and operating results assets may be included in the a consolidated financial statements statement of an Affiliate, its affiliates provided that (Ai) appropriate notation shall be made on such consolidated financial statements to indicate the separate identity separateness of Borrower from and such Affiliate affiliates and to indicate that Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate affiliates or any other Person, Person and (Bii) Borrower’s assets, liabilities and net worth such assets shall also be listed on Borrower’s own separate balance sheet. Borrower has maintained and will maintain its books, records, resolutions and agreements as official records;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, principal or any Affiliate of the foregoingaffiliate, except upon terms and conditions that are intrinsically fair, commercially reasonable fair and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure for the obligations benefit of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other Person;
(xiii) fail to (A) file its own tax returns separate unless prohibited by Applicable Law from those doing so (except that Borrower may file or may include its filing as part of any other Persona consolidated federal tax return, except to the extent required and/or permitted by Applicable Law, provided that there shall be an appropriate notation indicating the separate existence of Borrower is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under applicable Legal Requirements its assets and (B) pay any taxes required to be paid under applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrowerliabilities);
(xiv) fail either to (A) hold itself out to the public public, and identify itself, in each case, as a legal entity separate and distinct from any other Person and not as a division or part of any other Person, (B) fail to conduct its business solely in its own name or (C) fail to correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operationsoperations (to the extent there exists sufficient cash flow from the Property to do so after the payment of Debt Service, monthly deposits into the Reserve Funds, other sums due and payable under the Loan Documents and Operating Expenses; provided, however, it being understood that the foregoing this provision shall not require Borrower’s members, partners or shareholders any equity owner to make any additional capital contributions contribution to Borrower);
(xvi) without the unanimous written consent of all of its partners or members, as applicable, and the written consent of all directors or managers each Independent Director (regardless of whether such Independent Director is engaged at the Borrower or each SPE Component Entity, as applicable including, without limitation, each Independent DirectorEntity level), take any Material Action or action that is intended to cause such entity to become insolventAction;
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space space) or fail to use separate stationery, invoices and services performed by an employee of an Affiliate) among the Persons sharing such expenseschecks;
(xviii) fail to intend remain solvent, to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, pay its own liabilities (including, without limitation, salaries of its own employees) only from its own fundsfunds or fail to maintain a sufficient number of employees in light of its contemplated business operations (in each case, to the extent there exists sufficient cash flow from the Property to do so after the payment of Debt Service, monthly deposits into the Reserve Funds, other sums due and payable under the Loan Documents and Operating Expenses; provided, however, it being understood that the foregoing this provision shall not require Borrower’s members, partners or shareholders any equity owner to make any additional capital contributions contribution to Borrower);
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable or identify its partners, members or shareholders or other affiliates, as applicable;, as a division or part of it; or
(xx) violate identify its partners, members, shareholders or cause to be violated the assumptions made with respect to other Affiliates, as applicable, as a division or part of it.
(b) Borrower hereby represents and its principals warrants that (I) Borrower (i) is and has always been duly formed, validly existing and in good standing in the Non-Consolidation Opinion or any New Non-Consolidation Opinion;
(xxi) fail to maintain a sufficient number of employees in light state of its contemplated business operations;
incorporation and in all other jurisdictions where it is qualified to do business; (xxiiii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) does not have any judgments or liens of any nature against it (except for Permitted Encumbrances not yet due); (iii) has been and is in material compliance with all Applicable Law and has received all permits necessary for it to operate its contemplated business; (iv) except as set forth on Schedule VII attached hereto (the “Existing Litigation”), is not the subject of, or currently involved in any capacity in, any pending or threatened litigation; and such Existing Litigation, if determined adversely against Borrower would not reasonably be expected to result in a Material Adverse Effect; (v) has paid all Taxes and Other Charges; (vi) has never owned any property other than the Property and has never engaged in any business except the ownership and operation of the Property; (vii) is not now and has not ever been a party to any lawsuit, arbitration, summons or legal proceeding; (viii) has not failed to provide Lender with complete financial statements that reflect a fair and accurate view of its financial condition; and (ix) has no material contingent or actual obligations guaranteed by an Affiliatenot related to the Property; and (II)(A) Prior Lender is the current holder of the Prior Loan, except (xB) as contemplated by the Prior Loan Documents and prior loans that have has been satisfied in full on or before the date hereof, (C) neither Borrower, SPE Component Entity, nor Guarantor have any remaining liabilities or obligations in connection with the Prior Loan (other than environmental and other limited and customary indemnity obligations), and (D) Prior Lender has released all collateral and security for the Prior Loan as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other Personhereof.
(ic) If Borrower is a limited partnership or a limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner in the case of a partnership, or the managing member in the case of a limited liability company (each each, an “SPE Component Entity”) of shall be a corporation or an Acceptable LLC (I) whose sole asset is its interest in Borrower, as applicable, (II) which has not been and shall not be an Acceptable DE LLC. Each SPE Component Entity (A) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iii) through (vi) and (viii) through (xxiv) inclusive, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (B) will not permitted to engage in any business or activity other than owning an interest in Borrower; (CIII) will which has not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (D) will been and shall not own any subsidiary, or make any investment in any Person other than its investment in Borrower; (E) will not be permitted to incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (FIV) which has and will at all times own at least a 0.5% direct equity ownership interest in Borrower. Each such SPE Component Entity will at all times comply, and will cause Borrower to comply comply, with each of the provisions of representations, warranties, and covenants contained in this Section 6.1 and Section 6.4Article 5 (to the extent applicable) as if such representation, warranty or covenant was made directly by such SPE Component Entity. Prior to Upon the withdrawal or the disassociation of any an SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner SPE Component Entity whose articles of incorporation or managing member whose limited liability company agreement is organization are substantially similar to that those of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, and deliver a new opinion letter acceptable New Non-Consolidation Opinion to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors.
(iid) In the event Borrower or the SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”)LLC, the limited liability company agreement of Borrower or the Company SPE Component Entity (as applicable) (the “LLC Agreement”) shall provide that (Ai) upon the occurrence of any event that causes the sole last remaining member of Borrower or the Company SPE Component Entity (as applicable) (“Member”) to cease to be the member of Borrower or the Company SPE Component Entity (as applicable) (other than (1A) upon an assignment by Member of all of its limited liability company interest in Borrower or the Company SPE Component Entity (as applicable) and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2B) the resignation of Member and the admission of an additional member of Borrower or the Company SPE Component Entity (as applicable) in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of Borrower or the Company and executing the LLC Agreement SPE Component Entity (“Special Member”as applicable) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of Borrower or the Company, SPE Component Entity (as applicable) automatically be admitted to Borrower or the Company SPE Component Entity (as applicable) as a member with a 0% economic interest (“Special Member”) and shall continue Borrower or the existence of the Company SPE Component Entity (as applicable) without dissolution, dissolution and (Bii) Special Member may not resign from Borrower or the Company SPE Component Entity (as applicable) or transfer its rights as Special Member unless (1A) a successor Special Member has been admitted to Borrower or the Company SPE Component Entity (as applicable) as a Special Member in accordance with the requirements of the Act Delaware or Maryland law (as applicable) and (2B) after giving effect to such resignationresignation or transfer, such successor Special Member has also accepted its appointment there remains at least two (2) Independent Directors of the SPE Component Entity or Borrower (as an Independent Directorapplicable) in accordance with Section 5.2 below. The LLC Agreement shall further provide that (vi) Special Member shall automatically cease to be a member of Borrower or the Company SPE Component Entity (as applicable) upon the admission to Borrower or the Company SPE Component Entity (as applicable) of a the first substitute Membermember, (wii) Special Member shall be a member of Borrower or the Company SPE Component Entity (as applicable) that has no interest in the profits, losses and capital of Borrower or the Company SPE Component Entity (as applicable) and has no right to receive any distributions of the assets of Borrower or the CompanySPE Component Entity (as applicable), (xiii) pursuant to Section 18-301 the applicable provisions of the limited liability company act of the State of Delaware or Maryland (as applicable, the “Act”), Special Member shall not be required to make any capital contributions to Borrower or the Company SPE Component Entity (as applicable) and shall not receive a limited liability company interest in Borrower or the CompanySPE Component Entity (as applicable), (yiv) Special Member, in its capacity as Special Member, may not bind Borrower or the Company, SPE Component Entity (as applicable) and (zv) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, Borrower or the Company, SPE Component Entity (as applicable) including, without limitation, the merger, consolidation or conversion of Borrower or the CompanySPE Component Entity (as applicable); provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. In order to implement the admission to Borrower or the SPE Component Entity (as applicable) of Special Member, Special Member shall execute a counterpart to the LLC Agreement. Prior to its admission to Borrower or the Company SPE Component Entity (as applicable) as Special Member, Special Member shall not be a member of Borrower or the CompanySPE Component Entity (as applicable), but the Special Member may serve as an Independent Director of Borrower or the Company. Any SPE Component Entity (as applicable).
(e) The LLC Agreement shall further provide that, (i) upon the occurrence of any event that causes the Member to cease to be a member of Borrower or the SPE Component Entity (as applicable) to the fullest extent permitted by law, the personal representative of Member shall, within ninety (90) days after the occurrence of the event that terminated the continued membership of Member in Borrower or the SPE Component Entity (as applicable) agree in writing (A) to continue Borrower or the SPE Component Entity (as applicable) and (B) to the admission of the personal representative or its nominee or designee, as the case may be, as a substitute member of Borrower or the SPE Component Entity (as applicable) effective as of the occurrence of the event that terminated the continued membership of Member in Borrower or the SPE Component Entity (as applicable), (ii) any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of Borrower or the Company SPE Component Entity (as applicable) and upon the occurrence of such an event, the existence business of Borrower or the Company SPE Component Entity (as applicable) shall continue without dissolution. The LLC Agreement shall also provide that , and (iii) each of Member and Special Member waives any right it might have to agree in writing to dissolve Borrower or the Company SPE Component Entity (as applicable) upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of Borrower or the Company.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents(as applicable).
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 1 contract
Sources: Loan Agreement (Brookfield DTLA Fund Office Trust Investor Inc.)
Single Purpose Entity/Separateness. Until the Debt has been paid in full, Borrower represents, warrants and covenants as follows:
(a) Borrower has not and will not:
(i) engage in any business or activity other than the ownership, operation and maintenance of the PropertiesProperty, and activities incidental thereto;
(ii) acquire or own any assets other than (A) the PropertiesProperty, and (B) such incidental Personal Property as may be necessary for the ownership and operation of the PropertiesProperty;
(iii) to the fullest extent permitted by law, merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existenceformalities, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;
(v) own any subsidiary, or make any investment in, any Person;
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its assets with the assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;
(vii) incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than (A) the Debt Debt, (B) trade and Permitted Debt operational indebtedness incurred in the ordinary course of business with trade creditors, provided such indebtedness is (1) unsecured, (2) not evidenced by a note, (3) on commercially reasonable terms and conditions, and (4) due not more than sixty (60) days past the date incurred and paid on or prior loans that have been satisfied to such date, and/or (C) financing leases and purchase money indebtedness incurred in full as the ordinary course of business relating to Personal Property on commercially reasonable terms and conditions; provided however, the aggregate amount of the date hereofindebtedness described in (B) and (C) shall not exceed at any time three percent (3%) of the outstanding principal amount of the Note;
(viii) fail to maintain its records, books of account, bank accounts, financial statements, accounting records and other entity documents separate and apart from those of any other Person; except that Borrower’s financial position, assets, liabilities, net worth and operating results may be included in the consolidated financial statements of an Affiliate, provided that (A) appropriate notation shall be made on such consolidated financial statements to indicate the separate identity of Borrower from such Affiliate and that Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate or any other Person, and (B) Borrower’s assets, liabilities and net worth shall also be listed on Borrower’s own separate balance sheet;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, or any Affiliate of the foregoing, except upon terms and conditions that are intrinsically fair, commercially reasonable and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure for the obligations benefit of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other Person;
(xiii) fail to (A) file its own tax returns separate from those of or files a consolidated federal income tax return with any other PersonPerson (unless prohibited or required, as the case may be, by applicable Legal Requirements), except to the extent that the Borrower is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under applicable Legal Requirements and (B) pay any taxes required to be paid under applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrowerlaw;
(xiv) fail either to (A) hold itself out to the public as a legal entity separate and distinct from any other Person, (B) Person or to conduct its business solely in its own name or (C) fail to correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, provided that there are sufficient funds from the foregoing shall not require Borrower’s members, partners or shareholders operation of the Property to make additional capital contributions to Borrowerdo so;
(xvi) if it is a partnership or limited liability company, without the unanimous written consent of all of its partners or members, as applicable, and the written consent of all 100% of the directors or managers of Borrower or each SPE Component EntityBorrower, as applicable including, without limitation, each Independent Director, (a) file or consent to the filing of any petition, either voluntary or involuntary, to take advantage of any Creditors Rights Laws, (b) seek or consent to the appointment of a receiver, liquidator or any similar official, (c) take any Material Action or action that is intended to might cause such entity to become insolvent, or (d) make an assignment for the benefit of creditors;
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space and services performed by an employee of an Affiliate) among the Persons sharing such expensesexpenses and to use separate stationery, invoices and checks;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, or pay its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; provided, however, provided that there are sufficient funds from the foregoing shall not require Borrower’s members, partners or shareholders operation of the Property to make additional capital contributions to Borrowerdo so;
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable;
(xx) violate or cause to be violated the assumptions made with respect to Borrower Borrower, Manager (if applicable) and its principals their respective direct and/or indirect owners in any opinion letter pertaining to substantive consolidation delivered to Lender in connection with the Non-Consolidation Opinion or any New Non-Consolidation Opinion;Loan; or
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other Person.
(ib) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner in the case of a partnership, or the managing member in the case of a limited liability company (each an “SPE Component Entity”) of Borrower, as applicable, shall be an Acceptable DE LLC. Each SPE Component Entity (A) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iii) through (vi) and (viii) through (xxiv) inclusive, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (B) will not engage in any business or activity other than owning an interest in Borrower; (C) will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (D) will not own any subsidiary, or make any investment in any Person other than its investment in Borrower; (E) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (F) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to the withdrawal or the disassociation of any SPE Component Entity the sole member of Borrower from Borrower, Borrower shall immediately appoint a new general partner or managing sole member whose limited liability company agreement is substantially similar to that of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity sole member and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors.
(iic) In the event Borrower or SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”)a single member Delaware limited liability company, the limited liability company agreement of the Company Borrower (the “LLC Agreement”) shall provide that (Ai) upon the occurrence of any event that causes the sole member of the Company Borrower (“Member”) to cease to be the member of the Company Borrower (other than (1A) upon an assignment by Member of all of its limited liability company interest in the Company Borrower and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2B) the resignation of Member and the admission of an additional member of the Company Borrower in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of the Company and executing the LLC Agreement (“Special Member”) Borrower shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the CompanyBorrower, automatically be admitted to the Company Borrower (“Special Member”) and shall continue the existence of the Company Borrower without dissolution, dissolution and (Bii) Special Member may not resign from the Company Borrower or transfer its rights as Special Member unless (1A) a successor Special Member has been admitted to the Company Borrower as Special Member in accordance with the requirements of the Act Delaware law and (2B) after giving effect to such resignation, such successor Special Member has also accepted its appointment as an Independent Director. The LLC Agreement shall further provide that (vi) Special Member shall automatically cease to be a member of the Company Borrower upon the admission to the Company Borrower of a substitute Member, (wii) Special Member shall be a member of the Company Borrower that has no interest in the profits, losses and capital of the Company Borrower and has no right to receive any distributions of the assets of the CompanyBorrower assets, (xiii) pursuant to Section 18-301 of the Delaware Limited Liability Company Act (the “Act”), Special Member shall not be required to make any capital contributions to the Company Borrower and shall not receive a limited liability company interest in the CompanyBorrower, (yiv) Special Member, in its capacity as Special Member, may not bind the Company, Borrower and (zv) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the CompanyBorrower, including, without limitation, the merger, consolidation or conversion of the CompanyBorrower; provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. In order to implement the admission to Borrower of Special Member, Special Member shall execute a counterpart to the LLC Agreement. Prior to its admission to the Company Borrower as Special Member, Special Member shall not be a member of Borrower. Upon the Companyoccurrence of any event that causes the Member to cease to be a member of Borrower, but to the Special fullest extent permitted by law, the personal representative of Member may serve as an Independent Director shall, within ninety (90) days after the occurrence of the Companyevent that terminated the continued membership of Member in Borrower, agree in writing (i) to continue 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 Borrower, effective as of the occurrence of the event that terminated the continued membership of Member of Borrower in Borrower. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company Borrower and upon the occurrence of such an event, the existence business of the Company Borrower shall continue without dissolution. The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company Borrower upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the CompanyBorrower.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents.
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 1 contract
Single Purpose Entity/Separateness. Until the Indebtedness has been paid in full, Borrower represents, warrants and covenants as follows:
(a) Borrower has not and will not:
(i) engage in any business or activity other than the ownership, operation and maintenance ownership of the Properties, Ownership Interests and activities incidental related thereto;
(ii) acquire or own any assets other than (A) the Properties, Ownership Interests and (B) such incidental Personal Property personal property as may be necessary for the ownership and operation of the Propertiesthereof;
(iii) merge into or consolidate with any Person, or or, to the fullest extent permitted by law, dissolve, wind-up, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existenceformalities, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;
(v) own any subsidiarysubsidiary other than Mortgage Borrower, or make any investment in, any Person;
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its assets with the assets of any other Person, or permit Master Lessee, any Affiliate of either of them or any constituent party independent access to its bank accounts;
(vii) incur any debtDebt, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than the Debt and Permitted Debt and prior loans that have been satisfied in full as of the date hereofBorrower;
(viii) fail to maintain its records, books of account, bank accounts, financial statements, accounting records and other entity documents separate and apart from those of any other Person; except that Borrower’s financial position, assets, liabilities, net worth and operating results may be included in the consolidated financial statements of an Affiliate, provided that (A) appropriate notation shall be made on such consolidated financial statements to indicate the separate identity of Borrower from such Affiliate and that Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate or any other Person, and (B) Borrower’s assets, liabilities and net worth shall also be listed on Borrower’s own separate balance sheet;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, Master Lessee or any Affiliate of the foregoing, except upon terms and conditions that are intrinsically fair, commercially reasonable and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties (it being agreed and acknowledged that the Asset Management Agreement is on terms and conditions that are intrinsically fair, commercially reasonable and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties);
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure the obligations of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other Person;
(xiii) fail to (A) file its own tax returns separate from those of any other Person, except to the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under applicable Legal Requirements Requirements, and (B) pay any taxes required to be paid under applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrower;
(xiv) fail either to (A) hold itself out to the public as a legal entity separate and distinct from any other Person, (B) Person or to own its assets or conduct its business solely in its own name or (C) fail to correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; operations (provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders any equity owner to make any additional capital contributions to Borrower);
(xvi) if it is a partnership or limited liability company, without the unanimous written consent of all of its partners or members, as applicable, and the written consent of all directors or 100% of the managers of Borrower or each SPE Component EntityBorrower, as applicable including, including without limitation, each Independent DirectorManager, take any Material Action or other action that is intended reasonably likely to cause such entity to become insolvent;
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space and services performed by an employee of an Affiliate) among the Persons sharing such expensesexpenses and to use separate stationery, invoices and checks;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, pay its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; provided, howeverand Borrower represents that it is, that as of the foregoing shall not require Borrower’s membersClosing Date, partners or shareholders solvent and intends to make additional capital contributions to Borrowerbe solvent;
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable;
(xx) violate or cause to be violated the assumptions made with respect to Borrower and its principals in the any Non-Consolidation Opinion or any New Non-Consolidation Opiniondelivered to Lender in connection with the Loan;
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;; or
(xxiii) have any of its obligations guaranteed by an Affiliate, Master Lessee or any Affiliate of Borrower or Master Lessee except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other PersonDocuments.
(ib) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”)company, each general partner in the case of a partnership, or the managing member in the case of a limited liability company (each an “SPE Component Entity”) of Borrower, as applicable, shall be an Acceptable DE LLCa corporation or a limited liability company whose sole asset is its interest in Borrower, provided that if such SPE Component Entity is a limited liability company, each of its managing members shall also be a SPE Component Entity. Each SPE Component Entity (Ai) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iii) through (viSection 5.3(a)(iii)—(vi) and (viii) through (xxiv) inclusiveviii)—(xxi), as if such representation, warranty or covenant was made directly by such SPE Component Entity; (Bii) will not engage in any business or activity other than owning an interest in Borrower; (Ciii) will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (D) will not own any subsidiary, or make any investment in any Person other than its investment in Borrower; (Eiv) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (Fv) will cause Borrower to comply with the provisions of this Section 6.1 5.3 and Section 6.45.4. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose articles of incorporation or limited liability company agreement is agreement, as applicable, are substantially similar to that those of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLCa single member Delaware limited liability company, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection subsections (b)(iic) and (d) below, the no SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directorsrequired.
(iic) In the event Borrower or SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”)a single-member Delaware limited liability company, the limited liability company agreement of the Company Borrower (the “LLC Agreement”) shall provide that (Ai) upon the occurrence of any event that causes the sole member of the Company Borrower (“Member”) to cease to be the member of the Company Borrower (other than (1A) upon an assignment by Member of all of its limited liability company interest in the Company Borrower and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2B) the resignation of Member and the admission of an additional member of the Company Borrower, in either case in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director Manager of the Company and executing the LLC Agreement Borrower (“Special Member”) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the CompanyBorrower, automatically be admitted to the Company Borrower and shall continue the existence of the Company Borrower without dissolution, dissolution and (Bii) Special Member may not resign from the Company Borrower or transfer its rights as Special Member unless (1A) a successor Special Member has been admitted to the Company Borrower as Special Member in accordance with the requirements of the Act Delaware law and (2B) after giving effect to such resignation, such successor Special Member has also accepted its appointment as an Independent DirectorManager. The LLC Agreement shall further provide that (vi) Special Member shall automatically cease to be a member of the Company Borrower upon the admission to the Company Borrower of a substitute Member, (wii) Special Member shall be a member of the Company Borrower that has no interest in the profits, losses and capital of the Company Borrower and has no right to receive any distributions of the assets of the CompanyBorrower assets, (xiii) pursuant to Section 18-301 of the Delaware Limited Liability Company Act (the “Act”), Special Member shall not be required to make any capital contributions to the Company Borrower and shall not receive a limited liability company interest in the CompanyBorrower, (yiv) Special Member, in its capacity as Special Member, may not bind the CompanyBorrower, and (zv) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the CompanyBorrower, including, without limitation, the merger, consolidation or conversion of the CompanyBorrower; provided, however, that such prohibition shall not limit the obligations of Special Member, in its capacity as Independent DirectorManager, to vote on such matters required by the Loan Documents or the LLC Agreement. In order to implement the admission to Borrower of Special Member, Special Member shall execute a counterpart to the LLC Agreement. Prior to its admission to the Company Borrower as Special Member, Special Member shall not be a member of Borrower.
(d) In the Companyevent Borrower is a single-member Delaware limited liability company, but the Special LLC Agreement shall provide that upon the occurrence of any event that causes the Member may serve as an Independent Director to cease to be a member of Borrower, to the fullest extent permitted by law, the personal representative of Member shall, within ninety (90) days after the occurrence of the Companyevent that terminated the continued membership of Member in Borrower, agree in writing (i) to continue 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 Borrower, effective as of the occurrence of the event that terminated the continued membership of Member of Borrower in Borrower. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company Borrower and upon the occurrence of such an event, the existence business of the Company Borrower shall continue without dissolution. The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company Borrower upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the CompanyBorrower.
(ce) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents.
(df) Notwithstanding anything to the contrary contained in this Section 5.3 or Article VIII, in connection with and contemporaneously with a refinancing in full of the Loan, the Mortgage Loan and the Second Mezzanine Loan, Borrower may (i) amend its organizational documents and/or (ii) form one or more new direct or indirect wholly-owned Subsidiaries and transfer the Collateral to such direct or indirect wholly-owned Subsidiaries subject to escrow and other customary closing arrangements reasonably acceptable to Lender.
(g) Borrower has executed shall cause Mortgage Borrower to satisfy and delivered to Lender comply in all respects with the certificate attached hereto as Exhibit D.provisions of Sections 5.3 and 5.4 of the Mortgage Loan Agreement.
Appears in 1 contract
Sources: Mezzanine Loan and Security Agreement (Bloomin' Brands, Inc.)
Single Purpose Entity/Separateness. Borrower represents, warrants and covenants as follows:
(a) Borrower has not and will not:
(i) engage in any business or activity other than the ownership, operation and maintenance ownership of the Propertiesapplicable Collateral, and activities incidental thereto;
(ii) acquire or own any assets other than (A) the Properties, and (B) such incidental Personal Property as may be necessary for the ownership and operation of the PropertiesCollateral;
(iii) merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existencein all material respects, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documentsdocuments (provided, that, such organizational documents may be amended or modified to the extent that, in each case without addition to the satisfaction of the requirements related thereto set forth therein, Lender’s prior written consent of and, if required by Lender, a Rating Agency Confirmation are first obtained);
(v) own any subsidiary, or make any investment in, any PersonPerson (other than any applicable Mortgage Borrower that owns the ▇▇▇▇▇▇ Property or the Delano Property);
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its funds or assets with the funds or assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;
(vii) incur any debtIndebtedness, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than the Debt. No Indebtedness other than the Debt and Permitted Debt and prior loans that have been satisfied in full as of may be secured (subordinate or pari passu) by the date hereofCollateral;
(viii) fail to maintain all of its books, records, books of account, financial statements and bank accounts, financial statements, accounting records and other entity documents accounts separate and apart from those of any other Person (including, without limitation, any Affiliates). Borrower’s assets have not and will not be listed as assets on the financial statement of any other Person; except provided, however, that Borrower’s financial position, assets, liabilities, net worth and operating results assets may be included in the a consolidated financial statements statement of an Affiliate, its Affiliates provided that (Ai) appropriate notation shall be made on such consolidated financial statements to indicate the separate identity separateness of Borrower from and such Affiliate Affiliates and to indicate that Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate Affiliates or any other Person, Person and (Bii) Borrower’s assets, liabilities and net worth such assets shall also be listed on Borrower’s own separate balance sheet. Borrower has maintained and will maintain its books, records, resolutions and agreements as official records;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, principal or any Affiliate of the foregoingAffiliate, except in each case, upon terms and conditions that are intrinsically fair, commercially reasonable fair and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure for the obligations benefit of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other Person;
(xiii) fail to (A) file its own tax returns separate from those of any other Person, except to the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under (unless prohibited by applicable Legal Requirements and (B) pay any taxes required to be paid under applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrowerfrom doing so);
(xiv) fail to (A) hold itself out to the public and identify itself, in each case, as a legal entity separate and distinct from any other Person and not as a division or part of any other Person, (B) conduct its business solely in its own name, (C) hold its assets in its own name or (CD) correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, that operations (to the foregoing shall not require Borrower’s members, partners or shareholders extent there exists sufficient cash flow from the applicable Individual Property to make additional capital contributions to Borrowerdo so);
(xvi) without the prior unanimous written consent of all of its partners partners, shareholders or members, as applicable, and the prior unanimous written consent of all its board of directors or managers managers, as applicable, and the prior written consent of each Independent Director (regardless of whether such Independent Director is engaged at the Borrower or each SPE Component EntityEntity level), as applicable including(a) file or consent to the filing of any petition, without limitationeither voluntary or involuntary, each Independent Directorto take advantage of any Creditors Rights Laws, (b) seek or consent to the appointment of a receiver, liquidator or any similar official, (c) take any Material Action or action that is intended to will cause such entity to become insolvent, (d) make an assignment for the benefit of creditors or (e) take any Material Action with respect to Borrower or any SPE Component Entity (provided, that, none of any member, shareholder or partner (as applicable) of Borrower or any SPE Component Entity or any board of directors or managers (as applicable) of Borrower or any SPE Component Entity may vote on or otherwise authorize the taking of any of the foregoing actions unless, in each case, there are at least two (2) Independent Directors then serving in such capacity in accordance with the terms of the applicable organizational documents and each of such Independent Directors have consented to such foregoing action);
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space space) or fail to use separate stationery, invoices and services performed by an employee of an Affiliate) among the Persons sharing such expenseschecks;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, pay its own liabilities (including, without limitation, salaries of its own employees, if any) only from its own funds; provided, however, that funds or fail to maintain a sufficient number of employees in light of its contemplated business operations (in each case to the foregoing shall not require Borrower’s members, partners or shareholders extent there exists sufficient cash flow from the applicable Individual Property to make additional capital contributions to Borrowerdo so);
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliatesAffiliates, as applicable;
(xx) violate identify its partners, members, shareholders or cause to be violated the assumptions made with respect to Borrower and its principals in the Non-Consolidation Opinion other Affiliates, as applicable, as a division or any New Non-Consolidation Opinion;part of it; or
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other Person.
(i) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner in the case of a partnership, or the managing member in the case of a limited liability company (each an “SPE Component Entity”) of Borrower, as applicable, shall be an Acceptable DE LLC. Each SPE Component Entity (A) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iii) through (vi) and (viii) through (xxiv) inclusive, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (B) will not engage in any business or activity other than owning an interest in Borrower; (C) will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (D) will not own any subsidiary, or make any investment in any Person other than its investment in Borrower; (E) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (F) will cause Mortgage Borrower to comply with the provisions terms and conditions of this Section 6.1 and Section 6.4. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is substantially similar to that of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors.
(ii) In the event Borrower or SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”), the limited liability company agreement of the Company (the “LLC Agreement”) shall provide that (A) upon the occurrence of any event that causes the sole member of the Company (“Member”) to cease to be the member of the Company (other than (1) upon an assignment by Member of all of its limited liability company interest in the Company and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2) the resignation of Member and the admission of an additional member of the Company in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of the Company and executing the LLC Agreement (“Special Member”) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the Company, automatically be admitted to the Company and shall continue the existence of the Company without dissolution, and (B) Special Member may not resign from the Company or transfer its rights as Special Member unless (1) a successor Special Member has been admitted to the Company as Special Member in accordance with the requirements of the Act and (2) after giving effect to such resignation, such successor Special Member has also accepted its appointment as an Independent Director. The LLC Agreement shall further provide that (v) Special Member shall automatically cease to be a member of the Company upon the admission to the Company of a substitute Member, (w) Special Member shall be a member of the Company that has no interest in the profits, losses and capital of the Company and has no right to receive any distributions of the assets of the Company, (x) pursuant to Section 18-301 of the Act, Special Member shall not be required to make any capital contributions to the Company and shall not receive a limited liability company interest in the Company, (y) Special Member, in its capacity as Special Member, may not bind the Company, and (z) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Company, including, without limitation, the merger, consolidation or conversion of the Company; provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. Prior to its admission to the Company as Special Member, Special Member shall not be a member of the Company, but the Special Member may serve as an Independent Director of the Company. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company and upon the occurrence of such an event, the existence of the Company shall continue without dissolution. The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the Company.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents.
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.5.1
Appears in 1 contract
Single Purpose Entity/Separateness. Borrower Company represents, warrants and ---------------------------------- covenants as follows:
(i) the purpose for which the Company is organized shall be limited solely to (a) Borrower has not owning, holding, selling, leasing, transferring, and will not:
exchanging the Facilities and the SFHI Notes owned by Company as further provided herein and any 10 1/4% notes outstanding under the Hacienda Indenture acquired with the proceeds of a Permitted Equity Financing as further provided herein, (ib) engage entering into the Note Purchase Agreement, other Basic Documents, the ▇▇▇▇▇▇▇▇▇ Property Documents and the Wet 'N Wild Documents, (c) refinancing the Facilities in any business or activity other than the ownership, operation and maintenance connection with a permitted repayment of the PropertiesNotes and (d) transacting any and all lawful business for which Corporation may be organized under Nevada law that is incident, necessary and activities incidental thereto;appropriate to accomplish the foregoing.
(ii) acquire or Company does not own and will not own any assets asset or property other than (Aa) the PropertiesFacilities and the SFHI Notes and any 10 1/4% notes outstanding under the Hacienda Indenture acquired with the proceeds of a Permitted Equity Financing as further provided herein, (b) the capital stock of the ▇▇▇▇▇▇▇▇▇ Subsidiary and (Bc) such incidental Personal Property as may be personal property necessary for and used or to be used in connection with the ownership and operation of the Properties;Facilities. The ▇▇▇▇▇▇▇▇▇ Subsidiary does not own and will not own any asset or property other than, concurrently or after the ▇▇▇▇▇▇▇▇▇ Release Date if the ▇▇▇▇▇▇▇▇▇ Facility is transferred to the ▇▇▇▇▇▇▇▇▇ Development Subsidiary, the capital stock of the ▇▇▇▇▇▇▇▇▇ Development Subsidiary.
(iii) merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existence, or fail to preserve its existence as an entity duly organized, validly existing Company has not made and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;
(v) own any subsidiary, or make any investment in, any Person;
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its assets with the assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;
(vii) incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)), other than the Debt and Permitted Debt and prior loans that have been satisfied in full as of the date hereof;
(viii) fail to maintain its records, books of account, bank accounts, financial statements, accounting records and other entity documents separate and apart from those of any other Person; except that Borrower’s financial position, assets, liabilities, net worth and operating results may be included in the consolidated financial statements of an Affiliate, provided that (A) appropriate notation shall be made on such consolidated financial statements to indicate the separate identity of Borrower from such Affiliate and that Borrower’s assets and credit are will not available to satisfy the debts and other obligations of such Affiliate or any other Person, and (B) Borrower’s assets, liabilities and net worth shall also be listed on Borrower’s own separate balance sheet;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, or any Affiliate of the foregoing, except upon terms and conditions that are intrinsically fair, commercially reasonable and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure the obligations of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;
(xii) make any loans or advances to any Personentity or person (including any Affiliate of Company), and shall not acquire obligations or securities of any such Affiliates other than the SFHI and any 10 1/4% notes outstanding under the Hacienda Indenture acquired with the proceeds of a Permitted Equity Financing as further provided herein Notes or as expressly permitted hereby.
(iv) Company is and will remain solvent and Company will pay it debts and liabilities from its assets as the same shall become due.
(v) Company has done or caused to be done and will do all things necessary to observe organizational formalities and preserve its existence, and Company will not, nor will Company permit any of its shareholders to, amend, modify or otherwise change Articles III or V of the articles of incorporation and bylaws, or own any stock or securities of, any Person, or buy or hold evidence other organizational documents of indebtedness issued by any other Person;Company without the prior written consent of Requisite Holders.
(xiiivi) fail to (A) file Company will maintain all of its own tax returns books, records, financial statements and bank accounts separate from those of its Affiliates. Company assets will not be listed as assets on the financial statement of any other Personentity other than on the consolidated financial statements of SGC and Saraha Resorts. Company shall maintain its books, except to the extent that Borrower is treated records, resolutions and agreements as a “disregarded entity” for tax purposes and is not required to file tax returns under applicable Legal Requirements and (B) pay any taxes required to be paid under applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrower;official records.
(xivvii) fail to (A) Company will be, and at all times will hold itself out to the public as as, a legal entity separate and distinct from any other Personentity (including any Affiliate of Company), (B) conduct its business solely in its own name or (C) shall correct any known misunderstanding regarding its status as a separate identity;entity, shall conduct business in its own name, shall not identify itself or any of its Affiliates as a division or part of any other Affiliate and shall maintain and utilize a separate telephone number and separate stationery invoices and checks.
(xvviii) fail to intend to Company will maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations.
(ix) Company will not commingle the funds and other assets of Company with those of any of its Affiliates or any other Person, and will not participate in any cash management system with any such party.
(x) Company will not commingle its assets with those of any other person or entity and will hold all of its assets in its own name.
(xi) Company will not hold itself out as being responsible for the debts or obligations of any other person.
(xii) Company shall at all times cause there to be at least one duly appointed member of its board of directors (an "Independent Director") to be an individual who is not at the time of initial appointment and has not been at any time during the preceding five (5) years: (a) a stockholder of more than 5% of the capital stock of Company or any of its Affiliates, or an officer, employee, partner, attorney or counsel of the Company or any of its Affiliates; provided(b) a customer, howeversupplier or other person who derives more than 10% of its purchases or revenues from its activities with the Company or any of its Affiliates; (c) a person or other entity controlling or under common control with any such stockholder, that partner, customer, supplier or other person (other than solely as a result of being a director of any of the foregoing foregoing); or (d) a member of the immediate family of any such stockholder, officer, employee, partner, customer, supplier or other person. (As used herein, the term "control" means the possession, directly or indirectly, of the power to direct or cause the direction of management, policies or activities of a person or entity, whether through ownership of voting securities, by contract or otherwise.)
(xiii) Company shall not require Borrower’s memberscause or permit the board of directors of Company to take any action which, partners under the terms of any articles of incorporation or shareholders by-laws requires the vote of an Independent Director unless at the time of such action there shall be at least one member who is an Independent Director and the directors of Company, including the Independent Director, shall have participated in such vote and all of such directors shall have voted affirmatively to make additional capital contributions authorize such action.
(xiv) The stationery, invoices, and checks utilized by Company or utilized to Borrower;collect its funds or pay its expenses shall bear its own name and shall not bear the name of any other entity unless such entity is clearly designated as being Company's agent.
(xv) Company shall correct any known misunderstanding regarding its separate identity.
(xvi) without the unanimous written consent of all of its partners or members, as applicable, and the written consent of all directors or managers of Borrower or each SPE Component Entity, as applicable including, without limitation, each Independent Director, take any Material Action or action that is intended to cause such entity to become insolvent;
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space and services performed by an employee of an Affiliate) among the Persons sharing such expenses;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, pay its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; provided, however, that the foregoing Company shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable;
(xx) violate or cause to be violated the assumptions made with respect to Borrower and its principals in the Non-Consolidation Opinion or any New Non-Consolidation Opinion;
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other Personperson or entity.
(i) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner in the case of a partnership, or the managing member in the case of a limited liability company (each an “SPE Component Entity”) of Borrower, as applicable, shall be an Acceptable DE LLC. Each SPE Component Entity (A) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iii) through (vi) and (viii) through (xxiv) inclusive, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (B) will not engage in any business or activity other than owning an interest in Borrower; (C) will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (D) will not own any subsidiary, or make any investment in any Person other than its investment in Borrower; (E) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (F) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is substantially similar to that of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors.
(ii) In the event Borrower or SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”), the limited liability company agreement of the Company (the “LLC Agreement”) shall provide that (A) upon the occurrence of any event that causes the sole member of the Company (“Member”) to cease to be the member of the Company (other than (1) upon an assignment by Member of all of its limited liability company interest in the Company and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2) the resignation of Member and the admission of an additional member of the Company in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of the Company and executing the LLC Agreement (“Special Member”) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the Company, automatically be admitted to the Company and shall continue the existence of the Company without dissolution, and (B) Special Member may not resign from the Company or transfer its rights as Special Member unless (1) a successor Special Member has been admitted to the Company as Special Member in accordance with the requirements of the Act and (2) after giving effect to such resignation, such successor Special Member has also accepted its appointment as an Independent Director. The LLC Agreement shall further provide that (v) Special Member shall automatically cease to be a member of the Company upon the admission to the Company of a substitute Member, (w) Special Member shall be a member of the Company that has no interest in the profits, losses and capital of the Company and has no right to receive any distributions of the assets of the Company, (x) pursuant to Section 18-301 of the Act, Special Member shall not be required to make any capital contributions to the Company and shall not receive a limited liability company interest in the Company, (y) Special Member, in its capacity as Special Member, may not bind the Company, and (z) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Company, including, without limitation, the merger, consolidation or conversion of the Company; provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. Prior to its admission to the Company as Special Member, Special Member shall not be a member of the Company, but the Special Member may serve as an Independent Director of the Company. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company and upon the occurrence of such an event, the existence of the Company shall continue without dissolution. The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the Company.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents.
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 1 contract
Single Purpose Entity/Separateness. Borrower represents, warrants and covenants as follows:
(a) Borrower has not Each Borrower, on behalf of itself and will noteach other Loan Party, hereby represents and warrants to, and covenants with, Agent that since the date of its formation and at all times on and after the date hereof and until such time as the Obligations shall be paid and performed in full, each Loan Party:
(i) engage in the case of each Borrower and each Parent (i) has been, is, and will be organized solely for the purpose of (A) owning the Equity Interests in the BorrowerBorrowers or Depositors, as the case may be, (B) entering into the Loan Agreement and the other Loan Documents and the transactions contemplated hereby and thereby to which they are a party, and (C) engaging in any business lawful act or activity and exercising any powers permitted to limited liability companies organized under the laws of the State of Delaware that are related or incidental to and necessary, convenient or advisable for the accomplishment of the above-mentioned purposes, and (ii) has not owned, does not own, and will not own any asset or property other than the ownership, operation Pledged Equity Interests and maintenance of the Properties, and activities incidental theretoother Collateral;
(ii) acquire or own any assets other than in the case of Depositors (i) has been, is, and will be organized solely for the purpose of (A) owning the Properties, Equity Interests in the applicable DST and (B) such engaging in any lawful act or activity and exercising any powers permitted to trusts organized under the laws of the State of Delaware that are related or incidental Personal Property as may be necessary to and necessary, convenient or advisable for the ownership and operation accomplishment of the Propertiesabove-mentioned purposes, and (ii) has not owned, does not own, and will not own any asset or property other than Equity Interests in the Owned DSTs;
(iii) merge into (X) in the case of each Borrower and each Parent, has not owned, does not own, and will not own any asset or consolidate with property other than the Pledged Equity Interests and the other Collateral, and (Y) in the case of each Depositor, has not owned, does not own, and will not own any Personasset or property other than the Equity Interests in the DSTs.
(iv) to the fullest extent permitted by law, has not engaged in, sought, or dissolveconsented to and will not engage in, terminateseek or consent to any dissolution, liquidate winding up, termination, liquidation, consolidation or merger, in whole or in part, and, except as otherwise expressly permitted by this Agreement, has not engaged in, sought, or consented to and will not engage in, seek or consent to any asset sale, transfer of membership interests, or otherwise dispose of all or substantially all amendment of its assets certificate of formation or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existenceGoverning Documents in a manner that amends, modifies, replaces, deletes or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under supplements the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lenderhereof;
(v) own has not failed and will not fail to correct any subsidiary, or make any investment in, any Personknown misunderstanding regarding the separate identity of itself;
(vi) except as contemplated by has not and will not, without the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as unanimous consent of the date hereofmembers of the applicable Depositor, commingle its assets with the assets of any other Personapplicable Borrower, or applicable Parent, as applicable, and the consent of the Administrative Agent, commenced or commence any Bankruptcy Action or take or otherwise permit to occur any Affiliate or constituent party independent access to its bank accountsBankruptcy Event;
(vii) incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)), other than the Debt has maintained and Permitted Debt and prior loans that have been satisfied in full as of the date hereof;
(viii) fail to will maintain its books, records, books of account, bank accounts, financial statements, accounting records records, bank accounts and other entity documents in its own name and separate and apart from those of any other Person; except provided, however, that Borrowersuch entity’s financial position, assets, liabilities, net worth and operating results assets may be have been included in the a consolidated financial statements statement of an Affiliateits Affiliates; provided that, provided that if applicable, (Ai) appropriate notation shall be notations were made on such consolidated financial statements to indicate the separate identity separateness of Borrower from such entity and such Affiliate and to indicate that Borrowersuch entity’s assets and credit are were not available to satisfy the debts and other obligations of such Affiliate Affiliates or any other Person, and (Bii) Borrower’s assets, liabilities and net worth shall also be such assets were listed on Borrowersuch entity’s own separate balance sheet;
(ixviii) except for capital contributions or capital distributions permitted under the terms has maintained and conditions of Borrower’s organizational documents and properly reflected on will maintain its books and books, records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, or any Affiliate of the foregoing, except upon terms resolutions and conditions that are intrinsically fair, commercially reasonable and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third partiesagreements as official records;
(xix) maintain has not commingled and will not commingle its funds or other assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from with those of any other Person except as expressly contemplated by the Loan Documents;
(i) has not listed (and is not aware of any listing) its assets on the financial statements of any other Person; provided, however, that a Loan Party’s assets may have been included in a consolidated financial statement of such entity’s Affiliates; provided that, if applicable, (i) appropriate notations were made on such consolidated financial statements to indicate the separateness of such Loan Party, as applicable, and such Affiliate and to indicate that such Loan Party’s assets and credit were not available to satisfy the debts and other obligations of such Affiliates or any other Person, and (ii) such assets were listed on such Loan Party’s, as applicable, own separate balance sheet;
(ii) has filed and will file its own Tax returns (to the extent required to file any Tax returns), has not filed and will not file a consolidated federal income Tax return with any other Person, and will continue to be a disregarded entity or a partnership for U.S. federal income Tax purposes;
(iii) has been, is, and intends to remain solvent, and has paid and will pay its own debts and liabilities out of its own funds and assets (to the extent of such funds and assets, it being acknowledged by Administrative Agent that the foregoing shall in no event require any contribution of equity into any Borrower) as the same shall become due, and has given and will give prompt written notice to Administrative Agent of the insolvency or Bankruptcy Action with respect to any Loan Party, Guarantor or any Sponsor, or the death or Disability of any Key Person;
(xiiv) except as contemplated by (i) has done or caused to be done, and will do or cause to be done, all things necessary to observe all limited liability company formalities and preserve its existence and good standing, (ii) has not terminated or failed to comply in any material respect with and will not terminate or fail to comply in any material respect with the Loan provisions of its Governing Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as any of the date hereof matters set forth in this Section 8.18Section 8.18 and certain obligations (iii) without the prior written consent of Operating Lessee Administrative Agent, has not and will not, amend, modify or otherwise change any of its Governing Documents with respect to any of the matters set forth in this Section 8.18Section 8.18;
(v) does not have and will not voluntarily incur any Indebtedness other than the Permitted Indebtedness;
(vi) other than the Carve OutCarve-Out Guaranty, has not assumed, guaranteed or a predecessor operating lessee) thereunderbecome obligated for or held out its credit and will not assume, assume guarantee, become obligated for or guaranty hold out its credit, as being available to satisfy the debts of any other Person, hold itself out to be responsible for the debts or obligations of any other Person, or otherwise pledge its assets to secure the obligations decisions or actions respecting the daily business or affairs of any other Person (other than such decisions or hold out its credit or assets as being available to satisfy actions made in connection with the obligations management of any other such Person in accordance with the Governing Documents of such Person);
(xiivii) make any loans or advances to any Person, or own any stock has not acquired and will not acquire obligations or securities of(other than the Collateral) of the Depositors, any PersonBorrower, Parent Borrowers, Parents or buy or hold evidence of indebtedness issued by any other PersonPerson other than Permitted Investments;
(xiiiviii) fail to (A) file has allocated and will allocate fairly and reasonably shared expenses, including without limitation, shared office space, and has maintained and utilized and will maintain and utilize separate stationery, invoices and checks bearing its own tax returns separate from those of any other Person, except to the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under applicable Legal Requirements and (B) pay any taxes required to be paid under applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrowername;
(xivix) fail to has not pledged and will not pledge its assets for the benefit of any Person other than the Secured Parties;
(Ax) has held and identified itself and will hold itself out to the public as a legal entity separate and distinct from any other Person, (B) and has conducted and shall conduct its business solely in under its own name or (C) correct any known misunderstanding regarding its separate identityname;
(xvxi) fail has not made and will not make loans to intend any Person;
(xii) has not identified and will not identify itself or any of its Affiliates as a division or part of the other; provided, however, that such entity’s assets may have been included in a consolidated financial statement of its Affiliates; provided that, if applicable, (i) appropriate notations were made on such consolidated financial statements to indicate the separateness of such entity and such Affiliate and to indicate that such entity’s assets and credit were not available to satisfy the debts and other obligations of such Affiliates or any other Person, and (ii) such assets were listed on such entity’s own separate balance sheet;
(xiii) except as permitted under the Loan Documents, has not entered and will not enter into any contract or agreement with Borrowerany of the Borrowers, the Depositors, ParentParents, the DSTs or any other Affiliate;
(xiv) has maintained and, to the extent cash flow from the sale of the DST Interests is sufficient, will maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, that the foregoing and shall not require Borrower’s membersmake any distributions to any Loan Party, partners or shareholders any other Affiliate that would cause such Loan Party or any Owned DST to make additional capital contributions fail to Borrowermaintain such adequate capital;
(xv) has not permitted and will not permit any Affiliate independent access to its bank accounts except to the extent permitted or contemplated by the Loan Documents;
(xvi) without the unanimous written consent of all of has not and will not have any obligation to indemnify its partners or membersofficers, as applicablepartners, and the written consent of all directors or managers of Borrower or each SPE Component Entitymembers unless such an obligation was and is fully subordinated to the Obligations and, as applicable includingto the fullest extent permitted by law, without limitation, each Independent Director, take any Material Action or action that is intended to cause will not constitute a claim against such entity in the event that cash flow in excess of the amount required to become insolventpay the Obligations is insufficient to pay such indemnity obligation;
(xvii) fail has caused and will use reasonable efforts to fairly cause its representatives to act at all times with respect to such entity consistently and reasonably allocate shared expenses (including, without limitation, shared office space in furtherance of the foregoing and services performed by an employee in the best interests of an Affiliate) among the Persons sharing such expenses;entity; and
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, pay has and will hold all of its assets in its own liabilities (includingname and has maintained and will maintain its assets in such a manner that it will not be costly or difficult to segregate, without limitation, salaries of ascertain or identify its own employees) only individual assets from its own funds; provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable;
(xx) violate or cause to be violated the assumptions made with respect to Borrower and its principals in the Non-Consolidation Opinion or any New Non-Consolidation Opinion;
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division those of any other Person.
(ib) If Borrower is a partnership or limited liability company The Governing Documents of each of each Loan Party shall provide that, as long as any portion of the Obligations (other than a single-Obligations which by their terms survive repayment) remains outstanding, except as expressly permitted pursuant to the terms of the Loan Documents, (i) such entity’s last member Delaware limited liability company formed under may not resign, and (ii) no additional member shall be admitted to Borrowerany of the Act Borrowers, the Depositors or ParentParents.
(c) The Governing Documents of each Loan Party shall each provide that, as long as any portion of the Obligations (other than Obligations which complies with by their terms survive repayment) remains outstanding: (i) such Loan Party shall be dissolved, and their respective affairs shall be wound up, only upon the requirements first to occur of subsection the following: (b)(iiA) below) (an “Acceptable DE LLC”)the termination of the legal existence of the last remaining member of such entity or the occurrence of any other event which terminates the continued membership of the last remaining member of the applicable Borrower in such Borrower, each general partner the last remaining member of the applicable Depositor in the case of a partnershipsuch Depositor, or the managing last remaining member of the applicable Parent in the case of a limited liability company (each an “SPE Component Entity”) of Borrowersuch Parent, as applicable, shall be an Acceptable DE LLC. Each SPE Component Entity (A) will at all times comply with each unless the business of the covenantsapplicable Borrower, terms and provisions contained in Sections 6.1(a)(iii) through (vi) and (viii) through (xxiv) inclusivethe applicable Depositor or the applicable Parent, as if such representationapplicable, warranty is continued in a manner permitted by their respective operating agreements or covenant was made directly by such SPE Component Entity; the Delaware Limited Liability Company Act (the “Act”), or (B) will not engage in any business or activity other than owning an interest in Borrowerthe entry of a decree of judicial dissolution under Section 18-802 of the Act; (C) will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (D) will not own any subsidiary, or make any investment in any Person other than its investment in Borrower; (E) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (F) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is substantially similar to that of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors.
(ii) In the event Borrower or SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”), the limited liability company agreement of the Company (the “LLC Agreement”) shall provide that (A) upon the occurrence of any event that causes the sole last remaining member of the Company (“Member”) applicable Borrower to cease to be the a member of such Borrower, of the Company applicable Depositor to cease to be a member of such Depositor or of the applicable Parent to cease to be a member of such Parent (other than (1A) upon an assignment by Member of such member of all of its limited liability company interest interests in the Company such entity and the admission of the transferee in accordance with transferee, if permitted pursuant to the Governing Documents of such entity and the Loan Documents and the LLC AgreementDocuments, or (2B) the resignation of Member such member and the admission of an additional member of the Company in accordance with applicable Borrower, the terms applicable Depositor, or the applicable Parent, as applicable, if permitted pursuant to the Governing Documents of such entity and the Loan Documents and Documents), to the LLC Agreement)fullest extent permitted by law, the personal representative of Member such last remaining member shall be authorized to, and shall, within ninety (90) daysdays after the occurrence of the event that terminated the continued membership of such member in such entity, agree in writing (1) to continue the existence of the Company applicable Borrower, the applicable Depositor or the applicable Parent, as applicable, and (2) to the admission of such the personal representative or its nominee or designee, as the case may be, as a substitute member of the Companyapplicable Borrower, the applicable Depositor or the applicable Parent, as applicable, effective as of the occurrence of the event that caused terminated the Member continued membership of such member in the applicable Borrower, the applicable Depositor or the applicable Parent, as applicable; (iii) the bankruptcy of any member of the applicable Borrower or the applicable Depositor or the applicable Parent shall not cause such member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of the Company and executing the LLC Agreement (“Special Member”) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the Company, automatically be admitted to the Company and shall continue the existence of the Company without dissolution, and (B) Special Member may not resign from the Company or transfer its rights as Special Member unless (1) a successor Special Member has been admitted to the Company as Special Member in accordance with the requirements of the Act and (2) after giving effect to such resignation, such successor Special Member has also accepted its appointment as an Independent Director. The LLC Agreement shall further provide that (v) Special Member shall automatically cease to be a member of the Company upon the admission to the Company of a substitute Member, (w) Special Member shall be a member of the Company that has no interest in the profits, losses and capital of the Company and has no right to receive any distributions of the assets of the Company, (x) pursuant to Section 18-301 of the Act, Special Member shall not be required to make any capital contributions to the Company and shall not receive a limited liability company interest in the Company, (y) Special Member, in its capacity as Special Member, may not bind the Company, and (z) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating toapplicable Borrower, the Company, including, without limitation, the merger, consolidation or conversion of the Company; provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents applicable Depositor or the LLC Agreement. Prior to its admission to the Company applicable Parent, as Special Memberapplicable, Special Member shall not be a member of the Company, but the Special Member may serve as an Independent Director of the Company. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company and upon the occurrence of such an event, the existence business of the Company such entity shall continue without dissolution. The LLC Agreement ; (iv) in the event of the dissolution of a Borrower, a Depositor or a Parent, then such Borrower, such Depositor or such Parent, as applicable, shall also provide that conduct only such activities as are necessary to wind up its affairs (including the sale of the assets and properties of such Borrower, such Depositor or such Parent, as applicable, in an orderly manner), and the assets and properties of such Borrower, such Depositor or such Parent, as applicable, 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 applicable law, each member of Member the applicable Borrower, the applicable Depositor and Special Member waives the applicable Parent shall irrevocably waive any right it or power that they might have to agree in writing cause such Borrower, such Depositor or such Parent, as applicable, or any of their respective assets or properties to dissolve be partitioned, to cause the Company upon appointment of a receiver for all or any portion of the occurrence assets or properties of any action initiated by or brought against Member or Special Member under any Creditors Rights Lawsthe applicable Borrower, the applicable Depositor, or the occurrence applicable Parent, as applicable, to compel any sale of an event that causes Member all or Special Member to cease to be a member any portion of the Company.
(c) The organizational documents assets or properties of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary such entity 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 the “special purpose” provisions of such organizational documentsapplicable Borrower, the applicable Depositor or the applicable Parent, as applicable.
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 1 contract
Single Purpose Entity/Separateness. Borrower represents, warrants and covenants as follows:
(a) Borrower has not and will not, for so long as the Loan remains outstanding:
(i) engage in any business or activity other than the ownership, operation and maintenance of the Properties, and activities incidental thereto;
(ii) acquire or own any assets other than (A) the Properties, and (B) such incidental Personal Property as may be necessary for the ownership ownership, leasing, maintenance and operation of the Properties;
(iii) merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existenceformalities, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;
(v) own any subsidiary, or make any investment in, any Person;
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its funds or assets with the funds or assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;
(vii) incur any debtIndebtedness, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than (A) the Debt, (B) trade and operational indebtedness incurred in the ordinary course of business with trade creditors, provided such indebtedness is (1) unsecured, (2) not evidenced by a note, (3) on commercially reasonable terms and conditions, and (4) due not more than sixty (60) days past the date incurred and paid on or prior to such date, and/or (C) Permitted Equipment Leases; provided however, the aggregate amount of the indebtedness described in (B) and (C) shall not exceed at any time two percent (2%) of the outstanding principal amount of the Debt. No Indebtedness other than the Debt and Permitted Debt and prior loans that have been satisfied in full as of the date hereofmay be secured (subordinate or pari passu) by any Individual Property;
(viii) fail to maintain all of its books, records, books of account, financial statements and bank accounts, financial statements, accounting records and other entity documents accounts separate and apart from those of its affiliates and any constituent party. Borrower’s assets have not and will not be listed as assets on the financial statement of any other Person; except provided, however, that Borrower’s financial position, assets, liabilities, net worth and operating results assets may be included in the a consolidated financial statements statement of an Affiliate, its affiliates provided that (Ai) appropriate notation shall be made on such consolidated financial statements to indicate the separate identity separateness of Borrower from and such Affiliate affiliates and to indicate that Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate affiliates or any other Person, Person and (Bii) Borrower’s assets, liabilities and net worth such assets shall also be listed on Borrower’s own separate balance sheet. Borrower has maintained and will maintain its books, records, resolutions and agreements as official records;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, member or any Affiliate of the foregoingaffiliate, except upon terms and conditions that are intrinsically fair, commercially reasonable fair and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of from the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunderLender, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure for the obligations benefit of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other Person;
(xiii) fail to (A) file its own tax returns separate from those of any other Person, except to the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under (unless prohibited by applicable Legal Requirements and (B) pay any taxes required to be paid under applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrowerfrom doing so);
(xiv) fail either to (A) hold itself out to the public as a legal entity separate and distinct from any other Person, (B) Person or to conduct its business solely in its own name or (C) fail to correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, that operations (to the foregoing shall not require Borrower’s members, partners or shareholders extent there exists sufficient cash flow from the Properties to make additional capital contributions to Borrowerdo so);
(xvi) without the unanimous written consent of all of its partners or members, as applicable, and the written consent of all directors or managers each Independent Director (regardless of whether such Independent Director is engaged at the Borrower or each SPE Component EntityEntity level), as applicable including(a) file or consent to the filing of any petition, without limitationeither voluntary or involuntary, each Independent Directorto take advantage of any Creditors Rights Laws, (b) seek or consent to the appointment of a receiver, liquidator or any similar official, (c) take any Material Action or action that is intended to might cause such entity to become insolvent, or (d) make an assignment for the benefit of creditors;
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space space) or fail to use separate stationery, invoices and services performed by an employee of an Affiliate) among the Persons sharing such expenseschecks;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, pay its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; provided, however, that funds or fail to maintain a sufficient number of employees in light of its contemplated business operations (in each case to the foregoing shall not require Borrower’s members, partners or shareholders extent there exists sufficient cash flow from the Properties to make additional capital contributions to Borrowerdo so);
(xix) acquire obligations or securities of its partners, members, shareholders members or other affiliates, as applicable;; or
(xx) violate or cause to be violated the assumptions made with respect to Borrower and its principals in the Non-Consolidation Opinion or in any New Non-Consolidation Opinion;
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other Person.
(ib) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner (in the case of a partnership, or the managing ) and at least one member (in the case of a limited liability company company) of Borrower, as applicable, shall be a corporation or an Acceptable LLC (each an “SPE Component Entity”) of whose sole asset is its interest in Borrower, as applicable, shall be an Acceptable DE LLC. Each SPE Component Entity (Ai) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iiiSection 5.1(a)(iii) through - (vi) (inclusive) and (viii) through - (xxivxx) (inclusive) and, if such SPE Component Entity is an Acceptable LLC, Section 5.1(c) and (d) hereof, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (Bii) will not engage in any business or activity other than owning an interest in Borrower; (Ciii) will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (Div) will not at all times continue to own any subsidiary, or make any investment in any Person other no less than its investment a 0.5% direct equity ownership interest in Borrower; (Ev) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (Fvi) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is substantially similar to that of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors5.1.
(iic) In the event Borrower or the SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”)LLC, the limited liability company agreement of Borrower or the Company SPE Component Entity (as applicable) (the “LLC Agreement”) shall provide that (Ai) upon the occurrence of any event that causes the sole last remaining member of Borrower or the Company SPE Component Entity (as applicable) (“Member”) to cease to be the member of Borrower or the Company SPE Component Entity (as applicable) (other than (1A) upon an assignment by Member of all of its limited liability company interest in Borrower or the Company SPE Component Entity (as applicable) and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2B) the resignation of Member and the admission of an additional member of Borrower or the Company SPE Component Entity (as applicable) in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of Borrower or the Company and executing the LLC Agreement SPE Component Entity (“Special Member”as applicable) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of Borrower or the Company, SPE Component Entity (as applicable) automatically be admitted to Borrower or the Company SPE Component Entity (as applicable) as a member with a 0% economic interest (“Special Member”) and shall continue Borrower or the existence of the Company SPE Component Entity (as applicable) without dissolution, dissolution and (Bii) Special Member may not resign from Borrower or the Company SPE Component Entity (as applicable) or transfer its rights as Special Member (A) unless (1) a successor Special Member has been admitted to Borrower or the Company SPE Component Entity (as applicable) as a Special Member in accordance with the requirements of the Act Delaware or Maryland law (as applicable) and (2B) after giving effect to such resignationresignation or transfer, such successor Special Member has also accepted its appointment there remains at least one (1) Independent Director of the SPE Component Entity or Borrower (as an Independent Directorapplicable). The LLC Agreement shall further provide that (vi) Special Member shall automatically cease to be a member of Borrower or the Company SPE Component Entity (as applicable) upon the admission to Borrower or the Company SPE Component Entity (as applicable) of a the first substitute Membermember, (wii) Special Member shall be a member of Borrower or the Company SPE Component Entity (as applicable) that has no interest in the profits, losses and capital of Borrower or the Company SPE Component Entity (as applicable) and has no right to receive any distributions of the assets of Borrower or the CompanySPE Component Entity (as applicable), (xiii) pursuant to Section 18-301 the applicable provisions of the limited liability company act of the State of Delaware or Maryland (as applicable, the “Act”), Special Member shall not be required to make any capital contributions to Borrower or the Company SPE Component Entity (as applicable) and shall not receive a limited liability company interest in Borrower or the CompanySPE Component Entity (as applicable), (yiv) Special Member, in its capacity as Special Member, may not bind Borrower or the Company, SPE Component Entity (as applicable) and (zv) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, Borrower or the Company, SPE Component Entity (as applicable) including, without limitation, the merger, consolidation or conversion of Borrower or the CompanySPE Component Entity (as applicable); provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. In order to implement the admission to Borrower or the SPE Component Entity (as applicable) of Special Member, Special Member shall execute a counterpart to the LLC Agreement. Prior to its admission to Borrower or the Company SPE Component Entity (as applicable) as Special Member, Special Member shall not be a member of Borrower or the CompanySPE Component Entity (as applicable), but the Special Member may serve as an Independent Director of Borrower or the Company. Any SPE Component Entity (as applicable).
(d) The LLC Agreement shall further provide that (i) upon the occurrence of any event that causes the Member to cease to be a member of Borrower or the SPE Component Entity (as applicable) to the fullest extent permitted by law, the personal representative of Member shall, within ninety (90) days after the occurrence of the event that terminated the continued membership of Member in Borrower or the SPE Component Entity (as applicable) agree in writing (A) to continue Borrower or the SPE Component Entity (as applicable) and (B) to the admission of the personal representative or its nominee or designee, as the case may be, as a substitute member of Borrower or the SPE Component Entity (as applicable) effective as of the occurrence of the event that terminated the continued membership of Member in Borrower or the SPE Component Entity (as applicable), (ii) any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of Borrower or the Company SPE Component Entity (as applicable) and upon the occurrence of such an event, the existence business of Borrower or the Company SPE Component Entity (as applicable) shall continue without dissolution. The LLC Agreement shall also provide that dissolution and (iii) each of Member and Special Member waives any right it might have to agree in writing to dissolve Borrower or the Company SPE Component Entity (as applicable) upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of Borrower or the Company.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents(as applicable).
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 1 contract
Sources: Loan Agreement (American Realty Capital Trust III, Inc.)
Single Purpose Entity/Separateness. Borrower represents, warrants and covenants as follows:
(a) Each Borrower has not and not, and, for so long as the Debt remains outstanding, will not:
(i) engage in any business or activity other than the ownership, operation and maintenance of the PropertiesProperty, and activities incidental thereto;
(ii) acquire or own any assets other than (A) the PropertiesProperty, and (B) such incidental Personal Property as may be necessary for the ownership ownership, leasing, maintenance and operation of the PropertiesProperty;
(iii) merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existenceformalities, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements Applicable Law of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;
(v) own any subsidiary, or make any investment in, any Person;
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its assets with the assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;
(vii) incur any debtIndebtedness, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than (A) the Debt, (B) trade and operational indebtedness incurred in the ordinary course of business with trade creditors, provided such indebtedness is (1) unsecured, (2) not evidenced by a note, (3) on commercially reasonable terms and conditions, and (4) due not more than sixty (60) days past the date incurred and paid on or prior to such date, (C) Permitted Equipment Leases and/or (D) Borrower’s obligations and liabilities under the Interest Rate Protection Agreement; provided however, the aggregate amount of the indebtedness described in (B) and (C) shall not exceed at any time two percent (2%) of the outstanding principal amount of the Debt. No Indebtedness other than the Debt and Permitted Debt and prior loans that have been satisfied in full as of may be secured (subordinate or pari passu) by the date hereofProperty;
(viii) fail to maintain all of its books, records, books of account, financial statements and bank accounts, financial statements, accounting records and other entity documents accounts separate and apart from those of its affiliates and any constituent party. Borrower’s assets have not and will not be listed as assets on the financial statement of any other Person; except provided, however, that Borrower’s financial position, assets, liabilities, net worth and operating results assets may be included in the a consolidated financial statements statement of an Affiliate, its affiliates provided that (Ai) appropriate notation shall be made on such consolidated financial statements to indicate the separate identity separateness of Borrower from and such Affiliate affiliates and to indicate that Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate affiliates or any other Person, Person and (Bii) Borrower’s assets, liabilities and net worth such assets shall also be listed on Borrower’s own separate balance sheet. Borrower has maintained and will maintain its books, records, resolutions and agreements as official records;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, principal or any Affiliate of the foregoingaffiliate, except upon terms and conditions that are intrinsically fair, commercially reasonable fair and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure for the obligations benefit of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other Person;
(xiii) fail to (A) file its own tax returns separate (unless prohibited by Applicable Law from those of any other Person, except to the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under applicable Legal Requirements and (B) pay any taxes required to be paid under applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrowerdoing so);
(xiv) fail either to (A) hold itself out to the public as a legal entity separate and distinct from any other Person, (B) Person or to conduct its business solely in its own name or (C) fail to correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, that operations (to the foregoing extent there exists sufficient cash flow from the Property to do so after the payment of all operating expenses and Debt Service and shall not require Borrower’s members, partners or shareholders any equity owner to make additional capital contributions to Borrower);
(xvi) without the unanimous written consent of all of its partners or members, as applicable, and (a) file or consent to the written filing of any petition, either voluntary or involuntary, to take advantage of any Creditors’ Rights Laws, (b) seek or consent to the appointment of all directors a receiver, liquidator or managers of Borrower or each SPE Component Entityany similar official, as applicable including, without limitation, each Independent Director, (c) take any Material Action or action that is intended to might cause such entity to become insolvent, or (d) make an assignment for the benefit of creditors;
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space space) or fail to use separate stationery, invoices and services performed by an employee of an Affiliate) among the Persons sharing such expenseschecks;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, pay its own liabilities (including, without limitation, salaries of its own employees) only from its own fundsfunds or fail to maintain a sufficient number of employees in light of its contemplated business operations (in each case to the extent there exists sufficient cash flow from the Property to do so); provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;or
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable;
(xx) violate or cause to be violated the assumptions made with respect to Borrower and its principals in the Non-Consolidation Opinion or any New Non-Consolidation Opinion;
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other Person.
(ib) If Borrower is a limited partnership or a limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner in the case of a partnership, or the managing member in the case of a limited liability company (each each, an “SPE Component Entity”) of shall be a corporation or an Acceptable LLC (I) whose sole asset is its interest in Borrower, as applicable, (II) which has not been and shall not be an Acceptable DE LLC. Each SPE Component Entity (A) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iii) through (vi) and (viii) through (xxiv) inclusive, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (B) will not permitted to engage in any business or activity other than owning an interest in Borrower; (CIII) will which has not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (D) will been and shall not own any subsidiary, or make any investment in any Person other than its investment in Borrower; (E) will not be permitted to incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (FIV) which has and will at all times own at least a 0.5% direct equity ownership interest in Borrower. Each such SPE Component Entity will at all times comply, and will cause Borrower to comply comply, with each of the provisions of representations, warranties, and covenants contained in this Section 6.1 and Section 6.4Article 5 (to the extent applicable) as if such representation, warranty or covenant was made directly by such SPE Component Entity. Prior to Upon the withdrawal or the disassociation of any an SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner SPE Component Entity whose articles of incorporation or managing member whose limited liability company agreement is organization are substantially similar to that those of such SPE Component Entity andEntity. As of the date hereof, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, LLC and an SPE Component Entity is not required so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement continues to qualify as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent DirectorsLLC.
(ii) In the event Borrower or SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”), the limited liability company agreement of the Company (the “LLC Agreement”) shall provide that (A) upon the occurrence of any event that causes the sole member of the Company (“Member”) to cease to be the member of the Company (other than (1) upon an assignment by Member of all of its limited liability company interest in the Company and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2) the resignation of Member and the admission of an additional member of the Company in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of the Company and executing the LLC Agreement (“Special Member”) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the Company, automatically be admitted to the Company and shall continue the existence of the Company without dissolution, and (B) Special Member may not resign from the Company or transfer its rights as Special Member unless (1) a successor Special Member has been admitted to the Company as Special Member in accordance with the requirements of the Act and (2) after giving effect to such resignation, such successor Special Member has also accepted its appointment as an Independent Director. The LLC Agreement shall further provide that (v) Special Member shall automatically cease to be a member of the Company upon the admission to the Company of a substitute Member, (w) Special Member shall be a member of the Company that has no interest in the profits, losses and capital of the Company and has no right to receive any distributions of the assets of the Company, (x) pursuant to Section 18-301 of the Act, Special Member shall not be required to make any capital contributions to the Company and shall not receive a limited liability company interest in the Company, (y) Special Member, in its capacity as Special Member, may not bind the Company, and (z) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Company, including, without limitation, the merger, consolidation or conversion of the Company; provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. Prior to its admission to the Company as Special Member, Special Member shall not be a member of the Company, but the Special Member may serve as an Independent Director of the Company. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company and upon the occurrence of such an event, the existence of the Company shall continue without dissolution. The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the Company.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents.
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 1 contract
Sources: Loan Agreement (American Realty Capital New York Recovery Reit Inc)
Single Purpose Entity/Separateness. Until the Debt has been paid in full, Borrower represents, warrants and covenants as follows:
(a) Borrower has not and will not:
(i) engage in any business or activity other than the ownership, operation and maintenance of the PropertiesProperty, and activities incidental thereto;
(ii) acquire or own any assets other than (A) the PropertiesProperty, and (B) such incidental Personal Property as may be necessary for the ownership and operation of the PropertiesProperty;
(iii) except with respect to a Permitted Transfer (as described in Section 7.3 below), merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existenceformalities, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;
(v) except with respect to FSP LLC, own any subsidiary, or make any investment in, any Person;
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its assets with the assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;
(vii) incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than (A) the Debt Debt, (B) trade and Permitted Debt operational indebtedness incurred in the ordinary course of business with trade creditors, provided such indebtedness is (1) unsecured, (2) not evidenced by a note, (3) on commercially reasonable terms and conditions, and (4) due not more than sixty (60) days past the date incurred and paid on or prior loans that have been satisfied to such date, and/or (C) financing leases and purchase money indebtedness incurred in full as the ordinary course of business relating to Personal Property on commercially reasonable terms and conditions; provided however, the aggregate amount of the date hereofindebtedness described in (B) and (C) shall not exceed at any time three percent (3%) of the outstanding principal amount of the Note;
(viii) fail to maintain its records, books of account, bank accounts, financial statements, accounting records and other entity documents separate and apart from those of any other Person; except that Borrower’s 's financial position, assets, liabilities, net worth and operating results may be included in the consolidated financial statements of an Affiliate, provided that (A) appropriate notation shall be made on such consolidated financial statements to indicate the contain a footnote indicating that Borrower is a separate identity of Borrower from such Affiliate legal entity and that Borrower’s assets it maintains separate books and credit are not available to satisfy the debts and other obligations of such Affiliate or any other Person, and (B) Borrower’s assets, liabilities and net worth shall also be listed on Borrower’s own separate balance sheetrecords;
(ix) except for capital contributions or capital distributions permitted under other than the terms Asset Management Agreement and conditions of Borrower’s organizational documents and properly reflected on its books and recordsin connection with the Private Offering (as defined in the Charter), enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, or any Affiliate of the foregoing, except upon terms and conditions that are intrinsically fair, commercially reasonable and substantially similar to those that would be available on an arm’sarm's-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure for the obligations benefit of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other Person;
(xiii) fail to (A) file its own tax returns separate from those of or files a consolidated federal income tax return with any other PersonPerson (unless prohibited or required, except to as the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under applicable Legal Requirements and (B) pay any taxes required to be paid under case may be, by applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrower);
(xiv) fail either to (A) hold itself out to the public as a legal entity separate and distinct from any other Person, (B) Person or to conduct its business solely in its own name or (C) fail to correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;
(xvi) without the unanimous written consent of all of its partners or members, as applicable, and the written consent of all directors or managers of Borrower or each SPE Component Entity, as applicable including, without limitation, each Independent Director, take any Material Action or action that is intended to cause such entity to become insolvent;
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space and services performed by an employee of an Affiliate) among the Persons sharing such expensesexpenses and to use separate stationery, invoices and checks;
(xviiixvii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, or pay its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;
(xixxviii) except with respect to a Permitted Transfer (as described in Section 7.3 below), acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable;
(xxxix) violate or cause to be violated the assumptions made with respect to Borrower and its principals in any opinion letter pertaining to substantive consolidation delivered to Lender in connection with the Non-Consolidation Opinion or any New Non-Consolidation Opinion;Loan, if required in connection with a Securitization; or
(xxixx) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other Person.
(ib) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner in the case of a partnership, or the managing member in the case of a limited liability company (each an “SPE Component Entity”) of Borrower, as applicable, shall be an Acceptable DE LLC. Each SPE Component Entity (A) will cause FSP LLC to at all times comply with each of the covenants, terms and provisions contained in Sections Section 6.1(a)(iii) through - (vi) and (viii) through - (xxiv) inclusivexviii), to the extent applicable to FSP LLC, as if such representation, warranty or covenant was made directly by such SPE Component EntityFSP LLC; (Bii) will not engage in any business or activity other than owning an interest in Borroweras landlord under the Master Lease and activities ancillary thereto; (Ciii) will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrowerthe Master Lease; and (D) will not own any subsidiary, or make any investment in any Person other than its investment in Borrower; (Eiv) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (F) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is substantially similar to that of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors.
(ii) In the event Borrower or SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”), the limited liability company agreement of the Company (the “LLC Agreement”) shall provide that (A) upon the occurrence of any event that causes the sole member of the Company (“Member”) to cease to be the member of the Company (other than (1) upon an assignment by Member of all of its limited liability company interest in the Company and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2) the resignation of Member and the admission of an additional member of the Company in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of the Company and executing the LLC Agreement (“Special Member”) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the Company, automatically be admitted to the Company and shall continue the existence of the Company without dissolution, and (B) Special Member may not resign from the Company or transfer its rights as Special Member unless (1) a successor Special Member has been admitted to the Company as Special Member in accordance with the requirements of the Act and (2) after giving effect to such resignation, such successor Special Member has also accepted its appointment as an Independent Director. The LLC Agreement shall further provide that (v) Special Member shall automatically cease to be a member of the Company upon the admission to the Company of a substitute Member, (w) Special Member shall be a member of the Company that has no interest in the profits, losses and capital of the Company and has no right to receive any distributions of the assets of the Company, (x) pursuant to Section 18-301 of the Act, Special Member shall not be required to make any capital contributions to the Company and shall not receive a limited liability company interest in the Company, (y) Special Member, in its capacity as Special Member, may not bind the Company, and (z) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Company, including, without limitation, the merger, consolidation or conversion of the Company; provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. Prior to its admission to the Company as Special Member, Special Member shall not be a member of the Company, but the Special Member may serve as an Independent Director of the Company. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company and upon the occurrence of such an event, the existence of the Company shall continue without dissolution. The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the Company.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents.
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 1 contract
Single Purpose Entity/Separateness. Until the Debt has been paid in full, Borrower represents, warrants and covenants as follows:
(a) Borrower has not and will not:
(i) engage in any business or activity other than the acquisition, ownership, operation operation, development, financing and maintenance of the PropertiesProperty, and activities incidental thereto;
(ii) acquire or own any assets other than (A) the PropertiesProperty, and (B) such incidental Personal Property as may be necessary for the ownership and operation of the PropertiesProperty;
(iii) merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary in order to maintain its separate existence, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;
(v) own any subsidiary, or make any investment in, any Person;
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its assets with the assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;
(vii) incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than (A) the Debt Debt, (B) trade and Permitted Debt operational indebtedness incurred in the ordinary course of business with trade creditors, provided such indebtedness is (1) unsecured, (2) not evidenced by a note, (3) on commercially reasonable terms and conditions, and (4) due not more than sixty (60) days past the date incurred and paid on or prior loans that have been satisfied to such date, and/or (C) financing leases and purchase money indebtedness incurred in full as the ordinary course of business relating to Personal Property on commercially reasonable terms and conditions, provided however, the aggregate amount of the date hereofindebtedness described in (B) and (C) shall not exceed at any time three percent (3%) of the original principal amount of the Loan (provided that there is sufficient cash flow generated from the operation of the Property);
(viii) fail to maintain its records, books of account, bank accounts, financial statements, accounting records and other entity documents separate and apart from those of any other Person; except that Borrower’s financial position, assets, liabilities, net worth and operating results may be included in the consolidated financial statements of an Affiliate, provided that (A) appropriate notation shall be made on such consolidated financial statements to indicate the contain a footnote indicating that Borrower is a separate identity of Borrower from such Affiliate and that Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate or any other Person, and (B) Borrower’s assets, liabilities and net worth shall also be listed on Borrower’s own separate balance sheetlegal entity;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, or any Affiliate of the foregoingforegoing (excluding the Master Lease executed herewith), except upon terms and conditions that are intrinsically fair, commercially reasonable and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lesseeA) thereunder, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure for the obligations benefit of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other PersonPerson or (B) other than with respect to (I) the obligations of Borrower guaranteed by Borrower Principal pursuant to the terms of the Loan Documents, or (II) reimbursement obligations, if any, of Borrower Principal or its Affiliates (other than Borrower) to the Issuing Bank with respect to the Reserve Letters of Credit, permit any of its partners, members, shareholders or other Affiliates to guarantee, become obligated for or hold its credit out to be responsible for any of the debts or obligations of Borrower;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other Person;
(xiii) fail to (A) file its own tax returns separate from those of any other Person, except to the extent that (if Borrower is treated as a “disregarded entity” for tax purposes and is not required to file such tax returns under by applicable Legal Requirements and law) or file a consolidated federal income tax return with any Person (B) pay any taxes unless required to be paid under or permitted, as the case may be, by applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrower);
(xiv) identify itself as a division or part of any Affiliate (other than for tax purposes) or fail either to (A) hold itself out to the public as a legal entity separate and distinct from any other Person, (B) Person or to conduct its business solely in its own name or (C) fail to correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, provided that (A) there is sufficient cash flow generated from the operation of the Property to maintain adequate capitalization and (B) this covenant shall not restrict Borrower’s ability to make distributions to its member in the ordinary course of business. Notwithstanding the foregoing or anything to the contrary contained in any of the Loan Documents, Borrower Principal shall not require Borrower’s members, partners or shareholders be obligated to make additional contribute capital contributions to Borrower;
(xvi) without the unanimous written consent of all of its partners or members, as applicable, members and the written consent of all directors or 100% of the managers of Borrower or each SPE Component EntityBorrower, as applicable including, without limitation, each Independent DirectorManager, (a) file or consent to the filing of any petition, either voluntary or involuntary, to take advantage of any Material Action Creditors Rights Laws, (b) seek or action that is intended consent to cause such entity to become insolventthe appointment of a receiver, liquidator or any similar official, or (c) make an assignment for the benefit of creditors;
(xvii) fail to allocate, fairly and reasonably allocate reasonably, shared expenses (including, without limitation, shared office space and services performed by an employee of an Affiliate) among the Persons sharing such expenses and to use separate stationery, invoices and checks with the result that Borrower bears its fair share of such expenses;
(xviii) fail to intend remain solvent, provided and to remain solvent orthe extent that sufficient cash flow is generated from the operation of the Property, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, or pay its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; provided, however, provided and to the extent that sufficient cash flow is generated from the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borroweroperation of the Property;
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable;
(xx) violate or cause to be violated the assumptions made with respect to Borrower and its principals in any opinion letter pertaining to substantive consolidation delivered to Lender in connection with the Non-Consolidation Opinion or any New Non-Consolidation OpinionLoan;
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail permit any Affiliate independent access to maintain its bank accounts other than with respect to the Manager (and use separate stationery, invoices and checks bearing any sub manager) in its own namecapacity as manager of the Property pursuant to the Management Agreement;
(xxiii) have any of its obligations guaranteed by an Affiliatefail to maintain the resolutions, except (x) as agreements and other instruments regarding the transactions contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreementsofficial records; or
(xxiv) identify itself as a department or division fail to make all oral and written communication, including, without limitation, letters, invoices, purchase orders, contracts, statements, and applications solely in the name of any other PersonBorrower.
(ib) If Borrower is shall have Borrower Principal as its sole member. Borrower shall maintain its status as a partnership or limited liability company (other than a single-single member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner in the case of a partnership, or the managing member in the case of a limited liability company (each an “SPE Component Entity”) of Borrower, as applicable, shall be an Acceptable DE LLC. Each SPE Component Entity (A) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iii) through (vi) and (viii) through (xxiv) inclusive, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (B) will not engage in any business or activity other than owning an interest in Borrower; (C) will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (D) will not own any subsidiary, or make any investment in any Person other than its investment in Borrower; (E) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (F) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is substantially similar to that of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directorscompany.
(iic) In the event Borrower or SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”), the The limited liability company agreement of the Company Borrower (the “LLC Agreement”) shall provide that (Ai) upon the occurrence of any event that causes the sole member of the Company Borrower (“Member”) to cease to be the member of the Company Borrower (other than (1A) upon an assignment by Member of all of its limited liability company interest in the Company Borrower and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2B) the resignation of Member and the admission of an additional member of the Company Borrower in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director Manager of the Company and executing the LLC Agreement (“Special Member”) Borrower shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the CompanyBorrower, automatically be admitted to the Company Borrower (“Special Member”) and shall continue the existence of the Company Borrower without dissolution, dissolution and (Bii) Special Member may not resign from the Company Borrower or transfer its rights as Special Member unless (1A) a successor Special Member has been admitted to the Company Borrower as Special Member in accordance with the requirements of the Act Delaware law and (2B) after giving effect to such resignation, such successor Special Member has also accepted its appointment as an Independent DirectorManager. The LLC Agreement shall further provide that (vi) Special Member shall automatically cease to be a member of the Company Borrower upon the admission to the Company Borrower of a substitute Member, (wii) Special Member shall be a member of the Company Borrower that has no interest in the profits, losses and capital of the Company Borrower and has no right to receive any distributions of the assets of the CompanyBorrower assets, (xiii) pursuant to Section 18-301 of the Delaware Limited Liability Company Act (the “Act”), Special Member shall not be required to make any capital contributions to the Company Borrower and shall not receive a limited liability company interest in the CompanyBorrower, (yiv) Special Member, in its capacity as Special Member, may not bind the Company, and Borrower and
(zv) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the CompanyBorrower, including, without limitation, the merger, consolidation or conversion of the CompanyBorrower; provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent DirectorManager, to vote on such matters required by the Loan Documents or the LLC Agreement. In order to implement the admission to Borrower of Special Member, Special Member shall execute a counterpart to the LLC Agreement. Prior to its admission to the Company Borrower as Special Member, Special Member shall not be a member of Borrower. Upon the Companyoccurrence of any event that causes the Member to cease to be a member of Borrower, but to the Special fullest extent permitted by law, the personal representative of Member may serve as an Independent Director shall, within ninety (90) days after the occurrence of the Companyevent that terminated the continued membership of Member in Borrower, agree in writing (i) to continue 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 Borrower, effective as of the occurrence of the event that terminated the continued membership of Member of Borrower in Borrower. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company Borrower and upon the occurrence of such an event, the existence business of the Company Borrower shall continue without dissolution. The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company Borrower upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of Borrower. Lender acknowledges that the Company.
(c) The organizational documents terms of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary Borrower’s LLC Agreement as of the “special purpose” provisions Closing Date are deemed to have satisfied the requirements of such organizational documentsthis Section 6.1(c).
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 1 contract
Single Purpose Entity/Separateness. Borrower represents, warrants and covenants as follows:
(a) Borrower will not and Borrower hereby represents and warrants to Lender that Borrower has not and will notsince the date of its formation:
(i) engage in any business or activity other than the ownership, operation and maintenance operation, management of the Properties, Collateral and activities incidental thereto;
(ii) acquire or own any assets other than (A) the Properties, and (B) such incidental Personal Property as may be necessary for the ownership and operation of the PropertiesCollateral;
(iii) merge into or consolidate with any Person, or or, to the fullest extent permitted by law, dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structurestructure from a Delaware limited liability company, other than, in each case, such activities as are contemplated or permitted pursuant to any provision of this Agreement or of any of the other Loan Documents;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existenceformalities, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or amend (B) amendexcept as otherwise expressly permitted hereunder), modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;
(v) own any subsidiary, or make any investment in, any PersonPerson other than the Mortgage Borrower (and other than, with respect to any SPE Component Entity, in Borrower);
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its funds or assets with the funds or assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;
(vii) incur any debtIndebtedness, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than the Debt and Indebtedness not to exceed $10,000 and not material in the aggregate that is necessary to Borrower’s activities as a member of Mortgage Borrower. Other than Permitted Encumbrances, no Indebtedness other than the Mortgage Debt and prior loans that have been satisfied in full as of may be secured (subordinate or pari passu) by the date hereofProperty. No Indebtedness other than the Debt may be secured (subordinate or pari passu) by the Collateral;
(viii) fail to maintain all of its records, books of account, bank accountsrecords, financial statements, accounting records and records, other entity documents and bank accounts separate and apart from those of any other Person (including, without limitation, any Affiliates). Borrower’s assets have not and will not be listed as assets on the financial statement of any other Person; except provided, however, that Borrower’s financial position, assets, liabilities, net worth and operating results assets may be included in a consolidated and/or combined financial statement of its Affiliates provided that, to the consolidated financial statements extent necessary to (i) prevent a substantive consolidation of an Affiliate, provided that the assets and liabilities of Borrower with the assets and liabilities of any other Person or (Aii) deliver a Non-Consolidation Opinion when required under this Agreement: (1) appropriate notation shall be made on such consolidated financial statements to indicate the separate identity separateness of Borrower from and such Affiliate Affiliates and to indicate that Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate Affiliates or any other Person, Person and (B2) Borrower’s assets, liabilities and net worth such assets shall also be listed on Borrower’s own separate balance sheet. Borrower has maintained and will maintain its books of account, records, financial statements, accounting record, other entity documents, resolutions and agreements as official records;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, principal or any Affiliate of the foregoingAffiliate, except (i) as may have been approved in writing by Lender in its sole and absolute discretion or (ii) upon terms and conditions that are intrinsically fair, commercially reasonable and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts or obligations of any other Person, hold itself out to be responsible for the debts or obligations of any other Person, or otherwise pledge its assets to secure or credits for the obligations benefit of any other Person or hold out its assets or credit or assets as being available to satisfy the debts or obligations of any other Person;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other PersonPersons;
(xiii) fail to (A) file its own tax returns separate from those of any other Person, Person (unless prohibited by applicable Legal Requirements from doing so or except to the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file such tax returns under applicable Legal Requirements Requirements) and (B) pay any taxes so required to be paid by such Borrower under applicable Legal Requirements; provided, however, that Borrower shall not have any obligation Requirements (to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrowerthe extent there is sufficient cash flow from the Property to do so);
(xiv) fail to (A) hold itself out to the public and identify itself, in each case, as a legal entity separate and distinct from any other Person and not as a division, department or part of any other Person, (B) conduct its business solely in its own name, (C) hold its assets in its own name or (CD) correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operationsoperations (to the extent there exists sufficient cash flow from the Property to do so); provided, however, that the foregoing no Person shall not require Borrower’s members, partners or shareholders be required to make any direct or indirect additional capital contributions to BorrowerBorrower in order to comply with the foregoing;
(xvi) without the prior unanimous written consent of all of its partners partners, shareholders or members, as applicable, and the prior unanimous written consent of all its board of directors or managers managers, as applicable, and the prior written consent of each Independent Manager (regardless of whether such Independent Manager is engaged at the Borrower or each SPE Component EntityEntity level), as applicable including(a) file or consent to the filing of any petition, without limitationeither voluntary or involuntary, each Independent Directorto take advantage of any Creditors Rights Laws, (b) seek or consent to the appointment of a receiver, liquidator or any similar official unless such appointment is sought by Lender, (c) take any Material Action or action that is intended to might cause such entity to become insolvent, (d) make an assignment for the benefit of creditors or (e) take any Material Action with respect to Borrower or any SPE Component Entity (provided, that, none of any member, shareholder or partner (as applicable) of Borrower or any SPE Component Entity or any board of directors or managers (as applicable) of Borrower or any SPE Component Entity may vote on or otherwise authorize the taking of any of the foregoing actions unless, in each case, there are at least two (2) Independent Managers then serving in such capacity in accordance with the terms of the applicable organizational documents and each of such Independent Managers has consented to such foregoing action);
(xvii) fail to allocate fairly and reasonably allocate shared expenses with its Affiliates (including, without limitation, shared office space space) or fail to use separate stationery, invoices and services performed by an employee of an Affiliate) among the Persons sharing such expenseschecks bearing its own name;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, and pay its own liabilities (including, without limitation, salaries of its own employees, if any) only from its own fundsfunds or fail to maintain a sufficient number of employees (if any) in light of its contemplated business operations (in each case to the extent there exists sufficient cash flow from the Property to do so); provided, however, that the foregoing no Person shall not require Borrower’s members, partners or shareholders be required to make any direct or indirect additional capital contributions to BorrowerBorrower in order to comply with the foregoing;
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliatesAffiliates, as applicable;
(xx) identify its partners, members, shareholders or other Affiliates, as applicable, as a division, department or part of it;
(xxi) violate or cause to be violated the assumptions made with respect to Borrower and its principals in the Non-Consolidation Opinion or in any New Non-Consolidation Opinion;
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail hold itself out as having agreed to maintain and use separate stationery, invoices and checks bearing its own namepay indebtedness incurred by any Affiliate;
(xxiii) have hold out the assets or credit of any Affiliate as being available to satisfy any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan debts or guarantees relating to obligations under the Management Agreements or Franchise Agreementsobligations; or
(xxiv) identify itself as a department or division allow an Affiliate to act in its name, to the extent of any other Personits power to do so.
(ib) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner (in the case of a partnership, or the managing ) and at least one member (in the case of a limited liability company (each an “SPE Component Entity”company) of Borrower, as applicable, shall be a corporation or an Acceptable DE LLCLLC (each, an “SPE Component Entity”) whose sole asset is its interest in Borrower. Each SPE Component Entity (Ai) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iiiSection 5.1(a)(iii) through – (vi) (inclusive) and (viii) through – (xxivxxi) (inclusive) and, if such SPE Component Entity is an Acceptable LLC, Section 5.1(c) and (d) hereof, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (Bii) will not engage in any business or activity other than owning an interest in Borrower; (Ciii) will not acquire or own any assets other than its partnership, membership, or other equity ownership interest in Borrower; (Div) will not at all times continue to own any subsidiary, or make any investment in any Person other no less than its investment a 0.5% direct equity ownership interest in Borrower; (Ev) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (Fvi) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to 5.1.
(c) In the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is substantially similar to that of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors.
(ii) In the event Borrower or SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”)LLC, the limited liability company agreement of the Company Borrower or such SPE Component Entity (as applicable) (the “LLC Agreement”) shall provide that (Ai) upon the occurrence of any event that causes the sole last remaining member of the Company Borrower or such SPE Component Entity (as applicable) (“Member”) to cease to be the member of the Company Borrower or such SPE Component Entity (as applicable) (other than (1A) upon an assignment by Member of all of its limited liability company interest in the Company Borrower or such SPE Component Entity (as applicable) and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, Agreement or (2B) the resignation of Member and the admission of an additional member of the Company Borrower or such SPE Component Entity (as applicable) in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director Manager of the Company and executing the LLC Agreement Borrower or such SPE Component Entity (“Special Member”as applicable) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the Company, Borrower or such SPE Component Entity (as applicable) automatically be admitted to the Company Borrower or such SPE Component Entity (as applicable) as a member with a zero percent (0%) economic interest (“Special Member”) and shall continue the existence of the Company Borrower or such SPE Component Entity (as applicable) without dissolution, dissolution and (Bii) Special Member may not resign from the Company Borrower or such SPE Component Entity (as applicable) or transfer its rights as Special Member unless (1A) a successor Special Member has been admitted to the Company Borrower or such SPE Component Entity (as applicable) as a Special Member in accordance with the requirements of the Act Delaware law and (2B) after giving effect to such resignationresignation or transfer, there remains at least two (2) Independent Managers of such successor Special Member has also accepted its appointment SPE Component Entity or Borrower (as an Independent Directorapplicable) in accordance with Section 5.2 below. The LLC Agreement shall further provide that (vi) Special Member shall automatically cease to be a member of the Company Borrower or such SPE Component Entity (as applicable) upon the admission to Borrower or such SPE Component Entity (as applicable) of the Company of a first substitute Membermember, (wii) Special Member shall be a member of the Company Borrower or such SPE Component Entity (as applicable) that has no interest in the profits, losses and capital of the Company Borrower or such SPE Component Entity (as applicable) and has no right to receive any distributions of the assets of the CompanyBorrower or such SPE Component Entity (as applicable), (xiii) pursuant to Section 18-301 the applicable provisions of the limited liability company act of the State of Delaware (the “Act”), Special Member shall not be required to make any capital contributions to the Company Borrower or such SPE Component Entity (as applicable) and shall not receive a limited liability company interest in the CompanyBorrower or such SPE Component Entity (as applicable), (yiv) Special Member, in its capacity as Special Member, may not bind the Company, Borrower or such SPE Component Entity (as applicable) and (zv) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Company, Borrower or such SPE Component Entity (as applicable) including, without limitation, the merger, consolidation or conversion of the CompanyBorrower or such SPE Component Entity (as applicable); provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent DirectorManager, to vote on such matters required by the Loan Documents or the LLC Agreement. In order to implement the admission to Borrower or such SPE Component Entity (as applicable) of Special Member, Special Member shall execute a counterpart to the LLC Agreement. Prior to its admission to the Company Borrower or such SPE Component Entity (as applicable) as Special Member, Special Member shall not be a member of the CompanyBorrower or such SPE Component Entity (as applicable), but the Special Member may serve as an Independent Director Manager of Borrower or such SPE Component Entity (as applicable).
(d) In the event Borrower or any SPE Component Entity is an Acceptable LLC, the LLC Agreement shall further provide that (i) upon the occurrence of any event that causes the Member to cease to be a member of Borrower or such SPE Component Entity (as applicable) (other than upon continuation of the Company. Any Company without dissolution upon (A) an assignment by the Member of all of its limited liability company interest in the Company and the admission of the transferee in accordance with this Agreement, or (B) the resignation of the member and the admission of an additional member of the Company in accordance with the terms of this Agreement) to the fullest extent permitted by law, the personal representative of Member shall, within ninety (90) days after the occurrence of the event that terminated the continued membership of Member in Borrower or such SPE Component Entity (as applicable) agree in writing (A) to continue Borrower or such SPE Component Entity (as applicable) and (B) to the admission of the personal representative or its nominee or designee, as the case may be, as a substitute member of Borrower or such SPE Component Entity (as applicable) effective as of the occurrence of the event that terminated the continued membership of Member in Borrower or such SPE Component Entity (as applicable), (ii) any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company Borrower or such SPE Component Entity (as applicable) and upon the occurrence of such an event, the existence business of the Company Borrower or such SPE Component Entity (as applicable) shall continue without dissolution. The LLC Agreement shall also provide that dissolution and (iii) each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company Borrower or such SPE Component Entity (as applicable) upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the Company.
(c) The organizational documents of Borrower and each or such SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents(as applicable).
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 1 contract
Sources: Mezzanine Loan Agreement (Brookfield DTLA Fund Office Trust Investor Inc.)
Single Purpose Entity/Separateness. Borrower represents, warrants and covenants as follows:
(a) Borrower will not and Borrower hereby represents and warrants to Lender that Borrower has not and will notsince the date of its formation:
(i) engage in any business or activity other than the ownership, operation and maintenance operation, management of the Properties, Collateral and activities incidental thereto;
(ii) acquire or own any assets other than (A) the Properties, and (B) such incidental Personal Property as may be necessary for the ownership and operation of the PropertiesCollateral;
(iii) merge into or consolidate with any Person, or or, to the fullest extent permitted by law, dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structurestructure from a Delaware limited liability company, other than, in each case, such activities as are contemplated or permitted pursuant to any provision of this Agreement or of any of the other Loan Documents;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existenceformalities, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or amend (B) amendexcept as otherwise expressly permitted hereunder), modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;
(v) own any subsidiary, or make any investment in, any PersonPerson other than the Mortgage Borrower (and other than, with respect to any SPE Component Entity, in Borrower);
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its funds or assets with the funds or assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;
(vii) incur any debtIndebtedness, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than the Debt and Indebtedness not to exceed $10,000 and not material in the aggregate that is necessary to Borrower’s activities as a member of Mortgage Borrower. Other than Permitted Encumbrances, no Indebtedness other than the Mortgage Debt and prior loans that have been satisfied in full as of may be secured (subordinate or pari passu) by the date hereofProperty. No Indebtedness other than the Debt may be secured (subordinate or pari passu) by the Collateral;
(viii) fail to maintain all of its records, books of account, bank accountsrecords, financial statements, accounting records and records, other entity documents and bank accounts separate and apart from those of any other Person (including, without limitation, any Affiliates). Borrower’s assets have not and will not be listed as assets on the financial statement of any other Person; except provided, however, that Borrower’s financial position, assets, liabilities, net worth and operating results assets may be included in a consolidated and/or combined financial statement of its Affiliates provided that, to the consolidated financial statements extent necessary to (i) prevent a substantive consolidation of an Affiliate, provided that the assets and liabilities of Borrower with the assets and liabilities of any other Person or (Aii) deliver a Non-Consolidation Opinion when required under this Agreement: (1) appropriate notation shall be made on such consolidated financial statements to indicate the separate identity separateness of Borrower from and such Affiliate Affiliates and to indicate that Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate Affiliates or any other Person, Person and (B2) Borrower’s assets, liabilities and net worth such assets shall also be listed on Borrower’s own separate balance sheet. Borrower has maintained and will maintain its books of account, records, financial statements, accounting record, other entity documents, resolutions and agreements as official records;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, principal or any Affiliate of the foregoingAffiliate, except (i) as may have been approved in writing by Lender in its sole and absolute discretion or (ii) upon terms and conditions that are intrinsically fair, commercially reasonable and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts or obligations of any other Person, hold itself out to be responsible for the debts or obligations of any other Person, or otherwise pledge its assets to secure or credits for the obligations benefit of any other Person or hold out its assets or credit or assets as being available to satisfy the debts or obligations of any other Person;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other PersonPersons;
(xiii) fail to (A) file its own tax returns separate from those of any other Person, Person (unless prohibited by applicable Legal Requirements from doing so or except to the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file such tax returns under applicable Legal Requirements Requirements) and (B) pay any taxes so required to be paid by such Borrower under applicable Legal Requirements; provided, however, that Borrower shall not have any obligation Requirements (to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrowerthe extent there is sufficient cash flow from the Property to do so);
(xiv) fail to (A) hold itself out to the public and identify itself, in each case, as a legal entity separate and distinct from any other Person and not as a division, department or part of any other Person, (B) conduct its business solely in its own name, (C) hold its assets in its own name or (CD) correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operationsoperations (to the extent there exists sufficient cash flow from the Property to do so); provided, however, that the foregoing no Person shall not require Borrower’s members, partners or shareholders be required to make any direct or indirect additional capital contributions to BorrowerBorrower in order to comply with the foregoing;
(xvi) without the prior unanimous written consent of all of its partners partners, shareholders or members, as applicable, and the prior unanimous written consent of all its board of directors or managers managers, as applicable, and the prior written consent of each Independent Manager (regardless of whether such Independent Manager is engaged at the Borrower or each SPE Component EntityEntity level), as applicable including(a) file or consent to the filing of any petition, without limitationeither voluntary or involuntary, each Independent Directorto take advantage of any Creditors Rights Laws, (b) seek or consent to the appointment of a receiver, liquidator or any similar official unless such appointment is sought by Lender, (c) take any Material Action or action that is intended to might cause such entity to become insolvent, (d) make an assignment for the benefit of creditors or (e) take any Material Action with respect to Borrower or any SPE Component Entity (provided, that, none of any member, shareholder or partner (as applicable) of Borrower or any SPE Component Entity or any board of directors or managers (as applicable) of Borrower or any SPE Component Entity may vote on or otherwise authorize the taking of any of the foregoing actions unless, in each case, there are at least two (2) Independent Managers then serving in such capacity in accordance with the terms of the applicable organizational documents and each of such Independent Managers has consented to such foregoing action);
(xvii) fail to allocate fairly and reasonably allocate shared expenses with its Affiliates (including, without limitation, shared office space space) or fail to use separate stationery, invoices and services performed by an employee of an Affiliate) among the Persons sharing such expenseschecks bearing its own name;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, and pay its own liabilities (including, without limitation, salaries of its own employees, if any) only from its own fundsfunds or fail to maintain a sufficient number of employees (if any) in light of its contemplated business operations (in each case to the extent there exists sufficient cash flow from the Property to do so); provided, however, that the foregoing no Person shall not require Borrower’s members, partners or shareholders be required to make any direct or indirect additional capital contributions to BorrowerBorrower in order to comply with the foregoing;
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliatesAffiliates, as applicable;
(xx) identify its partners, members, shareholders or other Affiliates, as applicable, as a division, department or part of it;
(xxi) violate or cause to be violated the assumptions made with respect to Borrower and its principals in the Non-Consolidation Opinion or in any New Non-Consolidation Opinion;
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail hold itself out as having agreed to maintain and use separate stationery, invoices and checks bearing its own namepay indebtedness incurred by any Affiliate;
(xxiii) have hold out the assets or credit of any Affiliate as being available to satisfy any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan debts or guarantees relating to obligations under the Management Agreements or Franchise Agreementsobligations; or
(xxiv) identify itself as a department or division allow an Affiliate to act in its name, to the extent of any other Personits power to do so.
(ib) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner (in the case of a partnership, or the managing ) and at least one member (in the case of a limited liability company (each an “SPE Component Entity”company) of Borrower, as applicable, shall be a corporation or an Acceptable DE LLCLLC (each, an “SPE Component Entity”) whose sole asset is its interest in Borrower. Each SPE Component Entity (Ai) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iiiSection 5.1(a)(iii) through - (vi) (inclusive) and (viii) through - (xxivxxi) (inclusive) and, if such SPE Component Entity is an Acceptable LLC, Section 5.1(c) and (d) hereof, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (Bii) will not engage in any business or activity other than owning an interest in Borrower; (Ciii) will not acquire or own any assets other than its partnership, membership, or other equity ownership interest in Borrower; (Div) will not at all times continue to own any subsidiary, or make any investment in any Person other no less than its investment a 0.5% direct equity ownership interest in Borrower; (Ev) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (Fvi) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to 5.1.
(c) In the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is substantially similar to that of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors.
(ii) In the event Borrower or SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”)LLC, the limited liability company agreement of the Company Borrower or such SPE Component Entity (as applicable) (the “LLC Agreement”) shall provide that (Ai) upon the occurrence of any event that causes the sole last remaining member of the Company Borrower or such SPE Component Entity (as applicable) (“Member”) to cease to be the member of the Company Borrower or such SPE Component Entity (as applicable) (other than (1A) upon an assignment by Member of all of its limited liability company interest in the Company Borrower or such SPE Component Entity (as applicable) and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, Agreement or (2B) the resignation of Member and the admission of an additional member of the Company Borrower or such SPE Component Entity (as applicable) in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director Manager of the Company and executing the LLC Agreement Borrower or such SPE Component Entity (“Special Member”as applicable) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the Company, Borrower or such SPE Component Entity (as applicable) automatically be admitted to the Company Borrower or such SPE Component Entity (as applicable) as a member with a zero percent (0%) economic interest (“Special Member”) and shall continue the existence of the Company Borrower or such SPE Component Entity (as applicable) without dissolution, dissolution and (Bii) Special Member may not resign from the Company Borrower or such SPE Component Entity (as applicable) or transfer its rights as Special Member unless (1A) a successor Special Member has been admitted to the Company Borrower or such SPE Component Entity (as applicable) as a Special Member in accordance with the requirements of the Act Delaware law and (2B) after giving effect to such resignationresignation or transfer, there remains at least two (2) Independent Managers of such successor Special Member has also accepted its appointment SPE Component Entity or Borrower (as an Independent Directorapplicable) in accordance with Section 5.2 below. The LLC Agreement shall further provide that (vi) Special Member shall automatically cease to be a member of the Company Borrower or such SPE Component Entity (as applicable) upon the admission to Borrower or such SPE Component Entity (as applicable) of the Company of a first substitute Membermember, (wii) Special Member shall be a member of the Company Borrower or such SPE Component Entity (as applicable) that has no interest in the profits, losses and capital of the Company Borrower or such SPE Component Entity (as applicable) and has no right to receive any distributions of the assets of the CompanyBorrower or such SPE Component Entity (as applicable), (xiii) pursuant to Section 18-301 the applicable provisions of the limited liability company act of the State of Delaware (the “Act”), Special Member shall not be required to make any capital contributions to the Company Borrower or such SPE Component Entity (as applicable) and shall not receive a limited liability company interest in the CompanyBorrower or such SPE Component Entity (as applicable), (yiv) Special Member, in its capacity as Special Member, may not bind the Company, Borrower or such SPE Component Entity (as applicable) and (zv) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Company, Borrower or such SPE Component Entity (as applicable) including, without limitation, the merger, consolidation or conversion of the CompanyBorrower or such SPE Component Entity (as applicable); provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent DirectorManager, to vote on such matters required by the Loan Documents or the LLC Agreement. In order to implement the admission to Borrower or such SPE Component Entity (as applicable) of Special Member, Special Member shall execute a counterpart to the LLC Agreement. Prior to its admission to the Company Borrower or such SPE Component Entity (as applicable) as Special Member, Special Member shall not be a member of the CompanyBorrower or such SPE Component Entity (as applicable), but the Special Member may serve as an Independent Director Manager of Borrower or such SPE Component Entity (as applicable).
(d) In the event Borrower or any SPE Component Entity is an Acceptable LLC, the LLC Agreement shall further provide that (i) upon the occurrence of any event that causes the Member to cease to be a member of Borrower or such SPE Component Entity (as applicable) (other than upon continuation of the Company. Any Company without dissolution upon (A) an assignment by the Member of all of its limited liability company interest in the Company and the admission of the transferee in accordance with this Agreement, or (B) the resignation of the member and the admission of an additional member of the Company in accordance with the terms of this Agreement) to the fullest extent permitted by law, the personal representative of Member shall, within ninety (90) days after the occurrence of the event that terminated the continued membership of Member in Borrower or such SPE Component Entity (as applicable) agree in writing (A) to continue Borrower or such SPE Component Entity (as applicable) and (B) to the admission of the personal representative or its nominee or designee, as the case may be, as a substitute member of Borrower or such SPE Component Entity (as applicable) effective as of the occurrence of the event that terminated the continued membership of Member in Borrower or such SPE Component Entity (as applicable), (ii) any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company Borrower or such SPE Component Entity (as applicable) and upon the occurrence of such an event, the existence business of the Company Borrower or such SPE Component Entity (as applicable) shall continue without dissolution. The LLC Agreement shall also provide that dissolution and (iii) each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company Borrower or such SPE Component Entity (as applicable) upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the Company.
(c) The organizational documents of Borrower and each or such SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents(as applicable).
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 1 contract
Sources: Mezzanine Loan Agreement (Brookfield DTLA Fund Office Trust Investor Inc.)
Single Purpose Entity/Separateness. Borrower represents, warrants and covenants as follows:
(a) Borrower has not and will not:
(i) engage in any business or activity other than the acquisition, ownership, operation improvement, operation, management, leasing and maintenance of the PropertiesProperty, and activities incidental thereto;
(ii) acquire or own any assets other than (A) the PropertiesProperty, and (B) such incidental Personal Property as may be necessary for the ownership ownership, leasing, maintenance and operation of the PropertiesProperty, and (C) cash and U.S. Obligations;
(iii) merge into or consolidate with any Person, or or, to the fullest extent permitted by applicable law, dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existenceformalities, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements Applicable Law of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;
(v) own any subsidiary, or make any investment in, any Person;
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its assets with the assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;
(vii) incur any debtIndebtedness, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than (A) the Debt Debt, (B) trade and operational indebtedness incurred in the ordinary course of business with trade creditors, provided such indebtedness is (1) unsecured, (2) not evidenced by a note, (3) on commercially reasonable terms and conditions, and (4) due not more than sixty (60) days past the date incurred and paid on or prior to such date, (C) Indebtedness associated with Permitted Debt Encumbrances, and/or (D) Permitted Equipment Leases; provided however, the aggregate amount of the indebtedness described in (B), (C) and prior loans that have been satisfied in full as (D) shall not exceed at any time two percent (2%) of the outstanding principal amount of the Debt. From and after the date hereof, no Indebtedness other than the Debt may be secured (subordinate or pari passu) by the Property;
(viii) fail to maintain all of its books, records, books of account, financial statements and bank accounts, financial statements, accounting records and other entity documents accounts separate and apart from those of its affiliates and any constituent party. Borrower’s assets have not and will not be listed as assets on the financial statement of any other Person; except provided, however, that Borrower’s financial position, assets, liabilities, net worth and operating results assets may be included in the a consolidated financial statements statement of an Affiliate, its affiliates provided that (A) appropriate notation such assets shall be made on such consolidated financial statements to indicate the separate identity of Borrower from such Affiliate and that Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate or any other Person, and (B) Borrower’s assets, liabilities and net worth shall also be listed on Borrower’s own separate balance sheet. Borrower has maintained and will maintain its books, records, resolutions and agreements as official records;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, principal or any Affiliate of the foregoingaffiliate, except upon terms and conditions that are intrinsically fair, commercially reasonable fair and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure for the obligations benefit of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person, other than with respect to any asset pledges that have been released on or prior to the date hereof;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other Person;
(xiii) fail to (A) file its own tax returns separate from those of any other Person, except (to the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file its own tax returns under applicable Legal Requirements and (B) pay any taxes required to be paid under applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of BorrowerApplicable Law);
(xiv) fail either to (A) hold itself out to the public as a legal entity separate and distinct from any other Person, (B) Person or to conduct its business solely in its own name or (C) fail to correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, that operations (to the foregoing shall not require Borrower’s members, partners or shareholders extent there exists sufficient cash flow from the Property to make additional capital contributions to Borrowerdo so);
(xvi) without the unanimous written consent of all of its partners or members, as applicable, and the written consent of all directors or managers each Independent Director (regardless of whether such Independent Director is engaged at the Borrower or each SPE Component EntityEntity level), as applicable including(a) file or consent to the filing of any petition, without limitationeither voluntary or involuntary, each Independent Directorto take advantage of any Creditors Rights Laws, (b) seek or consent to the appointment of a receiver, liquidator or any similar official, (c) take any Material Action or action that is intended to might cause such entity to become insolvent, or (d) make an assignment for the benefit of creditors;
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space space) or fail to use separate invoices and services performed by an employee of an Affiliate) among the Persons sharing such expenseschecks;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, pay its own liabilities (including, without limitation, salaries of its own employees) only from its own fundsfunds or fail to maintain a sufficient number of employees in light of its contemplated business operations (in each case to the extent there exists sufficient cash flow from the Property to do so); provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;or
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable;
(xx) violate or cause to be violated the assumptions made with respect to Borrower and its principals in the Non-Consolidation Opinion or any New Non-Consolidation Opinion;
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other Person.
(ib) If Borrower is a limited partnership or a limited liability company (other than a single-member an Acceptable Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner in the case of a partnership, or the managing member in the case of a limited liability company (each each, an “SPE Component Entity”) shall be a corporation or an Acceptable Delaware LLC (I) whose sole asset is its interest in Borrower; (II) which has not been and 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) separate and apart from debt of Borrower solely in its capacity as general partner of Borrower, as applicable, shall be an Acceptable DE LLC. Each SPE Component Entity ; and (AIV) which has and will at all times comply own at least a 0.5% direct equity ownership interest in Borrower (or a 0.1% direct equity ownership interest if Borrower is a Delaware limited partnership). Each such SPE Component Entity will at all times comply, and will cause Borrower to comply, with each of the covenantsrepresentations, terms warranties, and provisions covenants contained in Sections 6.1(a)(iiithis Article 5 (to the extent applicable) through (vi) and (viii) through (xxiv) inclusive, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (B) will not engage in any business or activity other than owning an interest in Borrower; (C) will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (D) will not own any subsidiary, or make any investment in any Person other than its investment in Borrower; (E) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (F) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to Upon the withdrawal or the disassociation of any an SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner SPE Component Entity whose articles of incorporation or managing member whose limited liability company agreement is organization are substantially similar to that those of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent DirectorsEntity.
(iic) In the event Borrower or the SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”)Delaware LLC, the limited liability company agreement of Borrower or the Company SPE Component Entity (as applicable) (the “LLC Agreement”) shall provide that (Ai) upon the occurrence of any event that causes the sole last remaining member of Borrower or the Company SPE Component Entity (as applicable) (“Member”) to cease to be the member of Borrower or the Company SPE Component Entity (as applicable) (other than (1A) upon an assignment by Member of all of its limited liability company interest in Borrower or the Company SPE Component Entity (as applicable) and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2B) the resignation of Member and the admission of an additional member of Borrower or the Company SPE Component Entity (as applicable) in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, any Person acting as a substitute springing member of Borrower or the Company, effective SPE Component Entity (as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of the Company and executing the LLC Agreement (“Special Member”applicable) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of Borrower or the Company, SPE Component Entity (as applicable) automatically be admitted to Borrower or the Company SPE Component Entity (as applicable) as a member with a 0% economic interest (“Special Member”) and shall continue Borrower or the existence of the Company SPE Component Entity (as applicable) without dissolution, dissolution and (Bii) Special Member may not resign from Borrower or the Company SPE Component Entity (as applicable) or transfer its rights as Special Member unless (1A) a successor Special Member has been admitted to Borrower or the Company SPE Component Entity (as applicable) as a Special Member in accordance with the requirements of the Act Delaware law and (2B) after giving effect to such resignationresignation or transfer, such successor Special Member has also accepted its appointment there remains at least one (1) Independent Director of the SPE Component Entity or Borrower (as an Independent Directorapplicable) in accordance with Section 5.2 below. The LLC Agreement shall further provide that (vi) Special Member shall automatically cease to be a member of Borrower or the Company SPE Component Entity (as applicable) upon the admission to Borrower or the Company SPE Component Entity (as applicable) of a the first substitute Membermember, (wii) Special Member shall be a member of Borrower or the Company SPE Component Entity (as applicable) that has no interest in the profits, losses and capital of Borrower or the Company SPE Component Entity (as applicable) and has no right to receive any distributions of the assets of Borrower or the CompanySPE Component Entity (as applicable), (xiii) pursuant to Section 18-301 the applicable provisions of the limited liability company act of the State of Delaware (the “Act”), Special Member shall not be required to make any capital contributions to Borrower or the Company SPE Component Entity (as applicable) and shall not receive a limited liability company interest in Borrower or the CompanySPE Component Entity (as applicable), (yiv) Special Member, in its capacity as Special Member, may not bind Borrower or the Company, SPE Component Entity (as applicable) and (zv) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, Borrower or the Company, SPE Component Entity (as applicable) including, without limitation, the merger, consolidation or conversion of Borrower or the Company; provided, however, such prohibition shall not limit SPE Component Entity (as applicable). In order to implement the obligations admission to Borrower or the SPE Component Entity (as applicable) of Special Member, in its capacity as Independent Director, Special Member shall execute a counterpart to vote on such matters required by the Loan Documents or the LLC Agreement. Prior to its admission to Borrower or the Company SPE Component Entity (as applicable) as Special Member, Special Member shall not be a member of Borrower or the CompanySPE Component Entity (as applicable).
(d) The LLC Agreement shall further provide that, but (i) upon the Special occurrence of any event that causes the Member may serve to cease to be a member of Borrower or the SPE Component Entity (as an Independent Director applicable) to the fullest extent permitted by law, the personal representative of Member shall, within ninety (90) days after the occurrence of the Company. Any event that terminated the continued membership of Member in Borrower or the SPE Component Entity (as applicable) agree in writing (A) to continue Borrower or the SPE Component Entity (as applicable) and (B) to the admission of the personal representative or its nominee or designee, as the case may be, as a substitute member of Borrower or the SPE Component Entity (as applicable) effective as of the occurrence of the event that terminated the continued membership of Member in Borrower or the SPE Component Entity (as applicable), (ii) any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of Borrower or the Company SPE Component Entity (as applicable) and upon the occurrence of such an event, the existence business of Borrower or the Company SPE Component Entity (as applicable) shall continue without dissolution. The LLC Agreement shall also provide that , and (iii) each of Member and Special Member waives any right it might have to agree in writing to dissolve Borrower or the Company SPE Component Entity (as applicable) upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of Borrower or the Company.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents(as applicable).
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 1 contract
Single Purpose Entity/Separateness. Until the Debt has been paid in full, Borrower represents, warrants and covenants as follows:
(a) Borrower has not and will not:
(i) engage in any business or activity other than the ownership, operation and maintenance of the PropertiesProperty, and activities incidental thereto;
(ii) acquire or own any assets other than (A) the PropertiesProperty, and (B) such incidental Personal Property as may be necessary for the ownership and operation of the PropertiesProperty;
(iii) merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existenceformalities, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;
(v) own any subsidiary, or make any investment in, any Person;
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its assets with the assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;
(vii) incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than (A) the Debt Debt, (B) trade and Permitted Debt operational indebtedness incurred in the ordinary course of business with trade creditors, provided such indebtedness is (1) unsecured, (2) not evidenced by a note, (3) on commercially reasonable terms and conditions, and (4) due not more than sixty (60) days past the date incurred and paid on or prior loans that have been satisfied to such date, and/or (C) financing leases and purchase money indebtedness incurred in full as the ordinary course of business relating to Personal Property on commercially reasonable terms and conditions; provided however, the aggregate amount of the date hereofindebtedness described in (B) and (C) shall not exceed at any time three percent (3%) of the outstanding principal amount of the Note;
(viii) fail to maintain its records, books of account, bank accounts, financial statements, accounting records and other entity documents separate and apart from those of any other Person; except that Borrower’s 's financial position, assets, liabilities, net worth and operating results may be included in the consolidated financial statements of an Affiliate, provided that (A) appropriate notation shall be made on such consolidated financial statements to indicate the contain a footnote indicating that Borrower is a separate identity of Borrower from such Affiliate legal entity and that Borrower’s assets it maintains separate books and credit are not available to satisfy the debts and other obligations of such Affiliate or any other Person, and (B) Borrower’s assets, liabilities and net worth shall also be listed on Borrower’s own separate balance sheetrecords;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, or any Affiliate of the foregoing, except upon terms and conditions that are intrinsically fair, commercially reasonable and substantially similar to those that would be available on an arm’sarm's-length basis with unaffiliated third parties; (the Management Agreement shall be deemed to comply with this subsection);
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure for the obligations benefit of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other Person;
(xiii) fail to (A) file its own tax returns separate from those or be included on the tax returns of any other Person, person or entity except as required by Applicable Law and to the extent that Borrower is not treated as a “"disregarded entity” for tax purposes and is not required to file tax returns " under applicable Legal Requirements and (B) pay any taxes required to be paid under applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of BorrowerApplicable Law;
(xiv) fail either to (A) hold itself out to the public as a legal entity separate and distinct from any other Person, (B) Person or to conduct its business solely in its own name or (C) fail to correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; providedoperations (provided that Borrower's failure to do so solely because of a shortfall in cash flow derived from the operation of the Property shall not, howeverby itself, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrowerconstitute a breach of this covenant);
(xvi) without the unanimous written consent of all of its partners or members, as applicable, and the written consent of all directors or 100% of the directors/managers of Borrower or each SPE Component EntityEntity (if any), as applicable including(a) file or consent to the filing of any petition, without limitationeither voluntary or involuntary, each Independent Directorto take advantage of any Creditors Rights Laws, (b) seek or consent to the appointment of a receiver, liquidator or any similar official, (c) take any Material Action or action that is intended to might cause such entity to become insolvent, or (d) make an assignment for the benefit of creditors;
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space and services performed by an employee of an Affiliate) among the Persons sharing such expensesexpenses and to use separate stationery, invoices and checks;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, or pay its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; providedfunds (provided that Borrower's failure to do so solely because of a shortfall in cash flow derived from the operation of the Property shall not, howeverby itself, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrowerconstitute a breach of this covenant);
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable;
(xx) violate or cause to be violated the assumptions made with respect to Borrower and its principals in any opinion letter pertaining to substantive consolidation delivered to Lender in connection with the Non-Consolidation Opinion or any New Non-Consolidation Opinion;Loan; or
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other Person.
(ib) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”)company, each general partner in the case of a partnership, or the managing member in the case of a limited liability company (each an “"SPE Component Entity”COMPONENT ENTITY") of Borrower, as applicable, shall be an Acceptable DE LLCa corporation whose sole asset is its interest in Borrower. Each SPE Component Entity (Ai) will at all times comply with each of the covenants, terms and provisions contained in Sections Section 6.1(a)(iii) through - (vi) and (viii) through - (xxiv) inclusivexxi), as if such representation, warranty or covenant was made directly by such SPE Component Entity; (Bii) will not engage in any business or activity other than owning an interest in Borrower; (Ciii) will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (D) will not own any subsidiary, or make any investment in any Person other than its investment in Borrower; (Eiv) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (Fv) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.46.1. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is articles of incorporation are substantially similar to that those of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLCa single member Delaware limited liability company, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) belowstatus, the no SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directorsrequired.
(iic) In the event Borrower or SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”)a single member Delaware limited liability company, the limited liability company agreement of the Company Borrower (the “"LLC Agreement”AGREEMENT") shall provide that (Ai) upon the occurrence of any event that causes the sole member of the Company Borrower (“Member”"MEMBER") to cease to be the member of the Company Borrower (other than (1A) upon an assignment by Member of all of its limited liability company interest in the Company Borrower and the admission of the transferee in accordance with the Loan Documents and the LLC Agreementtransferee, or (2B) the resignation of Member and the admission of an additional member of the Company member, in either case in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of the Company and executing the LLC Agreement (“as a "Special Member”" (as such term is defined in the LLC Agreement) ("SPECIAL MEMBER") shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the CompanyBorrower, automatically be admitted to the Company Borrower and shall continue the existence of the Company Borrower without dissolution, dissolution and (Bii) Special Member may not resign from the Company Borrower or transfer its rights as Special Member unless (1) a successor Special Member has been admitted to the Company Borrower as Special Member in accordance with the requirements of the Act and (2) after giving effect to such resignation, such successor Special Member has also accepted its appointment as an Independent DirectorDelaware law. The LLC Agreement shall further provide that (vi) Special Member shall automatically cease to be a member of the Company Borrower upon the admission to the Company Borrower of a substitute Member, (wii) Special Member shall be a member of the Company Borrower that has no interest in the profits, losses and capital of the Company Borrower and has no right to receive any distributions of the assets of the CompanyBorrower assets, (xiii) pursuant to Section 18-301 of the ActDelaware Limited Liability Company Act (the "ACT"), Special Member shall not be required to make any capital contributions to the Company Borrower and shall not receive a limited liability company interest in the CompanyBorrower, (yiv) Special Member, in its capacity as Special Member, may not bind the Company, Borrower and (zv) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the CompanyBorrower, including, without limitation, the merger, consolidation or conversion of Borrower. In order to implement the Company; provided, however, such prohibition shall not limit the obligations admission to Borrower of Special Member, in its capacity as Independent Director, Special Member shall execute a counterpart to vote on such matters required by the Loan Documents or the LLC Agreement. Prior to its admission to the Company Borrower as Special Member, Special Member shall not be a member of Borrower. Upon the Companyoccurrence of any event that causes the Member to cease to be a member of Borrower, but to the Special fullest extent permitted by law, the personal representative of Member may serve as an Independent Director shall, within ninety (90) days after the occurrence of the Companyevent that terminated the continued membership of Member in Borrower, agree in writing (i) to continue 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 Borrower, effective as of the occurrence of the event that terminated the continued membership of Member of Borrower in Borrower. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company Borrower and upon the occurrence of such an event, the existence business of the Company Borrower shall continue without dissolution. The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company Borrower upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the CompanyBorrower.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents.
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 1 contract
Sources: Loan Agreement (Inland Western Retail Real Estate Trust Inc)
Single Purpose Entity/Separateness. Borrower represents, warrants and covenants as follows:
(a) Each Borrower has not and will not:
(i) engage in any business or activity other than the ownership, operation and maintenance of the Propertiesapplicable Individual Property, and activities incidental thereto;
(ii) acquire or own any assets other than (A) the Propertiesapplicable Individual Property, and (B) such incidental Personal Property as may be necessary for the ownership ownership, leasing, maintenance and operation of the Propertiessuch applicable Individual Property;
(iii) merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existencein all material respects, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply in all material respects with the single purpose entity provisions of its organizational documentsdocuments (provided, that, such organizational documents may be amended or modified to the extent that, in each case without addition to the satisfaction of the requirements related thereto set forth therein, Lender’s prior written consent of (not to be unreasonably withheld, conditioned or delayed) and, if required by Lender, a Rating Agency Confirmation are first obtained);
(v) own any subsidiary, or make any investment in, any PersonPerson (other than, with respect to any SPE Component Entity, in the applicable Borrower);
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its funds or assets with the funds or assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;
(vii) incur any debtIndebtedness, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than (A) the Debt, (B) trade and operational indebtedness incurred in the ordinary course of business with trade creditors, provided such indebtedness is (1) unsecured, (2) not evidenced by a note, (3) on commercially reasonable terms and conditions, and (4) due not more than sixty (60) days past the date incurred and paid on or prior to such date, and/or (C) Permitted Equipment Leases; provided however, the aggregate amount of the indebtedness described in (B) and (C) shall not exceed at any time (I) with respect to the Persons constituting Seattle Borrower (in the aggregate and not individually), two percent (2%) of the outstanding aggregate Allocated Loan Amount associated with the Seattle Property and (II) with respect to the Persons constituting SLC Borrower (in the aggregate and not individually), two percent (2%) of the outstanding aggregate Allocated Loan Amount associated with the SLC Property. No Indebtedness other than the Debt and Permitted Debt and prior loans that have been satisfied in full as of may be secured (senior, subordinate or pari passu) by the date hereofProperty;
(viii) fail to maintain all of its books, records, books of account, financial statements and bank accounts, financial statements, accounting records and other entity documents accounts separate and apart from those of any other Person (including, without limitation, any Affiliates). Borrower’s assets have not and will not be listed as assets on the financial statement of any other Person; except provided, however, that Borrower’s financial position, assets, liabilities, net worth and operating results assets may be included in the a consolidated financial statements statement of an Affiliate, its Affiliates provided that (Ai) appropriate notation shall be made on such consolidated financial statements to indicate the separate identity separateness of Borrower from and such Affiliate Affiliates and to indicate that Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate Affiliates or any other Person, Person and (Bii) Borrower’s assets, liabilities and net worth such assets shall also be listed on Borrower’s own separate balance sheet. Borrower has maintained and will maintain its books, records, resolutions and agreements as official records;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principalprincipal or Affiliate, guarantor of the obligations of Borrowerexcept, or any Affiliate of the foregoingin each case, except upon terms and conditions that are intrinsically fair, commercially reasonable fair and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure for the obligations benefit of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other Person;
(xiii) fail to (A) file its own tax returns separate from those of any other Person, except to (unless the extent that applicable Borrower is treated as a “disregarded entity” for tax purposes and is not required permitted by law to file a joint tax returns under applicable Legal Requirements return with its constituent owner(s) and (B) pay any taxes required appropriate notation is made on such tax return to be paid under applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that indicate such equityholders or their Affiliates may incur as a result of any profits or losses of Borrower;’s separate existence)
(xiv) fail to (A) hold itself out to the public and identify itself, in each case, as a legal entity separate and distinct from any other Person and not as a division or part of any other Person, (B) conduct its business solely in its own name, (C) hold its assets in its own name or (CD) correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, that operations (to the foregoing shall not require Borrower’s members, partners or shareholders extent there exists sufficient cash flow from the applicable Individual Property to make additional capital contributions to Borrowerdo so);
(xvi) without the prior unanimous written consent of all of its partners partners, shareholders or members, as applicable, and the prior unanimous written consent of all its board of directors or managers managers, as applicable, and the prior written consent of each Independent Director (regardless of whether such Independent Director is engaged at the Borrower or each SPE Component EntityEntity level), as applicable including(a) file or consent to the filing of any petition, without limitationeither voluntary or involuntary, each Independent Directorto take advantage of any Creditors Rights Laws, (b) seek or consent to the appointment of a receiver, liquidator or any similar official, (c) take any Material Action or action that is intended to might cause such entity to become insolvent, (d) make an assignment for the benefit of creditors or (e) take any Material Action with respect to Borrower or any SPE Component Entity (provided, that, none of any member, shareholder or partner (as applicable) of Borrower or any SPE Component Entity or any board of directors or managers (as applicable) of Borrower or any SPE Component Entity may vote on or otherwise authorize the taking of any of the foregoing actions unless, in each case, there are at least one (1) Independent Director then serving in such capacity in accordance with the terms of the applicable organizational documents and such Independent Director has consented to such foregoing action);
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space space) or fail to use separate stationery, invoices and checks bearing its own name and not bearing the name of any other Person (provided, that, (A) business conducted on behalf of Borrower by another Person under a business management services performed agreement entered into on commercially reasonable terms and conditions and otherwise in accordance with the applicable terms and conditions hereof shall not be deemed to violate the foregoing so long as the manager (or equivalent thereof) under such business management services agreement is required thereunder to hold itself out as an agent of Borrower and Borrower enforces said obligation and (B) any such stationary, invoices or checks delivered solely to Lender by an employee Borrower may reference “Lightstone” or any derivation of an Affiliate) among the Persons sharing foregoing name and such expensesreference will not be deemed to violate the foregoing);
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, pay its own liabilities (including, without limitation, salaries of its own employees, if any) only from its own funds; providedfunds or fail to maintain a sufficient number of employees, howeverif any, that in light of its contemplated business operations (in each case to the foregoing shall not require Borrower’s members, partners or shareholders extent there exists sufficient cash flow from the applicable Individual Property to make additional capital contributions to Borrowerdo so);
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliatesAffiliates, as applicable;
(xx) identify its partners, members, shareholders or other Affiliates, as applicable, as a division or part of it; or
(xxi) violate or cause to be violated the assumptions made with respect to Borrower and its principals in the Non-Consolidation Opinion or in any New Non-Non- Consolidation Opinion;
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other Person.
(ib) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner (in the case of a partnership, or the managing ) and at least one member (in the case of a limited liability company (each an “SPE Component Entity”company) of Borrower, as applicable, shall be a corporation or an Acceptable DE LLCLLC (each, an “SPE Component Entity”) whose sole asset is its interest in Borrower. Each SPE Component Entity (Ai) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iiiSection 5.1(a)(iii) through - (vi) (inclusive) and (viii) through – (xxivxxi) (inclusive) and, if such SPE Component Entity is an Acceptable LLC, Section 5.1(c) and (d) hereof, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (Bii) will not engage in any business or activity other than owning an interest in Borrower; (Ciii) will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (Div) will not at all times continue to own any subsidiary, or make any investment in any Person other no less than its investment a 0.5% direct equity ownership interest in Borrower; (Ev) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (Fvi) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to 5.1.
(c) In the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is substantially similar to that of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors.
(ii) In the event Borrower or SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”)LLC, the limited liability company agreement of the Company Borrower or such SPE Component Entity (as applicable) (the “LLC Agreement”) shall provide that (Ai) upon the occurrence of any event that causes the sole last remaining member of the Company Borrower or such SPE Component Entity (as applicable) (“Member”) to cease to be the member of the Company Borrower or such SPE Component Entity (as applicable) (other than (1A) upon an assignment by Member of all of its limited liability company interest in the Company Borrower or such SPE Component Entity (as applicable) and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2B) the resignation of Member and the admission of an additional member of the Company Borrower or such SPE Component Entity (as applicable) in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of the Company and executing the LLC Agreement Borrower or such SPE Component Entity (“Special Member”as applicable) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the Company, Borrower or such SPE Component Entity (as applicable) automatically be admitted to the Company Borrower or such SPE Component Entity (as applicable) as a member with a 0% economic interest (“Special Member”) and shall continue the existence of the Company Borrower or such SPE Component Entity (as applicable) without dissolution, dissolution and (Bii) Special Member may not resign from the Company Borrower or such SPE Component Entity (as applicable) or transfer its rights as Special Member unless (1A) a successor Special Member has been admitted to the Company Borrower or such SPE Component Entity (as applicable) as a Special Member in accordance with the requirements of the Act Delaware law and (2B) after giving effect to such resignationresignation or transfer, there remains at least one (1) Independent Director of such successor Special Member has also accepted its appointment SPE Component Entity or Borrower (as an Independent Directorapplicable) in accordance with Section 5.2 below. The LLC Agreement shall further provide that (vi) Special Member shall automatically cease to be a member of the Company Borrower or such SPE Component Entity (as applicable) upon the admission to Borrower or such SPE Component Entity (as applicable) of the Company of a first substitute Membermember, (wii) Special Member shall be a member of the Company Borrower or such SPE Component Entity (as applicable) that has no interest in the profits, losses and capital of the Company Borrower or such SPE Component Entity (as applicable) and has no right to receive any distributions of the assets of the CompanyBorrower or such SPE Component Entity (as applicable), (xiii) pursuant to Section 18-301 the applicable provisions of the limited liability company act of the State of Delaware (the “Act”), Special Member shall not be required to make any capital contributions to the Company Borrower or such SPE Component Entity (as applicable) and shall not receive a limited liability company interest in the CompanyBorrower or such SPE Component Entity (as applicable), (yiv) Special Member, in its capacity as Special Member, may not bind the Company, Borrower or such SPE Component Entity (as applicable) and (zv) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Company, Borrower or such SPE Component Entity (as applicable) including, without limitation, the merger, consolidation or conversion of the CompanyBorrower or such SPE Component Entity (as applicable); provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. In order to implement the admission to Borrower or such SPE Component Entity (as applicable) of Special Member, Special Member shall execute a counterpart to the LLC Agreement. Prior to its admission to the Company Borrower or such SPE Component Entity (as applicable) as Special Member, Special Member shall not be a member of the CompanyBorrower or such SPE Component Entity (as applicable), but the Special Member may serve as an Independent Director of Borrower or such SPE Component Entity (as applicable).
(d) The LLC Agreement shall further provide that (i) upon the Company. Any occurrence of any event that causes the Member to cease to be a member of Borrower or such SPE Component Entity (as applicable) to the fullest extent permitted by law, the personal representative of Member shall, within ninety (90) days after the occurrence of the event that terminated the continued membership of Member in Borrower or such SPE Component Entity (as applicable) agree in writing (A) to continue Borrower or such SPE Component Entity (as applicable) and (B) to the admission of the personal representative or its nominee or designee, as the case may be, as a substitute member of Borrower or such SPE Component Entity (as applicable) effective as of the occurrence of the event that terminated the continued membership of Member in Borrower or such SPE Component Entity (as applicable), (ii) any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company Borrower or such SPE Component Entity (as applicable) and upon the occurrence of such an event, the existence business of the Company Borrower or such SPE Component Entity (as applicable) shall continue without dissolution. The LLC Agreement shall also provide that dissolution and (iii) each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company Borrower or such SPE Component Entity (as applicable) upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the Company.
(c) The organizational documents of Borrower and each or such SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents(as applicable).
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 1 contract
Sources: Loan Agreement (Lightstone Value Plus Real Estate Investment Trust III, Inc.)
Single Purpose Entity/Separateness. Until the Debt has been paid in full, Borrower represents, warrants and covenants as follows:
(a) Borrower has not and will not:
(i) engage in any business or activity other than the ownership, operation and maintenance of the PropertiesProperty, and activities incidental thereto;
(ii) acquire or own any assets other than (A) the PropertiesProperty, and (B) such incidental Personal Property as may be necessary for the ownership and operation of the PropertiesProperty;
(iii) merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existenceformalities, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;
(v) own any subsidiary, or make any investment in, any Person;
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its assets with the assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;
(vii) incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than (A) the Debt Debt, (B) trade and Permitted Debt operational indebtedness incurred in the ordinary course of business with trade creditors, provided such indebtedness is (1) unsecured, (2) not evidenced by a note, (3) on commercially reasonable terms and conditions, and (4) due not more than sixty (60) days past the date incurred and paid on or prior loans that have been satisfied to such date, and/or (C) financing leases and purchase money indebtedness incurred in full as the ordinary course of business relating to Personal Property on commercially reasonable terms and conditions; provided however, the aggregate amount of the date hereofindebtedness described in (B) and (C) shall not exceed at any time three percent (3%) of the outstanding principal amount of the Note;
(viii) fail to maintain its records, books of account, bank accounts, financial statements, accounting records and other entity documents separate and apart from those of any other Person; except that Borrower’s 's financial position, assets, liabilities, net worth and operating results may be included in the consolidated financial statements of an Affiliate, provided that (A) appropriate notation shall be made on such consolidated financial statements to indicate the that Borrower is a separate identity of Borrower from such Affiliate legal entity and that Borrower’s assets it maintains separate books and credit are not available to satisfy the debts and other obligations of such Affiliate or any other Person, and (B) Borrower’s assets, liabilities and net worth shall also be listed on Borrower’s own separate balance sheetrecords;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, or any Affiliate of the foregoing, except upon terms and conditions that are intrinsically fair, commercially reasonable and substantially similar to those that would be available on an arm’sarm's-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure for the obligations benefit of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other Person;
(xiii) fail to (A) file its own tax returns separate from those of or files a consolidated federal income tax return with any other PersonPerson (unless prohibited or required, except to as the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under applicable Legal Requirements and (B) pay any taxes required to be paid under case may be, by applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrower);
(xiv) fail either to (A) hold itself out to the public as a legal entity separate and distinct from any other Person, (B) Person or to conduct its business solely in its own name or (C) fail to correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; , provided, however, that any such failure to maintain adequate capital will not constitute a breach of this covenant if cash flow from the foregoing shall not require Borrower’s members, partners or shareholders Property is insufficient for Borrower to make additional maintain adequate capital contributions to Borroweras set forth above;;
(xvi) if it is a partnership or limited liability company, without the unanimous written consent of all of its partners or members, as applicable, and the written consent of all directors or 100% of the managers of Borrower or each SPE Component Entity(if any), as applicable including, without limitation, each Independent Director, (a) file or consent to the filing of any petition, either voluntary or involuntary, to take advantage of any Creditors Rights Laws, (b) seek or consent to the appointment of a receiver, liquidator or any similar official, (c) take any Material Action or action that is intended to might cause such entity to become insolvent, or (d) make an assignment for the benefit of creditors;
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space and services performed by an employee of an Affiliate) among the Persons sharing such expensesexpenses and to use separate stationery, invoices and checks;
(xviii) fail make any distributions so as to intend render Borrower insolvent or cause Borrower to remain solvent or, except as contemplated by the Loan Documents with respect become unable to co-borrowers under the Loan, pay its own liabilities (including, without limitation, the salaries of its own employees, if any) only from its own funds; provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable;; or
(xx) violate or cause to be violated the assumptions made with respect to Borrower and its principals in any opinion letter pertaining to substantive consolidation delivered to Lender in connection with the Non-Consolidation Opinion or any New Non-Consolidation Opinion;
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise AgreementsLoan; or
(xxiv) identify itself as a department or division of any other Person.
(ixxi) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”)company, each general partner in the case of a general partnership, each general partner in the case of a limited partnership, or the managing member in the case of a limited liability company (each an “"SPE Component Entity”COMPONENT ENTITY") of Borrower, as applicable, shall be an Acceptable DE LLCa corporation or a single member Delaware limited liability company whose sole asset is its interest in Borrower. Each SPE Component Entity (Ai) will at all times comply with each of the covenants, terms and provisions contained in Sections Section 6.1(a)(iii) through - (vi) and (viii) through - (xxiv) inclusivexxi), as if such representation, warranty or covenant was made directly by such SPE Component Entity; (Bii) will not engage in any business or activity other than owning an interest in Borrower; (Ciii) will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (D) will not own any subsidiary, or make any investment in any Person other than its investment in Borrower; (Eiv) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (F) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is substantially similar to that of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors.
(ii) In the event Borrower or SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”), the limited liability company agreement of the Company (the “LLC Agreement”) shall provide that (A) upon the occurrence of any event that causes the sole member of the Company (“Member”) to cease to be the member of the Company (other than (1) upon an assignment by Member of all of its limited liability company interest in the Company and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2) the resignation of Member and the admission of an additional member of the Company in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of the Company and executing the LLC Agreement (“Special Member”) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the Company, automatically be admitted to the Company and shall continue the existence of the Company without dissolution, and (B) Special Member may not resign from the Company or transfer its rights as Special Member unless (1) a successor Special Member has been admitted to the Company as Special Member in accordance with the requirements of the Act and (2) after giving effect to such resignation, such successor Special Member has also accepted its appointment as an Independent Director. The LLC Agreement shall further provide that (v) Special Member shall automatically cease to be will at all times when the Loan is outstanding own at least a member one hundredth of the Company upon the admission to the Company of a substitute Member, one percent (w.
01%) Special Member shall be a member of the Company that has no general partnership or managing membership interest in the profits, losses and capital of the Company and has no right to receive any distributions of the assets of the Company, (x) pursuant to Section 18-301 of the Act, Special Member shall not be required to make any capital contributions to the Company and shall not receive a limited liability company interest in the Company, (y) Special Member, in its capacity as Special Member, may not bind the Company, and (z) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Company, including, without limitation, the merger, consolidation or conversion of the CompanyBorrower; provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. Prior to its admission to the Company as Special Member, Special Member shall not be a member of the Company, but the Special Member may serve as an Independent Director of the Company. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company and upon the occurrence of such an event, the existence of the Company shall continue without dissolution. The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the Company.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents.
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.and
Appears in 1 contract
Single Purpose Entity/Separateness. Each Borrower represents, warrants and covenants as followsfollows with respect to such Borrower:
(a) Borrower has not and will not:
shall not own any asset or property other than (i) its tenant in common interest in the Property, and (ii) incidental personal property necessary for the ownership or operation of the Property.
(b) Borrower has not engaged and shall not engage in any business or activity other than the ownership, management, operation and maintenance sale of the Properties, Property (or undivided interests therein) and activities incidental thereto;Borrower has conducted and operated and will conduct and operate its business as presently conducted and operated.
(iic) acquire or own any assets other than (A) the Properties, and (B) such incidental Personal Property as may be necessary Except for the ownership Management Agreement (as hereinafter defined) and operation of the Properties;
(iii) merge TIC Agreement, Borrower has not and shall not enter into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail be a party to observe all organizational formalities necessary to maintain its separate existence, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;
(v) own any subsidiary, or make any investment in, any Person;
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its assets with the assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;
(vii) incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)), other than the Debt and Permitted Debt and prior loans that have been satisfied in full as of the date hereof;
(viii) fail to maintain its records, books of account, bank accounts, financial statements, accounting records and other entity documents separate and apart from those of any other Person; except that Borrower’s financial position, assets, liabilities, net worth and operating results may be included in the consolidated financial statements of an Affiliate, provided that (A) appropriate notation shall be made on such consolidated financial statements to indicate the separate identity of Borrower from such Affiliate and that Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate or any other Person, and (B) Borrower’s assets, liabilities and net worth shall also be listed on Borrower’s own separate balance sheet;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, Debt or any Affiliate of the foregoingpart thereof (a “Guarantor”) or any party which is directly or indirectly controlling, controlled by or under common control with Borrower or Guarantor (an “Affiliate”), except upon terms and conditions that are intrinsically fair, commercially reasonable fair and substantially similar to those that would be available on an arm’sarms-length basis with unaffiliated third partiesparties other than any Guarantor or Affiliate.
(d) Borrower has not incurred and shall not incur any indebtedness, secured or unsecured, direct or indirect, absolute or contingent (including guaranteeing any obligation), other than (i) the Debt, or (ii) trade and operational debt incurred by Borrower in the ordinary course of business with trade creditors in connection with owning, operating and maintaining the Property, in such amounts as are normal and reasonable under the circumstances, provided such debt is not evidenced by a promissory note or other security instrument and is not at any time in an aggregate amount in excess of two percent of the original Debt, and further provided that all such trade debts are paid within 30 days after the same are incurred. No indebtedness other than the Debt may be secured (senior, subordinated or pari passu) by the Property;
(xe) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan Borrower has not made and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure the obligations of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;
(xii) shall not make any loans or advances to any Personthird party, or own any stock or securities ofnor to Guarantor, any Person, Affiliate or buy or hold evidence of indebtedness issued by any other Person;person.
(xiiif) fail Borrower is and will remain solvent and Borrower will pay its debts from its assets as the same shall become due.
(g) Borrower has done or caused to be done and will do all things necessary, to preserve its existence, and Borrower will not, nor will Borrower permit any Guarantor to amend, modify or otherwise change the partnership certificate, partnership agreement, articles of incorporation and bylaws, operating agreement, trust or other organizational documents of Borrower or any Guarantor in a manner which would adversely affect Borrower’s existence as a single-purpose entity, without the prior written consent of Grantee.
(Ah) file its own tax returns Borrower has maintained and shall maintain financial statements, accounting records, books and records, bank accounts and other entity documents separate from those of its Affiliates and any constituent party of Borrower or any other Personperson or entity, except to the extent that and Borrower is treated shall maintain its books, records, resolutions and agreements as a “disregarded entity” for tax purposes and is not required to file tax returns under applicable Legal Requirements and (B) pay any taxes required to be paid under applicable Legal Requirementsofficial records; provided, however, that if the Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that is a disregarded entity under federal tax law, then Borrower’s owner may include the Borrower’s tax reporting on such equityholders or their Affiliates may incur as a result of any profits or losses of Borrower;owner’s tax returns.
(xivi) fail to (A) Borrower has been and will be, and at all times will hold itself out to the public as as, a legal entity separate and distinct from any other Personentity (including any Affiliate, (B) conduct its business solely in its own name any constituent party of Borrower or (C) any Guarantor), shall correct any known misunderstanding regarding its identity or status as a separate identity;entity, has conducted and shall conduct business in its own name, has held and shall hold its assets in its own name, has maintained and shall maintain and utilize separate stationery and a separate telephone number, invoices and checks, has allocated and shall allocate fairly and reasonably any overhead for shared office space, and has not identified and shall not identify itself as a division or part of any Affiliate or other person, or any Affiliate or other person as a division or part of Borrower.
(xvj) fail Borrower has preserved and kept and shall preserve and keep in full force and effect its existence, good standing and qualification to intend to do business in the state in which the Property is located and Borrower has observed and will observe all partnership, corporate or limited liability company formalities, as applicable.
(k) Borrower has maintained and shall maintain adequate capital and a sufficient number of employees for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations. Borrower will pay the salaries of its own employees.
(1) Borrower nor any constituent party of Borrower has sought or shall seek or consent to the dissolution or winding up, in whole or in part, of Borrower, nor will Borrower merge with or be consolidated into any other entity or acquire by purchase or otherwise all or substantially all of the business assets of, or any stock of beneficial ownership of, any entity or participate in an UPREIT, DOWNREIT or similar transaction with a real estate investment trust or other entity.
(m) Borrower has not and shall not commingle the funds and other assets of Borrower with those of any Affiliate, any Guarantor, any constituent party of Borrower or any other person, and Borrower has paid and will pay its own liabilities out of its own funds and assets.
(n) Borrower has maintained and shall maintain its assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify its individual assets from those of any constituent party of Borrower, Affiliate, Guarantor or any other person; provided that owning the Property as a tenant in common with the other Borrowers shall not be, nor deemed to be, a violation of this provision.
(o) Borrower has not and shall not assume, guarantee, become obligated for or hold itself out to be responsible for or held out its credit as being available to satisfy, or pledged its assets as security for the debts or obligations of any other person, except to the extent that each Borrower is liable for the Debt jointly and severally with the other Borrowers (provided, however, that the foregoing shall not require Borrower’s members, partners prevent Borrower from being and holding itself responsible for expenses incurred or shareholders to make additional capital contributions to Borrower;obligations undertaken by the property manager of the Property in respect of its duties regarding the Property).
(xvip) without the unanimous written consent of all of its partners or members, as applicableBorrower shall obtain and maintain in full force and effect, and abide by and satisfy the written consent of material terms and conditions of, all directors material permits, licenses, registrations and other authorizations with or managers of Borrower or each SPE Component Entity, as applicable including, without limitation, each Independent Director, take granted by any Material Action or action governmental authorities that is intended may be required from time to cause such entity to become insolvent;
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space and services performed by an employee of an Affiliate) among the Persons sharing such expenses;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents time with respect to co-borrowers under the Loan, pay its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable;
(xx) violate or cause to be violated the assumptions made with respect to Borrower and its principals in the Non-Consolidation Opinion or any New Non-Consolidation Opinion;
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any performance of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other Personthis Security Instrument.
(iq) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner in the case of a partnership, or the managing member in the case of a limited liability company (each an “SPE Component Entity”) of Borrower, as applicable, does not own and shall be an Acceptable DE LLC. Each SPE Component Entity (A) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iii) through (vi) and (viii) through (xxiv) inclusive, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (B) will not engage in any business or activity other than owning an interest in Borrower; (C) will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (D) will not own any subsidiary, or make any investment in any Person other than person or entity.
(r) Borrower has not and shall not without the unanimous consent of all its investment in Borrower; (E) will not incur any debtgeneral partners, secured directors or unsecuredmembers, direct as applicable, file or contingent (including guaranteeing any obligation); and (F) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior consent to the withdrawal or the disassociation filing of any SPE Component Entity from Borrowerpetition, either voluntary or involuntary, to take advantage of any applicable insolvency, bankruptcy, liquidation or reorganization statute, or make an assignment for the benefit of creditors.
(s) Borrower shall immediately appoint be a new general partner or managing member whose limited liability company formed under the laws of the State of Idaho, with one or more members, whose articles of organization and operating agreement is substantially similar or certificate of formation and limited liability company agreement, as applicable (“Borrower’s Organizational Documents”) shall be in form and substance reasonably satisfactory to that Grantee.
(t) Borrower’s Organizational Documents shall contain each of such SPE Component Entity andthe representations, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender covenants and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as warranties set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors9.
(iiu) In the event Borrower shall not acquire obligations or SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”), the limited liability company agreement of the Company (the “LLC Agreement”) shall provide that (A) upon the occurrence securities of any event that causes the sole member of the Company (“Member”) to cease to be the member of the Company (other than (1) upon an assignment by Member of all of its limited liability company interest in the Company and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, Guarantor or (2) the resignation of Member and the admission of an additional member of the Company in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of the Company and executing the LLC Agreement (“Special Member”) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the Company, automatically be admitted to the Company and shall continue the existence of the Company without dissolution, and (B) Special Member may not resign from the Company or transfer its rights as Special Member unless (1) a successor Special Member has been admitted to the Company as Special Member in accordance with the requirements of the Act and (2) after giving effect to such resignation, such successor Special Member has also accepted its appointment as an Independent Director. The LLC Agreement shall further provide that Affiliate.
(v) Special Member shall automatically cease to be a member of the Company upon the admission to the Company of a substitute Member, (w) Special Member shall be a member of the Company that Borrower has no interest in the profits, losses and capital of the Company and has no right to receive any distributions of the assets of the Company, (x) pursuant to Section 18-301 of the Act, Special Member shall not be required to make any capital contributions to the Company and shall not receive a limited liability company interest in permit the Company, (y) Special Member, in its capacity as Special Member, may not bind the Company, debts and (z) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Company, including, without limitation, the merger, consolidation or conversion of the Company; provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. Prior to its admission to the Company as Special Member, Special Member shall not be a member of the Company, but the Special Member may serve as an Independent Director of the Company. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease Borrower to be a member of the Company and upon the occurrence of such an event, the existence of the Company shall continue without dissolution. The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company upon the occurrence of any action initiated paid by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the Companyanother party.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents.
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 1 contract
Single Purpose Entity/Separateness. Until the Debt has been paid in full, Borrower represents, represents warrants and covenants as follows:
(a) Borrower has not and will not:
(i) with respect to Borrower, engage in any business or activity other than the ownership, operation ownership and maintenance managing of the PropertiesCollateral, and activities incidental thereto;
(ii) acquire or own any assets other than (A) the Properties, Collateral and (B) such incidental Personal Property property as may be necessary for the ownership and operation of the PropertiesCollateral;
(iii) merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existenceformalities, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of LenderOrganizational Documents;
(v) own any subsidiary, or make any investment in, any PersonPerson (other than Mortgage Borrower and Mortgage SPE Component Entity);
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its assets with the assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accountsPerson (other than Mortgage Borrower and Mortgage SPE Component Entity);
(vii) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than (A) the Debt Debt, (B) liabilities incurred in the ordinary course of business relating to the ownership of the Collateral and Permitted Debt and prior loans that have been satisfied the routine administration of Borrower, in full as amounts not to exceed $25,000 which liabilities are paid within sixty (60) days of the date hereofincurred or the agreed date of repayment, whichever occurs later;
(viii) fail to maintain its records, books of account, bank accounts, financial statements, accounting records and other entity documents separate and apart from those of any other Person; except that Borrower’s financial position, assets, liabilities, net worth and operating results may be included in the consolidated financial statements of an Affiliate, provided that (A) appropriate notation shall be made on such consolidated financial statements to indicate the contain a footnote indicating that Borrower is a separate identity of Borrower from such Affiliate legal entity and that Borrower’s assets it maintains separate books and credit are not available to satisfy the debts and other obligations of such Affiliate or any other Person, and (B) Borrower’s assets, liabilities and net worth shall also be listed on Borrower’s own separate balance sheetrecords;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, Borrower or any Affiliate of the foregoing, except upon terms and conditions that are intrinsically fair, commercially reasonable and substantially similar to to, or better than, those that would be available on an arm’s-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure for the obligations benefit of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other Person;
(xiii) fail to (A) file its own tax returns separate from those of or files a consolidated federal income tax return with any other PersonPerson (unless prohibited or required, except to as the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under applicable Legal Requirements and (B) pay any taxes required to be paid under case may be, by applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrower);
(xiv) fail either to (A) hold itself out to the public as a legal entity separate and distinct from any other Person, (B) Person or to conduct its business solely in its own name or (C) fail to correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower[Reserved];
(xvi) if it is a partnership or limited liability company, without the unanimous written consent of all of its partners or members, as applicable, and the written consent of all directors or 100% of the managers of Borrower or each SPE Component EntityEntity (if any) (and if it is a corporation, as applicable without the unanimous written consent of 100% of its directors) in each instance, including, without limitation, each Independent Director, (a) file or consent to the filing of any petition, either voluntary or involuntary, to take advantage of any Creditors Rights Laws, (b) seek or consent to the appointment of a receiver, liquidator or any similar official, (c) take any Material Action or action that is intended to might cause such entity to become insolvent, or (d) make an assignment for the benefit of creditors;
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space and services performed by an employee of an Affiliate) among the Persons sharing such expensesexpenses and to use separate invoices and checks;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, pay its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower[Reserved];
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable;
(xx) violate or cause to be violated the assumptions made with respect to Borrower and its principals in any opinion letter pertaining to substantive consolidation delivered to Lender in connection with the Non-Consolidation Opinion or any New Non-Consolidation Opinion;Loan; or
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other Person.
(b) Borrower has not failed (i) to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations and (ii) to remain solvent or pay its own liabilities (including, without limitation, salaries of its own employees) from its own funds. Borrower will not make any distributions to its equity owners if such distribution would render (i) Borrower inadequately capitalized for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations or (ii) Borrower insolvent or make Borrower unable to pay its own liabilities (including, without limitation, salaries of its own employees) from its own funds.
(c) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”)company, each general partner in the case of a general partnership, each general partner in the case of a limited partnership, or the managing member in the case of a limited liability company (each an “SPE Component Entity”) of Borrower, as applicable, Borrower shall be an Acceptable DE LLCa corporation or Delaware single member limited liability company whose sole asset is its interest in Borrower. Each SPE Component Entity (Ai) will at all times comply with each of the covenants, terms and provisions contained in Sections Section 6.1(a)(iii) through - (vi) and (viii) through - (xxiv) inclusivexxi), as if such representation, warranty or covenant was made directly by such SPE Component Entity; (Bii) will not engage in any business or activity other than owning an interest in Borrower; (Ciii) will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (D) will not own any subsidiary, or make any investment in any Person other than its investment in Borrower; (Eiv) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (Fv) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose articles of incorporation (or operating agreement in the case of a Delaware single member limited liability company agreement is company) are substantially similar to that those of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLCa single member Delaware limited liability company, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) belowstatus, the no SPE Component Entity requirement shall be required with respect to Borrower, as set forth in this section shall not be applicable. Furthermore, in no .
(d) In the event shall Borrower or any SPE Component Entity be is a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors.
(ii) In the event Borrower or SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”)single member Delaware limited liability company, the limited liability company agreement of the Company such Person (the “LLC Agreement”) shall provide that (Ai) upon the occurrence of any event that causes the sole member of the Company such Person (“Member”) to cease to be the member of the Company such Person (other than (1A) upon an assignment by Member of all of its limited liability company interest in the Company such Person and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2B) the resignation of Member and the admission of an additional member of the Company such Person in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of the Company and executing the LLC Agreement (“Special Member”) such Person shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the Companysuch Person, automatically be admitted to the Company such Person (“Special Member”) and shall continue the existence of the Company such Person without dissolution, dissolution and (Bii) Special Member may not resign from the Company such Person or transfer its rights as Special Member unless (1A) a successor Special Member has been admitted to the Company such Person as Special Member in accordance with the requirements of the Act Delaware law and (2B) after giving effect to such resignation, such successor Special Member has also accepted its appointment as an Independent Director. The LLC Agreement shall further provide that (vi) Special Member shall automatically cease to be a member of the Company such Person upon the admission to the Company such Person of a substitute Member, (wii) Special Member shall be a member of the Company such Person that has no interest in the profits, losses and capital of the Company such Person and has no right to receive any distributions of the assets of the Companysuch Person assets, (xiii) pursuant to Section 18-301 of the Delaware Limited Liability Company Act (the “Act”), Special Member shall not be required to make any capital contributions to the Company such Person and shall not receive a limited liability company interest in the Companysuch Person, (yiv) Special Member, in its capacity as Special Member, may not bind the Company, such Person and (zv) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Companysuch Person, including, without limitation, the merger, consolidation or conversion of the Companysuch Person; provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. In order to implement the admission to such Person of Special Member, Special Member shall execute a counterpart to the LLC Agreement. Prior to its admission to the Company such Person as Special Member, Special Member shall not be a member of such Person. Upon the Companyoccurrence of any event that causes the Member to cease to be a member of such Person, but to the Special fullest extent permitted by law, the personal representative of Member may serve as an Independent Director shall, within ninety (90) days after the occurrence of the Companyevent that terminated the continued membership of Member in such Person, agree in writing (i) to continue such Person 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 Person, effective as of the occurrence of the event that terminated the continued membership of Member of such Person in such Person. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company such Person and upon the occurrence of such an event, the existence business of the Company such Person shall continue without dissolution. The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company such Person upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of such Person. Borrower shall cause Mortgage Borrower to be and to continue to comply with the Company.
(c) The organizational documents provisions of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary Section 6.1 of the “special purpose” provisions of such organizational documentsMortgage Loan Agreement.
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 1 contract
Single Purpose Entity/Separateness. Borrower represents, warrants and covenants as follows:
(a) Borrower will not and Borrower hereby represents and warrants to Lender that Borrower has not and will notsince the date of its formation:
(i) engage in any business or activity other than the ownership, operation and maintenance operation, management of the Properties, Collateral and activities incidental thereto;
(ii) acquire or own any assets other than (A) the Properties, and (B) such incidental Personal Property as may be necessary for the ownership and operation of the PropertiesCollateral;
(iii) merge into or consolidate with any Person, or or, to the fullest extent permitted by law, dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structurestructure from a Delaware limited liability company, other than, in each case, such activities as are contemplated or permitted pursuant to any provision of this Agreement or of any of the other Loan Documents;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existenceformalities, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or amend (B) amendexcept as otherwise expressly permitted hereunder), modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;
(v) own any subsidiary, or make any investment in, any PersonPerson other than the Mezzanine A Borrower (and other than, with respect to any SPE Component Entity, in Borrower);
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its funds or assets with the funds or assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;
(vii) incur any debtIndebtedness, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than the Debt and Indebtedness not to exceed $10,000 and not material in the aggregate that is necessary to Borrower’s activities as a member of Mortgage Borrower. Other than Permitted Encumbrances, no Indebtedness other than the Mortgage Debt and prior loans that have been satisfied in full as of may be secured (subordinate or pari passu) by the date hereofProperty. No Indebtedness other than the Debt may be secured (subordinate or pari passu) by the Collateral;
(viii) fail to maintain all of its records, books of account, bank accountsrecords, financial statements, accounting records and records, other entity documents and bank accounts separate and apart from those of any other Person (including, without limitation, any Affiliates). Borrower’s assets have not and will not be listed as assets on the financial statement of any other Person; except provided, however, that Borrower’s financial position, assets, liabilities, net worth and operating results assets may be included in a consolidated and/or combined financial statement of its Affiliates provided that, to the consolidated financial statements extent necessary to (i) prevent a substantive consolidation of an Affiliate, provided that the assets and liabilities of Borrower with the assets and liabilities of any other Person or (Aii) deliver a Non-Consolidation Opinion when required under this Agreement: (1) appropriate notation shall be made on such consolidated financial statements to indicate the separate identity separateness of Borrower from and such Affiliate Affiliates and to indicate that Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate Affiliates or any other Person, Person and (B2) Borrower’s assets, liabilities and net worth such assets shall also be listed on Borrower’s own separate balance sheet. Borrower has maintained and will maintain its books of account, records, financial statements, accounting record, other entity documents, resolutions and agreements as official records;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, principal or any Affiliate of the foregoingAffiliate, except (i) as may have been approved in writing by Lender in its sole and absolute discretion or (ii) upon terms and conditions that are intrinsically fair, commercially reasonable and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts or obligations of any other Person, hold itself out to be responsible for the debts or obligations of any other Person, or otherwise pledge its assets to secure or credits for the obligations benefit of any other Person or hold out its assets or credit or assets as being available to satisfy the debts or obligations of any other Person;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other PersonPersons;
(xiii) fail to (A) file its own tax returns separate from those of any other Person, Person (unless prohibited by applicable Legal Requirements from doing so or except to the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file such tax returns under applicable Legal Requirements Requirements) and (B) pay any taxes so required to be paid by such Borrower under applicable Legal Requirements; provided, however, that Borrower shall not have any obligation Requirements (to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrowerthe extent there is sufficient cash flow from the Property to do so);
(xiv) fail to (A) hold itself out to the public and identify itself, in each case, as a legal entity separate and distinct from any other Person and not as a division, department or part of any other Person, (B) conduct its business solely in its own name, (C) hold its assets in its own name or (CD) correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operationsoperations (to the extent there exists sufficient cash flow from the Property to do so); provided, however, that the foregoing no Person shall not require Borrower’s members, partners or shareholders be required to make any direct or indirect additional capital contributions to BorrowerBorrower in order to comply with the foregoing;
(xvi) without the prior unanimous written consent of all of its partners partners, shareholders or members, as applicable, and the prior unanimous written consent of all its board of directors or managers managers, as applicable, and the prior written consent of each Independent Manager (regardless of whether such Independent Manager is engaged at the Borrower or each SPE Component EntityEntity level), as applicable including(a) file or consent to the filing of any petition, without limitationeither voluntary or involuntary, each Independent Directorto take advantage of any Creditors Rights Laws, (b) seek or consent to the appointment of a receiver, liquidator or any similar official unless such appointment is sought by Lender, (c) take any Material Action or action that is intended to might cause such entity to become insolvent, (d) make an assignment for the benefit of creditors or (e) take any Material Action with respect to Borrower or any SPE Component Entity (provided, that, none of any member, shareholder or partner (as applicable) of Borrower or any SPE Component Entity or any board of directors or managers (as applicable) of Borrower or any SPE Component Entity may vote on or otherwise authorize the taking of any of the foregoing actions unless, in each case, there are at least two (2) Independent Managers then serving in such capacity in accordance with the terms of the applicable organizational documents and each of such Independent Managers has consented to such foregoing action);
(xvii) fail to allocate fairly and reasonably allocate shared expenses with its Affiliates (including, without limitation, shared office space space) or fail to use separate stationery, invoices and services performed by an employee of an Affiliate) among the Persons sharing such expenseschecks bearing its own name;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, and pay its own liabilities (including, without limitation, salaries of its own employees, if any) only from its own fundsfunds or fail to maintain a sufficient number of employees (if any) in light of its contemplated business operations (in each case to the extent there exists sufficient cash flow from the Property to do so); provided, however, that the foregoing no Person shall not require Borrower’s members, partners or shareholders be required to make any direct or indirect additional capital contributions to BorrowerBorrower in order to comply with the foregoing;
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliatesAffiliates, as applicable;
(xx) identify its partners, members, shareholders or other Affiliates, as applicable, as a division, department or part of it;
(xxi) violate or cause to be violated the assumptions made with respect to Borrower and its principals in the Non-Consolidation Opinion or in any New Non-Consolidation Opinion;
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail hold itself out as having agreed to maintain and use separate stationery, invoices and checks bearing its own namepay indebtedness incurred by any Affiliate;
(xxiii) have hold out the assets or credit of any Affiliate as being available to satisfy any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan debts or guarantees relating to obligations under the Management Agreements or Franchise Agreementsobligations; or
(xxiv) identify itself as a department or division allow an Affiliate to act in its name, to the extent of any other Personits power to do so.
(ib) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner (in the case of a partnership, or the managing ) and at least one member (in the case of a limited liability company (each an “SPE Component Entity”company) of Borrower, as applicable, shall be a corporation or an Acceptable DE LLCLLC (each, an “SPE Component Entity”) whose sole asset is its interest in Borrower. Each SPE Component Entity (Ai) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iiiSection 5.1(a)(iii) through – (vi) (inclusive) and (viii) through – (xxivxxi) (inclusive) and, if such SPE Component Entity is an Acceptable LLC, Section 5.1(c) and (d) hereof, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (Bii) will not engage in any business or activity other than owning an interest in Borrower; (Ciii) will not acquire or own any assets other than its partnership, membership, or other equity ownership interest in Borrower; (Div) will not at all times continue to own any subsidiary, or make any investment in any Person other no less than its investment a 0.5% direct equity ownership interest in Borrower; (Ev) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (Fvi) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to 5.1.
(c) In the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is substantially similar to that of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors.
(ii) In the event Borrower or SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”)LLC, the limited liability company agreement of the Company Borrower or such SPE Component Entity (as applicable) (the “LLC Agreement”) shall provide that (Ai) upon the occurrence of any event that causes the sole last remaining member of the Company Borrower or such SPE Component Entity (as applicable) (“Member”) to cease to be the member of the Company Borrower or such SPE Component Entity (as applicable) (other than (1A) upon an assignment by Member of all of its limited liability company interest in the Company Borrower or such SPE Component Entity (as applicable) and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, Agreement or (2B) the resignation of Member and the admission of an additional member of the Company Borrower or such SPE Component Entity (as applicable) in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director Manager of the Company and executing the LLC Agreement Borrower or such SPE Component Entity (“Special Member”as applicable) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the Company, Borrower or such SPE Component Entity (as applicable) automatically be admitted to the Company Borrower or such SPE Component Entity (as applicable) as a member with a zero percent (0%) economic interest (“Special Member”) and shall continue the existence of the Company Borrower or such SPE Component Entity (as applicable) without dissolution, dissolution and (Bii) Special Member may not resign from the Company Borrower or such SPE Component Entity (as applicable) or transfer its rights as Special Member unless (1A) a successor Special Member has been admitted to the Company Borrower or such SPE Component Entity (as applicable) as a Special Member in accordance with the requirements of the Act Delaware law and (2B) after giving effect to such resignationresignation or transfer, there remains at least two (2) Independent Managers of such successor Special Member has also accepted its appointment SPE Component Entity or Borrower (as an Independent Directorapplicable) in accordance with Section 5.2 below. The LLC Agreement shall further provide that (vi) Special Member shall automatically cease to be a member of the Company Borrower or such SPE Component Entity (as applicable) upon the admission to Borrower or such SPE Component Entity (as applicable) of the Company of a first substitute Membermember, (wii) Special Member shall be a member of the Company Borrower or such SPE Component Entity (as applicable) that has no interest in the profits, losses and capital of the Company Borrower or such SPE Component Entity (as applicable) and has no right to receive any distributions of the assets of the CompanyBorrower or such SPE Component Entity (as applicable), (xiii) pursuant to Section 18-301 the applicable provisions of the limited liability company act of the State of Delaware (the “Act”), Special Member shall not be required to make any capital contributions to the Company Borrower or such SPE Component Entity (as applicable) and shall not receive a limited liability company interest in the CompanyBorrower or such SPE Component Entity (as applicable), (yiv) Special Member, in its capacity as Special Member, may not bind the Company, Borrower or such SPE Component Entity (as applicable) and (zv) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Company, Borrower or such SPE Component Entity (as applicable) including, without limitation, the merger, consolidation or conversion of the CompanyBorrower or such SPE Component Entity (as applicable); provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent DirectorManager, to vote on such matters required by the Loan Documents or the LLC Agreement. In order to implement the admission to Borrower or such SPE Component Entity (as applicable) of Special Member, Special Member shall execute a counterpart to the LLC Agreement. Prior to its admission to the Company Borrower or such SPE Component Entity (as applicable) as Special Member, Special Member shall not be a member of the CompanyBorrower or such SPE Component Entity (as applicable), but the Special Member may serve as an Independent Director Manager of Borrower or such SPE Component Entity (as applicable).
(d) In the event Borrower or any SPE Component Entity is an Acceptable LLC, the LLC Agreement shall further provide that (i) upon the occurrence of any event that causes the Member to cease to be a member of Borrower or such SPE Component Entity (as applicable) (other than upon continuation of the Company. Any Company without dissolution upon (A) an assignment by the Member of all of its limited liability company interest in the Company and the admission of the transferee in accordance with this Agreement, or (B) the resignation of the member and the admission of an additional member of the Company in accordance with the terms of this Agreement) to the fullest extent permitted by law, the personal representative of Member shall, within ninety (90) days after the occurrence of the event that terminated the continued membership of Member in Borrower or such SPE Component Entity (as applicable) agree in writing (A) to continue Borrower or such SPE Component Entity (as applicable) and (B) to the admission of the personal representative or its nominee or designee, as the case may be, as a substitute member of Borrower or such SPE Component Entity (as applicable) effective as of the occurrence of the event that terminated the continued membership of Member in Borrower or such SPE Component Entity (as applicable), (ii) any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company Borrower or such SPE Component Entity (as applicable) and upon the occurrence of such an event, the existence business of the Company Borrower or such SPE Component Entity (as applicable) shall continue without dissolution. The LLC Agreement shall also provide that dissolution and (iii) each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company Borrower or such SPE Component Entity (as applicable) upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the Company.
(c) The organizational documents of Borrower and each or such SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents(as applicable).
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 1 contract
Sources: Mezzanine Loan Agreement (Brookfield DTLA Fund Office Trust Investor Inc.)
Single Purpose Entity/Separateness. Until the Debt has been paid in full, each Borrower represents, warrants and covenants as follows:
(a) Each Borrower has not and will not:
(i) engage in any business or activity other than the ownership, operation and maintenance of the Propertiesrelated Individual Property, and activities incidental thereto;
(ii) acquire or own any assets other than (A) the Propertiesapplicable Individual Property, and (B) such incidental Personal Property as may be necessary for the ownership and operation of the Propertiessuch Individual Property;
(iii) merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all applicable organizational formalities necessary to maintain its separate existenceformalities, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;
(v) own any subsidiary, or make any investment in, any Person;
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its assets with the assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;
(vii) incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than (A) the Debt Debt, (B) trade and Permitted Debt operational indebtedness incurred in the ordinary course of business with trade creditors, provided such indebtedness is (1) unsecured, (2) not evidenced by a note, (3) on commercially reasonable terms and conditions, and (4) due not more than sixty (60) days past the date incurred and paid on or prior loans that have been satisfied to such date, and/or (C) financing leases and purchase money indebtedness incurred in full as the ordinary course of business relating to Personal Property on commercially reasonable terms and conditions; provided, however, the aggregate amount of the date hereofindebtedness described in (B) and (C) shall not exceed at any time three percent (3%) of the outstanding principal amount of the Note;
(viii) fail to maintain its records, books of account, bank accounts, financial statements, accounting records and other entity documents separate and apart from those of any other Person; except that each Borrower’s financial position, assets, liabilities, net worth and operating results may be included in the consolidated financial statements of an Affiliate, provided that (A) appropriate notation shall be made on such consolidated financial statements to indicate the contain a footnote indicating that such Borrower is a separate identity of Borrower from such Affiliate legal entity and that Borrower’s assets it maintains separate books and credit are not available to satisfy the debts and other obligations of such Affiliate or any other Person, and (B) Borrower’s assets, liabilities and net worth shall also be listed on Borrower’s own separate balance sheetrecords;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of any Borrower, or any Affiliate of the foregoing, except upon terms and conditions that are intrinsically fair, commercially reasonable and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure for the obligations benefit of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other PersonPerson except, in each case, as provided by the Loan Documents;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other Person;
(xiii) fail to (A) file its own tax returns separate from those of or files a consolidated federal income tax return with any other PersonPerson (unless prohibited or required, except to as the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under applicable Legal Requirements and (B) pay any taxes required to be paid under case may be, by applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrower);
(xiv) fail either to (A) hold itself out to the public as a legal entity separate and distinct from any other Person, (B) Person or to conduct its business solely in its own name or (C) fail to correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;
(xvi) if it is a partnership or limited liability company, without the unanimous written consent of all of its partners or members, as applicable, and (a) file or consent to the written filing of any petition, either voluntary or involuntary, to take advantage of any Creditors Rights Laws, (b) seek or consent to the appointment of all directors a receiver, liquidator or managers of Borrower or each SPE Component Entityany similar official, as applicable including, without limitation, each Independent Director, (c) take any Material Action or action that is intended to might cause such entity to become insolvent, or (d) make an assignment for the benefit of creditors;
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space and services performed by an employee of an Affiliate) among the Persons sharing such expensesexpenses or to use separate stationery, invoices and checks;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, or pay its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable;
(xx) violate or cause to be violated the assumptions made with respect to Borrower and its principals in any opinion letter pertaining to substantive consolidation delivered to Lender in connection with the Non-Consolidation Opinion or any New Non-Consolidation Opinion;Loan; or
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other Person.
(ib) If a Borrower is a partnership or a limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with that meets all of the requirements of subsection Sections 6.1 (b)(iic) belowand 6.1(d) (an “Acceptable DE LLC”of this Agreement), each general partner in the case of a general partnership, at least one general partner in the case of a limited partnership, or the managing member in the case of a limited liability company (each an “SPE Component Entity”) of such Borrower, as applicable, shall be a corporation or a Delaware limited liability company meeting all of the requirements of Sections 6.1(c) and 6.1(d). The sole asset of an Acceptable DE LLCSPE Component Entity (if any) shall be a direct interest in such Borrower of not less than one-half of one percent (0.5%). Each SPE Component Entity (Ai) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iiiSection 6.1 (a)(iii) through - (vi) and (viii) through - (xxiv) inclusivexxi), as if such representation, warranty or covenant was made directly by such SPE Component Entity; (Bii) will not engage in any business or activity other than owning an interest in such Borrower; (Ciii) will not acquire or own any assets other than its partnership, membership, or other equity interest in such Borrower; (D) will not own any subsidiary, or make any investment in any Person other than its investment in Borrower; (Eiv) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (Fv) will cause such Borrower to comply with the provisions of this Section 6.1 and Section 6.46.1. Prior to the withdrawal or the disassociation of any SPE Component Entity from such Borrower, such Borrower shall immediately appoint a new general partner or managing member whose articles of incorporation or limited liability company agreement is are substantially similar to that those of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent a Borrower is an Acceptable DE LLCa single member Delaware limited liability company, so long as such Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(iiof Section 6.1(c) belowand 6.1(d) hereof, the no SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directorsrequired.
(iic) In the event a Borrower or a SPE Component Entity (if any) is an Acceptable DE LLC a single-member Delaware limited liability company that has only one (as referred to in this clause (ii), the “Company”)1) member, the limited liability company agreement of the Company such entity (the “LLC Agreement”) shall provide that (Ai) upon the occurrence of any event that causes the sole member of the Company such entity (“Member”) to cease to be the member of the Company such entity (other than (1A) upon an assignment by Member of all of its limited liability company interest in the Company such entity and the admission of the transferee in accordance with the Loan Documents and the LLC Agreementtransferee, or (2B) the resignation of Member and the admission of an additional member of the Company in either case in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission a specified person who is not an equity member of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, Borrower and a natural person duly designated under who has signed the LLC Agreement any person acting as Independent Director of the Company and executing the LLC Agreement (“Special Member”) shall, shall without any action of any other Person and simultaneously with the Member ceasing to be the member of the Companysuch entity, automatically be admitted to the Company such entity (“Special Member”) and shall continue the existence of the Company such entity without dissolution, dissolution and (Bii) Special Member may not resign from the Company such entity or transfer its rights as Special Member unless (1) a successor Special Member has been admitted to the Company such entity as Special Member in accordance with the requirements of the Act and (2) after giving effect to such resignation, such successor Special Member has also accepted its appointment as an Independent DirectorDelaware law. The LLC Agreement shall further provide that (vi) Special Member shall automatically cease to be a member of the Company such entity upon the admission to the Company such entity of a substitute Member, (wii) Special Member shall be a member of the Company such entity that has no interest in the profits, losses and capital of the Company such entity and has no right to receive any distributions of the assets of the Companysuch entity assets, (xiii) pursuant to Section 18-301 of the Delaware Limited Liability Company Act (the “Act”), Special Member shall not be required to make any capital contributions to the Company such entity and shall not receive a limited liability company interest in the Companysuch entity, (yiv) Special Member, in its capacity as Special Member, may not bind the Companysuch entity, and (zv) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Companysuch entity, including, without limitation, the merger, consolidation or conversion of such entity. In order to implement the Company; provided, however, admission to such prohibition shall not limit the obligations entity of Special Member, in its capacity as Independent Director, Special Member shall execute a counterpart to vote on such matters required by the Loan Documents or the LLC Agreement. Prior to its admission to the Company such entity as Special Member, Special Member shall not be a member of such entity.
(d) In the Companyevent a Borrower or SPE Component entity (if any) is a Delaware limited liability company having only one (1) member (“Member”), but upon the Special occurrence of any event that causes the Member may serve as an Independent Director to cease to be a member of such entity, to the fullest extent permitted by law, the personal representative of Member shall, within ninety (90) days after the occurrence of the Companyevent that terminated the continued membership of Member in such entity, agree in writing (i) to continue such entity 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 entity, effective as of the occurrence of the event that terminated the continued membership of Member of such entity in such entity. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company such entity and upon the occurrence of such an event, the existence business of the Company such entity shall continue without dissolution. The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company such entity upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the Companysuch entity.
(ce) The Each of the Borrowers shall at all times have as its sole member a limited liability company having organizational documents substantially similar to those of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary Extra Space Properties Nine LLC at the time of the “special purpose” provisions of such organizational documentsClosing Date.
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 1 contract
Single Purpose Entity/Separateness. Until the Indebtedness has been paid in full, Borrower represents, warrants and covenants as follows:
(a) Borrower has not and will not:
(i) engage in any business or activity other than the ownership, operation and maintenance ownership of the Properties, Ownership Interests and activities incidental related thereto;
(ii) acquire or own any assets other than (A) the Properties, Ownership Interests and (B) such incidental Personal Property personal property as may be necessary for the ownership and operation of the Propertiesthereof;
(iii) merge into or consolidate with any Person, or or, to the fullest extent permitted by law, dissolve, wind-up, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existenceformalities, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;
(v) own any subsidiarysubsidiary other than each Senior Borrower, or make any investment in, any Person;
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its assets with the assets of any other Person, or permit Master Lessee, any Affiliate of either of them or any constituent party independent access to its bank accounts;
(vii) incur any debtDebt, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than the Debt and Permitted Debt and prior loans that have been satisfied in full as of the date hereofBorrower;
(viii) fail to maintain its records, books of account, bank accounts, financial statements, accounting records and other entity documents separate and apart from those of any other Person; except that Borrower’s financial position, assets, liabilities, net worth and operating results may be included in the consolidated financial statements of an Affiliate, provided that (A) appropriate notation shall be made on such consolidated financial statements to indicate the separate identity of Borrower from such Affiliate and that Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate or any other Person, and (B) Borrower’s assets, liabilities and net worth shall also be listed on Borrower’s own separate balance sheet;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, Master Lessee or any Affiliate of the foregoing, except upon terms and conditions that are intrinsically fair, commercially reasonable and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties (it being agreed and acknowledged that the Asset Management Agreement is on terms and conditions that are intrinsically fair, commercially reasonable and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties);
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure the obligations of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other Person;
(xiii) fail to (A) file its own tax returns separate from those of any other Person, except to the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under applicable Legal Requirements Requirements, and (B) pay any taxes required to be paid under applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrower;
(xiv) fail either to (A) hold itself out to the public as a legal entity separate and distinct from any other Person, (B) Person or to own its assets or conduct its business solely in its own name or (C) fail to correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; operations (provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders any equity owner to make any additional capital contributions to Borrower);
(xvi) if it is a partnership or limited liability company, without the unanimous written consent of all of its partners or members, as applicable, and the written consent of all directors or 100% of the managers of Borrower or each SPE Component EntityBorrower, as applicable including, including without limitation, each Independent DirectorManager, take any Material Action or other action that is intended reasonably likely to cause such entity to become insolvent;
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space and services performed by an employee of an Affiliate) among the Persons sharing such expensesexpenses and to use separate stationery, invoices and checks;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, pay its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; provided, howeverand Borrower represents that it is, that as of the foregoing shall not require Borrower’s membersClosing Date, partners or shareholders solvent and intends to make additional capital contributions to Borrowerbe solvent;
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable;
(xx) violate or cause to be violated the assumptions made with respect to Borrower and its principals in the any Non-Consolidation Opinion or any New Non-Consolidation Opiniondelivered to Lender in connection with the Loan;
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;; or
(xxiii) have any of its obligations guaranteed by an Affiliate, Master Lessee or any Affiliate of Borrower or Master Lessee except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other PersonDocuments.
(ib) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”)company, each general partner in the case of a partnership, or the managing member in the case of a limited liability company (each an “SPE Component Entity”) of Borrower, as applicable, shall be an Acceptable DE LLCa corporation or a limited liability company whose sole asset is its interest in Borrower, provided that if such SPE Component Entity is a limited liability company, each of its managing members shall also be a SPE Component Entity. Each SPE Component Entity (Ai) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iii) through (viSection 5.3(a)(iii)—(vi) and (viii) through (xxiv) inclusiveviii)—(xxi), as if such representation, warranty or covenant was made directly by such SPE Component Entity; (Bii) will not engage in any business or activity other than owning an interest in Borrower; (Ciii) will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (D) will not own any subsidiary, or make any investment in any Person other than its investment in Borrower; (Eiv) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (Fv) will cause Borrower to comply with the provisions of this Section 6.1 5.3 and Section 6.45.4. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose articles of incorporation or limited liability company agreement is agreement, as applicable, are substantially similar to that those of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLCa single member Delaware limited liability company, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection subsections (b)(iic) and (d) below, the no SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directorsrequired.
(iic) In the event Borrower or SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”)a single-member Delaware limited liability company, the limited liability company agreement of the Company Borrower (the “LLC Agreement”) shall provide that (Ai) upon the occurrence of any event that causes the sole member of the Company Borrower (“Member”) to cease to be the member of the Company Borrower (other than (1A) upon an assignment by Member of all of its limited liability company interest in the Company Borrower and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2B) the resignation of Member and the admission of an additional member of the Company Borrower, in either case in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director Manager of the Company and executing the LLC Agreement Borrower (“Special Member”) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the CompanyBorrower, automatically be admitted to the Company Borrower and shall continue the existence of the Company Borrower without dissolution, dissolution and (Bii) Special Member may not resign from the Company Borrower or transfer its rights as Special Member unless (1A) a successor Special Member has been admitted to the Company Borrower as Special Member in accordance with the requirements of the Act Delaware law and (2B) after giving effect to such resignation, such successor Special Member has also accepted its appointment as an Independent DirectorManager. The LLC Agreement shall further provide that (vi) Special Member shall automatically cease to be a member of the Company Borrower upon the admission to the Company Borrower of a substitute Member, (wii) Special Member shall be a member of the Company Borrower that has no interest in the profits, losses and capital of the Company Borrower and has no right to receive any distributions of the assets of the CompanyBorrower assets, (xiii) pursuant to Section 18-301 of the Delaware Limited Liability Company Act (the “Act”), Special Member shall not be required to make any capital contributions to the Company Borrower and shall not receive a limited liability company interest in the CompanyBorrower, (yiv) Special Member, in its capacity as Special Member, may not bind the CompanyBorrower, and (zv) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the CompanyBorrower, including, without limitation, the merger, consolidation or conversion of the CompanyBorrower; provided, however, that such prohibition shall not limit the obligations of Special Member, in its capacity as Independent DirectorManager, to vote on such matters required by the Loan Documents or the LLC Agreement. In order to implement the admission to Borrower of Special Member, Special Member shall execute a counterpart to the LLC Agreement. Prior to its admission to the Company Borrower as Special Member, Special Member shall not be a member of Borrower.
(d) In the Companyevent Borrower is a single-member Delaware limited liability company, but the Special LLC Agreement shall provide that upon the occurrence of any event that causes the Member may serve as an Independent Director to cease to be a member of Borrower, to the fullest extent permitted by law, the personal representative of Member shall, within ninety (90) days after the occurrence of the Companyevent that terminated the continued membership of Member in Borrower, agree in writing (i) to continue 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 Borrower, effective as of the occurrence of the event that terminated the continued membership of Member of Borrower in Borrower. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company Borrower and upon the occurrence of such an event, the existence business of the Company Borrower shall continue without dissolution. The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company Borrower upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the CompanyBorrower.
(ce) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents.
(df) Notwithstanding anything to the contrary contained in this Section 5.3 or Article VIII, in connection with and contemporaneously with a refinancing in full of the Loan, and each Senior Loan, Borrower may (i) amend its organizational documents and/or (ii) form one or more new direct or indirect wholly-owned Subsidiaries and transfer the Collateral to such direct or indirect wholly-owned Subsidiaries subject to escrow and other customary closing arrangements reasonably acceptable to Lender.
(g) Borrower has executed shall cause (i) First Mezzanine Borrower to satisfy and delivered comply in all respects with the provisions of Sections 5.3 and 5.4 of the First Mezzanine Loan Agreement and (ii) First Mezzanine Borrower to Lender cause Mortgage Borrower to satisfy and comply in all respects with the certificate attached hereto as Exhibit D.provisions of Sections 5.3 and 5.4 of the Mortgage Loan Agreement.
Appears in 1 contract
Sources: Mezzanine Loan and Security Agreement (Bloomin' Brands, Inc.)
Single Purpose Entity/Separateness. Borrower represents, warrants and covenants as follows:
(a) Each Borrower has not and will not:
(i) engage in any business or activity other than the ownership, operation and maintenance of the Propertiesapplicable Individual Property, and activities incidental thereto;
(ii) acquire or own any assets other than (A) the Propertiesapplicable Individual Property, and (B) such incidental Personal Property as may be necessary for the ownership ownership, leasing, maintenance and operation of the Propertiessuch applicable Individual Property;
(iii) merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existenceformalities, or fail to preserve its existence as an entity duly organizedformed, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documentsdocuments (provided, that, such organizational documents may be amended or modified to the extent that, in each case without addition to the satisfaction of the requirements related thereto set forth therein, Lender’s prior written consent, such consent of not to be unreasonably withheld or delayed, and, if required by Lender, a Rating Agency Confirmation are first obtained);
(v) own any subsidiary, or make any investment in, any PersonPerson (other than, with respect to any SPE Component Entity, in the applicable Borrower);
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its funds or assets with the funds or assets of any other Person, Person (except for one or permit any Affiliate or constituent party independent access to its bank accountsmore other Borrowers);
(vii) incur any debtIndebtedness, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than (A) the Debt, (B) trade and operational indebtedness incurred in the ordinary course of business with trade creditors, provided such indebtedness is (1) unsecured, (2) not evidenced by a note, (3) on commercially reasonable terms and conditions, and (4) due not more than sixty (60) days past the date incurred and paid on or prior to such date, and/or (C) Permitted Equipment Leases; provided however, the aggregate amount of the indebtedness described in (B) and (C) shall not exceed at any time two percent (2%) of the outstanding aggregate Allocated Loan Amounts associated with the portions of the Property owned by the applicable Borrower. No Indebtedness other than the Debt and Permitted Debt and prior loans that have been satisfied in full as of the date hereofmay be secured (senior, subordinate or pari passu) by any Individual Property;
(viii) fail to maintain all of its recordsbooks, books of account, bank accounts, financial statements, accounting records and other entity documents financial statements (if any) separate and apart from those of any other Person (including, without limitation, any Affiliates) (except a bank account or accounts maintained by one Borrower for one or more other Borrowers (but for no other Person)). Borrower’s assets have not and will not be listed as assets on the financial statement of any other Person; except provided, however, that Borrower’s financial position, assets, liabilities, net worth and operating results assets may be included in the a consolidated financial statements statement of an Affiliate, its Affiliates provided that (Ai) appropriate notation shall be made on such consolidated financial statements to indicate the separate identity separateness of Borrower from and such Affiliate Affiliates and to indicate that Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate Affiliates or any other Person, Person and (Bii) Borrower’s assets, liabilities and net worth such assets shall also be listed on Borrower’s own separate balance sheet. Borrower has maintained and will maintain its books, records, resolutions and agreements as official records;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principalprincipal or Affiliate, guarantor of the obligations of Borrowerexcept, or any Affiliate of the foregoingin each case, except upon terms and conditions that are intrinsically fair, commercially reasonable fair and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts of any other PersonPerson (except for one or more other Borrowers), hold itself out to be responsible for the debts of any other PersonPerson (other than the statutory liability of any SPE Component Entity to its applicable limited partnership Borrower), or or, except pursuant to the Loan Documents, otherwise pledge its assets to secure for the obligations benefit of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other Person;
(xiii) fail to (A) file its own tax returns separate from those of any other Personreturns, except (A) to the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file any tax returns under return by applicable Legal Requirements, or (B) if Borrower is prohibited by applicable Legal Requirements and (B) pay any taxes required to be paid under applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrower;from doing so
(xiv) fail to (A) hold itself out to the public and identify itself, in each case, as a legal entity separate and distinct from any other Person and not as a division or part of any other Person, (B) conduct its business solely in its own name, (C) hold its assets in its own name or (CD) correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, that operations (to the foregoing shall not require Borrower’s members, partners or shareholders extent there exists sufficient cash flow from the applicable Individual Property to make additional do so and without any requirement for any investor in Borrower to contribute capital contributions to Borrower);
(xvi) without the prior unanimous written consent of all of its partners partners, shareholders or members, as applicable, and the prior unanimous written consent of all its board of directors or managers managers, as applicable, and the prior written consent of each Independent Director (regardless of whether such Independent Director is engaged at the Borrower or each SPE Component EntityEntity level), as applicable including(a) file or consent to the filing of any petition, without limitationeither voluntary or involuntary, each Independent Directorto take advantage of any Creditors Rights Laws, (b) seek or consent to the appointment of a receiver, liquidator or any similar official, (c) take any Material Action or action that is intended to might cause such entity to become insolvent;
, (xviid) fail to fairly and reasonably allocate shared expenses make an assignment for the benefit of creditors or (including, without limitation, shared office space and services performed by an employee of an Affiliatee) among the Persons sharing such expenses;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents take any Material Action with respect to co-borrowers under the Loan, pay its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable;
(xx) violate or cause to be violated the assumptions made with respect to Borrower and its principals in the Non-Consolidation Opinion or any New Non-Consolidation Opinion;
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other Person.
(i) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner in the case of a partnership, or the managing member in the case of a limited liability company (each an “SPE Component Entity”) of Borrower, as applicable, shall be an Acceptable DE LLC. Each SPE Component Entity (A) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iii) through (vi) and (viii) through (xxiv) inclusive, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (B) will not engage in any business or activity other than owning an interest in Borrower; (C) will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (D) will not own any subsidiary, or make any investment in any Person other than its investment in Borrower; (E) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (F) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is substantially similar to that of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors.
(ii) In the event Borrower or SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii)provided, the “Company”)that, the limited liability company agreement of the Company (the “LLC Agreement”) shall provide that (A) upon the occurrence none of any event that causes the sole member of the Company member, shareholder or partner (“Member”) to cease to be the member of the Company (other than (1) upon an assignment by Member of all of its limited liability company interest in the Company and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2) the resignation of Member and the admission of an additional member of the Company in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of the Company and executing the LLC Agreement (“Special Member”) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the Company, automatically be admitted to the Company and shall continue the existence of the Company without dissolution, and (B) Special Member may not resign from the Company or transfer its rights as Special Member unless (1) a successor Special Member has been admitted to the Company as Special Member in accordance with the requirements of the Act and (2) after giving effect to such resignation, such successor Special Member has also accepted its appointment as an Independent Director. The LLC Agreement shall further provide that (v) Special Member shall automatically cease to be a member of the Company upon the admission to the Company of a substitute Member, (w) Special Member shall be a member of the Company that has no interest in the profits, losses and capital of the Company and has no right to receive any distributions of the assets of the Company, (x) pursuant to Section 18-301 of the Act, Special Member shall not be required to make any capital contributions to the Company and shall not receive a limited liability company interest in the Company, (y) Special Member, in its capacity as Special Member, may not bind the Company, and (z) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Company, including, without limitation, the merger, consolidation or conversion of the Company; provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. Prior to its admission to the Company as Special Member, Special Member shall not be a member of the Company, but the Special Member may serve as an Independent Director of the Company. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company and upon the occurrence of such an event, the existence of the Company shall continue without dissolution. The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the Company.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents.
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.as
Appears in 1 contract
Single Purpose Entity/Separateness. Each Borrower representsrepresents and warrants, warrants until the Obligations have been paid and covenants as follows:
satisfied in full and the Total Commitment under this Agreement has been terminated and each Letter of Credit returned, that each Borrower: (a) Borrower has except as expressly permitted by Section 8.4, will not and will not:
(i) engage in any business or activity other than the ownership, operation and maintenance of the Properties, and activities incidental thereto;
(ii) acquire or own any assets other than (A) the Properties, and (B) such incidental Personal Property as may be necessary for the ownership and operation of the Properties;
(iii) merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure (for the avoidance of doubt, change in ownership of such Borrower shall not be a change of its legal structure;
); (ivb) except as expressly permitted by Section 8.4, has not and will not (Ai) fail to observe all organizational formalities necessary to maintain its separate existenceformalities, or (ii) fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements legal requirements of the jurisdiction of its organization or formation, or (Biii) amend, modifymodify (except for amendments and modifications prior to the Closing Date approved by Administrative Agent), terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;
; (vc) own any subsidiary, or make any investment in, any Person;
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan is not and prior loans that have been satisfied in full as of the date hereof, will not commingle its funds or assets with the funds or assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;
(vii) incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)), Person other than the Debt other Borrowers (Administrative Agent and Permitted Debt and prior loans that have been satisfied in full as the Lenders acknowledge the making of the date hereof;
Distributions by a Borrower does not constitute a commingling of funds or assets with another Person); (viiid) will not fail to maintain all of its books, records, books of account, financial statements and bank accounts, financial statements, accounting records and other entity documents accounts separate and apart from those of any other PersonPerson (including OpCo, its Subsidiaries and any other Affiliates) other than the other Borrowers; except will not fail to maintain its books, records, resolutions and agreements as official records; and will not list the assets of Borrowers and their Subsidiaries on the financial statement of any other Person (including OpCo, its Subsidiaries and any other Affiliates but excluding parents of Borrowers consolidated therewith in accordance with GAAP; provided, however, that Borrower’s financial position, assets, liabilities, net worth and operating results may be included in the consolidated financial statements of an Affiliate, provided that (A) appropriate notation shall be made on any such consolidated financial statements statement contains a note indicating that no Borrower’s separate assets and credit are available to indicate pay the separate identity debts of Borrower from such Affiliate and that no Borrower’s assets and credit are not available to satisfy the debts and other liabilities constitute obligations of such Affiliate or any other Personthe consolidated entity); (e) has not entered into (unless as of the “Initial Funding Date” under the Original Credit Agreement no longer in effect), and (B) Borrower’s assetswill not enter into, liabilities and net worth shall also be listed on Borrower’s own separate balance sheet;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, principal or any Affiliate of the foregoingAffiliate, except (i) upon terms and conditions that are intrinsically fair, commercially reasonable fair and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties;
, (xii) for Leases with OpCo Affiliates at Collateral Properties, so long as each such Lease is in the form delivered to and approved by Administrative Agent as provided in Section 8.16, and (iii) as otherwise permitted by Section 8.12; (f) has not maintained and will not maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;Person (other than other Borrowers); (g)
(xii) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, will not assume or guaranty the debts of Trilogy Investors or any of its Subsidiaries (other Person, than other Borrowers) or hold itself out to be responsible for the debts of Trilogy Investors or any of its Subsidiaries (other Person, or than other Borrowers); and has not (unless as of the Closing Date no longer in effect) and will not otherwise pledge its assets to secure for the obligations benefit of Trilogy Investors or any of its Subsidiaries (other Person than other Borrowers) or hold out its credit or assets as being available to satisfy the obligations of Trilogy Investors or any of its Subsidiaries (other Person;
than other Borrowers) and (xiiii) has not 114 US_Active\120558968\V-3 US_ACTIVE\122519032\V-4 done any of the foregoing described in this subsection (g) (except to the extent as of the Closing Date no longer in effect) effective as of the Closing Date; (h) has not made (unless as of the “Initial Funding Date” under the Original Credit Agreement no longer in effect) and will not make any loans or advances to Trilogy Investors or any Personof its Subsidiaries (other than other Borrowers), and has not (unless as of the Closing Date no longer in effect) and will not incur any Indebtedness or undertake any other obligations that are, or own would be, owed to Trilogy Investors or any stock or securities ofof its Subsidiaries (other than other Borrowers), any Person, or buy or hold evidence other than Leases that are in full force and effect as of indebtedness issued by any other Person;
the Closing Date; (xiiii) has not failed and will not fail to (A) file its own tax returns separate (unless prohibited by Applicable Law from those of any other Person, except to the extent that Borrower is treated as doing so or unless constituting a “disregarded entity” pass-through entity for tax purposes and is not required to file for which no tax returns under applicable Legal Requirements and (B) pay any taxes are required to be paid under applicable Legal Requirementsfiled), as appropriate; provided, however, that Borrower shall (j) has not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrower;
(xiv) failed and will not fail to (Ai) hold itself out to the public and identify itself, in each case, as a legal entity separate and distinct from any other PersonPerson (other than other Borrowers) and not as a division or part of any other Person (other than other Borrowers), (Bii) conduct its business solely in its own name, (iii) hold its assets in its own name or (Civ) correct any known misunderstanding regarding its separate legal identity;
; (xvk) has not failed and will not fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations, provided that the foregoing shall only apply to the extent it has available cash to maintain such capital and shall not require the contribution of additional capital to Borrowers; (l) has not failed and will not fail to allocate shared expenses (including shared office space) or fail to use separate stationery, invoices and checks (provided, however, that the foregoing shall not require Borrower’s membersBorrowers may use combined stationery, partners or shareholders to make additional capital contributions to Borrower;
invoices and checks with other Borrowers and may operate under a tradename); (xvim) without the unanimous written consent of all of its partners or members, as applicable, and the written consent of all directors or managers of Borrower or each SPE Component Entity, as applicable including, without limitation, each Independent Director, take any Material Action or action that is intended to cause such entity to become insolvent;
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space and services performed by an employee of an Affiliate) among the Persons sharing such expenses;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, will pay its own liabilities (including, without limitation, including salaries of its own employees, if any) only from its own fundsfunds (including amounts received pursuant to the Leases) (and, with respect to the Obligations, funds of other Borrowers); provided(n) has not acquired (unless as of the Closing Date no longer owned) and will not acquire obligations, however, that the foregoing shall not require Borrower’s members, partners securities or shareholders to make additional capital contributions to Borrower;
(xix) acquire obligations or securities other Equity Interests of its partners, members, shareholders or other affiliates, as applicable;
(xx) violate or cause to be violated the assumptions made with respect to Borrower and its principals in the Non-Consolidation Opinion or any New Non-Consolidation Opinion;
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other Person.
(i) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner in the case of a partnership, or the managing member in the case of a limited liability company (each an “SPE Component Entity”) of BorrowerAffiliates, as applicable, shall be an Acceptable DE LLC. Each SPE Component Entity (A) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iii) through (vi) and (viii) through (xxiv) inclusive, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (B) will not engage in any business or activity other than owning an interest in Borrower; other Borrowers (C) will not acquire or own any assets other than as to Parent, its partnership, membership, or other equity interest in Borrower; (D) will not own any subsidiary, or make any investment in any Person other than its investment in Borrower; (E) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligationSubsidiaries which are Borrowers); and (Fo) has not and will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to the withdrawal not identify its partners, members, shareholders or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is substantially similar to that of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors.
(ii) In the event Borrower or SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”), the limited liability company agreement of the Company (the “LLC Agreement”) shall provide that (A) upon the occurrence of any event that causes the sole member of the Company (“Member”) to cease to be the member of the Company other Affiliates (other than other Borrowers or with an entity one hundred percent (1100%) upon an assignment owned by Member of all of its limited liability company interest in the Company and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2) the resignation of Member and the admission of an additional member of the Company in accordance with the terms of the Loan Documents and the LLC AgreementParent), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may beapplicable, as a substitute member division or part of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of the Company and executing the LLC Agreement (“Special Member”) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the Company, automatically be admitted to the Company and shall continue the existence of the Company without dissolution, and (B) Special Member may not resign from the Company or transfer its rights as Special Member unless (1) a successor Special Member has been admitted to the Company as Special Member in accordance with the requirements of the Act and (2) after giving effect to such resignation, such successor Special Member has also accepted its appointment as an Independent Directorit. The LLC Agreement shall further provide that (v) Special Member shall automatically cease to be a member of the Company upon the admission to the Company of a substitute Member, (w) Special Member shall be a member of the Company that has no interest in the profits, losses and capital of the Company and has no right to receive any distributions of the assets of the Company, (x) pursuant to Section 18-301 of the Act, Special Member shall not be required to make any capital contributions to the Company and shall not receive a limited liability company interest in the Company, (y) Special Member, in its capacity as Special Member, may not bind the Company, and (z) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Company, including, without limitation, the merger, consolidation or conversion of the Company; provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. Prior to its admission to the Company as Special Member, Special Member shall not be a member of the Company, but the Special Member may serve as an Independent Director of the Company. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company and upon the occurrence of such an event, the existence of the Company shall continue without dissolution. The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the Company.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents.
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.6.38
Appears in 1 contract
Sources: Senior Secured Credit Agreement (American Healthcare REIT, Inc.)
Single Purpose Entity/Separateness. Borrower represents, warrants and covenants as follows:
8.28.1 The purpose for which Borrower is organized shall be limited solely to (aA) Borrower has not owning, holding, selling, leasing, transferring, exchanging, operating and will not:
(i) engage in any business or activity other than the ownership, operation and maintenance of managing the Properties, (B) entering into the Loan Agreement with Lender, (C) refinancing the Properties in connection with a permitted repayment of the Loan and activities incidental thereto;
(iiD) acquire or transacting any and all lawful business for which Borrower may be organized under its constitutive law that is incident, necessary and appropriate to accomplish the foregoing. Borrower does not own and will not own any assets asset or property other than (Ai) the Properties, and (Bii) such incidental Personal Property as may be personal property necessary for the ownership or operation of the Properties.
8.28.2 Borrower will not engage in any business other than the ownership, management and operation of the Properties;Properties and Borrower will conduct and operate its business as presently conducted and operated.
(iii) merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existence, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;
(v) own any subsidiary, or make any investment in, any Person;
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its assets with the assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;
(vii) incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)), other than the Debt and Permitted Debt and prior loans that have been satisfied in full as of the date hereof;
(viii) fail to maintain its records, books of account, bank accounts, financial statements, accounting records and other entity documents separate and apart from those of any other Person; except that Borrower’s financial position, assets, liabilities, net worth and operating results may be included in the consolidated financial statements of an Affiliate, provided that (A) appropriate notation shall be made on such consolidated financial statements to indicate the separate identity of 8.28.3 Borrower from such Affiliate and that Borrower’s assets and credit are will not available to satisfy the debts and other obligations of such Affiliate or any other Person, and (B) Borrower’s assets, liabilities and net worth shall also be listed on Borrower’s own separate balance sheet;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations Affiliate of Borrower, any constituent party of Borrower, the guarantors or any Affiliate of the foregoingany constituent party or guarantor, except upon terms and conditions that are intrinsically fair, commercially reasonable fair and substantially similar to those that would be available on an arm’sarms-length basis with unaffiliated third parties;parties other than any such party.
8.28.4 Borrower has not incurred and will not incur any Indebtedness other than (xi) maintain its assets the Loan, (ii) trade and operational debt which is (A) incurred in the ordinary course of business, (B) not more than sixty (60) days past the date incurred, (C) with trade creditors, (D) in the aggregate, in an amount less than one percent (1%) of the original principal amount of the Loan, (E) not evidenced by a note, and (F) paid when due, and (iii) Indebtedness incurred in the ordinary course of business for the purpose of financing equipment and other personal property used on the Properties (including obligations pursuant to equipment leases) in amounts that are normal and reasonable under the circumstances, provided, that (1) such debt shall be fully amortizing over a manner that it will be costly term not to exceed five (5) years (or difficult to segregatethe term of the related equipment lease shall not exceed five (5) years), ascertain or identify its individual assets from those of any other Person;
and (xi2) except as contemplated by the Loan Documents such debt (which, with respect to co-borrowers under an equipment lease, shall be the annual rents payable thereunder for the then current calendar year) shall not in the aggregate outstanding at any one time exceed one percent (1%) of Operating Revenues. No Indebtedness other than the Loan may be secured (subordinate or pari passu) by the Properties.
8.28.5 Borrower has not made and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure the obligations of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;
(xii) will not make any loans or advances to any Personthird party (including any affiliate or constituent party, any guarantor or own any stock affiliate of any constituent party or guarantor), and shall not acquire obligations or securities ofof its affiliates or any constituent party.
8.28.6 Borrower is and will remain solvent and Borrower will pay its debts and liabilities (including, as applicable, shared personnel and overhead expenses) from its assets as the same shall become due.
8.28.7 Borrower has done or caused to be done and will do all things necessary to observe organizational formalities and preserve its existence, and Borrower will not, nor will Borrower permit any Personconstituent party or any guarantor to amend, modify or buy otherwise change the partnership certificate, partnership agreement, articles of incorporation and bylaws, operating agreement, trust or hold evidence other organizational documents of indebtedness issued by Borrower or such constituent party or guarantor without the prior written consent of Lender.
8.28.8 Borrower will maintain all of its books, records, financial statements and bank accounts separate from those of its Affiliates and any constituent party. Borrower's assets will not be listed as assets on the financial statement of any other Person;
(xiii) fail entity except as required by generally accepted accounting principles; provided, however, that any such consolidated financial statement shall contain a note indicating that its separate assets and liabilities are neither available to (A) pay the debts of the consolidated entity nor constitute obligations of the consolidated entity. Borrower will file its own tax returns separate from those of any other Personreturns, except to the extent that Borrower it is treated as a “disregarded entity” for tax purposes and is not required to file consolidated federal income tax returns under applicable Legal Requirements and (B) pay any taxes required to be paid under applicable Legal Requirements; provided, however, that by law. Borrower shall not have any obligation to reimburse maintain its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur books, records, resolutions and agreements as a result of any profits or losses of Borrower;official records.
(xiv) fail to (A) 8.28.9 Borrower will be, and at all times will hold itself out to the public as as, a legal entity separate and distinct from any other Personentity (including any Affiliate of Borrower, (B) conduct its business solely in its own name any constituent party of Borrower, any guarantor or (C) any Affiliate of any constituent party or guarantor), shall correct any known misunderstanding regarding its status as a separate identity;entity, shall conduct business in its own name, shall not identify itself as a division or part of any other person or entity.
(xv) fail to intend to 8.28.10 Borrower will maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided.
8.28.11 Neither Borrower nor any constituent party will seek the dissolution, howeverwinding up, that liquidation, consolidation or merger in whole or in part, of the foregoing shall Borrower.
8.28.12 Borrower will not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;
(xvi) without commingle the unanimous written consent of all of its partners or members, as applicable, funds and the written consent of all directors or managers other assets of Borrower with those of any Affiliate or each SPE Component Entityconstituent party, as applicable includingany guarantor, without limitation, each Independent Director, take any Material Action or action that is intended to cause such entity to become insolvent;
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space and services performed by an employee of an Affiliate) among the Persons sharing such expenses;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, pay its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable;
(xx) violate or cause to be violated the assumptions made with respect to Borrower and its principals in the Non-Consolidation Opinion or any New Non-Consolidation Opinion;Affiliate of any constituent party or guarantor, or any other person.
(xxi) fail 8.28.13 Borrower has and will maintain its assets in such a manner that it will not be costly or difficult to maintain a sufficient number segregate, ascertain or identify its individual assets from those of employees in light any Affiliate or constituent party, any guarantor, or any Affiliate of its contemplated business operations;any constituent party or guarantor, or any other person.
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by 8.28.14 Borrower will not guarantee or become obligated for the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division debts of any other Personentity or person and does not and will not hold itself out as being responsible for the debts or obligations of any other person.
(i) 8.28.15 If Borrower is a limited partnership or a limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”)company, each general partner in the case of a partnership, or the managing member in the case of a limited liability company (each each, an “SPE Component Entity”"SPC Party") of Borrower, as applicable, shall be an Acceptable DE LLC. Each SPE Component Entity (A) a corporation whose sole asset is its interest in Borrower and each such SPC Party will at all times comply comply, and will cause Borrower to comply, with each of the covenantsrepresentations, terms warranties, and provisions covenants contained in Sections 6.1(a)(iii) through (vi) and (viii) through (xxiv) inclusive, this Section 8.28 as if such representation, warranty or covenant was made directly by such SPE Component Entity; SPC Party.
8.28.16 Borrower shall at all times cause there to be at least two (B2) will duly appointed members of the board of directors (each an "Independent Director") of each SPC Party in Borrower reasonably satisfactory to Lender who shall not engage in have been at the time of such individual's appointment or at any business or activity other than owning an interest in Borrower; time while serving as a director of SPC Party, and may not have been at any time during the preceding five years (Ci) will not acquire or own any assets other than its partnership, membershipa shareholder of, or other equity interest in Borrower; (D) will not own any subsidiaryan officer, or make any investment in any Person other than its investment in Borrower; (E) will not incur any debtdirector, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (F) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is substantially similar to that of such SPE Component Entity andemployee of, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is of its shareholders, subsidiaries or affiliates (except for serving as an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote independent director of such Acceptable DE LLC and its Independent Directors.
(ii) In the event Borrower or SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”), the limited liability company agreement of the Company (the “LLC Agreement”) shall provide that (A) upon the occurrence any single purpose corporations serving as general partners of any event that causes the sole member of the Company (“Member”) to cease to be the member of the Company (other than (1) upon an assignment by Member of all of its limited liability company interest in the Company and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2) the resignation of Member and the admission of an additional member of the Company in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of the Company and executing the LLC Agreement (“Special Member”) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the Company, automatically be admitted to the Company and shall continue the existence of the Company without dissolution, and (B) Special Member may not resign from the Company or transfer its rights as Special Member unless (1) a successor Special Member has been admitted to the Company as Special Member in accordance with the requirements of the Act and (2) after giving effect to such resignation, such successor Special Member has also accepted its appointment as an Independent Director. The LLC Agreement shall further provide that (v) Special Member shall automatically cease to be a member of the Company upon the admission to the Company of a substitute Member, (w) Special Member shall be a member of the Company that has no interest in the profits, losses and capital of the Company and has no right to receive any distributions of the assets of the Company, (x) pursuant to Section 18-301 of the Act, Special Member shall not be required to make any capital contributions to the Company and shall not receive a limited liability company interest in the Company, (y) Special Member, in its capacity as Special Member, may not bind the Company, and (z) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Company, including, without limitation, the merger, consolidation or conversion of the Company; provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. Prior to its admission to the Company as Special Member, Special Member shall not be a member of the Company, but the Special Member may serve as an Independent Director of the Company. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company and upon the occurrence of such an event, the existence of the Company shall continue without dissolution. The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the Company.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents.
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.partnerships
Appears in 1 contract
Sources: Loan Agreement (Equity Inns Inc)
Single Purpose Entity/Separateness. Borrower represents, warrants and covenants as follows:
(a) Each Borrower has not and not, and, for so long as the Debt remains outstanding, will not:
(i) engage in any business or activity other than the ownership, operation and maintenance of the Properties, applicable Individual Property and activities incidental theretothereto and, with respect to MO Borrower, the Bonds;
(ii) acquire or own any assets other than (A) the Propertiesapplicable Individual Property, and (B) with respect to the MO Borrower only, the Bonds, and (C) such incidental Personal Property as may be necessary for the ownership ownership, leasing, maintenance and operation of the Propertiessuch Individual Property;
(iii) merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existenceformalities, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements Applicable Law of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;
(v) own any subsidiary, or make any investment in, any Person;
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its assets with the assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;
(vii) incur any debtIndebtedness, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than (A) the Debt, (B) trade and operational indebtedness incurred in the ordinary course of business with trade creditors, provided such indebtedness is (1) unsecured, (2) not evidenced by a note, (3) on commercially reasonable terms and conditions, and (4) due not more than sixty (60) days past the date incurred and paid on or prior to such date, (C) Permitted Equipment Leases and/or (D) Borrower’s obligations and liabilities under the Interest Rate Protection Agreement; provided however, the aggregate amount of the indebtedness described in (B) and (C) shall not exceed at any time two percent (2%) of the outstanding aggregate Allocated Loan Amounts associated with the portions of the Property owned by Borrower. No Indebtedness other than the Debt and Permitted Debt and prior loans that have been satisfied in full as of may be secured (subordinate or pari passu) by the date hereofProperty;
(viii) fail to maintain all of its books, records, books of account, financial statements and bank accounts, financial statements, accounting records and other entity documents accounts separate and apart from those of its affiliates and any constituent party. Borrower’s assets have not and will not be listed as assets on the financial statement of any other Person; except provided, however, that Borrower’s financial position, assets, liabilities, net worth and operating results assets may be included in the a consolidated financial statements statement of an Affiliate, its affiliates provided that (Ai) appropriate notation shall be made on such consolidated financial statements to indicate the separate identity separateness of Borrower from and such Affiliate affiliates and to indicate that Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate affiliates or any other Person, Person and (Bii) Borrower’s assets, liabilities and net worth such assets shall also be listed on Borrower’s own separate balance sheet. Borrower has maintained and will maintain its books, records, resolutions and agreements as official records;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, principal or any Affiliate of the foregoingaffiliate, except upon terms and conditions that are intrinsically fair, commercially reasonable fair and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure for the obligations benefit of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person, other than in the context of the cross-collateralization and cross-defaulting of the Loan;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other Person;
(xiii) fail to (A) file its own tax returns separate (unless prohibited by Applicable Law from those of any other Person, except to the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under applicable Legal Requirements and (B) pay any taxes required to be paid under applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrowerdoing so);
(xiv) fail either to (A) hold itself out to the public as a legal entity separate and distinct from any other Person, (B) Person or to conduct its business solely in its own name or (C) fail to correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, that operations (to the foregoing extent there exists sufficient cash flow from the applicable Individual Property to do so after the payment of all operating expenses and Debt Service and shall not require Borrower’s members, partners or shareholders any equity owner to make additional capital contributions to Borrower);
(xvi) without the unanimous written consent of all of its partners or members, as applicable, and the written consent of all directors or managers each Independent Director (regardless of whether such Independent Director is engaged at the Borrower or each SPE Component EntityEntity level), as applicable including(a) file or consent to the filing of any petition, without limitationeither voluntary or involuntary, each Independent Directorto take advantage of any Creditors’ Rights Laws, (b) seek or consent to the appointment of a receiver, liquidator or any similar official, (c) take any Material Action or action that is intended to might cause such entity to become insolvent, or (d) make an assignment for the benefit of creditors;
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space space) or fail to use separate stationery, invoices and services performed by an employee of an Affiliate) among the Persons sharing such expenseschecks;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, pay its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; provided, however, that funds or fail to maintain a sufficient number of employees in light of its contemplated business operations (in each case to the foregoing shall not require Borrower’s members, partners or shareholders extent there exists sufficient cash flow from the applicable Individual Property to make additional capital contributions to Borrowerdo so);
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable;; or
(xx) violate or cause to be violated the assumptions made with respect to Borrower and its principals in the Non-Consolidation Opinion or in any New Non-Consolidation Opinion;
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other Person.
(ib) If Borrower is a limited partnership or a limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner in the case of a partnership, or the managing member in the case of a limited liability company (each each, an “SPE Component Entity”) of shall be a corporation or an Acceptable LLC (I) whose sole asset is its interest in Borrower, as applicable, (II) which has not been and shall not be an Acceptable DE LLC. Each SPE Component Entity (A) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iii) through (vi) and (viii) through (xxiv) inclusive, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (B) will not permitted to engage in any business or activity other than owning an interest in Borrower; (CIII) will which has not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (D) will been and shall not own any subsidiary, or make any investment in any Person other than its investment in Borrower; (E) will not be permitted to incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (FIV) which has and will at all times own at least a 0.5% direct equity ownership interest in Borrower. Each such SPE Component Entity will at all times comply, and will cause Borrower to comply comply, with each of the provisions of representations, warranties, and covenants contained in this Section 6.1 and Section 6.4Article 5 (to the extent applicable) as if such representation, warranty or covenant was made directly by such SPE Component Entity. Prior to Upon the withdrawal or the disassociation of any an SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner SPE Component Entity whose articles of incorporation or managing member whose limited liability company agreement is organization are substantially similar to that those of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, and deliver a new opinion letter acceptable New Non-Consolidation Opinion to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding As of the foregoingdate hereof, to the extent Borrower is an Acceptable DE LLC, LLC and an SPE Component Entity is not required so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement continues to qualify as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent DirectorsLLC.
(iic) In the event Borrower or the SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”)LLC, the limited liability company agreement of Borrower or the Company SPE Component Entity (as applicable) (the “LLC Agreement”) shall provide that (Ai) upon the occurrence of any event that causes the sole last remaining member of Borrower or the Company SPE Component Entity (as applicable) (“Member”) to cease to be the member of Borrower or the Company SPE Component Entity (as applicable) (other than (1A) upon an assignment by Member of all of its limited liability company interest in Borrower or the Company SPE Component Entity (as applicable) and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2B) the resignation of Member and the admission of an additional member of Borrower or the Company SPE Component Entity (as applicable) in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of Borrower or the Company and executing the LLC Agreement SPE Component Entity (“Special Member”as applicable) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of Borrower or the Company, SPE Component Entity (as applicable) automatically be admitted to Borrower or the Company SPE Component Entity (as applicable) as a member with a 0% economic interest (“Special Member”) and shall continue Borrower or the existence of the Company SPE Component Entity (as applicable) without dissolution, dissolution and (Bii) Special Member may not resign from Borrower or the Company SPE Component Entity (as applicable) or transfer its rights as Special Member unless (1A) a successor Special Member has been admitted to Borrower or the Company SPE Component Entity (as applicable) as a Special Member in accordance with the requirements of the Act Delaware or Maryland law (as applicable) and (2B) after giving effect to such resignationresignation or transfer, such successor Special Member has also accepted its appointment there remains at least one (1) Independent Director of the SPE Component Entity or Borrower (as an Independent Directorapplicable) in accordance with Section 5.2 below. The LLC Agreement shall further provide that (vi) Special Member shall automatically cease to be a member of Borrower or the Company SPE Component Entity (as applicable) upon the admission to Borrower or the Company SPE Component Entity (as applicable) of a the first substitute Membermember, (wii) Special Member shall be a member of Borrower or the Company SPE Component Entity (as applicable) that has no interest in the profits, losses and capital of Borrower or the Company SPE Component Entity (as applicable) and has no right to receive any distributions of the assets of Borrower or the CompanySPE Component Entity (as applicable), (xiii) pursuant to Section 18-301 the applicable provisions of the limited liability company act of the State of Delaware or Maryland (as applicable, the “Act”), Special Member shall not be required to make any capital contributions to Borrower or the Company SPE Component Entity (as applicable) and shall not receive a limited liability company interest in Borrower or the CompanySPE Component Entity (as applicable), (yiv) Special Member, in its capacity as Special Member, may not bind Borrower or the Company, SPE Component Entity (as applicable) and (zv) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, Borrower or the Company, SPE Component Entity (as applicable) including, without limitation, the merger, consolidation or conversion of Borrower or the CompanySPE Component Entity (as applicable); provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. In order to implement the admission to Borrower or the SPE Component Entity (as applicable) of Special Member, Special Member shall execute a counterpart to the LLC Agreement. Prior to its admission to Borrower or the Company SPE Component Entity (as applicable) as Special Member, Special Member shall not be a member of Borrower or the CompanySPE Component Entity (as applicable), but the Special Member may serve as an Independent Director of Borrower or the Company. Any SPE Component Entity (as applicable).
(d) The LLC Agreement shall further provide that, (i) upon the occurrence of any event that causes the Member to cease to be a member of Borrower or the SPE Component Entity (as applicable) to the fullest extent permitted by law, the personal representative of Member shall, within ninety (90) days after the occurrence of the event that terminated the continued membership of Member in Borrower or the SPE Component Entity (as applicable) agree in writing (A) to continue Borrower or the SPE Component Entity (as applicable) and (B) to the admission of the personal representative or its nominee or designee, as the case may be, as a substitute member of Borrower or the SPE Component Entity (as applicable) effective as of the occurrence of the event that terminated the continued membership of Member in Borrower or the SPE Component Entity (as applicable), (ii) any action initiated by or brought against Member or Special Member under any Creditors Creditors’ Rights Laws shall not cause Member or Special Member to cease to be a member of Borrower or the Company SPE Component Entity (as applicable) and upon the occurrence of such an event, the existence business of Borrower or the Company SPE Component Entity (as applicable) shall continue without dissolution. The LLC Agreement shall also provide that , and (iii) each of Member and Special Member waives any right it might have to agree in writing to dissolve Borrower or the Company SPE Component Entity (as applicable) upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Creditors’ Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of Borrower or the CompanySPE Component Entity (as applicable).
(ca) The organizational documents of each Borrower (to the extent such Borrower is a corporation or an Acceptable LLC) or the SPE Component Entity, as applicable, shall provide that at all times there shall be at least one (1) duly appointed member of its board of directors or managers, as applicable (each, an “Independent Director”) reasonably satisfactory to Lender who each shall not have been at the time of each such individual’s initial appointment, and shall (I) not have been at any time during the preceding five years, and shall not be at any time while serving as Independent Director, either (i) a shareholder (or other equity owner) of, or an officer, director (other than in its capacity as Independent Director), partner, member or employee of, any Borrower or any of its respective shareholders, partners, members, subsidiaries or affiliates, (ii) a customer of, or supplier to, or other Person who derives any of its purchases or revenues from its activities with, any Borrower or any of its respective shareholders, partners, members, subsidiaries or affiliates, (iii) a Person who Controls or is under common Control with any such shareholder, officer, director, partner, member, employee supplier, customer or other Person, or (iv) a member of the immediate family of any such shareholder, officer, director, partner, member, employee, supplier, customer or other Person, and (II) be employed by, in good standing with and engaged by such Borrower in connection with, in each case, an Approved ID Provider. The organizational documents of each Borrower or the SPE Component Entity (as applicable) shall further provide an express acknowledgment that (I) the board of directors or managers of each Borrower or the SPE Component Entity as applicable, and the constituent members of such entities (the “Constituent Members”) shall not take any action which, under the terms of any organizational documents of such Borrower or the SPE Component Entity as applicable requires the unanimous vote of (1) the board of directors or managers of such Borrower or the SPE Component Entity as applicable, or (2) the Constituent Members, unless at the time of such action there shall be at least one (1) engaged as provided by the terms hereof; (II) any resignation, removal or replacement of any Independent Director shall not be effective without two (2) Business Days prior written notice to Lender is an intended third-party beneficiary accompanied by evidence that the replacement Independent Director satisfies the applicable terms and conditions hereof and of the “special purpose” provisions of such applicable organizational documents.
; (dIII) to the fullest extent permitted by applicable law, including Section 18- 1101(c) of the Act and notwithstanding any duty otherwise existing at law or in equity, the Independent Director shall consider only the interests of the Constituent Members and such Borrower has executed and delivered to Lender any SPE Component Entity (including such Borrower’s and any SPE Component Entity’s respective creditors) in acting or otherwise voting on the certificate attached hereto as Exhibit D.matters provided fo
Appears in 1 contract
Sources: Loan Agreement (American Realty Capital Trust III, Inc.)
Single Purpose Entity/Separateness. Until the Debt has been paid in full, Borrower represents, warrants and covenants as follows:
(a) Borrower has not and will not:
(i) engage in any business or activity other than the ownership, operation and maintenance of the PropertiesProperty, and activities incidental thereto;
(ii) acquire or own any assets other than (A) the PropertiesProperty, and (B) such incidental Personal Property as may be necessary for the ownership and operation of the PropertiesProperty;
(iii) merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existenceformalities, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;
(v) own any subsidiary, or make any investment in, any Person;
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its assets with the assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;
(vii) incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than (A) the Debt Debt, (B) trade and Permitted Debt operational indebtedness incurred in the ordinary course of business with trade creditors, provided such indebtedness is (1) unsecured, (2) not evidenced by a note, (3) on commercially reasonable terms and conditions, and (4) due not more than sixty (60) days past the date incurred and paid on or prior loans that have been satisfied to such date, and/or (C) financing leases and purchase money indebtedness incurred in full as the ordinary course of business relating to Personal Property on commercially reasonable terms and conditions; provided however, the aggregate amount of the date hereofindebtedness described in (B) and (C) shall not exceed at any time three percent (3%) of the outstanding principal amount of the Note;
(viii) fail to maintain its records, books of account, bank accounts, financial statements, accounting records and other entity documents separate and apart from those of any other Person; except that Borrower’s financial position, assets, liabilities, net worth and operating results may be included in the consolidated financial statements of an Affiliate, provided that (A) appropriate notation shall be made on such consolidated financial statements to indicate the contain a footnote indicating that Borrower is a separate identity of Borrower from such Affiliate legal entity and that Borrower’s assets it maintains separate books and credit are not available to satisfy the debts and other obligations of such Affiliate or any other Person, and (B) Borrower’s assets, liabilities and net worth shall also be listed on Borrower’s own separate balance sheetrecords;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, or any Affiliate of the foregoing, except upon terms and conditions that are intrinsically fair, commercially reasonable and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure for the obligations benefit of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other Person;
(xiii) fail to (A) file its own tax returns separate from those of or files a consolidated federal income tax return with any other PersonPerson (unless prohibited or required, except to as the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under applicable Legal Requirements and (B) pay any taxes required to be paid under case may be, by applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrower);
(xiv) fail either to (A) hold itself out to the public as a legal entity separate and distinct from any other Person, (B) Person or to conduct its business solely in its own name or (C) fail to correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;
(xvi) if it is a partnership or limited liability company, without the unanimous written consent of all of its partners or members, as applicable, and the written consent of all directors or 100% of the managers of Borrower Borrower, (a) file or each SPE Component Entityconsent to the filing of any petition, as applicable includingeither voluntary or involuntary, without limitationto take advantage of any Creditors Rights Laws, each Independent Director(b) seek or consent to the appointment of a receiver, liquidator or any similar official, (c) take any Material Action or action that is intended to might cause such entity to become insolvent, or (d) make an assignment for the benefit of creditors;
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space and services performed by an employee of an Affiliate) among the Persons sharing such expensesexpenses and to use separate stationery, invoices and checks;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, or pay its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; provided, however, provided that there are sufficient funds from the foregoing shall not require Borrower’s members, partners or shareholders operation of the Property to make additional capital contributions to Borrowerdo so;
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable;
(xx) violate or cause to be violated the assumptions made with respect to Borrower and its principals in any opinion letter pertaining to substantive consolidation delivered to Lender in connection with the Non-Consolidation Opinion or any New Non-Consolidation Opinion;Loan; or
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other Person.
(ib) If Borrower is a limited partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”)company, each general partner in the case of a limited partnership, or the managing member in the case of a limited liability company (each an “SPE Component Entity”) of Borrower, as applicable, shall be an Acceptable DE LLCa corporation whose sole asset is its interest in Borrower. Each SPE Component Entity (Ai) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iiiSection 6.1(a)(i) through - (vi) and (viii) through — (xxiv) inclusivexxi), as if such representation, warranty or covenant was made directly by such SPE Component Entity; (Bii) will not engage in any business or activity other than owning an interest in Borrower; (Ciii) will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (D) will not own any subsidiary, or make any investment in any Person other than its investment in Borrower; (Eiv) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (Fv) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.46.1. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is articles of incorporation are substantially similar to that those of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLCa single member Delaware limited liability company, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) belowstatus, the no SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directorsrequired.
(iic) In the event Borrower or SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”)a single member Delaware limited liability company, the limited liability company agreement of the Company Borrower (the “LLC Agreement”) shall provide that (Ai) upon the occurrence of any event that causes the sole member of the Company Borrower (“Member”) to cease to be the member of the Company Borrower (other than (1A) upon an assignment by Member of all of its limited liability company interest in the Company Borrower and the admission of the transferee in accordance with the Loan Documents and the LLC Agreementtransferee, or (2B) the resignation of Member and the admission of an additional member of the Company member, in either case in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of the Company and executing the LLC Agreement as a “Special Member” (as such term is defined in the LLC Agreement) (“Special Member”) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the CompanyBorrower, automatically be admitted to the Company Borrower and shall continue the existence of the Company Borrower without dissolution, dissolution and (Bii) Special Member may not resign from the Company Borrower or transfer its rights as Special Member unless (1) a successor Special Member has been admitted to the Company Borrower as Special Member in accordance with the requirements of the Act and (2) after giving effect to such resignation, such successor Special Member has also accepted its appointment as an Independent DirectorDelaware law. The LLC Agreement shall further provide that (vi) Special Member shall automatically cease to be a member of the Company Borrower upon the admission to the Company Borrower of a substitute Member, (wii) Special Member shall be a member of the Company Borrower that has no interest in the profits, losses and capital of the Company Borrower and has no right to receive any distributions of the assets of the CompanyBorrower assets, (xiii) pursuant to Section 18-301 of the Delaware Limited Liability Company Act (the “Act”), Special Member shall not be required to make any capital contributions to the Company Borrower and shall not receive a limited liability company interest in the CompanyBorrower, (yiv) Special Member, in its capacity as Special Member, may not bind the Company, Borrower and (zv) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the CompanyBorrower, including, without limitation, the merger, consolidation or conversion of Borrower. In order to implement the Company; provided, however, such prohibition shall not limit the obligations admission to Borrower of Special Member, in its capacity as Independent Director, Special Member shall execute a counterpart to vote on such matters required by the Loan Documents or the LLC Agreement. Prior to its admission to the Company Borrower as Special Member, Special Member shall not be a member of Borrower. Upon the Companyoccurrence of any event that causes the Member to cease to be a member of Borrower, but to the Special fullest extent permitted by law, the personal representative of Member may serve as an Independent Director shall, within ninety (90) days after the occurrence of the Companyevent that terminated the continued membership of Member in Borrower, agree in writing (i) to continue 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 Borrower, effective as of the occurrence of the event that terminated the continued membership of Member of Borrower in Borrower. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company Borrower and upon the occurrence of such an event, the existence business of the Company Borrower shall continue without dissolution. The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company Borrower upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the CompanyBorrower.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents.
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 1 contract
Sources: Loan Agreement (Acadia Realty Trust)
Single Purpose Entity/Separateness. Borrower represents, warrants and covenants as follows:
(a) Each Borrower has not since its formation and will not:
(i) engage in any business or activity other than the leasing, ownership, operation and maintenance of the Propertiesapplicable Individual Property, and activities incidental thereto;
(ii) acquire or own any assets other than (A) the applicable Individual Property and/or Individual Properties, and (B) such incidental Personal Property as may be necessary for the ownership ownership, leasing, maintenance and operation of the such applicable Individual Property or Individual Properties, as applicable;
(iii) merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary formalities, or fail to maintain comply with the provisions of its separate existenceorganizational documents, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single special purpose entity entity/bankruptcy remote provisions of its organizational documentsdocuments (provided, that, such organizational documents may be amended or modified to the extent that, in each case without addition to the satisfaction of the requirements related thereto set forth therein, Lender’s prior written consent of and, if required by Lender, a Rating Agency Confirmation are first obtained);
(v) own any subsidiary, or make any investment in, any PersonPerson (other than, with respect to any SPE Component Entity, in the applicable Borrower);
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its funds or assets with the funds or assets of any other Person, Person (except for one or permit any Affiliate or constituent party independent access to its bank accountsmore other Borrowers);
(vii) incur any debtIndebtedness, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than (A) the Debt, and/or (B) trade and operational indebtedness incurred in the ordinary course of business with trade creditors or in the routine administration of its affairs, provided such indebtedness is (1) unsecured, (2) not evidenced by a note and (3) due not more than sixty (60) days past the date incurred and paid on or prior to such date and/or (C) such other liabilities as are permitted pursuant to this Agreement; provided however, the aggregate amount of the indebtedness described in (B) shall not exceed (I) at any time with respect to any Individual Property with an Allocated Loan Amount less than $5,000,000, five percent (5%) of the Allocated Loan Amount with respect to such Individual Property, (II) at any time with respect to any Individual Property with an Allocated Loan Amount equal to or greater than $5,000,000, two percent (2%) of the Allocated Loan Amount with respect to such Individual Property and (III) at any time with respect to all Properties in the aggregate, two percent (2%) of the outstanding amount of the Loan. No Indebtedness other than the Debt and Permitted Debt and prior loans that have been satisfied in full as of the date hereofmay be secured (senior, subordinate or pari passu) by any Individual Property;
(viii) fail to maintain all of its books, records, books of account, financial statements and bank accounts, financial statements, accounting records and other entity documents accounts separate and apart from those of any other PersonPerson (except for one or more other Borrowers). Borrower’s assets will not be listed as assets on the financial statement of any other Person (except for one or more other Borrowers); except provided, however, that Borrower’s financial position, assets, liabilities, net worth and operating results assets may be included in the a consolidated financial statements statement of an Affiliateits Affiliates. Borrower has maintained and will maintain its books, provided that (A) appropriate notation shall be made on such consolidated financial statements to indicate the separate identity of Borrower from such Affiliate records, resolutions and that Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate or any other Person, and (B) Borrower’s assets, liabilities and net worth shall also be listed on Borrower’s own separate balance sheetagreements as official records;
(ix) except for capital contributions or capital and distributions permitted under the terms and conditions of Borrower’s its organizational documents and properly reflected on in its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principalprincipal or Affiliate, guarantor of the obligations of Borrowerexcept, or any Affiliate of the foregoingin each case, except upon terms and conditions that are intrinsically fair, commercially reasonable and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure for the obligations benefit of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;
(xii) make any loans or advances under any loan to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other Person;
(xiii) fail to (A) file its own tax returns returns, separate from those of any other Person, except (A) to the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file any tax returns under return by applicable Legal Requirements and Requirements, or (B) pay any taxes if Borrower is required to be paid under file consolidated tax returns by applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrower;
(xiv) fail to (A) hold itself out to the public and identify itself, in each case, as a legal entity separate and distinct from any other Person and not as a division or part of any other Person, (B) conduct its business solely in its own name, (C) hold its assets in its own name (provided that it may commingle its assets with one or more other Borrowers) or (CD) correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operationsoperations (to the extent there exists sufficient cash flow from the applicable Individual Property to do so); provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders any owners of Borrower to make additional capital contributions to Borrower;
(xvi) without the prior unanimous written consent of all of its partners partners, shareholders or members, as applicable, and the prior unanimous written consent of all its board of directors or managers, as applicable, and the prior written consent of each Independent Director (regardless of whether such Independent Director is engaged at the Borrower or SPE Component Entity level), take any Bankruptcy Action with respect to Borrower or any SPE Component Entity (provided, that, none of any member, shareholder or partner (as applicable) of Borrower or any SPE Component Entity or any board of directors or managers (as applicable) of Borrower or each any SPE Component EntityEntity may vote on or otherwise authorize the taking of any of the foregoing actions unless, as in each case, there are at least two (2) Independent Directors then serving in such capacity in accordance with the terms of the applicable including, without limitation, organizational documents and each of such Independent Director, take any Material Action or action that is intended Directors has consented to cause such entity to become insolventforegoing action);
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space space) or fail to use separate stationery, invoices and services performed by an employee of an Affiliate) among the Persons sharing such expenseschecks;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, pay its own liabilities (including, without limitation, salaries of its own employeesemployees and a fairly allocated portion of any personnel and overhead expenses that it shares with any Affiliate) only from its own fundsfunds or fail to maintain a sufficient number of employees in light of its contemplated business operations (in each case to the extent there exists sufficient cash flow from the applicable Individual Property to do so and except for payment of any Borrower’s liabilities by one or more other Borrowers and sharing of employees, personnel or overhead expenses by one or more Borrowers); provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders any owners of Borrower to make additional capital contributions to Borrower;
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliatesAffiliates, as applicable;
(xx) violate identify its partners, members, shareholders or cause other Affiliates, as applicable, as a division or part of it; or
(xxi) fail to be violated conduct its business so that the material factual assumptions made with respect to Borrower and its principals in the Non-Consolidation Opinion or in any New Non-Consolidation Opinion;
(xxi) fail Opinion cease to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other Personbe materially true.
(ib) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner (in the case of a partnership, or the managing ) and at least one member (in the case of a limited liability company company) of Borrower, as applicable, shall be a corporation or an Acceptable LLC (each an “SPE Component Entity”) whose sole asset is its interest in Borrower (and personal property incidental, ancillary or related to, or necessary or appropriate for, its ownership of Borrower, as applicable, shall be an Acceptable DE LLCsuch interest). Each SPE Component Entity (Ai) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iiiSection 5.1(a)(iii) through - (vi) (inclusive) and (viii) through – (xxivxxi) (inclusive) and, if such SPE Component Entity is an Acceptable LLC, Section 5.1(c) and (d) hereof, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (Bii) will not engage in any business or activity other than unrelated to owning an interest in BorrowerBorrower (and personal property incidental, ancillary or related to, or necessary or appropriate for, its ownership of such interest); (Ciii) will not acquire or own any assets other than its partnership, membership, or other equity interest in BorrowerBorrower (and personal property incidental, ancillary or related to, or necessary or appropriate for, its ownership of such interest); (Div) will not at all times continue to own any subsidiary, or make any investment in any Person other no less than its investment a 0.5% direct equity ownership interest in Borrower; (Ev) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation), except for trade payables not to exceed $10,000 which are incurred in the routine administration of its affairs, are unsecured, are not evidenced by a note and are due not more than ninety (90) days past the date incurred and are either paid on or prior to such date or are being contested in good faith; and (Fvi) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.45.1. Prior to Lender acknowledges that as of the withdrawal or the disassociation of any SPE Component Entity from BorrowerClosing Date each Borrower (other than ARC HR5HOTX001, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is substantially similar to that of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower LP) is an Acceptable DE LLC, so long as Borrower maintains such formation status LLC and complies with the requirements set forth in subsection (b)(ii) below, the there are no SPE Component Entity requirement as set forth in this section shall not be applicable. FurthermoreEntities other than ARC HR5HOTX001 GP, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent DirectorsLLC.
(iic) In the event Borrower or the SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”)LLC, the limited liability company agreement of Borrower or the Company SPE Component Entity (as applicable) (the “LLC Agreement”) shall provide that (Ai) upon the occurrence of any event that causes the sole last remaining member of Borrower or the Company SPE Component Entity (as applicable) (“Member”) to cease to be the member of Borrower or the Company SPE Component Entity (as applicable) (other than (1A) upon an assignment by Member of all of its limited liability company interest in Borrower or the Company SPE Component Entity (as applicable) and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2B) the resignation of Member and the admission of an additional member of Borrower or the Company SPE Component Entity (as applicable) in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of Borrower or the Company and executing the LLC Agreement SPE Component Entity (“Special Member”as applicable) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of Borrower or the Company, SPE Component Entity (as applicable) automatically be admitted to Borrower or the Company SPE Component Entity (as applicable) as a member with a 0% economic interest (“Special Member”) and shall continue Borrower or the existence of the Company SPE Component Entity (as applicable) without dissolution, dissolution and (Bii) Special Member may not resign from Borrower or the Company SPE Component Entity (as applicable) or transfer its rights as Special Member unless (1A) a successor Special Member has been admitted to Borrower or the Company SPE Component Entity (as applicable) as a Special Member in accordance with the requirements of the Act Delaware law and (2B) after giving effect to such resignationresignation or transfer, such successor Special Member has also accepted its appointment there remains at least two (2) Independent Directors of the SPE Component Entity or Borrower (as an Independent Directorapplicable) in accordance with Section 5.2 below. The LLC Agreement shall further provide that (vi) Special Member shall automatically cease to be a member of Borrower or the Company SPE Component Entity (as applicable) upon the admission to Borrower or the Company SPE Component Entity (as applicable) of a the first substitute Membermember, (wii) Special Member shall be a member of Borrower or the Company SPE Component Entity (as applicable) that has no interest in the profits, losses and capital of Borrower or the Company SPE Component Entity (as applicable) and has no right to receive any distributions of the assets of Borrower or the CompanySPE Component Entity (as applicable), (xiii) pursuant to Section 18-301 the applicable provisions of the limited liability company act of the State of Delaware (the “Act”), Special Member shall not be required to make any capital contributions to Borrower or the Company SPE Component Entity (as applicable) and shall not receive a limited liability company interest in Borrower or the CompanySPE Component Entity (as applicable), (yiv) Special Member, in its capacity as Special Member, may not bind Borrower or the Company, SPE Component Entity (as applicable) and (zv) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, Borrower or the Company, SPE Component Entity (as applicable) including, without limitation, the merger, consolidation or conversion of Borrower or the CompanySPE Component Entity (as applicable); provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. In order to implement the admission to Borrower or the SPE Component Entity (as applicable) of Special Member, Special Member shall execute a counterpart to the LLC Agreement. Prior to its admission to Borrower or the Company SPE Component Entity (as applicable) as Special Member, Special Member shall not be a member of Borrower or the CompanySPE Component Entity (as applicable), but the Special Member may serve as an Independent Director of Borrower or the Company. Any SPE Component Entity (as applicable).
(d) The LLC Agreement shall further provide that (i) upon the occurrence of any event that causes the Member to cease to be a member of Borrower or the SPE Component Entity (as applicable) to the fullest extent permitted by law, the personal representative of Member shall, within ninety (90) days after the occurrence of the event that terminated the continued membership of Member in Borrower or the SPE Component Entity (as applicable) agree in writing (A) to continue Borrower or the SPE Component Entity (as applicable) and (B) to the admission of the personal representative or its nominee or designee, as the case may be, as a substitute member of Borrower or the SPE Component Entity (as applicable) effective as of the occurrence of the event that terminated the continued membership of Member in Borrower or the SPE Component Entity (as applicable), (ii) any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of Borrower or the Company SPE Component Entity (as applicable) and upon the occurrence of such an event, the existence business of Borrower or the Company SPE Component Entity (as applicable) shall continue without dissolution. The LLC Agreement shall also provide that dissolution and (iii) each of Member and Special Member waives any right it might have to agree in writing to dissolve Borrower or the Company SPE Component Entity (as applicable) upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of Borrower or the CompanySPE Component Entity (as applicable).
(ce) The organizational documents With respect to each Borrower, (i) such Borrower is and always has been duly formed, validly existing and in good standing in the state in which it was formed and in any other jurisdictions where it is qualified to do business; (ii) such Borrower has no outstanding judgments or liens of any nature against it; (iii) such Borrower is in compliance in all material respects with all laws, regulations and orders applicable to such Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents.
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 1 contract
Single Purpose Entity/Separateness. Borrower represents, warrants and covenants as follows:
(a) Borrower has not and will not:
(i) engage in any business or activity other than the ownership, operation and maintenance of the PropertiesProperty, and activities incidental thereto;
(ii) acquire or own any assets other than (A) the PropertiesProperty, and (B) such incidental Personal Property as may be necessary for the ownership and operation of the PropertiesProperty;
(iii) merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existence, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;
(v) own any subsidiary, or make any investment in, any Person;
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its assets with the assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;
(vii) incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than the Debt and Permitted Debt and prior loans that have been satisfied in full as of the date hereofDebt;
(viii) fail to maintain its records, books of account, bank accounts, financial statements, accounting records and other entity documents separate and apart from those of any other Person; except that Borrower’s financial position, assets, liabilities, net worth and operating results may be included in the consolidated financial statements of an Affiliate, provided that (A) appropriate notation shall be made on such consolidated financial statements to indicate the separate identity of Borrower from such Affiliate and that Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate or any other Person, and (B) Borrower’s assets, liabilities and net worth shall also be listed on Borrower’s own separate balance sheet;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of the Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, or any Affiliate of the foregoing, except upon terms and conditions that are intrinsically fair, commercially reasonable and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure the obligations of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other Person;
(xiii) fail to (A) file its own tax returns separate from those of any other Person, except to the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under applicable Legal Requirements Requirements, and (B) pay any taxes required to be paid under applicable Legal Requirements; provided, however, that the Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of the Borrower;
(xiv) fail to (A) hold itself out to the public as a legal entity separate and distinct from any other Person, (B) conduct its business solely in its own name or (C) correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;
(xvi) without the unanimous written consent of all of its partners or members, as applicable, and the written consent of all directors or managers of Borrower or each SPE Component Entity, as applicable including, without limitation, each Independent Directorapplicable, take any Material Action or action that is intended to might cause such entity to become insolvent;
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space and services performed by an employee of an Affiliate) among the Persons sharing such expenses;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, or pay its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable;
(xx) violate or cause to be violated the assumptions made with respect to Borrower and its principals in the Non-Consolidation Opinion or any New Non-Consolidation Opinion[intentionally omitted];
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations; provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise AgreementsDocuments; or
(xxiv) identify itself as a department or division of any other Person.
(i) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner in the case of a partnership, or the managing member in the case of a limited liability company (each an “SPE Component Entity”) of Borrower, as applicable, shall be an Acceptable DE LLCa corporation or a limited liability company whose sole asset is its interest in Borrower, provided that if such SPE Component Entity is a limited liability company (other than a single-member Delaware limited liability company), each of its managing members shall also be a SPE Component Entity. Each SPE Component Entity (A) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iii) through (vi) and (viii) through (xxiv) inclusive, as well as the requirements of clause (ii) below if such SPE Component Entity is a single member limited liability company formed under the Act, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (B) will not engage in any business or activity other than owning an interest in Borrower; (C) will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (D) will not own any subsidiary, or make any investment in any Person other than its investment in Borrower; (E) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); ) and (F) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.46.1. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose articles of incorporation or limited liability company agreement is agreement, as applicable, are substantially similar to that those of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLCa single member Delaware limited liability company, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection subsections (b)(iiii) and (iii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors.
(ii) In the event Borrower or SPE Component Entity is an Acceptable DE LLC a single member limited liability company formed under the Act (as referred to in this clause (ii)applicable, the “Company”), the limited liability company agreement of the Company (the “LLC Agreement”) shall provide that (A) upon the occurrence of any event that causes the sole member of the Company (“Member”) to cease to be the member of the Company (other than (1) upon an assignment by Member of all of its limited liability company interest in the Company and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2) the resignation of Member and the admission of an additional member of the Company in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of the Company and executing the LLC Agreement (“Special Member”) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the Company, automatically be admitted to the Company and shall continue the existence of the Company without dissolution, and (B) Special Member may not resign from the Company or transfer its rights as Special Member unless (1) a successor Special Member has been admitted to the Company as Special Member in accordance with the requirements of the Act and (2) after giving effect to such resignation, such successor Special Member has also accepted its appointment as an Independent DirectorAct. The LLC Agreement shall further provide that (v) Special Member shall automatically cease to be a member of the Company upon the admission to the Company of a substitute Member, (w) Special Member shall be a member of the Company that has no interest in the profits, losses and capital of the Company and has no right to receive any distributions of the assets of the Company, (x) pursuant to Section 18-301 of the Act, Special Member shall not be required to make any capital contributions to the Company and shall not receive a limited liability company interest in the Company, (y) Special Member, in its capacity as Special Member, may not bind the Company, and (z) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Company, including, without limitation, the merger, consolidation or conversion of the Company; provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. Prior to its admission to the Company as Special Member, Special Member shall not be a member of the Company, but the Special Member may serve as an Independent Director of the Company. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company and upon the occurrence of such an event, the existence of the Company shall continue without dissolution. The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the Company.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents.
(d) Borrower Notwithstanding the foregoing, Lender has executed reviewed and delivered to Lender approved the certificate attached hereto as Exhibit D.limited liability company agreement of the Company and the structure of the Company in effect on the Closing Date.
Appears in 1 contract
Single Purpose Entity/Separateness. Borrower represents, warrants and covenants as follows:
(a) Borrower has and Panache Distillery have not and will not:
(i) engage in any business or activity other than the ownership, ownership and operation and maintenance of the Properties, its business and activities incidental thereto;
(ii) acquire or own any assets other than (A) the Propertiesproperty owned by Borrower, and (B) the Property; and (C) such incidental Personal Property property as may be necessary for the ownership and operation of the Propertiesits business;
(iii) merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existenceformalities, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements law of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;.
(v) own any subsidiary, or make any investment in, any Person, other than those currently owned as respect Borrower other than Panache Distillery;
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its assets with the assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;
(vii) incur any debtIndebtedness, except as related in the Intercreditor Agreement, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than (A) the Debt loan, and Permitted Debt (B) trade and prior loans that have been satisfied operational indebtedness incurred in full as the ordinary course of business with trade creditors, provided such indebtedness is (1) unsecured, (2) not evidenced by a note, (3) on commercially reasonable terms and conditions, and (4) due not more than sixty (60) days past the date hereofincurred and paid on or prior to such date;
(viii) fail to maintain all of its books, records, books of account, financial statements and bank accounts, financial statements, accounting records and other entity documents accounts separate and apart from those of its affiliates and any constituent party. No Borrower's assets have or will not be listed as assets on the financial statement of any other Person; except provided, however, that any Borrower’s financial position, assets, liabilities, net worth and operating results 's assets may be included in the a consolidated financial statements statement of an Affiliate, its affiliates provided that (Ai) appropriate notation shall be made on such consolidated financial statements to indicate the separate identity separateness of such Borrower from and such Affiliate affiliates and to indicate that such Borrower’s 's assets and credit are not available to satisfy the debts and other obligations of such Affiliate affiliates or any other Person, Person and (Bii) Borrower’s assets, liabilities and net worth such assets shall also be listed on each Borrower’s 's own separate balance sheet. Each Borrower has maintained and will maintain its books, records, resolutions and agreements as official records;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, principal or any Affiliate of the foregoingaffiliate, except upon terms and conditions that are intrinsically fair, commercially reasonable fair and substantially similar to those that would be available on an arm’sarm's-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure for the obligations benefit of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other Person;
(xiii) fail to (A) file its own tax returns separate (unless prohibited by Applicable Law from those of any other Person, except to the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under applicable Legal Requirements and (B) pay any taxes required to be paid under applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrowerdoing so);
(xiv) fail either to (A) hold itself out to the public as a legal entity separate and distinct from any other Person, (B) person or to conduct its business solely in its own name or (C) fail to correct any known misunderstanding regarding its separate identity;.
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;
(xvi) without the unanimous written consent of all of its partners or members, as applicable, and (a) file or consent to the written filing of any petition, either voluntary or involuntary, to take advantage of any creditors rights laws, (b) seek or consent to the appointment of all directors a receiver, liquidator or managers of Borrower or each SPE Component Entityany similar official, as applicable including, without limitation, each Independent Director, (c) take any Material Action or action that is intended to might cause such entity to become insolvent, or (d) make an assignment for the benefit of creditors;
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space space) or fail to use separate stationery, invoices and services performed by an employee of an Affiliate) among the Persons sharing such expenseschecks;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, pay its own liabilities (including, without limitation, salaries of its own employees) only from its own fundsfunds or fail to maintain a sufficient number of employees in light of its contemplated business operations (in each case to the extent there exists sufficient cash flow from any property owned by such Borrower to do so); provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;or
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable;
(xx) violate or cause to be violated the assumptions made with respect to Borrower and its principals in the Non-Consolidation Opinion or any New Non-Consolidation Opinion;
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other Person.
(i) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner in the case of a partnership, or the managing member in the case of a limited liability company (each an “SPE Component Entity”) of Borrower, as applicable, shall be an Acceptable DE LLC. Each SPE Component Entity (A) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iii) through (vi) and (viii) through (xxiv) inclusive, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (B) will not engage in any business or activity other than owning an interest in Borrower; (C) will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (D) will not own any subsidiary, or make any investment in any Person other than its investment in Borrower; (E) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (F) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is substantially similar to that of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors.
(ii) In the event Borrower or SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”), the limited liability company agreement of the Company (the “LLC Agreement”) shall provide that (A) upon the occurrence of any event that causes the sole member of the Company (“Member”) to cease to be the member of the Company (other than (1) upon an assignment by Member of all of its limited liability company interest in the Company and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2) the resignation of Member and the admission of an additional member of the Company in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of the Company and executing the LLC Agreement (“Special Member”) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the Company, automatically be admitted to the Company and shall continue the existence of the Company without dissolution, and (B) Special Member may not resign from the Company or transfer its rights as Special Member unless (1) a successor Special Member has been admitted to the Company as Special Member in accordance with the requirements of the Act and (2) after giving effect to such resignation, such successor Special Member has also accepted its appointment as an Independent Director. The LLC Agreement shall further provide that (v) Special Member shall automatically cease to be a member of the Company upon the admission to the Company of a substitute Member, (w) Special Member shall be a member of the Company that has no interest in the profits, losses and capital of the Company and has no right to receive any distributions of the assets of the Company, (x) pursuant to Section 18-301 of the Act, Special Member shall not be required to make any capital contributions to the Company and shall not receive a limited liability company interest in the Company, (y) Special Member, in its capacity as Special Member, may not bind the Company, and (z) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Company, including, without limitation, the merger, consolidation or conversion of the Company; provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. Prior to its admission to the Company as Special Member, Special Member shall not be a member of the Company, but the Special Member may serve as an Independent Director of the Company. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company and upon the occurrence of such an event, the existence of the Company shall continue without dissolution. The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the Company.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents.
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 1 contract
Single Purpose Entity/Separateness. Until the Debt has been paid in full, Borrower represents, warrants and covenants as follows:
(a) Borrower has not and will not:
(i) engage in any business or activity other than the ownership, operation and maintenance maintenance, improvement, renovation, exchange, disposition, leasing and management of the PropertiesProperty, and activities incidental thereto;
(ii) acquire or own any assets other than (A) the PropertiesProperty, and (B) such incidental Personal Property as may be necessary for the ownership operation, maintenance, improvement, renovation, exchange, disposition, leasing and operation management of the PropertiesProperty;
(iii) merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all applicable organizational formalities necessary to maintain its separate existenceformalities, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;
(v) own any subsidiary, subsidiary or make any investment in, any Person;
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its assets with the assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;
(vii) incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than (A) the Debt Debt, (B) trade and Permitted Debt operational indebtedness incurred in the ordinary course of business with trade creditors, provided such indebtedness is (1) unsecured, (2) not evidenced by a note, (3) on commercially reasonable terms and conditions, and (4) due not more than sixty (60) days past the date incurred and paid on or prior loans that have been satisfied to such date, and/or (C) financing leases and purchase money indebtedness incurred in full as the ordinary course of business relating to Personal Property on commercially reasonable terms and conditions; provided however, the aggregate amount of the date hereofindebtedness described in (B) and (C) shall not exceed at any time three percent (3%) of the original principal amount of the Note;
(viii) fail to maintain its records, books of account, bank accounts, financial statements, accounting records and other entity documents separate and apart from those of any other Person; except that Borrower’s financial position, assets, liabilities, net worth and operating results may be included in the consolidated financial statements of an Affiliate, provided that (A) appropriate notation shall be made on such consolidated financial statements to indicate the contain a footnote indicating that Borrower is a separate identity of Borrower from such Affiliate legal entity and that Borrower’s assets it maintains separate books and credit are not available to satisfy the debts and other obligations of such Affiliate or any other Person, and (B) Borrower’s assets, liabilities and net worth shall also be listed on Borrower’s own separate balance sheetrecords;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, partner or any Affiliate of the foregoingAffiliate, except upon terms and conditions that are intrinsically fair, commercially reasonable and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure for the obligations benefit of any other Person or hold out have its credit or assets as being available to satisfy the obligations of any other Person;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other Person;
(xiii) fail to (A) file its own tax returns separate from those of or files a consolidated federal income tax return with any other Person, except to the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under applicable Legal Requirements and Person (B) pay any taxes required to be paid under unless allowed by applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrower);
(xiv) fail either to (A) hold itself out to the public as a legal entity separate and distinct from any other Person, (B) Person or to conduct its business solely in its own name or (C) fail to correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;
(xvi) if it is a partnership or limited liability company, without the unanimous written consent of all of its partners or members, as applicable, and the written consent of all 100% of the directors or managers of Borrower or each SPE Component EntityEntity (if any), as applicable including(a) file or consent to the filing of any petition, without limitationeither voluntary or involuntary, each Independent Directorto take advantage of any Creditors Rights Laws, (b) seek or consent to the appointment of a receiver, liquidator or any similar official, (c) take any Material Action or action that is intended to would cause such entity to become insolvent, or (d) make an assignment for the benefit of creditors;
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space and services performed by an employee of an Affiliate) among the Persons sharing such expensesexpenses or to use separate invoices and checks;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, or pay its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; provided, however, that funds or assets as the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrowersame become due;
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable;; or
(xx) violate or cause to be violated the assumptions made with respect to Borrower and its principals in the Non-Consolidation Opinion or any New Non-Consolidation Opinion;
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations (it being understood that in light of Borrower’s contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans Borrower may determine that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other Personno employees are required).
(ib) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”)company, each general partner in the case of a partnership, or the managing member in the case of a limited liability company (each an “SPE Component Entity”) of Borrower, as applicable, shall be an Acceptable DE LLC. Each a limited liability company whose sole asset is its interest in Borrower and each SPE Component Entity which (Ai) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iiiSection 6.l(a)(iii) through - (vi) and (viii) through - (xxiv) inclusivexxi), as if such representation, warranty or covenant was made directly by such SPE Component Entity; (Bii) will not engage in any business or activity other than owning an interest in Borrower; (Ciii) will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (D) will not own any subsidiary, or make any investment in any Person other than its investment in Borrower; (Eiv) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (Fv) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.46.1. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is articles of organization are substantially similar to that those of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity ownersEntity. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLCa single member Delaware limited liability company, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) belowstatus, the no SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directorsrequired.
(iic) In the event Borrower or SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”)a single member Delaware limited liability company, the limited liability company agreement of the Company Borrower (the “LLC Agreement”) shall provide that (Ai) upon the occurrence of any event that causes the sole member of the Company Borrower (“Member”) to cease to be the member of the Company Borrower (other than (1A) upon an assignment by Member of all of its limited liability company interest in the Company Borrower and the admission of the transferee in accordance with the Loan Documents and the LLC Agreementtransferee, or (2B) the resignation of Member and the admission of an additional member of the Company member, in either case in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of the Company and executing the LLC Agreement as a “Special Member” (as such term is defined in the LLC Agreement) (“Special Member”) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the CompanyBorrower, automatically be admitted to the Company Borrower and shall continue the existence of the Company Borrower without dissolution, dissolution and (Bii) Special Member may not resign from the Company Borrower or transfer its rights as Special Member unless (1) a successor Special Member has been admitted to the Company Borrower as Special Member in accordance with the requirements of the Act and (2) after giving effect to such resignation, such successor Special Member has also accepted its appointment as an Independent DirectorDelaware law. The LLC Agreement shall further provide that (vi) Special Member shall automatically cease to be a member of the Company Borrower upon the admission to the Company Borrower of a substitute Member, (wii) Special Member shall be a member of the Company Borrower that has no interest in the profits, losses and capital of the Company Borrower and has no right to receive any distributions of the assets of the CompanyBorrower assets, (xiii) pursuant to Section 18-301 of the Delaware Limited Liability Act (the “Act”), Special Member shall not be required to make any capital contributions to the Company Borrower and shall not receive a limited liability company interest in the CompanyBorrower, (yiv) Special Member, in its capacity as Special Member, may not bind the CompanyBorrower, and (zv) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the CompanyBorrower, including, without limitation, the merger, consolidation or conversion of Borrower. In order to implement the Company; provided, however, such prohibition shall not limit the obligations admission to Borrower of Special Member, in its capacity as Independent Director, Special Member shall execute a counterpart to vote on such matters required by the Loan Documents or the LLC Agreement. Prior to its admission to the Company Borrower as Special Member, Special Member shall not be a member of Borrower. Upon the Companyoccurrence of any event that causes the Member to cease to be a member of Borrower, but to the Special fullest extent permitted by law, the personal representative of Member may serve as an Independent Director shall, within ninety (90) days after the occurrence of the Companyevent that terminated the continued membership of Member in Borrower, agree in writing (i) to continue 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 Borrower, effective as of the occurrence of the event that terminated the continued membership of Member of Borrower in Borrower. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws Law shall not cause Member or Special Member to cease to be a member of the Company Borrower and upon the occurrence of such an event, the existence business of the Company Borrower shall continue without dissolution. dissolution The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company Borrower upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the CompanyBorrower.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents.
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 1 contract
Single Purpose Entity/Separateness. Borrower represents, warrants and covenants as follows:
(a) Borrower has not and will not:
(i) engage in any business or activity other than the ownership, operation and maintenance of the PropertiesProperty, and activities incidental thereto;
(ii) acquire or own any assets other than (A) the PropertiesProperty, and (B) such incidental Personal Property as may be necessary for the ownership ownership, leasing, maintenance and operation of the PropertiesProperty;
(iii) merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existenceformalities, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;
(v) own any subsidiary, or make any investment in, any Person;
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its assets with the assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;
(vii) incur any debtIndebtedness, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than (A) the Debt, (B) trade and operational indebtedness incurred in the ordinary course of business with trade creditors, provided such indebtedness is (1) unsecured, (2) not evidenced by a note, (3) on commercially reasonable terms and conditions, and (4) due not more than sixty (60) days past the date incurred and paid on or prior to such date, and/or (C) Permitted Equipment Leases; provided however, the aggregate amount of the indebtedness described in (B) and (C) shall not exceed at any time three percent (3%) of the outstanding principal amount of the Debt. No Indebtedness other than the Debt and Permitted Debt and prior loans that have been satisfied in full as of may be secured (subordinate or pari passu) by the date hereofProperty;
(viii) fail to maintain all of its books, records, books of account, financial statements and bank accounts, financial statements, accounting records and other entity documents accounts separate and apart from those of its Affiliates. Borrower’s assets have not and will not be listed as assets on the financial statement of any other Person; except provided, however, that Borrower’s financial position, assets, liabilities, net worth and operating results assets may be included in the a consolidated financial statements statement of an Affiliate, its affiliates provided that (Ai) appropriate notation shall be made on such consolidated financial statements to indicate the separate identity separateness of Borrower from and such Affiliate affiliates and to indicate that Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate affiliates or any other Person, Person and (Bii) Borrower’s assets, liabilities and net worth such assets shall also be listed on Borrower’s own separate balance sheet. Borrower has maintained and will maintain its books, records, resolutions and agreements as official records;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, principal or any Affiliate of the foregoingaffiliate, except upon terms and conditions that are intrinsically fair, commercially reasonable fair and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure for the obligations benefit of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other Person;
(xiii) fail to (A) file its own tax returns separate from those of any other Person, except to the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under (unless prohibited by applicable Legal Requirements and (B) pay any taxes required to be paid under applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrowerfrom doing so);
(xiv) fail either to (A) hold itself out to the public as a legal entity separate and distinct from any other Person, (B) Person or to conduct its business solely in its own name or (C) fail to correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, that operations (to the foregoing shall not require Borrower’s members, partners or shareholders extent there exists sufficient cash flow from the Property to make additional capital contributions to Borrowerdo so);
(xvi) without the unanimous written consent of all of its partners or members, as applicable, and (a) file or consent to the written filing of any petition, either voluntary or involuntary, to take advantage of any Creditors Rights Laws, (b) seek or consent to the appointment of all directors a receiver, liquidator or managers of Borrower or each SPE Component Entityany similar official, as applicable including, without limitation, each Independent Director, (c) take any Material Action or action that is intended to might cause such entity to become insolvent, or (d) make an assignment for the benefit of creditors;
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space space) or fail to use separate stationery, invoices and services performed by an employee of an Affiliate) among the Persons sharing such expenseschecks;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, pay its own liabilities (including, without limitation, salaries of its own employees) only from its own fundsfunds or fail to maintain a sufficient number of employees in light of its contemplated business operations (in each case to the extent there exists sufficient cash flow from the Property to do so); provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;or
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable;
(xx) violate or cause to be violated the assumptions made with respect to Borrower and its principals in the Non-Consolidation Opinion or any New Non-Consolidation Opinion;
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other Person.
(ib) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner (in the case of a partnership, or the managing ) and at least one member (in the case of a limited liability company company) of Borrower, as applicable, shall be a corporation or an Acceptable LLC (each an “SPE Component Entity”) of whose sole asset is its interest in Borrower, as applicable, shall be an Acceptable DE LLC. Each SPE Component Entity (Ai) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iiiSection 5.1(a)(iii) through - (vi) (inclusive) and (viii) through - (xxivxx) (inclusive) and, if such SPE Component Entity is an Acceptable LLC, Section 5.1(c) and (d) hereof, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (Bii) will not engage in any business or activity other than owning an interest in Borrower; (Ciii) will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (Div) will not at all times continue to own any subsidiary, or make any investment in any Person other no less than its investment a 0.5% direct equity ownership interest in Borrower; (Ev) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (Fvi) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is substantially similar to that of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors5.1.
(iic) In the event Borrower or the SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”)LLC, the limited liability company agreement of Borrower or the Company SPE Component Entity (as applicable) (the “LLC Agreement”) shall provide that (Ai) upon the occurrence of any event that causes the sole last remaining member of Borrower or the Company SPE Component Entity (as applicable) (“Member”) to cease to be the member of Borrower or the Company SPE Component Entity (as applicable) (other than (1A) upon an assignment by Member of all of its limited liability company interest in Borrower or the Company SPE Component Entity (as applicable) and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2B) the resignation of Member and the admission of an additional member of Borrower or the Company SPE Component Entity (as applicable) in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of the Company and executing the LLC Agreement as a “Special Member” (as such term is defined in the LLC Agreement) (“Special Member”) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of Borrower or the Company, SPE Component Entity (as applicable) automatically be admitted to Borrower or the Company SPE Component Entity (as applicable) as a member with a 0% economic interest and shall continue Borrower or the existence of the Company SPE Component Entity (as applicable) without dissolution, dissolution and (Bii) Special Member may not resign from Borrower or the Company SPE Component Entity (as applicable) or transfer its rights as Special Member unless (1) a successor Special Member has been admitted to Borrower or the Company SPE Component Entity (as applicable) as a Special Member in accordance with the requirements of the Act and Delaware or Maryland law (2) after giving effect to such resignation, such successor Special Member has also accepted its appointment as an Independent Directorapplicable). The LLC Agreement shall further provide that (vi) Special Member shall automatically cease to be a member of Borrower or the Company SPE Component Entity (as applicable) upon the admission to Borrower or the Company SPE Component Entity (as applicable) of a the first substitute Membermember, (wii) Special Member shall be a member of Borrower or the Company SPE Component Entity (as applicable) that has no interest in the profits, losses and capital of Borrower or the Company SPE Component Entity (as applicable) and has no right to receive any distributions of the assets of Borrower or the CompanySPE Component Entity (as applicable), (xiii) pursuant to Section 18-301 the applicable provisions of the limited liability company act of the State of Delaware or Maryland (as applicable, the “Act”), Special Member shall not be required to make any capital contributions to Borrower or the Company SPE Component Entity (as applicable) and shall not receive a limited liability company interest in Borrower or the CompanySPE Component Entity (as applicable), (yiv) Special Member, in its capacity as Special Member, may not bind Borrower or the Company, SPE Component Entity (as applicable) and (zv) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, Borrower or the Company, SPE Component Entity (as applicable) including, without limitation, the merger, consolidation or conversion of Borrower or the Company; provided, however, such prohibition shall not limit SPE Component Entity (as applicable). In order to implement the obligations admission to Borrower or the SPE Component Entity (as applicable) of Special Member, in its capacity as Independent Director, Special Member shall execute a counterpart to vote on such matters required by the Loan Documents or the LLC Agreement. Prior to its admission to Borrower or the Company SPE Component Entity (as applicable) as Special Member, Special Member shall not be a member of Borrower or the CompanySPE Component Entity (as applicable).
(d) The LLC Agreement shall further provide that (i) upon the occurrence of any event that causes the Member to cease to be a member of Borrower or the SPE Component Entity (as applicable) to the fullest extent permitted by law, but the Special personal representative of Member may serve as an Independent Director shall, within ninety (90) days after the occurrence of the Company. Any event that terminated the continued membership of Member in Borrower or the SPE Component Entity (as applicable) agree in writing (A) to continue Borrower or the SPE Component Entity (as applicable) and (B) to the admission of the personal representative or its nominee or designee, as the case may be, as a substitute member of Borrower or the SPE Component Entity (as applicable) effective as of the occurrence of the event that terminated the continued membership of Member in Borrower or the SPE Component Entity (as applicable), (ii) any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of Borrower or the Company SPE Component Entity (as applicable) and upon the occurrence of such an event, the existence business of Borrower or the Company SPE Component Entity (as applicable) shall continue without dissolution. The LLC Agreement shall also provide that dissolution and (iii) each of Member and Special Member waives any right it might have to agree in writing to dissolve Borrower or the Company SPE Component Entity (as applicable) upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of Borrower or the Company.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents(as applicable).
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 1 contract
Single Purpose Entity/Separateness. (I) Each Borrower represents, warrants and covenants as follows:
each SPE Component Entity (aother than a Recycled SPE Borrower/SPE Component Entity) Borrower has not since its formation, (II) each Recycled SPE Borrower/SPE Component Entity has complied with clauses (i)(A), (ii)(A) and (vii) below since its formation and (III) each Borrower and each SPE Component Entity will not, except as may be provided for in this Agreement or as set forth in Section 5.5 hereof:
(i) (A) with respect to Borrower, except with respect to the Previously-Owned Properties, engage in any business or activity other than the ownership, operation operation, management, leasing and maintenance of the Propertiesapplicable Individual Property, and activities related or incidental thereto, and refinancing the Properties in connection with a repayment of the Loan or any subsequent or other Loan, (B) reserved, and (C) with respect to SPE Component Entity, act as a general partner of the limited partnership that owns the related Individual Property or as member of the limited liability company that owns the related Individual Property and transact lawful business that is incident, necessary and appropriate to accomplish the foregoing;
(ii) (A) with respect to Borrower, except with respect to the Previously-Owned Properties, acquire or own any assets other than (Ax) the Propertiesapplicable Individual Property, and (By) such incidental Personal Property as may be necessary for the ownership ownership, leasing, maintenance and operation of such applicable Individual Property and activities related or incidental thereof, (B) reserved, and (C) with respect to SPE Component Entity, own the Propertieslimited partnership or limited liability company interests in the related Borrower and personal property necessary or incidental to its ownership of such interests;
(iii) divide or otherwise engage in or permit any Division or have the power to engage in or permit any Division, merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer (other than with respect to any transfer permitted pursuant to Section 6.3 hereof) or otherwise dispose of all or substantially all of its assets or change its legal structurestructure and has not been the product of, the subject of or otherwise involved in, in each case, any limited liability company division (whether pursuant to a plan of division or otherwise);
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existenceformalities, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documentsdocuments (provided, that, such organizational documents may be amended or modified to the extent that, in each case without addition to the satisfaction of the requirements related thereto set forth therein, Lender’s prior written consent, such consent of Lendernot to be unreasonably withheld, conditioned or delayed);
(v) own any subsidiary, or make any investment in, any PersonPerson (other than, with respect to any SPE Component Entity, in the applicable Borrower);
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its funds or assets with the funds or assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accountsPerson (other than another Person comprising Borrower hereunder);
(vii) other than as permitted by this Agreement, and except with respect to debt that has been paid in full prior to the date of this Agreement, incur any debtIndebtedness, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than, with respect to Borrower (A) the Debt, (B) trade and operational indebtedness incurred in the ordinary course of business with trade creditors, provided such indebtedness is (1) unsecured, (2) not evidenced by a note, (3) on commercially reasonable terms and conditions, and (4) due not more than ninety (90) days past the date incurred and paid on or prior to such date (“Permitted Subordinate Financing”), and/or (C) Permitted Equipment Leases, (D) obligations pursuant to the Ground Leases (including the Curbline Leasehold Ground Leases) and the Curbline Fee Ground Leases, (E) obligations pursuant to the Previously-Owned Property Sale Agreements, (F) real estate taxes not yet delinquent, (G) Capital Expenditures spent and completed in accordance with this Agreement and paid when due, and (H) tenant allowances and tenant improvements incurred pursuant to Leases entered into in accordance with this Agreement and paid when due; provided however, the aggregate amount of the indebtedness described in (B) and (C) shall not exceed at any time (I) with respect to any individual Borrower, three percent (3%) of the initial Allocated Loan Amounts associated with the Individual Property owned by such ▇▇▇▇▇▇▇▇, and (II) with respect to all of the Borrowers, in the aggregate, three percent (3%) of the Outstanding Principal Balance. No Indebtedness other than the Debt and Permitted Debt and prior loans that have been satisfied in full as of may be secured (senior, subordinate or pari passu) by the date hereofProperty or Collateral;
(viii) fail to maintain all of its books, records, books of account, financial statements and bank accounts, financial statements, accounting records and other entity documents accounts separate and apart from those of any other Person; Person (including, without limitation, any Affiliates), except that Borrower’s financial position, assets, liabilities, net worth or SPE Component Entity’s assets and operating results liabilities may be included in the a consolidated financial statements statement of an Affiliate, provided that (A) its Affiliates so long as appropriate notation shall be is made on such consolidated financial statements to indicate the separate identity separateness of Borrower or SPE Component Entity from such Affiliate Affiliates and to indicate that Borrower’s or SPE Component Entity’ s assets and credit are not available to satisfy the debts and other obligations of such Affiliate Affiliates or any other Person. Borrower’s or SPE Component Entity’ s assets have not and will not be listed as assets on the financial statement of any other Person; provided, however, that Borrower’s or SPE Component Entity’s assets may be included in a consolidated financial statement of its Affiliates provided that (i) appropriate notation shall be made on such consolidated financial statements to indicate the separateness of Borrower or SPE Component Entity and such Affiliates and to indicate that Borrower’s or SPE Component Entity’ s assets and credit are not available to satisfy the debts and other obligations of such Affiliates or any other Person and (Bii) Borrower’s assets, liabilities and net worth such assets shall also be listed on Borrower’s or SPE Component Entity’s own separate balance sheet. Borrower or SPE Component Entity has maintained and will maintain its books, records, resolutions and agreements as official records;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principalprincipal or Affiliate including the Management Agreement, guarantor except, in each case in the ordinary course of the obligations of Borrower, or any Affiliate of the foregoing, except business and upon terms and conditions that are intrinsically fair, commercially reasonable fair and substantially similar to those that would be available on an arm’sarm’ s-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person, except for the other Persons comprising Borrower hereunder;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure for the obligations benefit of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person, except in each case for the other Persons comprising Borrower hereunder in connection with this Agreement and the other Loan Documents;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other Person;
(xiii) fail to (A) file its own tax Tax returns separate from those of any other Person, Person (unless prohibited by applicable Legal Requirements from doing so or except to the extent that Borrower or SPE Component Entity is treated as a “disregarded entity” for tax purposes and is not required to file tax such Tax returns under applicable Legal Requirements and (B) pay any taxes required to be paid under applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrower);
(xiv) fail to (A) hold itself out to the public and identify itself, in each case, as a legal entity separate and distinct from any other Person and not as a division or part of any other Person, (B) conduct its business solely in its own name, (C) hold its assets solely in its own name (or the name of other Persons comprising Borrower hereunder) or (CD) correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; operations (to the extent there exists sufficient cash flow from the applicable Individual Property to do so), provided, however, that the foregoing no Person shall not require Borrower’s members, partners or shareholders be required to make additional any direct or indirect capital contributions to BorrowerBorrower or SPE Component Entity in order to comply with the foregoing;
(xvi) without the prior unanimous written consent of all of its partners partners, shareholders or members, as applicable, and the prior unanimous written consent of all its board of directors or managers managers, as applicable, and the prior written consent of each Independent Director (regardless of whether such Independent Director is engaged at the Borrower or each SPE Component EntityEntity level), as applicable including(a) file or consent to the filing of any petition, without limitationeither voluntary or involuntary, each Independent Directorto take advantage of any Creditors Rights Laws, (b) seek or consent to the appointment of a receiver, liquidator or any similar official, (c) take any Material Action or action that is intended with the intent to cause such entity to become insolvent, (d) make an assignment for the benefit of creditors or (e) take any Material Action with respect to Borrower or any SPE Component Entity (provided, that, none of any member, shareholder or partner (as applicable) of Borrower or any SPE Component Entity or any board of directors or managers (as applicable) of Borrower or any SPE Component Entity may vote on or otherwise authorize the taking of any of the foregoing actions unless, in each case, there is at least one (1) Independent Director then serving in such capacity in accordance with the terms of the applicable organizational documents and each of such Independent Directors have consented to such foregoing action);
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space space) or fail to use separate invoices and services performed checks bearing its own name; provided, however, that it is acknowledged and agreed that the Accounts and the Borrower’s operating account may be opened in the name of one Borrower (on behalf of the other Borrowers) and that it shall not be a breach of this Agreement if checks on behalf of any Borrower entity are issued by an employee the name of an Affiliate) among the Persons sharing such expensesaccount-holding Borrower entity;
(xviii) fail to intend pay (or cause to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, pay be paid) its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; funds or fail to maintain a sufficient number of employees (if any) in light of its contemplated business operations (in each case to the extent there exists sufficient cash flow from the applicable Individual Property to do so), provided, however, that the foregoing no Person shall not require Borrower’s members, partners or shareholders be required to make any direct or indirect additional capital contributions to BorrowerBorrower in order to comply with the foregoing;
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliatesAffiliates, as applicable;
(xx) identify its partners, members, shareholders or other Affiliates, as applicable, as a division or part of it; or
(xxi) violate or cause to be violated the assumptions made with respect to Borrower and its principals each SPE Component Entity in the Non-Consolidation Opinion or in any New Non-Non Consolidation Opinion;
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other Person.
(ib) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner (in the case of a partnership, ) or the managing at least one member (in the case of a limited liability company company) of Borrower shall be an Acceptable LLC (each each, an “SPE Component Entity”) of whose sole asset is its interest in Borrower, as applicable, shall be an Acceptable DE LLC. Each SPE Component Entity (Ai) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iiiSection 5.l(a)(iii) through -(vi) (viinclusive) and (viii) through -(xxi) (xxivinclusive) inclusiveand, if such SPE Component Entity is an Acceptable LLC, Section 5.l(c) and (d) hereof, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (Bii) will not engage in any business or activity other than owning an interest in Borrower; (Ciii) will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (Div) will not at all times continue to own any subsidiary, or make any investment in any Person other no less than its investment a 0.1% direct equity ownership interest in Borrower; (Ev) other than as permitted by this Agreement, will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (Fvi) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to 5.1.
(c) In the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is substantially similar to that of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors.
(ii) In the event Borrower or SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”)LLC, the limited liability company agreement of the Company Borrower or such SPE Component Entity (as applicable) (the “LLC Agreement”) shall provide that (Ai) upon the occurrence of any event that causes the sole last remaining member of the Company Borrower or such SPE Component Entity (as applicable) (“Member”) to cease to be the member of the Company Borrower or such SPE Component Entity (as applicable) (other than upon the continuation of such Borrower or SPE Component Entity without dissolution upon (1A) upon an assignment by Member of all of its limited liability company interest in the Company Borrower or such SPE Component Entity (as applicable) and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2B) the resignation of Member and the admission of an additional member of the Company Borrower or such SPE Component Entity (as applicable) in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of the Company and executing the LLC Agreement Borrower or such SPE Component Entity (“Special Member”as applicable) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the Company, Borrower or such SPE Component Entity (as applicable) automatically be admitted to the Company Borrower or such SPE Component Entity (as applicable) as a member with a 0% economic interest (“Special Member”) and shall continue the existence of the Company Borrower or such SPE Component Entity (as applicable) without dissolution, dissolution and (Bii) Special Member may not resign from the Company Borrower or such SPE Component Entity (as applicable) or transfer its rights as Special Member unless (1A) a successor Special Member has been admitted to the Company Borrower or such SPE Component Entity (as applicable) as a Special Member in accordance with the requirements of the Act Delaware law and (2B) after giving effect to such resignationresignation or transfer, there remains at least one (1) Independent Director of such successor Special Member has also accepted its appointment Borrower or SPE Component Entity (as an Independent Directorapplicable) in accordance with Section 5.2 below. The LLC Agreement shall further provide that (vi) Special Member shall automatically cease to be a member of the Company Borrower or such SPE Component Entity (as applicable) upon the admission to Borrower or such SPE Component Entity (as applicable) of the Company of a first substitute Membermember, (wii) Special Member shall be a member of the Company Borrower or such SPE Component Entity (as applicable) that has no interest in the profits, losses and capital of the Company Borrower or such SPE Component Entity (as applicable) and has no right to receive any distributions of the assets of the CompanyBorrower or such SPE Component Entity (as applicable), (xiii) pursuant to Section 18-301 the applicable provisions of the limited liability company act of the State of Delaware (the “Act”), Special Member shall not be required to make any capital contributions to the Company Borrower or such SPE Component Entity (as applicable) and shall not receive a limited liability company interest in the CompanyBorrower or such SPE Component Entity (as applicable), (yiv) Special Member, in its capacity as Special Member, may not bind the Company, Borrower or such SPE Component Entity (as applicable) and (zv) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Company, Borrower or such SPE Component Entity (as applicable) including, without limitation, the merger, Division, consolidation or conversion of the CompanyBorrower or such SPE Component Entity (as applicable); provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. Prior to its admission to the Company as Special Member, Special Member shall not be a member of the Company, but the Special Member may serve as an Independent Director of the Company. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company and upon the occurrence of such an event, the existence of the Company shall continue without dissolution. The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the Company.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents.
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.h
Appears in 1 contract
Sources: Loan Agreement (SITE Centers Corp.)
Single Purpose Entity/Separateness. Until the Debt has been paid in full, Borrower represents, warrants and covenants as follows:
(a) Borrower has not and will not:
(i) engage in any business or activity other than the ownership, operation and maintenance of the PropertiesProperty, and activities incidental thereto;
(ii) acquire or own any assets other than (A) the PropertiesProperty, and (B) such incidental Personal Property as may be necessary for the ownership and operation of the PropertiesProperty;
(iii) merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existenceformalities, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;
(v) own any subsidiary, or make any investment in, any Person;
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its assets with the assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;
(vii) incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than (A) the Debt Debt, (B) trade and Permitted Debt operational indebtedness incurred in the ordinary course of business with trade creditors, provided such indebtedness is (1) unsecured, (2) not evidenced by a note, (3) on commercially reasonable terms and conditions, and (4) due not more than sixty (60) days past the date incurred and paid on or prior loans that have been satisfied to such date, and/or (C) financing leases and purchase money indebtedness incurred in full as the ordinary course of business relating to Personal Property on commercially reasonable terms and conditions; provided however, the aggregate amount of the date hereofindebtedness described in (B) and (C) shall not exceed at any time three percent (3%) of the outstanding principal amount of the Note;
(viii) fail to maintain its records, books of account, bank accounts, financial statements, accounting records and other entity documents separate and apart from those of any other Person; except that Borrower’s 's financial position, assets, liabilities, net worth and operating results may be included in the consolidated financial statements of an Affiliate, provided that (A) appropriate notation shall be made on such consolidated financial statements to indicate the contain a footnote indicating that Borrower is a separate identity of Borrower from such Affiliate legal entity and that Borrower’s assets it maintains separate books and credit are not available to satisfy the debts and other obligations of such Affiliate or any other Person, and (B) Borrower’s assets, liabilities and net worth shall also be listed on Borrower’s own separate balance sheetrecords;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, or any Affiliate of the foregoing, except upon terms and conditions that are intrinsically fair, commercially reasonable and substantially similar to those that would be available on an arm’sarm's-length basis with unaffiliated third parties; (the Management Agreement shall be deemed to comply with this subsection);
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify identity its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure for the obligations benefit of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other Person;
(xiii) fail to (A) file its own tax returns separate from those or be included on the tax returns of any other Person, person or entity except as required by Applicable Law and to the extent that Borrower is not treated as a “"disregarded entity” for tax purposes and is not required to file tax returns " under applicable Legal Requirements and (B) pay any taxes required to be paid under applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of BorrowerApplicable Law;
(xiv) fail either to (A) hold itself out to the public as a legal entity separate and distinct from any other Person, (B) Person or to conduct its business solely in its own name or (C) fail to correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; providedoperations (provided that Borrower's failure to do so solely because of a shortfall in cash flow derived from the operation of the Property shall not, howeverby itself, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrowerconstitute a breach of this covenant);
(xvi) without the unanimous written consent of all of its partners or members, as applicable, and the written consent of all directors or 100% of the directors/managers of Borrower or each SPE Component EntityEntity (if any), as applicable including(a) file or consent to the filing of any petition, without limitationeither voluntary or involuntary, each Independent Directorto take advantage of any Creditors Rights Laws, (b) seek or consent to the appointment of a receiver, liquidator or any similar official, (c) take any Material Action or action that is intended to might cause such entity to become insolvent, or (d) make an assignment for the benefit of creditors;
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space and services performed by an employee of an Affiliate) among the Persons sharing such expensesexpenses and to use separate stationery, invoices and checks;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, or pay its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; providedfunds (provided that Borrower's failure to do so solely because of a shortfall in cash flow derived from the operation of the Property shall not, howeverby itself, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrowerconstitute a breach of this covenant);
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable;
(xx) violate or cause to be violated the assumptions made with respect to Borrower and its principals in any opinion letter pertaining to substantive consolidation delivered to Lender in connection with the Non-Consolidation Opinion or any New Non-Consolidation Opinion;Loan; or
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other Person.
(ib) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”)company, each general partner in the case of a partnership, or the managing member in the case of a limited liability company (each an “"SPE Component Entity”COMPONENT ENTITY") of Borrower, as applicable, shall be an Acceptable DE LLCa corporation whose sole asset is its interest in Borrower. Each SPE Component Entity (Ai) will at all times comply with each of the covenants, terms and provisions contained in Sections Section 6.1(a)(iii) through - (vi) and (viii) through - (xxiv) inclusivexxi), as if such representation, warranty or covenant was made directly by such SPE Component Entity; (Bii) will not engage in any business or activity other than owning an interest in Borrower; (Ciii) will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (D) will not own any subsidiary, or make any investment in any Person other than its investment in Borrower; (Eiv) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (Fv) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.46.1. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is articles of incorporation are substantially similar to that those of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLCa single member Delaware limited liability company, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) belowstatus, the no SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directorsrequired.
(iic) In the event Borrower or SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”)a single member Delaware limited liability company, the limited liability company agreement of the Company Borrower (the “"LLC Agreement”AGREEMENT") shall provide that (Ai) upon the occurrence of any event that causes the sole member of the Company Borrower (“Member”"MEMBER") to cease to be the member of the Company Borrower (other than (1A) upon an assignment by Member of all of its limited liability company interest in the Company Borrower and the admission of the transferee in accordance with the Loan Documents and the LLC Agreementtransferee, or (2B) the resignation of Member and the admission of an additional member of the Company member, in either case in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of the Company and executing the LLC Agreement (“as a "Special Member”" (as such term is defined in the LLC Agreement) ("SPECIAL MEMBER") shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the CompanyBorrower, automatically be admitted to the Company Borrower and shall continue the existence of the Company Borrower without dissolution, dissolution and (Bii) Special Member may not resign from the Company Borrower or transfer its rights as Special Member unless (1) a successor Special Member has been admitted to the Company Borrower as Special Member in accordance with the requirements of the Act and (2) after giving effect to such resignation, such successor Special Member has also accepted its appointment as an Independent DirectorDelaware law. The LLC Agreement shall further provide that (vi) Special Member shall automatically cease to be a member of the Company Borrower upon the admission to the Company Borrower of a substitute Member, (wii) Special Member shall be a member of the Company Borrower that has no interest in the profits, losses and capital of the Company Borrower and has no right to receive any distributions of the assets of the CompanyBorrower assets, (xiii) pursuant to Section 18-301 of the ActDelaware Limited Liability Company Act (the "ACT"), Special Member shall not be required to make any capital contributions to the Company Borrower and shall not receive a limited liability company interest in the CompanyBorrower, (yiv) Special Member, in its capacity as Special Member, may not bind the Company, Borrower and (zv) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the CompanyBorrower, including, without limitation, the merger, consolidation or conversion of Borrower. In order to implement the Company; provided, however, such prohibition shall not limit the obligations admission to Borrower of Special Member, in its capacity as Independent Director, Special Member shall execute a counterpart to vote on such matters required by the Loan Documents or the LLC Agreement. Prior to its admission to the Company Borrower as Special Member, Special Member shall not be a member of Borrower. Upon the Companyoccurrence of any event that causes the Member to cease to be a member of Borrower, but to the Special fullest extent permitted by law, the personal representative of Member may serve as an Independent Director shall, within ninety (90) days after the occurrence of the Company. event that terminated the continued membership of Member in Borrower, agree in writing (i) to continue 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 Borrower, effective as of the occurrence of the event that terminated the continued membership of Member of Borrower in Borrower, Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company Borrower and upon the occurrence of such an event, the existence business of the Company Borrower shall continue without dissolution. The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company Borrower upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the CompanyBorrower.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents.
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 1 contract
Sources: Loan Agreement (Inland Western Retail Real Estate Trust Inc)
Single Purpose Entity/Separateness. Borrower represents, warrants and covenants as follows:
(a) Borrower has not and will not:
(i) engage in any business or activity other than the acquisition, ownership, operation operation, management, financing, refinancing, development, holding, sale, disposition, leasing and maintenance of the PropertiesProperty and/or the direct or indirect interests therein, and activities incidental theretothereto and/or appropriate to accomplish the foregoing, except for Borrower’s interest in RP/▇ ▇▇▇▇▇▇▇▇, Limited Partnership, a Delaware series limited partnership which Borrower shall dissolve within sixty (60) days after the date hereof;
(ii) acquire or own any assets other than (A) the PropertiesProperty, and (B) such incidental Personal Property Property, licenses, permits (including, without limitation, any applicable liquor licenses) as may be necessary for the ownership and operation of the PropertiesProperty and related to the activities described in clause (i) of this Section 6.1(a), and (C) Borrower’s interest in RP/▇ ▇▇▇▇▇▇▇▇, Limited Partnership, a Delaware series limited partnership which Borrower shall dissolve within sixty (60) days after the date hereof;
(iii) merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets unless as a result thereof the Loan shall be repaid or otherwise satisfied in full or in connection with a permitted assumption of the Loan pursuant to this Agreement, or change its legal structurestructure in violation of the terms of the Loan Documents;
(iv) (A) fail to observe all organizational formalities which are necessary to maintain its separate existence, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case case, with respect to the matters set forth in this Section 6.1 without the prior written consent of Lender;
(v) own any subsidiary, or make any investment in, any Person, except for Borrower’s interest in RP/▇ ▇▇▇▇▇▇▇▇, Limited Partnership, a Delaware series limited partnership which Borrower shall dissolve within sixty (60) days after the date hereof;
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its assets with the assets of any other Person, or permit any Affiliate (other than Manager) or constituent party independent access to its bank accounts;
(vii) incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than (A) the Debt Debt, (B) such other liabilities which are expressly permitted pursuant to this Agreement and Permitted Debt the other Loan Documents, (C) trade and operational indebtedness incurred in the ordinary course of business with trade creditors, provided such indebtedness is (1) unsecured, (2) not evidenced by a note, (3) on commercially reasonable terms and conditions, and (4) due not more than sixty (60) days past the date incurred and paid on or prior loans that have been satisfied to such date, unless being disputed in full as the ordinary course of Borrower’s business, and/or (D) financing leases and purchase money indebtedness incurred in the ordinary course of business relating to Personal Property on commercially reasonable terms and conditions; provided however, the aggregate amount of the date hereofindebtedness described in (C) and (D) shall not exceed at any time three percent (3%) of the outstanding principal amount of the Note;
(viii) fail to maintain its records, books of account, bank accounts, financial statements, accounting records and other entity documents separate and apart from those of any other Person; except that Borrower’s financial position, assets, liabilities, net worth and operating results may be included in the consolidated financial statements of an Affiliate, provided that (A) appropriate notation shall be made on such consolidated financial statements to indicate the separate identity of Borrower from such Affiliate and that Borrower’s assets and credit are not intended to be available to satisfy the debts and other obligations of such Affiliate or any other Person, and (B) Borrower’s assets, liabilities and net worth shall also be listed on Borrower’s own separate balance sheetincluded as supplemental information with the consolidated financial statements of such Affiliate;
(ix) except as set forth on Schedule III hereto, and except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and recordsexcept as expressly permitted by the Loan Documents, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, or any Affiliate of the foregoing, except upon terms and conditions that are intrinsically fair, commercially reasonable and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan for that certain Reimbursement and prior loans that have been satisfied in full Indemnity Agreement dated as of June 2, 2011, as assigned, assumed and amended pursuant to that certain Assignment, Assumption and Amendment to Reimbursement and Indemnity Agreement dated on or about the date hereof (true, correct and certain complete copies of which have been delivered to Lender, and pursuant to which Borrower no longer has any obligations of Operating Lessee arising from events or occurrences first arising from and after the date hereof) (or a predecessor operating lessee) thereunderthe “Reimbursement and Indemnity Agreement”), assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure the obligations of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other Personexcept for Borrower’s interest in RP/▇ ▇▇▇▇▇▇▇▇, Limited Partnership, a Delaware series limited partnership which Borrower shall dissolve within sixty (60) days after the date hereof;
(xiii) fail to (A) file its own tax returns separate from those of any other Person, except to the extent that Borrower is treated as a “disregarded entityDisregarded Entity” for tax purposes and is not required to file tax returns under applicable Legal Requirements and (B) pay any taxes required to be paid under applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrower;
(xiv) fail to (A) hold itself out to the public as a legal entity separate and distinct from any other Person, (B) conduct its business solely in its own name or (C) correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; , provided, however, that the foregoing shall not in no event require Borrower’s membersany direct or indirect member, partners partner or shareholders shareholder or other constituent owner (direct or indirect) of Borrower to make any loan, additional capital contributions contributions, equity or other infusion of capital to Borrower;
(xvi) if it is a partnership or limited liability company, without the unanimous written consent of all of its partners or members, as applicable, and the written consent of one hundred percent (100%) of all directors or managers of Borrower or each SPE Component EntityEntity (if any), as applicable including, without limitation, each Independent DirectorManager, take any Material Action or action that is intended to cause such entity to become insolventAction;
(xvii) fail to fairly and reasonably allocate material shared expenses (including, without limitation, shared office space and services performed by an employee of an Affiliate) among the Persons sharing such material expenses;
(xviii) fail to intend endeavor to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, or pay its own liabilities (including, without limitation, salaries of its own employees) only from its own funds, in each case to the extent there exists sufficient cash flow from the operation of the Property to do so and Borrower is not restricted from applying cash flow by Lender pursuant to the terms of this Agreement; provided, however, provided that the foregoing shall not not, in any event, require Borrower’s membersany direct or indirect member, partners partner or shareholders shareholder or any constituent member, direct or indirect, of Borrower to make any loan, additional capital contributions contributions, equity or other infusion of capital of any kind to Borrower;
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliatesAffiliates, as applicable, except for Borrower’s interest in RP/▇ ▇▇▇▇▇▇▇▇, Limited Partnership, a Delaware series limited partnership which Borrower shall dissolve within sixty (60) days after the date hereof;
(xx) fail to maintain (or cause to be maintained) a sufficient number of employees in light of its contemplated business operations;
(xxi) Intentionally Blank;
(xxii) violate or cause to be violated the assumptions made with respect to Borrower and its principals in the Non-Consolidation Opinion or any New Non-Consolidation Opinion;
(xxi) fail ; provided that the foregoing shall not, in any event, require any direct or indirect member, partner or shareholder or any constituent member, direct or indirect, of Borrower to maintain a sufficient number make any loan, additional capital contribution, equity or other infusion of employees in light capital of its contemplated business operations;
(xxii) fail any kind to maintain and use separate stationery, invoices and checks bearing its own nameBorrower;
(xxiii) except as set forth on Schedule IV hereto, have any of its obligations guaranteed by an Affiliate, Affiliate except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; orDocuments;
(xxiv) identify itself as a department or division of any other Person;
(xxv) Intentionally Blank; or
(xxvi) buy or hold evidence of indebtedness issued by any other Person (other than cash or investment-grade securities and/or Permitted Investments). The foregoing provisions of this Section 6.1(a) shall not be deemed to require any direct or indirect members, partners or shareholders of Borrower to contribute or loan any amount to Borrower.
(ib) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(iic) below) (an “Acceptable DE LLC”), each general partner in the case of a partnership, or the managing member in the case of a limited liability company (each an “SPE Component Entity”) of Borrower, as applicable, shall be an Acceptable DE LLCa corporation or a limited liability company whose sole asset is its interest in Borrower, provided that if such SPE Component Entity is a limited liability company (other than a single-member Delaware limited liability company), each of its managing members shall also be a SPE Component Entity. Each SPE Component Entity (Ai) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iii) through — (iv), (vi) and (viii) through - (xxivxxvi), as well as the requirements of subsection (c) inclusivebelow if such SPE Component Entity is a single member limited liability company formed under the Act, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (Bii) will not engage in any business or activity other than owning an interest in Borrower; (Ciii) will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (Div) will not own any subsidiary, or make any investment in any Person other than its investment in Borrower; (Ev) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); ) and (Fvi) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose articles of incorporation or limited liability company agreement is agreement, as applicable, are substantially similar to that those of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLCa single member Delaware limited liability company, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection subsections (b)(iic) and (d) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors.
(iic) In the event Borrower or SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”)a single member Delaware limited liability company, the limited liability company agreement of the Company Borrower or SPE Component Entity, as applicable (the “LLC Agreement”) ), shall provide that (Ai) upon the occurrence of any event that causes the sole member of the Company Borrower or SPE Component Entity, as applicable (“Member”) ), to cease to be the member of the Company Borrower or SPE Component Entity, as applicable (other than (1A) upon an assignment by Member of all of its limited liability company interest in the Company Borrower or SPE Component Entity and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2B) the resignation of Member and the admission of an additional member of the Company Borrower or SPE Component Entity, as applicable, in either case in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director Manager of the Company and executing the LLC Agreement Borrower or SPE Component Entity, as applicable (“Special Member”) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the CompanyBorrower or SPE Component Entity, as applicable, automatically be admitted to the Company Borrower or SPE Component Entity, as applicable, and shall continue the existence of the Company Borrower or SPE Component Entity, as applicable, without dissolution, dissolution and (Bii) Special Member may not resign from the Company Borrower or SPE Component Entity, as applicable, or transfer its rights as Special Member unless (1A) a successor Special Member has been admitted to the Company or SPE Component Entity, as applicable, as Special Member in accordance with the requirements of the Act Delaware law and (2B) after giving effect to such resignation, such successor Special Member has also accepted its appointment as an Independent DirectorManager. The LLC Agreement shall further provide that (vi) Special Member shall automatically cease to be a member of the Company Borrower or SPE Component Entity, as applicable, upon the admission to the Company Borrower or SPE Component Entity, as applicable, of a substitute Member, (wii) Special Member shall be a member of the Company Borrower or SPE Component Entity, as applicable, that has no interest in the profits, losses and capital of the Company Borrower or SPE Component Entity, as applicable, and has no right to receive any distributions of the assets of the CompanyBorrower assets, (xiii) pursuant to Section 18-301 of the Delaware Limited Liability Company Act (the “Act”), Special Member shall not be required to make any capital contributions to the Company Borrower or SPE Component Entity, as applicable, and shall not receive a limited liability company interest in the CompanyBorrower or SPE Component Entity, as applicable, (yiv) Special Member, in its capacity as Special Member, may not bind the CompanyBorrower or SPE Component Entity, as applicable, and (zv) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the CompanyBorrower or SPE Component Entity, as applicable, including, without limitation, the merger, consolidation or conversion of the CompanyBorrower or SPE Component Entity, as applicable; provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent DirectorManager (as applicable), to vote on such matters required by the Loan Documents or the LLC Agreement. In order to implement the admission to Borrower or SPE Component Entity, as applicable, of Special Member, Special Member shall execute a counterpart to the LLC Agreement. Prior to its admission to the Company Borrower or SPE Component Entity, as applicable, as Special Member, Special Member shall not be a member of Borrower or SPE Component Entity, as applicable.
(d) In the Companyevent Borrower or SPE Component Entity is a single-member Delaware limited liability company, but the Special Member may serve as an Independent Director LLC Agreement shall provide that upon the occurrence of the Company. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special event that causes its Member to cease to be a member of Borrower or SPE Component Entity, as applicable, to the Company and upon fullest extent permitted by law, the personal representative of Member shall, within ninety (90) days after the occurrence of such an event, the existence of the Company shall continue without dissolution. The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of terminated the Company.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents.
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.continued membership
Appears in 1 contract
Single Purpose Entity/Separateness. Borrower represents, warrants and covenants as follows:
(a) Borrower represents and warrants, and covenants until the Debt has not been paid and will notsatisfied in full, that Borrower:
(i) has not engaged and will not engage in any business or activity other than the ownership, operation and maintenance of the PropertiesProperty, and activities incidental thereto;
(ii) has not acquired or owned and will not acquire or own any assets other than (A) the PropertiesProperty, and (B) such incidental Personal Property as may be necessary for the ownership ownership, leasing, maintenance and operation of the PropertiesProperty;
(iii) has not and will not merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) has not and will not fail to observe all organizational formalities necessary to maintain its separate existenceformalities, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) without Lender’s prior written consent which Lender may withhold in its sole and absolute discretion, amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;
(v) has not owned and will not own any subsidiary, or make any investment in, any PersonPerson (other than, with respect to any SPE Component Entity, in Borrower);
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan has not and prior loans that have been satisfied in full as of the date hereof, will not commingle its funds or assets with the funds or assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;
(vii) has not and will not incur any debtIndebtedness, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than (A) the Debt, (B) trade and operational indebtedness incurred in the ordinary course of business with trade creditors, provided such indebtedness is (1) unsecured, (2) not evidenced by a note, (3) on commercially reasonable terms and conditions, and (4) due not more than sixty (60) days past the date incurred and paid on or prior to such date, and/or (C) Permitted Equipment Leases; provided however, the aggregate amount of the indebtedness described in (B) and (C) shall not exceed at any time two percent (2%) of the outstanding principal amount of the Debt. No Indebtedness other than the Debt and Permitted Debt and prior loans that have been satisfied in full as of may be secured (subordinate or pari passu) by the date hereofProperty;
(viii) has not failed and will not fail to maintain all of its books, records, books of account, financial statements and bank accounts, financial statements, accounting records and other entity documents accounts separate and apart from those of any other PersonPerson (including, without limitation, any Affiliates); except that has not failed and will not fail to maintain its books, records, resolutions and agreements as official records. Borrower’s assets have not and will not be listed as assets on the financial position, assets, liabilities, net worth and operating results may be included in the consolidated financial statements statement of an Affiliate, provided that any other Person unless (Ai) appropriate notation has been and shall be made on such consolidated financial statements to indicate the separate identity separateness of Borrower from and such Affiliate Affiliates and to indicate that Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate Affiliates or any other Person, Person and (Bii) Borrower’s assets, liabilities such assets have been and net worth shall also be listed on Borrower’s own separate balance sheet;
(ix) except for capital contributions or capital distributions permitted under the terms has not entered into and conditions of Borrower’s organizational documents and properly reflected on its books and records, will not enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, principal or any Affiliate of the foregoingAffiliate, except upon terms and conditions that are intrinsically fair, commercially reasonable fair and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties;
(x) has not maintained and will not maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan has not assumed or guaranteed, and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, will not assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or ; has not otherwise pledged and will not otherwise pledge its assets to secure for the obligations benefit of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;
(xii) has not made and will not make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other Person;
(xiii) has not failed and will not fail to (A) file its own tax returns separate from those of any other Person, except to the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under (unless prohibited by applicable Legal Requirements and (B) pay any taxes required to be paid under applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrowerfrom doing so);
(xiv) has not failed and will not fail to (A) hold itself out to the public and identify itself, in each case, as a legal entity separate and distinct from any other Person and not as a division or part of any other Person, (B) conduct its business solely in its own name, (C) hold its assets in its own name or (CD) correct any known misunderstanding regarding its separate identity;
(xv) has not failed and will not fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, that operations (to the foregoing shall not require Borrower’s members, partners or shareholders extent there exists sufficient cash flow from the Property to make additional capital contributions to Borrowerdo so);
(xvi) without the prior unanimous written consent of all of its partners or members, as applicableapplicable (a) has not filed or consented to, and will not file or consent to, the written filing of any petition, either voluntary or involuntary, to take advantage of any Creditors Rights Laws, (b) has not sought or consented to, and will not seek or consent to, the appointment of all directors a receiver, liquidator or managers of Borrower or each SPE Component Entityany similar official, as applicable including(c) has not taken, without limitationand will not take, each Independent Director, take any Material Action or non-commercially reasonable action that is intended to might cause such entity to become insolvent, or (d) has not made and will not make an assignment for the benefit of creditors;
(xvii) has not failed and will not fail to fairly and reasonably (a) allocate shared expenses (including, without limitation, shared office space space) or (b) use separate stationery, invoices and services performed by an employee of an Affiliate) among the Persons sharing such expenseschecks;
(xviii) has not failed and will not fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, (a) pay its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; provided, however, that funds or (b) maintain a sufficient number of employees in light of its contemplated business operations (in each case to the foregoing shall not require Borrower’s members, partners or shareholders extent there exists sufficient cash flow from the Property to make additional capital contributions to Borrowerdo so);
(xix) has not acquired and will not acquire obligations or securities of its partners, members, shareholders or other affiliatesAffiliates, as applicable;
(xx) has not identified and will not identify its partners, members, shareholders or other Affiliates, as applicable, as a division or part of it; or
(xxi) has not violated and will not violate or cause to be violated the assumptions made with respect to Borrower and its principals in the Non-Consolidation any Insolvency Opinion if required under this Agreement or any New Non-Consolidation Additional Insolvency Opinion;
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other Person.
(ib) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner (in the case of a partnership, or ) and the sole managing member (in the case of a limited liability company company) of Borrower, as applicable, shall be a corporation or an Acceptable LLC (each an “SPE Component Entity”) of whose sole asset is its interest in Borrower, as applicable, shall be an Acceptable DE LLC. Each SPE Component Entity (Ai) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iii8.1(a)(iii)–(vi) through (viinclusive) and Sections (viii)–(xxi) (inclusive) and, if such SPE Component Entity is an Acceptable LLC, Sections 8.1(c) and (viiid) through (xxiv) inclusivehereof, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (Bii) will not engage in any business or activity other than owning an interest in Borrower; (Ciii) will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (Div) will not at all times continue to own any subsidiary, or make any investment in any Person other no less than its investment a 0.5% direct equity ownership interest in Borrower; (Ev) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (Fvi) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is substantially similar to that of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors8.1.
(iic) In the event Borrower or the SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”)LLC, the limited liability company agreement of Borrower or the Company SPE Component Entity (as applicable) (the “LLC Agreement”) shall provide that (Ai) upon the occurrence of any event that causes the sole last remaining member of Borrower or the Company SPE Component Entity (as applicable) (“Member”) to cease to be the member of Borrower or the Company SPE Component Entity (as applicable) (other than (1A) upon an assignment by Member of all of its limited liability company interest in Borrower or the Company SPE Component Entity (as applicable) and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2B) the resignation of Member and the admission of an additional member of Borrower or the Company SPE Component Entity (as applicable) in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a any natural person duly designated under the LLC Agreement any person acting as Independent Director of the Company and executing the LLC Agreement (“Special Member”) applicable organizational documents shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of Borrower or the Company, SPE Component Entity (as applicable) automatically be admitted to Borrower or the Company SPE Component Entity (as applicable) as a member with a 0% economic interest (“Special Member”) and shall continue Borrower or the existence of the Company SPE Component Entity (as applicable) without dissolution, and (Bii) Special Member may not resign from Borrower or the Company SPE Component Entity (as applicable) or transfer its rights as Special Member unless (1) a successor Special Member has been admitted to Borrower or the Company SPE Component Entity (as applicable) as a Special Member in accordance with the requirements of the Act and Delaware law, (2) after giving effect to such resignation, such successor Special Member has also accepted its appointment as an Independent Director. The LLC Agreement shall further provide that (viii) Special Member shall automatically cease to be a member of Borrower or the Company SPE Component Entity (as applicable) upon the admission to Borrower or the Company SPE Component Entity (as applicable) of a the first substitute Membermember, (wiv) Special Member shall be a member of Borrower or the Company SPE Component Entity (as applicable) that has no interest in the profits, losses and capital of Borrower or the Company SPE Component Entity (as applicable) and has no right to receive any distributions of the assets of Borrower or the CompanySPE Component Entity (as applicable), (xv) pursuant to Section 18-301 the applicable provisions of the limited liability company act of the State of Delaware (the “Act”), Special Member shall not be required to make any capital contributions to Borrower or the Company SPE Component Entity (as applicable) and shall not receive a limited liability company interest in Borrower or the CompanySPE Component Entity (as applicable), (yvi) Special Member, in its capacity as Special Member, may not bind Borrower or the CompanySPE Component Entity (as applicable), and (zvii) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, Borrower or the Company, SPE Component Entity (as applicable) including, without limitation, the merger, consolidation or conversion of Borrower or the Company; provided, however, such prohibition shall not limit SPE Component Entity (as applicable). In order to implement the obligations admission to Borrower or the SPE Component Entity (as applicable) of Special Member, in its capacity as Independent Director, Special Member shall execute a counterpart to vote on such matters required by the Loan Documents or the LLC Agreement. Prior to its admission to Borrower or the Company SPE Component Entity (as applicable) as Special Member, Special Member shall not be a member of Borrower or the CompanySPE Component Entity (as applicable).
(d) The LLC Agreement with respect to any Acceptable LLC shall further provide that (i) upon the occurrence of any event that causes the Member to cease to be a member of Borrower or the SPE Component Entity (as applicable) to the fullest extent permitted by applicable Law, but the Special personal representative of Member may serve as an Independent Director shall, within ninety (90) days after the occurrence of the Company. Any event that terminated the continued membership of Member in Borrower or the SPE Component Entity (as applicable) agree in writing (A) to continue Borrower or the SPE Component Entity (as applicable) and (B) to the admission of the personal representative or its nominee or designee, as the case may be, as a substitute member of Borrower or the SPE Component Entity (as applicable) effective as of the occurrence of the event that terminated the continued membership of Member in Borrower or the SPE Component Entity (as applicable), (ii) any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of Borrower or the Company SPE Component Entity (as applicable) and upon the occurrence of such an event, the existence business of Borrower or the Company SPE Component Entity (as applicable) shall continue without dissolution. The LLC Agreement shall also provide that dissolution and (iii) each of Member and Special Member waives any right it might have to agree in writing to dissolve Borrower or the Company SPE Component Entity (as applicable) upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of Borrower or the Company.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents(as applicable).
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 1 contract
Sources: Loan Agreement (AmREIT, Inc.)
Single Purpose Entity/Separateness. Borrower represents, warrants and covenants as follows:
(a) Borrower will not and Borrower hereby represents and warrants to Administrative Agent and each Lender that Borrower has not and will notsince the date of its formation:
(i) engage in any business or activity other than the ownership, operation and operation, management, leasing, improvement and/or maintenance of the Properties, Property and activities incidental thereto;
(ii) acquire or own any assets other than (A) the PropertiesProperty, (B) Borrower’s leasehold interest in the Garage Penthouse Lease and (BC) such incidental Personal Property as may be necessary for the ownership and ownership, leasing, improvement, maintenance and/or operation of the PropertiesProperty and activities related or incidental thereto;
(iii) merge into or consolidate with any Person, or or, to the fullest extent permitted by law, dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structurestructure from a Delaware limited liability company, other than, in each case, such activities as are contemplated or permitted pursuant to any provision of this Agreement or of any of the other Loan Documents;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existenceformalities, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or amend (B) amendexcept as otherwise expressly permitted hereunder), modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;
(v) own any subsidiary, or make any investment in, any PersonPerson (other than, with respect to any SPE Component Entity, in Borrower);
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its funds or assets with the funds or assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;
(vii) incur any debtIndebtedness, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than (A) the Debt, (B) trade and operational indebtedness incurred in the ordinary course of business with trade creditors, provided such indebtedness is (1) unsecured, (2) not evidenced by a note, (3) on commercially reasonable terms and conditions, and (4) due not more than one hundred and twenty (120) days past the date incurred and paid on or prior to such date, (C) Permitted Equipment Leases, (D) indebtedness incurred prior to the Closing Date in connection with the ownership of the Property that has been indefeasibly repaid in full or is otherwise no longer owed by Borrower (contingent or otherwise) and/or (E) the Permitted Alterations Obligations; provided however, the aggregate amount of the indebtedness described in (B) and (C) shall not exceed at any time three percent (3%) of the outstanding principal amount of the Debt. No Indebtedness other than the Debt and Permitted Debt and prior loans that have been satisfied in full as of may be secured (senior, subordinate or pari passu) by the date hereofProperty;
(viii) fail to maintain all of its records, books of account, bank accountsrecords, financial statements, accounting records and records, other entity documents and bank accounts separate and apart from those of any other Person (including, without limitation, any Affiliates). Borrower’s assets have not and will not be listed as assets on the financial statement of any other Person; except provided, however, that Borrower’s financial position, assets, liabilities, net worth and operating results assets may be included in a consolidated and/or combined financial statement of its Affiliates provided that, to the consolidated financial statements extent necessary to (i) prevent a substantive consolidation of an Affiliate, provided that the assets and liabilities of Borrower with the assets and liabilities of any other Person or (Aii) deliver a Non-Consolidation Opinion when required under this Agreement: (1) appropriate notation shall be made on such consolidated financial statements to indicate the separate identity separateness of Borrower from and such Affiliate Affiliates and to indicate that Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate Affiliates or any other Person, Person and (B2) Borrower’s assets, liabilities and net worth such assets shall also be listed on Borrower’s own separate balance sheet. Borrower has maintained and will maintain its books of account, records, financial statements, accounting records, other entity documents, resolutions and agreements as official records;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, principal or any Affiliate of the foregoingAffiliate, except (i) as may have been approved in writing by Administrative Agent in its sole and absolute discretion or (ii) upon terms and conditions that are intrinsically fair, commercially reasonable and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts or obligations of any other Person, hold itself out to be responsible for the debts or obligations of any other Person, or otherwise pledge its assets to secure or credit for the obligations benefit of any other Person or hold out its assets or credit or assets as being available to satisfy the debts or obligations of any other Person;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other PersonPersons;
(xiii) fail to (A) file its own tax returns separate from those of any other Person, Person (unless prohibited by applicable Legal Requirements from doing so or except to the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file such tax returns under applicable Legal Requirements Requirements) and (B) pay any taxes so required to be paid by such Borrower under applicable Legal Requirements; provided, however, that Borrower shall not have any obligation Requirements (to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrowerthe extent there is sufficient cash flow from the Property to do so);
(xiv) fail to (A) hold itself out to the public and identify itself, in each case, as a legal entity separate and distinct from any other Person and not as a division, department or part of any other Person, (B) conduct its business solely in its own name, (C) hold its assets in its own name or (CD) correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operationsoperations (to the extent there exists sufficient cash flow from the Property to do so); provided, however, that the foregoing no Person shall not require Borrower’s members, partners or shareholders be required to make any direct or indirect additional capital contributions to BorrowerBorrower in order to comply with the foregoing;
(xvi) without the prior unanimous written consent of all of its partners partners, shareholders or members, as applicable, and the prior unanimous written consent of all its board of directors or managers managers, as applicable, and the prior written consent of each Independent Manager (regardless of whether such Independent Manager is engaged at the Borrower or each SPE Component EntityEntity level), as applicable including(a) file or consent to the filing of any petition, without limitationeither voluntary or involuntary, each Independent Directorto take advantage of any Creditors Rights Laws, (b) seek or consent to the appointment of a receiver, liquidator or any similar official unless such appointment is sought by Administrative Agent, (c) take any Material Action or action that is intended to might cause such entity to become insolvent, (d) make an assignment for the benefit of creditors or (e) take any Material Action with respect to Borrower or any SPE Component Entity (provided, that, none of any member, shareholder or partner (as applicable) of Borrower or any SPE Component Entity or any board of directors or managers (as applicable) of Borrower or any SPE Component Entity may vote on or otherwise authorize the taking of any of the foregoing actions unless, in each case, there are at least two (2) Independent Managers - 91 - then serving in such capacity in accordance with the terms of the applicable organizational documents and each of such Independent Managers has consented to such foregoing action);
(xvii) fail to allocate fairly and reasonably allocate shared expenses with its Affiliates (including, without limitation, shared office space space) or fail to use separate stationery, invoices and services performed by an employee checks bearing its own name (or, for so long as the Manager is acting on behalf of an Affiliate) among Borrower, the Persons sharing such expensesname of the Manager on behalf of Borrower);
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, and pay its own liabilities (including, without limitation, salaries of its own employees, if any) only from its own fundsfunds or fail to maintain a sufficient number of employees (if any) in light of its contemplated business operations (in each case to the extent there exists sufficient cash flow from the Property to do so); provided, however, that the foregoing no Person shall not require Borrower’s members, partners or shareholders be required to make any direct or indirect additional capital contributions to BorrowerBorrower in order to comply with the foregoing;
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliatesAffiliates, as applicable;
(xx) identify its partners, members, shareholders or other Affiliates, as applicable, as a division, department or part of it;
(xxi) violate or cause to be violated the assumptions made with respect to Borrower and its principals in the Non-Consolidation Opinion or in any New Non-Consolidation Opinion;
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail hold itself out as having agreed to maintain and use separate stationery, invoices and checks bearing its own namepay indebtedness incurred by any Affiliate;
(xxiii) have hold out the assets or credit of any Affiliate as being available to satisfy any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan debts or guarantees relating to obligations under the Management Agreements or Franchise Agreementsobligations; or
(xxiv) identify itself as a department or division allow an Affiliate to act in its name, to the extent of any other Personits power to do so.
(ib) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner (in the case of a partnership, or the managing ) and at least one member (in the case of a limited liability company (each an “SPE Component Entity”company) of Borrower, as applicable, shall be a corporation or an Acceptable DE LLCLLC (each, an “SPE Component Entity”) whose sole asset is its interest in Borrower. Each SPE Component Entity (Ai) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iiiSection 5.1(a)(iii) through – (vi) (inclusive) and (viii) through – (xxivxxi) (inclusive) and, if such SPE Component Entity is an Acceptable LLC, Section 5.1(c) and (d) hereof, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (Bii) will not engage in any business or activity other than owning an interest in Borrower; (Ciii) will not acquire or own any assets other than its partnership, membership, or other equity ownership interest in Borrower; (Div) will not at all times continue to own any subsidiary, or make any investment in any Person other no less than its investment a 0.5% direct equity ownership interest in Borrower; (Ev) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (Fvi) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to 5.1.
(c) In the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is substantially similar to that of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors.
(ii) In the event Borrower or SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”)LLC, the limited liability company agreement of the Company Borrower or such SPE Component Entity (as applicable) (the “LLC Agreement”) shall provide that (Ai) upon the occurrence of any event that causes the sole last remaining member of the Company Borrower or such SPE Component Entity (as applicable) (“Member”) to cease to be the member of the Company Borrower or such SPE Component Entity (as applicable) (other than (1A) upon an assignment by Member of all of its limited liability company interest in the Company Borrower or such SPE Component Entity (as applicable) and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, Agreement or (2B) the resignation of Member and the admission of an additional member of the Company Borrower or such SPE Component Entity (as applicable) in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director Manager of the Company and executing the LLC Agreement Borrower or such SPE Component Entity (“Special Member”as applicable) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the Company, Borrower or such SPE Component Entity (as applicable) automatically be admitted to the Company Borrower or such SPE Component Entity (as applicable) as a member with a zero percent (0%) economic interest (“Special Member”) and shall continue the existence of the Company Borrower or such SPE Component Entity (as applicable) without dissolution, dissolution and (Bii) Special Member may not resign from the Company Borrower or such SPE Component Entity (as applicable) or transfer its rights as Special Member unless (1A) a successor Special Member has been admitted to the Company Borrower or such SPE Component Entity (as applicable) as a Special Member in accordance with the requirements of the Act Delaware law and (2B) after giving effect to such resignationresignation or transfer, there remains at least two (2) Independent Managers of such successor Special Member has also accepted its appointment SPE Component Entity or Borrower (as an Independent Directorapplicable) in accordance with Section 5.2 below. The LLC Agreement shall further provide that (vi) Special Member shall automatically cease to be a member of the Company Borrower or such SPE Component Entity (as applicable) upon the admission to Borrower or such SPE Component Entity (as applicable) of the Company of a first substitute Membermember, (wii) Special Member shall be a member of the Company Borrower or such SPE Component Entity (as applicable) that has no interest in the profits, losses and capital of the Company Borrower or such SPE Component Entity (as applicable) and has no right to receive any distributions of the assets of the CompanyBorrower or such SPE Component Entity (as applicable), (xiii) pursuant to Section 18-301 the applicable provisions of the limited liability company act of the State of Delaware (the “Act”), Special Member shall not be required to make any capital contributions to the Company Borrower or such SPE Component Entity (as applicable) and shall not receive a limited liability company interest in the CompanyBorrower or such SPE Component Entity (as applicable), (yiv) Special Member, in its capacity as Special Member, may not bind the Company, Borrower or such SPE Component Entity (as applicable) and (zv) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Company, Borrower or such SPE Component Entity (as applicable) including, without limitation, the merger, consolidation or conversion of the CompanyBorrower or such SPE Component Entity (as applicable); provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent DirectorManager, to vote on such matters required by the Loan Documents or the LLC Agreement. In order to implement the admission to Borrower or such SPE Component Entity (as applicable) of Special Member, Special Member shall execute a counterpart to the LLC Agreement. Prior to its admission to the Company Borrower or such SPE Component Entity (as applicable) as Special Member, Special Member shall not be a member of the CompanyBorrower or such SPE Component Entity (as applicable), but the Special Member may serve as an Independent Director Manager of Borrower or such SPE Component Entity (as applicable).
(d) In the event Borrower or any SPE Component Entity is an Acceptable LLC, the LLC Agreement shall further provide that (i) upon the occurrence of any event that causes the Member to cease to be a member of Borrower or such SPE Component Entity (as applicable) (other than upon continuation of the Company. Any Company without dissolution upon (A) an assignment by the Member of all of its limited liability company interest in the Company and the admission of the transferee in accordance with this Agreement, or (B) the resignation of the member and the admission of an additional member of the Company in accordance with the terms of this Agreement) to the fullest extent permitted by law, the personal representative of Member shall, within ninety (90) days after the occurrence of the event that terminated the continued membership of Member in Borrower or such SPE Component Entity (as applicable) agree in writing (A) to continue Borrower or such SPE Component Entity (as applicable) and (B) to the admission of the personal representative or its nominee or designee, as the case may be, as a substitute member of Borrower or such SPE Component Entity (as applicable) effective as of the occurrence of the event that terminated the continued membership of Member in Borrower or such SPE Component Entity (as applicable), (ii) any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company Borrower or such SPE Component Entity (as applicable) and upon the occurrence of such an event, the existence business of the Company Borrower or such SPE Component Entity (as applicable) shall continue without dissolution. The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the Company.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents.
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.dissolutio
Appears in 1 contract
Sources: Loan Agreement (Brookfield DTLA Fund Office Trust Investor Inc.)
Single Purpose Entity/Separateness. Borrower represents, warrants and covenants as follows:
(a) Borrower has not and will not:
(i) engage in any business or activity other than the ownership, ownership and operation and maintenance of the Properties, its business and activities incidental thereto;
(ii) acquire or own any assets other than (A) the Propertiesproperty owned by Borrower, and (B) such incidental Personal Property property as may be be, necessary for the ownership and operation of the Propertiesits business;
(iii) merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existenceformalities, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements law of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;.
(v) own any subsidiary, or make any investment in, any Person, other than those currently owned;
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its assets with the assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;
(vii) incur any debtIndebtedness, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than (A) the Debt loan, and Permitted Debt (B) trade and prior loans that have been satisfied operational indebtedness incurred in full as the ordinary course of business with trade creditors, provided such indebtedness is (1) unsecured, (2) not evidenced by a note, (3) on commercially reasonable terms and conditions, and (4) due not more than sixty (60) days past the date hereofincurred and paid on or prior to such date;
(viii) fail to maintain all of its books, records, books of account, financial statements and bank accounts, financial statements, accounting records and other entity documents accounts separate and apart from those of its affiliates and any constituent party. No Borrower's assets have or will not be listed as assets on the financial statement of any other Person; except provided, however, that any Borrower’s financial position, assets, liabilities, net worth and operating results 's assets may be included in the a consolidated financial statements statement of an Affiliate, its affiliates provided that (Ai) appropriate notation shall be made on such consolidated financial statements to indicate the separate identity separateness of such Borrower from and such Affiliate affiliates and to indicate that such Borrower’s 's assets and credit are not available to satisfy the debts and other obligations of such Affiliate affiliates or any other Person, Person and (Bii) Borrower’s assets, liabilities and net worth such assets shall also be listed on each Borrower’s 's own separate balance sheet. Each Borrower has maintained and will maintain its books, records, resolutions and agreements as official records;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, principal or any Affiliate of the foregoingaffiliate, except upon terms and conditions that are intrinsically fair, commercially reasonable fair and substantially similar to those that would be available on an arm’sarm's-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure for the obligations benefit of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other Person;
(xiii) fail to (A) file its own tax returns separate (unless prohibited by Applicable Law from those of any other Person, except to the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under applicable Legal Requirements and (B) pay any taxes required to be paid under applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrowerdoing so);
(xiv) fail either to (A) hold itself out to the public as a legal entity separate and distinct from any other Person, (B) person or to conduct its business solely in its own name or (C) fail to correct any known misunderstanding regarding its separate identity;.
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;
(xvi) without the unanimous written consent of all of its partners or members, as applicable, and (a) file or consent to the written filing of any petition, either voluntary or involuntary, to take advantage of any creditors rights laws, (b) seek or consent to the appointment of all directors a receiver, liquidator or managers of Borrower or each SPE Component Entityany similar official, as applicable including, without limitation, each Independent Director, (c) take any Material Action or action that is intended to might cause such entity to become insolvent, or (d) make an assignment for the benefit of creditors;
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space space) or fail to use separate stationery, invoices and services performed by an employee of an Affiliate) among the Persons sharing such expenseschecks;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, pay its own liabilities (including, without limitation, salaries of its own employees) only from its own fundsfunds or fail to maintain a sufficient number of employees in light of its contemplated business operations (in each case to the extent there exists sufficient cash flow from any property owned by such Borrower to do so); provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;or
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable;
(xx) violate or cause to be violated the assumptions made with respect to Borrower and its principals in the Non-Consolidation Opinion or any New Non-Consolidation Opinion;
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other Person.
(i) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner in the case of a partnership, or the managing member in the case of a limited liability company (each an “SPE Component Entity”) of Borrower, as applicable, shall be an Acceptable DE LLC. Each SPE Component Entity (A) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iii) through (vi) and (viii) through (xxiv) inclusive, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (B) will not engage in any business or activity other than owning an interest in Borrower; (C) will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (D) will not own any subsidiary, or make any investment in any Person other than its investment in Borrower; (E) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (F) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is substantially similar to that of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors.
(ii) In the event Borrower or SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”), the limited liability company agreement of the Company (the “LLC Agreement”) shall provide that (A) upon the occurrence of any event that causes the sole member of the Company (“Member”) to cease to be the member of the Company (other than (1) upon an assignment by Member of all of its limited liability company interest in the Company and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2) the resignation of Member and the admission of an additional member of the Company in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of the Company and executing the LLC Agreement (“Special Member”) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the Company, automatically be admitted to the Company and shall continue the existence of the Company without dissolution, and (B) Special Member may not resign from the Company or transfer its rights as Special Member unless (1) a successor Special Member has been admitted to the Company as Special Member in accordance with the requirements of the Act and (2) after giving effect to such resignation, such successor Special Member has also accepted its appointment as an Independent Director. The LLC Agreement shall further provide that (v) Special Member shall automatically cease to be a member of the Company upon the admission to the Company of a substitute Member, (w) Special Member shall be a member of the Company that has no interest in the profits, losses and capital of the Company and has no right to receive any distributions of the assets of the Company, (x) pursuant to Section 18-301 of the Act, Special Member shall not be required to make any capital contributions to the Company and shall not receive a limited liability company interest in the Company, (y) Special Member, in its capacity as Special Member, may not bind the Company, and (z) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Company, including, without limitation, the merger, consolidation or conversion of the Company; provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. Prior to its admission to the Company as Special Member, Special Member shall not be a member of the Company, but the Special Member may serve as an Independent Director of the Company. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company and upon the occurrence of such an event, the existence of the Company shall continue without dissolution. The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the Company.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents.
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 1 contract
Single Purpose Entity/Separateness. Borrower represents, warrants and covenants as follows:
(a) Each Borrower has not and will not:
(i) engage in any business or activity other than the ownership, operation operation, leasing, maintenance, management, financing, disposing of and maintenance of otherwise dealing with the PropertiesProperty owned by such Borrower, and activities incidental thereto;
(ii) acquire or own any assets other than (A) the PropertiesProperty owned by such Borrower, and (B) such incidental Personal Property as may be necessary for the ownership ownership, leasing, maintenance and operation of the Propertiessuch Property;
(iii) merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existenceformalities, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements Applicable Law of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;
(v) own any subsidiary, or make any investment in, any Person;
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its assets with the assets of any other PersonPerson other than the other Borrowers; provided, that all amounts paid to Borrowers (including, without limitation, all rents and other revenues arising out of the Borrowers’ ownership and operation of the Properties) may be (A) deposited into a centralized cash management account (the “Central Account”) controlled by Guarantor (or permit any an Affiliate or constituent party independent access to its bank accountsof such entity) on behalf of Borrowers, as and when received, and (B) disbursed out of such Central Account in payment of amounts payable by Borrowers, as and when due, so long as all amounts deposited into such Centralized Account for the benefit of Borrowers and all amounts disbursed out of such Centralized Account for the benefit of the Borrowers are clearly segregated, for accounting purposes, from the revenues and expenses of all other Persons;
(vii) incur any debtIndebtedness, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than (A) the Debt, (B) trade and operational indebtedness incurred in the ordinary course of business with trade creditors, provided such indebtedness is (1) unsecured, (2) not evidenced by a note, (3) on commercially reasonable terms and conditions, and (4) due not more than sixty (60) days past the date incurred and paid (unless being contested in accordance with Section 4.16(b) hereof) on or prior to such date, and/or (C) Permitted Equipment Leases; provided however, the aggregate amount of the indebtedness described in (B) and (C) shall not exceed at any time six percent (6%) of the Allocated Loan Amount of the Property owned by such Borrower, but in no event less than $100,000 (or, when taken together with the unsecured trade payables of all Borrowers, three percent (3%) of the original amount of the Debt. No Indebtedness other than the Debt and Permitted Debt and prior loans that have been satisfied in full as of the date hereofmay be secured (subordinate or pari passu) by any Property;
(viii) fail to maintain all of its books, records, books of account, financial statements and bank accounts, financial statements, accounting records and accounts (other entity documents than the Central Account) separate and apart from those of its Affiliates and any constituent party. No Borrower’s assets have or will not be listed as assets on the financial statement of any other Person; except provided, however, that any Borrower’s financial position, assets, liabilities, net worth and operating results assets may be included in the a consolidated financial statements statement of an Affiliate, its Affiliates provided that (A) appropriate notation such assets shall be made on such consolidated financial statements to indicate the separate identity of Borrower from such Affiliate and that Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate or any other Person, and (B) Borrower’s assets, liabilities and net worth shall also be listed on each Borrower’s own separate balance sheet. Each Borrower has maintained and will maintain its books, records, resolutions and agreements as official records;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, principal or any Affiliate of the foregoingAffiliate, except upon terms and conditions that are intrinsically fair, commercially reasonable fair and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other PersonPerson (provided that Lender acknowledges the existence of the Central Account and agrees that the existence of such account does not violate this clause (x));
(xi) except as contemplated by other than in connection with the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunderLoan, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure for the obligations benefit of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other Person;
(xiii) fail to (A) file its own tax returns separate (unless prohibited by Applicable Law from those of any other Person, except to the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under applicable Legal Requirements and (B) pay any taxes required to be paid under applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrowerdoing so);
(xiv) fail either to (A) hold itself out to the public as a legal entity separate and distinct from any other Person, (B) Person or to conduct its business solely in its own name or (C) fail to correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, that operations (to the foregoing extent there exists sufficient cash flow from any Property owned by such Borrower to do so after the payment of all operating expenses and Debt Service and shall not require Borrower’s members, partners or shareholders any equity owner to make additional capital contributions to such Borrower);
(xvi) without the unanimous written consent of all of its partners or members, as applicable, and the written consent of all directors or managers each Independent Director (regardless of whether such Independent Director is engaged at such Borrower or each SPE Component EntityEntity level), as applicable including(a) file or consent to the filing of any petition, without limitationeither voluntary or involuntary, each Independent Directorto take advantage of any Creditors Rights Laws, (b) seek or consent to the appointment of a receiver, liquidator or any similar official (other than one sought by Lender), (c) take any Material Action or action that is intended might reasonably be expected to cause such entity to become insolvent, or (d) make an assignment for the benefit of creditors;
(xvii) to the extent that Borrowers share overhead expenses, fail to fairly allocate fairly, appropriately and reasonably allocate shared nonarbitrarily any such costs and expenses between or among Borrowers, or fail to use separate stationery, invoices and checks (including, without limitation, shared office space and services performed by an employee of an Affiliate) among other than checks written from the Persons sharing such expensesCentral Account);
(xviii) fail to intend to remain solvent orsolvent, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, pay its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; provided, however, that funds or fail to maintain a sufficient number of employees in light of its contemplated business operations (in each case to the foregoing extent there exists sufficient cash flow from any Property owned by such Borrower to do so) and shall not require Borrower’s members, partners or shareholders any equity owner to make additional capital contributions to such Borrower);
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliatesAffiliates, as applicable;; or
(xx) violate or cause to be violated the assumptions made with respect to Borrower and its principals in the Non-Consolidation Opinion or in any New Non-Consolidation Opinion;
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other Person.
(ib) If any Borrower is a limited partnership or a limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner in the case of a partnership, or the managing member in the case of a limited liability company (each each, an “SPE Component Entity”) of shall be a corporation or an Acceptable LLC (I) whose sole asset is its interest in such Borrower, as applicable, (II) which has not been and shall not be an Acceptable DE LLC. Each SPE Component Entity (A) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iii) through (vi) and (viii) through (xxiv) inclusive, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (B) will not permitted to engage in any business or activity other than owning an interest in such Borrower; (CIII) will which has not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (D) will been and shall not own any subsidiary, or make any investment in any Person other than its investment in Borrower; (E) will not be permitted to incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (FIV) which has and will at all times own at least a 0.5% direct equity ownership interest in such Borrower. Each such SPE Component Entity will at all times comply, and will cause such Borrower to comply comply, with each of the provisions of representations, warranties, and covenants contained in this Section 6.1 and Section 6.4Article 5 (to the extent applicable) as if such representation, warranty or covenant was made directly by such SPE Component Entity. Prior to Upon the withdrawal or the disassociation of any an SPE Component Entity from such Borrower, such Borrower shall immediately appoint a new general partner SPE Component Entity whose articles of incorporation or managing member whose limited liability company agreement is organization are substantially similar to that those of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, and deliver a new opinion letter acceptable New Non-Consolidation Opinion to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors.
(iic) In the event any Borrower or the SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”)LLC, the limited liability company agreement of such Borrower or the Company SPE Component Entity (as applicable) (the “LLC Agreement”) shall provide that (Ai) upon the occurrence of any event that causes the sole last remaining member of such Borrower or the Company SPE Component Entity (as applicable) (“Member”) to cease to be the member of such Borrower or the Company SPE Component Entity (as applicable) (other than (1A) upon an assignment by Member of all of its limited liability company interest in such Borrower or the Company SPE Component Entity (as applicable) and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2B) the resignation of Member and the admission of an additional member of such Borrower or the Company SPE Component Entity (as applicable) in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of such Borrower or the Company and executing the LLC Agreement SPE Component Entity (“Special Member”as applicable) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of such Borrower or the Company, SPE Component Entity (as applicable) automatically be admitted to such Borrower or the Company SPE Component Entity (as applicable) as a member with a 0% economic interest (“Special Member”) and shall continue such Borrower or the existence of the Company SPE Component Entity (as applicable) without dissolution, dissolution and (Bii) Special Member may not resign from such Borrower or the Company SPE Component Entity (as applicable) or transfer its rights as Special Member unless (1A) a successor Special Member has been admitted to such Borrower or the Company SPE Component Entity (as applicable) as a Special Member in accordance with the requirements of the Act Delaware or Maryland law (as applicable) and (2B) after giving effect to such resignationresignation or transfer, there remains at least two (2) Independent Directors of the SPE Component Entity or such successor Special Member has also accepted its appointment Borrower (as an Independent Directorapplicable) in accordance with Section 5.2 below. The LLC Agreement shall further provide that (vi) Special Member shall automatically cease to be a member of such Borrower or the Company SPE Component Entity (as applicable) upon the admission to such Borrower or the Company SPE Component Entity (as applicable) of a the first substitute Membermember, (wii) Special Member shall be a member of such Borrower or the Company SPE Component Entity (as applicable) that has no interest in the profits, losses and capital of such Borrower or the Company SPE Component Entity (as applicable) and has no right to receive any distributions of the assets of such Borrower or the CompanySPE Component Entity (as applicable), (xiii) pursuant to Section 18-301 the applicable provisions of the limited liability company act of the State of Delaware or Maryland (as applicable, the “Act”), Special Member shall not be required to make any capital contributions to such Borrower or the Company SPE Component Entity (as applicable) and shall not receive a limited liability company interest in such Borrower or the CompanySPE Component Entity (as applicable), (yiv) Special Member, in its capacity as Special Member, may not bind such Borrower or the Company, SPE Component Entity (as applicable) and (zv) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, such Borrower or the Company, SPE Component Entity (as applicable) including, without limitation, the merger, consolidation or conversion of such Borrower or the CompanySPE Component Entity (as applicable); provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. In order to implement the admission to such Borrower or the SPE Component Entity (as applicable) of Special Member, Special Member shall execute a counterpart to the LLC Agreement. Prior to its admission to such Borrower or the Company SPE Component Entity (as applicable) as Special Member, Special Member shall not be a member of such Borrower or the CompanySPE Component Entity (as applicable), but the Special Member may serve as an Independent Director of such Borrower or the Company. Any SPE Component Entity (as applicable).
(d) The LLC Agreement shall further provide that, (i) upon the occurrence of any event that causes the Member to cease to be a member of any Borrower or the SPE Component Entity (as applicable) to the fullest extent permitted by law, the personal representative of Member shall, within ninety (90) days after the occurrence of the event that terminated the continued membership of Member in such Borrower or the SPE Component Entity (as applicable) agree in writing (A) to continue Borrower or the SPE Component Entity (as applicable) and (B) to the admission of the personal representative or its nominee or designee, as the case may be, as a substitute member of such Borrower or the SPE Component Entity (as applicable) effective as of the occurrence of the event that terminated the continued membership of Member in such Borrower or the SPE Component Entity (as applicable), (ii) any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of such Borrower or the Company SPE Component Entity (as applicable) and upon the occurrence of such an event, the existence business of such Borrower or the Company SPE Component Entity (as applicable) shall continue without dissolution. The LLC Agreement shall also provide that , and (iii) each of Member and Special Member waives any right it might have to agree in writing to dissolve such Borrower or the Company SPE Component Entity (as applicable) upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of such Borrower or the Company.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents(as applicable).
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 1 contract
Single Purpose Entity/Separateness. Borrower represents, warrants and covenants as follows:
(a) Borrower will not and Borrower hereby represents and warrants to Lender that Borrower has not and will notsince the date of its formation:
(i) engage in any business or activity other than the ownership, operation and maintenance operation, management of the Properties, Collateral and activities incidental thereto;
(ii) acquire or own any assets other than (A) the Properties, and (B) such incidental Personal Property as may be necessary for the ownership and operation of the PropertiesCollateral;
(iii) merge into or consolidate with any Person, or or, to the fullest extent permitted by law, dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structurestructure from a Delaware limited liability company, other than, in each case, such activities as are contemplated or permitted pursuant to any provision of this Agreement or of any of the other Loan Documents;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existenceformalities, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or amend (B) amendexcept as otherwise expressly permitted hereunder), modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;
(v) own any subsidiary, or make any investment in, any PersonPerson other than the Mezzanine A Borrower (and other than, with respect to any SPE Component Entity, in Borrower);
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its funds or assets with the funds or assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;
(vii) incur any debtIndebtedness, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than the Debt and Indebtedness not to exceed $10,000 and not material in the aggregate that is necessary to Borrower’s activities as a member of Mortgage Borrower. Other than Permitted Encumbrances, no Indebtedness other than the Mortgage Debt and prior loans that have been satisfied in full as of may be secured (subordinate or pari passu) by the date hereofProperty. No Indebtedness other than the Debt may be secured (subordinate or pari passu) by the Collateral;
(viii) fail to maintain all of its records, books of account, bank accountsrecords, financial statements, accounting records and records, other entity documents and bank accounts separate and apart from those of any other Person (including, without limitation, any Affiliates). Borrower’s assets have not and will not be listed as assets on the financial statement of any other Person; except provided, however, that Borrower’s financial position, assets, liabilities, net worth and operating results assets may be included in a consolidated and/or combined financial statement of its Affiliates provided that, to the consolidated financial statements extent necessary to (i) prevent a substantive consolidation of an Affiliate, provided that the assets and liabilities of Borrower with the assets and liabilities of any other Person or (Aii) deliver a Non-Consolidation Opinion when required under this Agreement: (1) appropriate notation shall be made on such consolidated financial statements to indicate the separate identity separateness of Borrower from and such Affiliate Affiliates and to indicate that Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate Affiliates or any other Person, Person and (B2) Borrower’s assets, liabilities and net worth such assets shall also be listed on Borrower’s own separate balance sheet. Borrower has maintained and will maintain its books of account, records, financial statements, accounting record, other entity documents, resolutions and agreements as official records;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, principal or any Affiliate of the foregoingAffiliate, except (i) as may have been approved in writing by Lender in its sole and absolute discretion or (ii) upon terms and conditions that are intrinsically fair, commercially reasonable and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts or obligations of any other Person, hold itself out to be responsible for the debts or obligations of any other Person, or otherwise pledge its assets to secure or credits for the obligations benefit of any other Person or hold out its assets or credit or assets as being available to satisfy the debts or obligations of any other Person;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other PersonPersons;
(xiii) fail to (A) file its own tax returns separate from those of any other Person, Person (unless prohibited by applicable Legal Requirements from doing so or except to the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file such tax returns under applicable Legal Requirements Requirements) and (B) pay any taxes so required to be paid by such Borrower under applicable Legal Requirements; provided, however, that Borrower shall not have any obligation Requirements (to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrowerthe extent there is sufficient cash flow from the Property to do so);
(xiv) fail to (A) hold itself out to the public and identify itself, in each case, as a legal entity separate and distinct from any other Person and not as a division, department or part of any other Person, (B) conduct its business solely in its own name, (C) hold its assets in its own name or (CD) correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operationsoperations (to the extent there exists sufficient cash flow from the Property to do so); provided, however, that the foregoing no Person shall not require Borrower’s members, partners or shareholders be required to make any direct or indirect additional capital contributions to BorrowerBorrower in order to comply with the foregoing;
(xvi) without the prior unanimous written consent of all of its partners partners, shareholders or members, as applicable, and the prior unanimous written consent of all its board of directors or managers managers, as applicable, and the prior written consent of each Independent Manager (regardless of whether such Independent Manager is engaged at the Borrower or each SPE Component EntityEntity level), as applicable including(a) file or consent to the filing of any petition, without limitationeither voluntary or involuntary, each Independent Directorto take advantage of any Creditors Rights Laws, (b) seek or consent to the appointment of a receiver, liquidator or any similar official unless such appointment is sought by Lender, (c) take any Material Action or action that is intended to might cause such entity to become insolvent, (d) make an assignment for the benefit of creditors or (e) take any Material Action with respect to Borrower or any SPE Component Entity (provided, that, none of any member, shareholder or partner (as applicable) of Borrower or any SPE Component Entity or any board of directors or managers (as applicable) of Borrower or any SPE Component Entity may vote on or otherwise authorize the taking of any of the foregoing actions unless, in each case, there are at least two (2) Independent Managers then serving in such capacity in accordance with the terms of the applicable organizational documents and each of such Independent Managers has consented to such foregoing action);
(xvii) fail to allocate fairly and reasonably allocate shared expenses with its Affiliates (including, without limitation, shared office space space) or fail to use separate stationery, invoices and services performed by an employee of an Affiliate) among the Persons sharing such expenseschecks bearing its own name;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, and pay its own liabilities (including, without limitation, salaries of its own employees, if any) only from its own fundsfunds or fail to maintain a sufficient number of employees (if any) in light of its contemplated business operations (in each case to the extent there exists sufficient cash flow from the Property to do so); provided, however, that the foregoing no Person shall not require Borrower’s members, partners or shareholders be required to make any direct or indirect additional capital contributions to BorrowerBorrower in order to comply with the foregoing;
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliatesAffiliates, as applicable;
(xx) identify its partners, members, shareholders or other Affiliates, as applicable, as a division, department or part of it;
(xxi) violate or cause to be violated the assumptions made with respect to Borrower and its principals in the Non-Consolidation Opinion or in any New Non-Consolidation Opinion;
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail hold itself out as having agreed to maintain and use separate stationery, invoices and checks bearing its own namepay indebtedness incurred by any Affiliate;
(xxiii) have hold out the assets or credit of any Affiliate as being available to satisfy any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan debts or guarantees relating to obligations under the Management Agreements or Franchise Agreementsobligations; or
(xxiv) identify itself as a department or division allow an Affiliate to act in its name, to the extent of any other Personits power to do so.
(ib) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner (in the case of a partnership, or the managing ) and at least one member (in the case of a limited liability company (each an “SPE Component Entity”company) of Borrower, as applicable, shall be a corporation or an Acceptable DE LLCLLC (each, an “SPE Component Entity”) whose sole asset is its interest in Borrower. Each SPE Component Entity (Ai) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iiiSection 5.1(a)(iii) through - (vi) (inclusive) and (viii) through - (xxivxxi) (inclusive) and, if such SPE Component Entity is an Acceptable LLC, Section 5.1(c) and (d) hereof, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (Bii) will not engage in any business or activity other than owning an interest in Borrower; (Ciii) will not acquire or own any assets other than its partnership, membership, or other equity ownership interest in Borrower; (Div) will not at all times continue to own any subsidiary, or make any investment in any Person other no less than its investment a 0.5% direct equity ownership interest in Borrower; (Ev) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (Fvi) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to 5.1.
(c) In the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is substantially similar to that of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors.
(ii) In the event Borrower or SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”)LLC, the limited liability company agreement of the Company Borrower or such SPE Component Entity (as applicable) (the “LLC Agreement”) shall provide that (Ai) upon the occurrence of any event that causes the sole last remaining member of the Company Borrower or such SPE Component Entity (as applicable) (“Member”) to cease to be the member of the Company Borrower or such SPE Component Entity (as applicable) (other than (1A) upon an assignment by Member of all of its limited liability company interest in the Company Borrower or such SPE Component Entity (as applicable) and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, Agreement or (2B) the resignation of Member and the admission of an additional member of the Company Borrower or such SPE Component Entity (as applicable) in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director Manager of the Company and executing the LLC Agreement Borrower or such SPE Component Entity (“Special Member”as applicable) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the Company, Borrower or such SPE Component Entity (as applicable) automatically be admitted to the Company Borrower or such SPE Component Entity (as applicable) as a member with a zero percent (0%) economic interest (“Special Member”) and shall continue the existence of the Company Borrower or such SPE Component Entity (as applicable) without dissolution, dissolution and (Bii) Special Member may not resign from the Company Borrower or such SPE Component Entity (as applicable) or transfer its rights as Special Member unless (1A) a successor Special Member has been admitted to the Company Borrower or such SPE Component Entity (as applicable) as a Special Member in accordance with the requirements of the Act Delaware law and (2B) after giving effect to such resignationresignation or transfer, there remains at least two (2) Independent Managers of such successor Special Member has also accepted its appointment SPE Component Entity or Borrower (as an Independent Directorapplicable) in accordance with Section 5.2 below. The LLC Agreement shall further provide that (vi) Special Member shall automatically cease to be a member of the Company Borrower or such SPE Component Entity (as applicable) upon the admission to Borrower or such SPE Component Entity (as applicable) of the Company of a first substitute Membermember, (wii) Special Member shall be a member of the Company Borrower or such SPE Component Entity (as applicable) that has no interest in the profits, losses and capital of the Company Borrower or such SPE Component Entity (as applicable) and has no right to receive any distributions of the assets of the CompanyBorrower or such SPE Component Entity (as applicable), (xiii) pursuant to Section 18-301 the applicable provisions of the limited liability company act of the State of Delaware (the “Act”), Special Member shall not be required to make any capital contributions to the Company Borrower or such SPE Component Entity (as applicable) and shall not receive a limited liability company interest in the CompanyBorrower or such SPE Component Entity (as applicable), (yiv) Special Member, in its capacity as Special Member, may not bind the Company, Borrower or such SPE Component Entity (as applicable) and (zv) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Company, Borrower or such SPE Component Entity (as applicable) including, without limitation, the merger, consolidation or conversion of the CompanyBorrower or such SPE Component Entity (as applicable); provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent DirectorManager, to vote on such matters required by the Loan Documents or the LLC Agreement. In order to implement the admission to Borrower or such SPE Component Entity (as applicable) of Special Member, Special Member shall execute a counterpart to the LLC Agreement. Prior to its admission to the Company Borrower or such SPE Component Entity (as applicable) as Special Member, Special Member shall not be a member of the CompanyBorrower or such SPE Component Entity (as applicable), but the Special Member may serve as an Independent Director Manager of Borrower or such SPE Component Entity (as applicable).
(d) In the event Borrower or any SPE Component Entity is an Acceptable LLC, the LLC Agreement shall further provide that (i) upon the occurrence of any event that causes the Member to cease to be a member of Borrower or such SPE Component Entity (as applicable) (other than upon continuation of the Company. Any Company without dissolution upon (A) an assignment by the Member of all of its limited liability company interest in the Company and the admission of the transferee in accordance with this Agreement, or (B) the resignation of the member and the admission of an additional member of the Company in accordance with the terms of this Agreement) to the fullest extent permitted by law, the personal representative of Member shall, within ninety (90) days after the occurrence of the event that terminated the continued membership of Member in Borrower or such SPE Component Entity (as applicable) agree in writing (A) to continue Borrower or such SPE Component Entity (as applicable) and (B) to the admission of the personal representative or its nominee or designee, as the case may be, as a substitute member of Borrower or such SPE Component Entity (as applicable) effective as of the occurrence of the event that terminated the continued membership of Member in Borrower or such SPE Component Entity (as applicable), (ii) any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company Borrower or such SPE Component Entity (as applicable) and upon the occurrence of such an event, the existence business of the Company Borrower or such SPE Component Entity (as applicable) shall continue without dissolution. The LLC Agreement shall also provide that dissolution and (iii) each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company Borrower or such SPE Component Entity (as applicable) upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the Company.
(c) The organizational documents of Borrower and each or such SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents(as applicable).
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 1 contract
Sources: Mezzanine Loan Agreement (Brookfield DTLA Fund Office Trust Investor Inc.)
Single Purpose Entity/Separateness. Borrower represents, warrants and covenants as follows:
(a) The Borrower has not and will not:
shall solely conduct the business contemplated to be conducted by it pursuant to the Loan Documents, shall have no outstanding Indebtedness or other liabilities (i) engage in any business or activity other than the ownership, operation and maintenance of the PropertiesPermitted Indebtedness), and activities incidental thereto;
(ii) acquire or own any assets other than (A) the Propertiesshall be a party to, and (B) such incidental Personal Property as may be necessary for the ownership and operation of the Properties;
(iii) merge into or consolidate with any Personbound by, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existence, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;
(v) own any subsidiary, or make any investment in, any Person;
(vi) except as contemplated by solely the Loan Documents with respect to co-borrowers which it is a party, and no other contract, except for banking agreements, process agent agreements and similar agreements not otherwise prohibited under the Loan this Agreement which are incidental to conducting its business as permitted hereunder and prior loans that have been satisfied in full as of the date hereof, commingle its assets with the assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;under their respective Organizational Documents.
(viib) incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)), other than the Debt and Permitted Debt and prior loans that The Borrower shall have been satisfied in full as of the date hereof;no Subsidiaries.
(viiic) fail to The Borrower shall maintain its records, separate bank accounts and separate books of account, bank accounts, financial statements, accounting records account from the other Loan Parties and all other entity documents Persons.
(d) The Borrower shall conduct its business and operations separate and apart from that of any other person (including the owners of its Equity Interests and their Affiliates) and solely in its own name in a manner not misleading to other persons as to its identity, and not identify itself as a division of any other entity, and shall generally hold itself out as a separate entity, correct any known misunderstanding regarding its separate identity, conduct its dealings with third parties (including the owners of its Equity Interests and their Affiliates) on an arm’s length, fair and reasonable basis, and observe all procedures and organizational formalities under applicable law, or pursuant to the terms of its Organizational Documents.
(e) The Borrower shall not commingle or pool its funds or other assets with those of any other Person; except that Borrower’s financial position, assets, liabilities, net worth person and operating results may be included in the consolidated financial statements of an Affiliate, provided that (A) appropriate notation shall be made on such consolidated financial statements to indicate the separate identity of Borrower from such Affiliate and that Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate or any other Person, and (B) Borrower’s assets, liabilities and net worth shall also be listed on Borrower’s own separate balance sheet;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, or any Affiliate of the foregoing, except upon terms and conditions that are intrinsically fair, commercially reasonable and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be is not costly or difficult to segregate, ascertain or otherwise identify its individual assets as separate from those of any other Person;person.
(xif) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunderThe Borrower shall not pay, assume or guaranty the debts of any other Personguarantee, become obligated for, hold itself out its credit as being available to be responsible for the debts of any other Personsatisfy, or otherwise pledge its assets to secure the obligations or liabilities of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other Person;
(xiii) fail to (A) file its own tax returns separate from those of any other Person, except to the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under applicable Legal Requirements and (B) pay any taxes required to be paid under applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrower;
(xiv) fail to (A) hold itself out to the public as a legal entity separate and distinct from any other Person, (B) conduct its business solely in its own name or (C) correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;
(xvi) without the unanimous written consent of all of its partners or members, as applicable, and the written consent of all directors or managers of Borrower or each SPE Component Entity, as applicable including, without limitation, each Independent Director, take any Material Action or action that is intended to cause such entity to become insolvent;
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space and services performed by an employee of an Affiliate) among the Persons sharing such expenses;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, pay its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable;
(xx) violate or cause to be violated the assumptions made with respect to Borrower and its principals in the Non-Consolidation Opinion or any New Non-Consolidation Opinion;
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other Person.
(i) If Borrower is a partnership or limited liability company person (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner in the case of a partnership, or the managing member in the case of a limited liability company (each an “SPE Component Entity”) of Borrower, as applicable, shall be an Acceptable DE LLC. Each SPE Component Entity (A) will at all times comply with each pledge of the covenants, terms and provisions contained in Sections 6.1(a)(iii) through (vi) and (viii) through (xxiv) inclusive, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (B) will not engage in any business or activity other than owning an interest in Borrower; (C) will not acquire or own any ’s assets other than its partnership, membership, or other equity interest in Borrower; (D) will not own any subsidiary, or make any investment in any Person other than its investment in Borrower; (E) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (F) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior pursuant to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is substantially similar to that of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors.
(ii) In the event Borrower or SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”), the limited liability company agreement of the Company (the “LLC Agreement”) shall provide that (A) upon the occurrence of any event that causes the sole member of the Company (“Member”) to cease to be the member of the Company (other than (1) upon an assignment by Member of all of its limited liability company interest in the Company and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2) the resignation of Member and the admission of an additional member of the Company in accordance with the terms of the Loan Documents and the LLC Security Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of the Company and executing the LLC Agreement (“Special Member”) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the Company, automatically be admitted to the Company and shall continue the existence of the Company without dissolution, and (B) Special Member may not resign from the Company or transfer its rights as Special Member unless (1) a successor Special Member has been admitted to the Company as Special Member in accordance with the requirements of the Act and (2) after giving effect to such resignation, such successor Special Member has also accepted its appointment as an Independent Director. The LLC Agreement shall further provide that (v) Special Member shall automatically cease to be a member of the Company upon the admission to the Company of a substitute Member, (w) Special Member shall be a member of the Company that has no interest in the profits, losses and capital of the Company and has no right to receive any distributions of the assets of the Company, (x) pursuant to Section 18-301 of the Act, Special Member shall not be required to make any capital contributions to the Company and shall not receive a limited liability company interest in the Company, (y) Special Member, in its capacity as Special Member, may not bind the Company, and (z) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Company, including, without limitation, the merger, consolidation or conversion of the Company; provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. Prior to its admission to the Company as Special Member, Special Member shall not be a member of the Company, but the Special Member may serve as an Independent Director of the Company. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company and upon the occurrence of such an event, the existence of the Company shall continue without dissolution. The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the Company.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents.
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 1 contract
Single Purpose Entity/Separateness. Borrower represents, warrants and covenants that for so long as follows:
(a) the Indebtedness is outstanding, the Borrower has not and will notshall conduct its affairs in accordance with the following provisions:
(i) engage The Borrower shall not, nor will any partner, limited or general, member or shareholder thereof, as applicable, amend, modify or otherwise change its partnership certificate, partnership agreement, articles of incorporation, by-laws, operating agreement, articles of organization or other formation agreement or document, as applicable, in any business material term or activity other than manner, or in a manner which adversely affects the ownership, operation and maintenance of the Properties, and activities incidental thereto;Borrower’s existence as a single purpose entity.
(ii) acquire or own any assets other than (A) the Properties, It shall establish and (B) such incidental Personal Property as may maintain an office through which its business shall be necessary for the ownership and operation of the Properties;
(iii) merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existence, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;
(v) own any subsidiary, or make any investment in, any Person;
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its assets with the assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;
(vii) incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)), other than the Debt and Permitted Debt and prior loans that have been satisfied in full as of the date hereof;
(viii) fail to maintain its records, books of account, bank accounts, financial statements, accounting records and other entity documents conducted separate and apart from those of its parent and any other Person; except that Borrower’s financial positionaffiliate(s) or, assets, liabilities, net worth and operating results may be included in the consolidated financial statements of an Affiliate, provided that (A) appropriate notation shall be made on such consolidated financial statements to indicate the separate identity of Borrower from such Affiliate and that Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate if it shares office space with its parent or any affiliate(s), it shall allocate fairly and reasonably any overhead and expense for shared office space.
(iii) It shall not own and will not own any asset or property other Person, than (i) the Premises and (Bii) Borrower’s assets, liabilities and net worth shall also be listed on Borrower’s own separate balance sheet;incidental personal property necessary for the ownership or operation of the Premises.
(ixiv) except for capital contributions It will not engage, directly or capital distributions permitted under indirectly, in any business other than the terms ownership, management and conditions operation of Borrower’s organizational documents the Premises and properly reflected on it will conduct and operate its books business as presently conducted and records, operated.
(v) Borrower shall not enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor affiliate of the obligations of Borrower, any constituent party of the Borrower, Guarantor or any Affiliate affiliate of the foregoingGuarantor, 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 unaffiliated unrelated third parties;parties other than any such party.
(vi) It has not incurred and will not incur any indebtedness, secured or unsecured, direct or indirect, absolute or contingent (including guaranteeing any obligation), other than (i) the indebtedness secured by the Security Instrument lien and (ii) trade payables or accrued expenses incurred in the ordinary course of the business of operating the property with trade creditors and in amounts as are normal and reasonable under the circumstances. No indebtedness other than the indebtedness secured by the Security Instrument lien may be secured (subordinate or pari passu) by the Premises.
(vii) It has not made and will not make any loans or advances to any third party, including its parent, any affiliate of the Borrower or constituent party of the Borrower and shall not acquire obligations or securities of its affiliate(s).
(viii) It is and intends to remain solvent and will pay its debts and liabilities (including, as applicable, shared personnel and overhead expenses) from its assets as the same shall become due; provided, however, the foregoing shall not require any direct or indirect member, partner or shareholder of the Borrower to make any capital contributions to the Borrower.
(ix) It has done or caused to be done and will do all things reasonably necessary to observe organizational formalities and preserve its existence, and it will not materially amend, modify or otherwise change the articles of formation and/or the operating agreement of Borrower without the prior written consent of the Lender which consent shall not be unreasonably withheld or, after the securitization of the Loan, only if the Lender receives (i) confirmation from each of the applicable rating agencies that such amendment would not result in the qualification, withdrawal, or downgrade of any securities rating and (ii) reasonable approval of such amendment by Lender.
(x) It will maintain all of its books, records, financial statements and bank accounts separate from those of its parent, its affiliate(s) and any constituent party and the Borrower will file its own separate tax returns. It shall maintain its books, records, resolutions and agreements as official records.
(xi) It will be, and at all times will hold itself out to the public as, a legal entity separate and distinct from any other entity (including its parent, any affiliate or any constituent party of the Borrower), shall correct any known misunderstanding regarding its status as a separate entity, shall conduct and operate its business in its own name, shall not identify itself or any of 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.
(xii) As of the date hereof, it has at all times maintained adequate capital in light of its contemplated business operations and will not knowingly make any distributions that would leave it with inadequate capital; provided, however, the foregoing shall not require any direct or indirect member, partner or shareholder of the Borrower to make any capital contributions to the Borrower.
(xiii) Neither the Borrower nor any constituent party will seek or permit the dissolution, winding up, liquidation, consolidation or merger in whole or in part, of the Borrower, or acquire by purchase or otherwise all or substantially all the business or assets of, or any stock or other evidence of beneficial ownership of any other person or entity.
(xiv) It will not commingle the funds and other assets of the Borrower with those of its parent, any affiliate or constituent party, or any affiliate of any constituent party, or any other person in such a manner that would make such funds or other assets difficult to segregate.
(xv) It has and will maintain its assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify its individual assets asset or assets, as the case may be, from those of any affiliate or constituent party, or any affiliate of any constituent party, or any other Person;person.
(xixvi) except as Other than in connection with the transaction contemplated by the Loan Documents with respect to co-borrowers under the Loan Documents, it shall not pledge its assets and prior loans that have been satisfied in full as of the date hereof does not and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts of any other Person, will not hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure the obligations of any other Person or hold person.
(xvii) It shall pay any liabilities out of its credit or assets as being available to satisfy the obligations own funds, including salaries of any other Person;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other Person;
(xiii) fail to (A) file its own tax returns separate from those of any other Person, except to the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under applicable Legal Requirements and (B) pay any taxes required to be paid under applicable Legal Requirementsemployees; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrower;
(xiv) fail to (A) hold itself out to the public as a legal entity separate and distinct from any other Person, (B) conduct its business solely in its own name or (C) correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, that the foregoing shall not require Borrower’s membersany direct or indirect member, partners partner or shareholders shareholder of the Borrower to make additional any capital contributions to the Borrower;
(xvi) without the unanimous written consent of all of its partners or members, as applicable, and the written consent of all directors or managers of Borrower or each SPE Component Entity, as applicable including, without limitation, each Independent Director, take any Material Action or action that is intended to cause such entity to become insolvent;
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space and services performed by an employee of an Affiliate) among the Persons sharing such expenses;.
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, pay its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; provided, however, that the foregoing Borrower shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable;
(xx) violate or cause to be violated the assumptions made with respect to Borrower and its principals in the Non-Consolidation Opinion or any New Non-Consolidation Opinion;
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;.
(xix) Borrower shall not guarantee or become obligated for the debts of any other entity or person.
(xx) Borrower shall not form, acquire or hold any subsidiary.
(xxi) Borrower shall conduct and operate its business in its own name and as presently conducted and operated.
(xxii) fail to maintain and Borrower will use separate stationery, invoices invoices, and checks bearing separate from its own name;affiliates.
(xxiii) have any of Borrower shall file its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents own tax returns. Borrower and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other Person.
(i) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner in the case of a partnership, or the managing member in the case of a limited liability company (each an “SPE Component Entity”) of Borrower, as applicable, Guarantor shall be an Acceptable DE LLC. Each SPE Component Entity (A) will at all times comply with each of the covenantsrepresentations, terms warranties, and provisions covenants contained in Sections 6.1(a)(iii) through (vi) and (viii) through (xxiv) inclusive, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (B) will not engage in any business or activity other than owning an interest in Borrower; (C) will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (D) will not own any subsidiary, or make any investment in any Person other than its investment in Borrower; (E) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (F) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is substantially similar to that of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors4.08.
(ii) In the event Borrower or SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”), the limited liability company agreement of the Company (the “LLC Agreement”) shall provide that (A) upon the occurrence of any event that causes the sole member of the Company (“Member”) to cease to be the member of the Company (other than (1) upon an assignment by Member of all of its limited liability company interest in the Company and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2) the resignation of Member and the admission of an additional member of the Company in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of the Company and executing the LLC Agreement (“Special Member”) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the Company, automatically be admitted to the Company and shall continue the existence of the Company without dissolution, and (B) Special Member may not resign from the Company or transfer its rights as Special Member unless (1) a successor Special Member has been admitted to the Company as Special Member in accordance with the requirements of the Act and (2) after giving effect to such resignation, such successor Special Member has also accepted its appointment as an Independent Director. The LLC Agreement shall further provide that (v) Special Member shall automatically cease to be a member of the Company upon the admission to the Company of a substitute Member, (w) Special Member shall be a member of the Company that has no interest in the profits, losses and capital of the Company and has no right to receive any distributions of the assets of the Company, (x) pursuant to Section 18-301 of the Act, Special Member shall not be required to make any capital contributions to the Company and shall not receive a limited liability company interest in the Company, (y) Special Member, in its capacity as Special Member, may not bind the Company, and (z) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Company, including, without limitation, the merger, consolidation or conversion of the Company; provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. Prior to its admission to the Company as Special Member, Special Member shall not be a member of the Company, but the Special Member may serve as an Independent Director of the Company. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company and upon the occurrence of such an event, the existence of the Company shall continue without dissolution. The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the Company.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents.
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 1 contract
Single Purpose Entity/Separateness. Borrower represents, warrants and covenants as follows:
(a) Each Borrower has not and not, and, for so long as the Debt remains outstanding, will not:
(i) engage in any business or activity other than the ownership, operation and maintenance of the Propertiesapplicable Individual Property, and activities incidental thereto;
(ii) acquire or own any assets other than (A) the Propertiesapplicable Individual Property, and (B) such incidental Personal Property as may be necessary for the ownership ownership, leasing, maintenance and operation of the Propertiessuch Individual Property;
(iii) merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existenceformalities, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements Applicable Law of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;
(v) own any subsidiary, or make any investment in, any Person;
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its assets with the assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;
(vii) incur any debtIndebtedness, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than (A) the Debt, (B) trade and operational indebtedness incurred in the ordinary course of business with trade creditors, provided such indebtedness is (1) unsecured, (2) not evidenced by a note, (3) on commercially reasonable terms and conditions, and (4) due not more than sixty (60) days past the date incurred and paid on or prior to such date, (C) Permitted Equipment Leases and/or (D) Borrower’s obligations and liabilities under the Interest Rate Protection Agreement; provided however, the aggregate amount of the indebtedness described in (B) and (C) shall not exceed at any time two percent (2%) of the outstanding aggregate Allocated Loan Amounts associated with the portions of the Property owned by Borrower. No Indebtedness other than the Debt and Permitted Debt and prior loans that have been satisfied in full as of may be secured (subordinate or pari passu) by the date hereofProperty;
(viii) fail to maintain all of its books, records, books of account, financial statements and bank accounts, financial statements, accounting records and other entity documents accounts separate and apart from those of its affiliates and any constituent party. Borrower’s assets have not and will not be listed as assets on the financial statement of any other Person; except provided, however, that Borrower’s financial position, assets, liabilities, net worth and operating results assets may be included in the a consolidated financial statements statement of an Affiliate, its affiliates provided that (Ai) appropriate notation shall be made on such consolidated financial statements to indicate the separate identity separateness of Borrower from and such Affiliate affiliates and to indicate that Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate affiliates or any other Person, Person and (Bii) Borrower’s assets, liabilities and net worth such assets shall also be listed on Borrower’s own separate balance sheet. Borrower has maintained and will maintain its books, records, resolutions and agreements as official records;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, principal or any Affiliate of the foregoingaffiliate, except upon terms and conditions that are intrinsically fair, commercially reasonable fair and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure for the obligations benefit of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person, other than in the context of the cross-collateralization and cross-defaulting of the Loan;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other Person;
(xiii) fail to (A) file its own tax returns separate (unless prohibited by Applicable Law from those of any other Person, except to the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under applicable Legal Requirements and (B) pay any taxes required to be paid under applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrowerdoing so);
(xiv) fail either to (A) hold itself out to the public as a legal entity separate and distinct from any other Person, (B) Person or to conduct its business solely in its own name or (C) fail to correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, that operations (to the foregoing extent there exists sufficient cash flow from the applicable Individual Property to do so after the payment of all operating expenses and Debt Service and shall not require Borrower’s members, partners or shareholders any equity owner to make additional capital contributions to Borrower);
(xvi) without the unanimous written consent of all of its partners or members, as applicable, and the written consent of all directors or managers each Independent Director (regardless of whether such Independent Director is engaged at the Borrower or each SPE Component EntityEntity level), as applicable including(a) file or consent to the filing of any petition, without limitationeither voluntary or involuntary, each Independent Directorto take advantage of any Creditors’ Rights Laws, (b) seek or consent to the appointment of a receiver, liquidator or any similar official, (c) take any Material Action or action that is intended to might cause such entity to become insolvent, or (d) make an assignment for the benefit of creditors;
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space space) or fail to use separate stationery, invoices and services performed by an employee of an Affiliate) among the Persons sharing such expenseschecks;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, pay its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; provided, however, that funds or fail to maintain a sufficient number of employees in light of its contemplated business operations (in each case to the foregoing shall not require Borrower’s members, partners or shareholders extent there exists sufficient cash flow from the applicable Individual Property to make additional capital contributions to Borrowerdo so);
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable;; or
(xx) violate or cause to be violated the assumptions made with respect to Borrower and its principals in the Non-Consolidation Opinion or in any New Non-Consolidation Opinion;
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other Person.
(ib) If Borrower is a limited partnership or a limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner in the case of a partnership, or the managing member in the case of a limited liability company (each each, an “SPE Component Entity”) of shall be a corporation or an Acceptable LLC (I) whose sole asset is its interest in Borrower, as applicable, (II) which has not been and shall not be an Acceptable DE LLC. Each SPE Component Entity (A) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iii) through (vi) and (viii) through (xxiv) inclusive, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (B) will not permitted to engage in any business or activity other than owning an interest in Borrower; (CIII) will which has not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (D) will been and shall not own any subsidiary, or make any investment in any Person other than its investment in Borrower; (E) will not be permitted to incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (FIV) which has and will at all times own at least a 0.5% direct equity ownership interest in Borrower. Each such SPE Component Entity will at all times comply, and will cause Borrower to comply comply, with each of the provisions of representations, warranties, and covenants contained in this Section 6.1 and Section 6.4Article 5 (to the extent applicable) as if such representation, warranty or covenant was made directly by such SPE Component Entity. Prior to Upon the withdrawal or the disassociation of any an SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner SPE Component Entity whose articles of incorporation or managing member whose limited liability company agreement is organization are substantially similar to that those of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, and deliver a new opinion letter acceptable New Non-Consolidation Opinion to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding As of the foregoingdate hereof, to the extent Borrower is an Acceptable DE LLC, LLC and an SPE Component Entity is not required so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement continues to qualify as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent DirectorsLLC.
(iic) In the event Borrower or the SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”)LLC, the limited liability company agreement of Borrower or the Company SPE Component Entity (as applicable) (the “LLC Agreement”) shall provide that (Ai) upon the occurrence of any event that causes the sole last remaining member of Borrower or the Company SPE Component Entity (as applicable) (“Member”) to cease to be the member of Borrower or the Company SPE Component Entity (as applicable) (other than (1A) upon an assignment by Member of all of its limited liability company interest in Borrower or the Company SPE Component Entity (as applicable) and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2B) the resignation of Member and the admission of an additional member of Borrower or the Company SPE Component Entity (as applicable) in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of Borrower or the Company and executing the LLC Agreement SPE Component Entity (“Special Member”as applicable) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of Borrower or the Company, SPE Component Entity (as applicable) automatically be admitted to Borrower or the Company SPE Component Entity (as applicable) as a member with a 0% economic interest (“Special Member”) and shall continue Borrower or the existence of the Company SPE Component Entity (as applicable) without dissolution, dissolution and (Bii) Special Member may not resign from Borrower or the Company SPE Component Entity (as applicable) or transfer its rights as Special Member unless (1A) a successor Special Member has been admitted to Borrower or the Company SPE Component Entity (as applicable) as a Special Member in accordance with the requirements of the Act Delaware or Maryland law (as applicable) and (2B) after giving effect to such resignationresignation or transfer, such successor Special Member has also accepted its appointment there remains at least one (1) Independent Director of the SPE Component Entity or Borrower (as an Independent Directorapplicable) in accordance with Section 5.2 below. The LLC Agreement shall further provide that (vi) Special Member shall automatically cease to be a member of Borrower or the Company SPE Component Entity (as applicable) upon the admission to Borrower or the Company SPE Component Entity (as applicable) of a the first substitute Membermember, (wii) Special Member shall be a member of Borrower or the Company SPE Component Entity (as applicable) that has no interest in the profits, losses and capital of Borrower or the Company SPE Component Entity (as applicable) and has no right to receive any distributions of the assets of Borrower or the CompanySPE Component Entity (as applicable), (xiii) pursuant to Section 18-301 the applicable provisions of the limited liability company act of the State of Delaware or Maryland (as applicable, the “Act”), Special Member shall not be required to make any capital contributions to Borrower or the Company SPE Component Entity (as applicable) and shall not receive a limited liability company interest in Borrower or the CompanySPE Component Entity (as applicable), (yiv) Special Member, in its capacity as Special Member, may not bind Borrower or the Company, SPE Component Entity (as applicable) and (zv) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, Borrower or the Company, SPE Component Entity (as applicable) including, without limitation, the merger, consolidation or conversion of Borrower or the CompanySPE Component Entity (as applicable); provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. In order to implement the admission to Borrower or the SPE Component Entity (as applicable) of Special Member, Special Member shall execute a counterpart to the LLC Agreement. Prior to its admission to Borrower or the Company SPE Component Entity (as applicable) as Special Member, Special Member shall not be a member of Borrower or the CompanySPE Component Entity (as applicable), but the Special Member may serve as an Independent Director of Borrower or the Company. Any SPE Component Entity (as applicable).
(d) The LLC Agreement shall further provide that, (i) upon the occurrence of any event that causes the Member to cease to be a member of Borrower or the SPE Component Entity (as applicable) to the fullest extent permitted by law, the personal representative of Member shall, within ninety (90) days after the occurrence of the event that terminated the continued membership of Member in Borrower or the SPE Component Entity (as applicable) agree in writing (A) to continue Borrower or the SPE Component Entity (as applicable) and (B) to the admission of the personal representative or its nominee or designee, as the case may be, as a substitute member of Borrower or the SPE Component Entity (as applicable) effective as of the occurrence of the event that terminated the continued membership of Member in Borrower or the SPE Component Entity (as applicable), (ii) any action initiated by or brought against Member or Special Member under any Creditors Creditors’ Rights Laws shall not cause Member or Special Member to cease to be a member of Borrower or the Company SPE Component Entity (as applicable) and upon the occurrence of such an event, the existence business of Borrower or the Company SPE Component Entity (as applicable) shall continue without dissolution. The LLC Agreement shall also provide that , and (iii) each of Member and Special Member waives any right it might have to agree in writing to dissolve Borrower or the Company SPE Component Entity (as applicable) upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Creditors’ Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of Borrower or the CompanySPE Component Entity (as applicable).
(ce) The organizational documents of each Borrower (to the extent such Borrower is a corporation or an Acceptable LLC) or the SPE Component Entity, as applicable, shall provide that at all times there shall be at least one (1) duly appointed member of its board of directors or managers, as applicable (each, an “Independent Director”) reasonably satisfactory to Lender who each shall not have been at the time of each such individual’s initial appointment, and shall (I) not have been at any time during the preceding five years, and shall not be at any time while serving as Independent Director, either (i) a shareholder (or other equity owner) of, or an officer, director (other than in its capacity as Independent Director), partner, member or employee of, any Borrower or any of its respective shareholders, partners, members, subsidiaries or affiliates, (ii) a customer of, or supplier to, or other Person who derives any of its purchases or revenues from its activities with, any Borrower or any of its respective shareholders, partners, members, subsidiaries or affiliates, (iii) a Person who Controls or is under common Control with any such shareholder, officer, director, partner, member, employee supplier, customer or other Person, or (iv) a member of the immediate family of any such shareholder, officer, director, partner, member, employee, supplier, customer or other Person, and (II) be employed by, in good standing with and engaged by such Borrower in connection with, in each case, an Approved ID Provider. The organizational documents of each Borrower or the SPE Component Entity (as applicable) shall further provide an express acknowledgment that (I) the board of directors or managers of each Borrower or the SPE Component Entity as applicable, and the constituent members of such entities (the “Constituent Members”) shall not take any action which, under the terms of any organizational documents of such Borrower or the SPE Component Entity as applicable requires the unanimous vote of (1) the board of directors or managers of such Borrower or the SPE Component Entity as applicable, or (2) the Constituent Members, unless at the time of such action there shall be at least one (1) Independent Director engaged as provided by the terms hereof; (II) any resignation, removal or replacement of any Independent Director shall not be effective without two (2) Business Days prior written notice to Lender is an intended third-party beneficiary accompanied by evidence that the replacement Independent Director satisfies the applicable terms and conditions hereof and of the “special purpose” provisions of such applicable organizational documents.
; (dIII) to the fullest extent permitted by applicable law, including Section 18-1101(c) of the Act and notwithstanding any duty otherwise existing at law or in equity, the Independent Director shall consider only the interests of the Constituent Members and such Borrower has executed and delivered to Lender any SPE Component Entity (including such Borrower’s and any SPE Component Entity’s respective creditors) in acting or otherwise voting on the certificate attached hereto as Exhibit D.matters provided for herein and in such Borrower’s and SPE Component Entity’s organizational docume
Appears in 1 contract
Sources: Loan Agreement (American Realty Capital Trust III, Inc.)
Single Purpose Entity/Separateness. Until the Debt has been paid in full, Borrower represents, warrants and covenants as follows:
(a) Borrower has not and will not:
(i) engage in any business or activity other than the ownership, operation and maintenance of the PropertiesProperty, and activities incidental thereto;
(ii) acquire or own any assets other than (A) the PropertiesProperty, and (B) such incidental Personal Property as may be necessary for the ownership and operation of the PropertiesProperty;
(iii) except as expressly provided in Article 7 hereof, merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existenceformalities, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;
(v) own any subsidiary, or make any investment in, any Person;
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its assets with the assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;
(vii) incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than (A) the Debt Debt, (B) trade and Permitted Debt operational indebtedness incurred in the ordinary course of business with trade creditors, provided such indebtedness is (1) unsecured, (2) not evidenced by a note, (3) on commercially reasonable terms and conditions, and (4) due not more than sixty (60) days past the date incurred and paid on or prior loans that have been satisfied to such date, and/or (C) financing leases and purchase money indebtedness incurred in full as the ordinary course of business relating to Personal Property on commercially reasonable terms and conditions; provided however, the aggregate amount of the date hereofindebtedness described in (B) and (C) shall not exceed at any time three percent (3%) of the outstanding principal amount of the Note;
(viii) fail to maintain permit its records, books of account, bank accounts, financial statements, statements and accounting records and other entity documents separate and apart from those of any other Person; except that Borrower’s (including with respect to financial position, assets, liabilities, net worth and operating results may results) to be included in shown on the consolidated financial statements of an Affiliate, provided that (A) appropriate notation shall be made on any holder of a beneficial interest in Borrower unless such consolidated financial statements to indicate shall contain a footnote indicating that Borrower is a separate legal entity and the separate identity assets of Borrower from such Affiliate and that Borrower’s assets and credit are not available as collateral to satisfy the debts and other obligations creditors of such Affiliate or any other Person, and (B) Borrower’s assets, liabilities and net worth shall also be listed on Borrower’s own separate balance sheetholder;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, or any Affiliate of the foregoing, except upon terms and conditions that are intrinsically fair, commercially reasonable and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty guarantee the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure for the obligations benefit of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other Person;
(xiii) fail to (A) file its own tax returns separate from those of or files a consolidated federal income tax return with any other PersonPerson (unless prohibited or required, except to as the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under applicable Legal Requirements and (B) pay any taxes required to be paid under case may be, by applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrower);
(xiv) fail either to (A) hold itself out to the public as a legal entity separate and distinct from any other Person, (B) Person or to conduct its business solely in its own name or (C) fail to correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, operations (provided that the foregoing shall not require Borrower’s membersfailure to do so solely because of a shortfall in cash flow derived from the operation of the Property shall not, partners or shareholders to make additional capital contributions to Borrowerby itself, constitute a breach of this covenant);
(xvi) without Without the unanimous written consent of all of its partners or members, as applicable, and the written consent of all directors or 100% of the managers of Borrower (a) file or each SPE Component Entityconsent to the filing of any petition, as applicable includingeither voluntary or involuntary, without limitationto take advantage of any Creditors Rights Laws, each Independent Director(b) seek or consent to the appointment of a receiver, liquidator or any similar official, (c) take any Material Action or action that is intended to might cause such entity to become insolvent, or (d) make an assignment for the benefit of creditors;
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space and services performed by an employee of an Affiliate) among the Persons sharing such expensesexpenses and to use separate stationery, invoices and checks;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, or pay its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; provided, however, funds (provided that the foregoing shall not require Borrower’s membersfailure to do so solely because of a shortfall in cash flow derived from the operation of the Property shall not, partners or shareholders to make additional capital contributions to Borrowerby itself, constitute a breach of this covenant);
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable;
(xx) violate or cause to be violated the assumptions made with respect to Borrower Borrower, Manager (if applicable) and its principals their respective direct and/or indirect owners in any opinion letter pertaining to substantive consolidation delivered to Lender in connection with the Non-Consolidation Opinion or any New Non-Consolidation Opinion;Loan; or
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other Person.
(ib) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner in the case of a partnership, or the managing member in the case of a limited liability company (each an “SPE Component Entity”) of Borrower, as applicable, shall be an Acceptable DE LLC. Each SPE Component Entity (A) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iii) through (vi) and (viii) through (xxiv) inclusive, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (B) will not engage in any business or activity other than owning an interest in Borrower; (C) will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (D) will not own any subsidiary, or make any investment in any Person other than its investment in Borrower; (E) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (F) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is substantially similar to that of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors.
(ii) In the event Borrower or SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”), the The limited liability company agreement of the Company Borrower (the “LLC Agreement”) shall provide that (Ai) upon the occurrence of any event that causes the sole member of the Company Borrower (“Member”) to cease to be the member of the Company Borrower (other than (1A) upon an assignment by Member of all of its limited liability company interest in the Company Borrower and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2B) the resignation of Member and the admission of an additional member of the Company Borrower in accordance with the terms of the Loan Documents and the LLC Agreement), any such Person acting as additional member of Borrower in accordance with the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence terms of the Company Loan Documents and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of the Company and executing the LLC Agreement (“Special Member”) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the CompanyBorrower, automatically be admitted to the Company Borrower (“Special Member”) and shall continue the existence of the Company Borrower without dissolution, dissolution and (Bii) Special Member may not resign from the Company Borrower or transfer its rights as Special Member unless (1) a successor Special Member has been admitted to the Company Borrower as Special Member in accordance with the requirements of the Act and (2) after giving effect to such resignation, such successor Special Member has also accepted its appointment as an Independent DirectorDelaware law. The LLC Agreement shall further provide that (vi) Special Member shall automatically cease to be a member of the Company Borrower upon the admission to the Company Borrower of a substitute Member, (wii) Special Member shall be a member of the Company Borrower that has no interest in the profits, losses and capital of the Company Borrower and has no right to receive any distributions of the assets of the CompanyBorrower assets, (xiii) pursuant to Section 18-301 of the Delaware Limited Liability Company Act (the “Act”), Special Member shall not be required to make any capital contributions to the Company Borrower and shall not receive a limited liability company interest in the CompanyBorrower, (yiv) Special Member, in its capacity as Special Member, may not bind the Company, Borrower and (zv) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the CompanyBorrower, including, without limitation, the merger, consolidation or conversion of the CompanyBorrower; provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, Member to vote on such matters required by the Loan Documents or the LLC Agreement. In order to implement the admission to Borrower of Special Member, Special Member shall execute a counterpart to the LLC Agreement. Prior to its admission to the Company Borrower as Special Member, Special Member shall not be a member of Borrower. Upon the Companyoccurrence of any event that causes the Member to cease to be a member of Borrower, but to the Special fullest extent permitted by law, the personal representative of Member may serve as an Independent Director shall, within ninety (90) days after the occurrence of the Companyevent that terminated the continued membership of Member in Borrower, agree in writing (i) to continue 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 Borrower, effective as of the occurrence of the event that terminated the continued membership of Member of Borrower in Borrower. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company Borrower and upon the occurrence of such an event, the existence business of the Company Borrower shall continue without dissolution. The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company Borrower upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the CompanyBorrower.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents.
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 1 contract
Sources: Loan Agreement (Inland Western Retail Real Estate Trust Inc)
Single Purpose Entity/Separateness. Borrower represents, warrants and covenants as follows:
(a) Each of Borrower and Operating Lessee represents and warrants, and covenants until the Debt has not been paid and will notsatisfied in full, that each of Borrower and Operating Lessee:
(i) has not engaged and will not engage in any business or activity other than the ownershipownership or leasing, as applicable, operation and maintenance of the PropertiesProperty, and activities incidental thereto;
(ii) has not acquired or owned and will not acquire or own any assets other than (A) the PropertiesProperty, and (B) such incidental Personal Property as may be necessary for the ownership ownership, leasing, maintenance and operation of the PropertiesProperty;
(iii) has not and will not merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structurestructure except as permitted by the Loan Documents;
(iv) (A) has not and will not fail to observe all organizational formalities necessary to maintain its separate existenceformalities, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each the case of an amendment or modification, (A) that violates the single purpose covenants set forth in this Section 8.1 or (B) 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 the prior written consent of Lender;
(v) has not owned and will not own any subsidiary, or make any investment in, any PersonPerson (other than, with respect to any SPE Component Entity, in Borrower or Operating Lessee);
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan has not and prior loans that have been satisfied in full as of the date hereof, will not commingle its funds or assets with the funds or assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accountsPerson (it being acknowledged by Lender that Lender’s commingling of the Property Tax and Insurance Reserve Fund as permitted by this Agreement does not violate this restriction);
(vii) except as otherwise set forth on Schedule 2 hereto, has not and will not incur any debtIndebtedness, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than (A) the Debt, (B) Property Taxes not yet delinquent, (C) tenant allowances and Capital Expenditure costs and property improvement costs required under Leases, the Operating Lease, the Approved Management Agreement or the Franchise Agreement or otherwise permitted to be incurred under the Loan Documents that are paid on or prior to the date when due (subject to the Property generating sufficient cash flow), (D) Trade Payables not represented by a note, customarily paid by Borrower or Operating Lessee within 60 days of incurrence and in fact not more than 60 days outstanding (subject to the Property generating sufficient cash flow to pay such Trade Payables), which are incurred in the ordinary course of Borrower’s or Operating Lessee’s business with respect to amounts reasonable and customary for similar properties, and/or (E) Permitted Equipment Leases; provided however, (x) the aggregate amount of the indebtedness described in (D) and (E) for Borrower and Operating Lessee shall not exceed at any time three percent (3%) of the original principal amount of the Loan. No Indebtedness other than the Debt may be secured (subordinate or pari passu) by the Property and (y) Borrower shall have the right to contest payment of Indebtedness described in (D) and (E) in accordance with the definition of Permitted Debt and prior loans that have been satisfied in full as of the date hereofEncumbrances;
(viii) has not failed and will not fail to maintain all of its books, records, books of account, financial statements and bank accounts, financial statements, accounting records and other entity documents accounts separate and apart from those of any other PersonPerson (including, without limitation, any Affiliates); except that has not failed and will not fail to maintain its books, records, resolutions and agreements as official records. Notwithstanding the foregoing, Borrower’s or Operating Lessee’s financial position, assets, liabilities, net worth results of operations and operating results cash flows may be included in the consolidated financial statements of an Affiliateaffiliate in accordance with GAAP, provided that (Ax) appropriate notation shall be made on any such consolidated financial statements to indicate the separate identity of Borrower from such Affiliate and do not suggest in any way that Borrower’s or Operating Lessee’s assets and credit are not available to satisfy the debts and other obligations claims of such Affiliate or any other Person, affiliates creditors and (By) Borrower’s assets, liabilities and net worth such assets shall also be listed on Borrowersuch Person’s own separate balance sheet);
(ix) except for capital contributions or capital distributions permitted under the terms Operating Lease, has not entered into and conditions of Borrower’s organizational documents and properly reflected on its books and records, will not enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, principal or any Affiliate of the foregoingAffiliate, except upon terms and conditions that are intrinsically fair, commercially reasonable fair and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties;
(x) has not maintained and will not maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan set forth on Schedule 2 hereto, has not assumed or guaranteed, and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, will not assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or ; has not otherwise pledged and will not otherwise pledge its assets to secure for the obligations benefit of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;
(xii) has not made and will not make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other Person;
(xiii) has not failed and will not fail to (A) file its own tax returns separate from those of any other Person, except to the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under (unless prohibited by applicable Legal Requirements and (Bfrom doing so) pay any taxes required or unless Borrower or Operating Lessee, as applicable, has lawfully obtained extensions, in which event tax returns shall be filed prior to be paid under applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result the expiration of any profits or losses of Borrowerextension period);
(xiv) has not failed and will not fail to (A) hold itself out to the public and identify itself, in each case, as a legal entity separate and distinct from any other Person and not as a division or part of any other Person, (B) conduct its business solely in its own name, (C) hold its assets in its own name or (CD) correct any known misunderstanding regarding its separate identity;
(xv) has not failed and will not fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, that operations (to the foregoing shall not require Borrower’s members, partners or shareholders extent there exists sufficient cash flow from the Property to make additional capital contributions to Borrowerdo so);
(xvi) without the prior unanimous written consent of all of its partners or members, as applicable, and the prior written consent of all directors or managers of Borrower or each SPE Component Entity, as applicable including, without limitation, each Independent Director, if any, appointed pursuant to the terms of this Agreement (regardless of whether such Independent Director is engaged at the Borrower, or Operating Lessee, or SPE Component Entity level), (a) has not filed or consented to, and will not file or consent to, the filing of any petition, either voluntary or involuntary, to take advantage of any Material Action Creditors Rights Laws, (b) has not sought or consented to, and will not seek or consent to, the appointment of a receiver, liquidator or any similar official, (c) has not taken, and will not take, any action that is intended to might cause such entity to become insolventinsolvent (so long such entity does not become insolvent by reason of the failure of the Property to generate sufficient cash flow), or (d) has not made and will not make an assignment for the benefit of creditors;
(xvii) has not failed and will not fail to fairly and reasonably (a) allocate shared expenses (including, without limitation, shared office space space) or (b) use separate stationery, invoices and services performed by an employee of an Affiliate) among the Persons sharing such expenseschecks;
(xviii) has not failed and will not fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, (a) pay its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; provided, however, that funds or (b) maintain a sufficient number of employees in light of its contemplated business operations (in each case to the foregoing shall not require Borrower’s members, partners or shareholders extent there exists sufficient cash flow from the Property to make additional capital contributions to Borrowerdo so);
(xix) has not acquired and will not acquire obligations or securities of its partners, members, shareholders or other affiliatesAffiliates, as applicable;; or
(xx) violate has not identified and will not identify its partners, members, shareholders or cause to be violated the assumptions made with respect to Borrower and its principals in the Non-Consolidation Opinion or any New Non-Consolidation Opinion;
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationeryother Affiliates, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliateas applicable, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department division or division part of any other Personit.
(ib) If Borrower or Operating Lessee is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner (in the case of a partnership, or ) and the sole managing member (in the case of a limited liability company company) of Borrower or of Operating Lessee, as applicable, shall be a corporation or an Acceptable LLC (each an “SPE Component Entity”) of Borrower, as applicable, shall be an Acceptable DE LLCwhose sole asset is its interest in Borrower or Operating Lessee. Each SPE Component Entity (Ai) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iii8.1(a)(iii) through - (vi) (inclusive) and Sections (viii) through – (xxivxxi) (inclusive) and, if such SPE Component Entity is an Acceptable LLC, Sections 8.1(c) and (d) hereof, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (Bii) will not engage in any business or activity other than owning an interest in BorrowerBorrower or Operating Lessee; (Ciii) will not acquire or own any assets other than its partnership, membership, or other equity interest in BorrowerBorrower or Operating Lessee; (Div) will not at all times continue to own any subsidiary, no less than a 0.5% direct equity ownership interest in Borrower or make any investment in any Person other than its investment in BorrowerOperating Lessee; (Ev) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (Fvi) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is substantially similar to that of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors8.1.
(iic) In the event Borrower Borrower, Operating Lessee or the SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”)LLC, the limited liability company agreement of Borrower, Operating Lessee or the Company SPE Component Entity (as applicable) (the “LLC Agreement”) shall provide that (Ai) upon the occurrence of any event that causes the sole last remaining member of Borrower, Operating Lessee or the Company SPE Component Entity (as applicable) (“Member”) to cease to be the member of Borrower, Operating Lessee or the Company SPE Component Entity (as applicable) (other than (1A) upon an assignment by Member of all of its limited liability company interest in Borrower, Operating Lessee or the Company SPE Component Entity (as applicable) and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2B) the resignation of Member and the admission of an additional member of Borrower, Operating Lessee or the Company SPE Component Entity (as applicable) in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a any natural person duly designated under the LLC Agreement applicable organizational documents and, if the Loan or any interest therein is included in a Securitization, each person acting as Independent Director of Borrower, Operating Lessee or the Company and executing the LLC Agreement SPE Component Entity (“Special Member”) as applicable), shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of Borrower, Operating Lessee, or the Company, SPE Component Entity (as applicable) automatically be admitted to Borrower, Operating Lessee or the Company SPE Component Entity (as applicable) as a member with a 0% economic interest (“Special Member”) and shall continue Borrower, Operating Lessee or the existence of the Company SPE Component Entity (as applicable) without dissolution, and (Bii) Special Member may not resign from Borrower, Operating Lessee or the Company SPE Component Entity (as applicable) or transfer its rights as Special Member unless (1A) a successor Special Member has been admitted to Borrower or the Company SPE Component Entity (as applicable) as a Special Member in accordance with the requirements of the Act Delaware law and (2B) if the Loan or any interest therein is included in a Securitization, after giving effect to such resignationresignation or transfer, such successor Special Member has also accepted its appointment as each Independent Director required to be appointed by the terms of this Agreement remains an Independent Director. The LLC Agreement shall further provide that Director of the SPE Component Entity, Operating Lessee or Borrower (vas applicable) in accordance with Section 8.2 hereof, (iii) Special Member shall automatically cease to be a member of Borrower, Operating Lessee or the Company SPE Component Entity (as applicable) upon the admission to Borrower, Operating Lessee or the Company SPE Component Entity (as applicable) of a the first substitute Membermember, (wiv) Special Member shall be a member of Borrower, Operating Lessee the Company SPE Component Entity (as applicable) that has no interest in the profits, losses and capital of Borrower, Operating Lessee or the Company SPE Component Entity (as applicable) and has no right to receive any distributions of the assets of Borrower, Operating Lessee or the CompanySPE Component Entity (as applicable), (xv) pursuant to Section 18-301 the applicable provisions of the limited liability company act of the State of Delaware (the “Act”), Special Member shall not be required to make any capital contributions to Borrower, Operating Lessee or the Company SPE Component Entity (as applicable) and shall not receive a limited liability company interest in Borrower, Operating Lessee or the CompanySPE Component Entity (as applicable), (yvi) Special Member, in its capacity as Special Member, may not bind Borrower, Operating Lessee or the CompanySPE Component Entity (as applicable), and (zvii) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, Borrower, Operating Lessee or the Company, SPE Component Entity (as applicable) including, without limitation, the merger, consolidation or conversion of Borrower, Operating Lessee or the CompanySPE Component Entity (as applicable); provided, however, such prohibition shall not limit the obligations of any Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. In order to implement the admission to Borrower, Operating Lessee or the SPE Component Entity (as applicable) of Special Member, Special Member shall execute a counterpart to the LLC Agreement. Prior to its admission to Borrower, Operating Lessee or the Company SPE Component Entity (as applicable) as Special Member, Special Member shall not be a member of Borrower, Operating Lessee or the Company, SPE Component Entity (as applicable) but the Special Member may serve as an Independent Director of Borrower, Operating Lessee or the Company. Any SPE Component Entity (as applicable).
(d) The LLC Agreement with respect to any Acceptable LLC shall further provide that (i) upon the occurrence of any event that causes the Member to cease to be a member of Borrower, Operating Lessee or the SPE Component Entity (as applicable) to the fullest extent permitted by applicable Law, the personal representative of Member shall, within ninety (90) days after the occurrence of the event that terminated the continued membership of Member in Borrower, Operating Lessee or the SPE Component Entity (as applicable) agree in writing (A) to continue Borrower, Operating Lessee or the SPE Component Entity (as applicable) and (B) to the admission of the personal representative or its nominee or designee, as the case may be, as a substitute member of Borrower, Operating Lessee or the SPE Component Entity (as applicable) effective as of the occurrence of the event that terminated the continued membership of Member in Borrower, Operating Lessee or the SPE Component Entity (as applicable), (ii) any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of Borrower, Operating Lessee or the Company SPE Component Entity (as applicable) and upon the occurrence of such an event, the existence business of Borrower, Operating Lessee or the Company SPE Component Entity (as applicable) shall continue without dissolution. The LLC Agreement shall also provide that dissolution and (iii) each of Member and Special Member waives any right it might have to agree in writing to dissolve Borrower, Operating Lessee or the Company SPE Component Entity (as applicable) upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of Borrower, Operating Lessee or the CompanySPE Component Entity (as applicable).
(ce) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents.
(d) Borrower has executed Operating Lessee further represent and delivered warrant to Lender that the certificate attached hereto as Exhibit D.representations and warranties set forth on Schedule
Appears in 1 contract
Single Purpose Entity/Separateness. Borrower represents, warrants and covenants as follows:
(a) Borrower will not and Borrower hereby represents and warrants to Administrative Agent and each Lender that Borrower has not and will notsince the date of its formation:
(i) engage in any business or activity other than the ownership, operation and operation, management, leasing, improvement and/or maintenance of the Properties, Property and activities incidental thereto;
(ii) acquire or own any assets other than (A) the PropertiesProperty, (B) Borrower’s leasehold interest in the Garage Penthouse Lease (which interest has terminated as of the Closing Date) and (BC) such incidental Personal Property as may be necessary for the ownership and ownership, leasing, improvement, maintenance and/or operation of the PropertiesProperty and activities related or incidental thereto;
(iii) merge into or consolidate with any Person, or or, to the fullest extent permitted by law, dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structurestructure from a Delaware limited liability company, other than, in each case, such activities as are contemplated or permitted pursuant to any provision of this Agreement or of any of the other Loan Documents;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existenceformalities, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or amend (B) amendexcept as otherwise expressly permitted hereunder), modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;
(v) own any subsidiary, or make any investment in, any PersonPerson (other than, with respect to any SPE Component Entity, in Borrower);
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its funds or assets with the funds or assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;
(vii) incur any debtIndebtedness, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than (A) the Debt, (B) trade and operational indebtedness incurred in the ordinary course of business with trade creditors, provided such indebtedness is (1) unsecured, (2) not evidenced by a note, (3) on commercially reasonable terms and conditions, and (4) due not more than one hundred and sixty (60) days past the date incurred and paid on or prior to such date, (C) Permitted Equipment Leases, (D) indebtedness incurred prior to the Closing Date in connection with the ownership of the Property that has been indefeasibly repaid in full or is otherwise no longer owed by Borrower (contingent or otherwise) and/or (E) the Permitted Alterations Obligations; provided however, the aggregate amount of the indebtedness described in (B) and (C) shall not exceed at any time five percent (5%) of the outstanding principal amount of the Debt. No Indebtedness other than the Debt and Permitted Debt and prior loans that have been satisfied in full as of may be secured (senior, subordinate or pari passu) by the date hereofProperty;
(viii) fail to maintain all of its records, books of account, bank accountsrecords, financial statements, accounting records and records, other entity documents and bank accounts separate and apart from those of any other Person (including, without limitation, any Affiliates). Borrower’s assets have not and will not be listed as assets on the financial statement of any other Person; except provided, however, that Borrower’s financial position, assets, liabilities, net worth and operating results assets may be included in a consolidated and/or combined financial statement of its Affiliates provided that, to the consolidated financial statements extent necessary to (i) prevent a substantive consolidation of an Affiliate, provided that the assets and liabilities of Borrower with the assets and liabilities of any other Person or (Aii) deliver a Non-Consolidation Opinion when required under this Agreement: (1) appropriate notation shall be made on such consolidated financial statements to indicate the separate identity separateness of Borrower from and such Affiliate Affiliates and to indicate that Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate Affiliates or any other Person, Person and (B2) Borrower’s assets, liabilities and net worth such assets shall also be listed on Borrower’s own separate balance sheet. Borrower has maintained and will maintain its books of account, records, financial statements, accounting records, other entity documents, resolutions and agreements as official records;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, principal or any Affiliate of the foregoingAffiliate, except (i) as may have been approved in writing by Administrative Agent in its sole and absolute discretion or (ii) upon terms and conditions that are intrinsically fair, commercially reasonable and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts or obligations of any other Person, hold itself out to be responsible for the debts or obligations of any other Person, or otherwise pledge its assets to secure or credit for the obligations benefit of any other Person or hold out its assets or credit or assets as being available to satisfy the debts or obligations of any other Person;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other PersonPersons;
(xiii) fail to (A) file its own tax returns separate from those of any other Person, Person (unless prohibited by applicable Legal Requirements from doing so or except to the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file such tax returns under applicable Legal Requirements Requirements) and (B) pay any taxes so required to be paid by such Borrower under applicable Legal Requirements; provided, however, that Borrower shall not have any obligation Requirements (to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrowerthe extent there is sufficient cash flow from the Property to do so);
(xiv) fail to (A) hold itself out to the public and identify itself, in each case, as a legal entity separate and distinct from any other Person and not as a division, department or part of any other Person, (B) conduct its business solely in its own name, (C) hold its assets in its own name or (CD) correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operationsoperations (to the extent there exists sufficient cash flow from the Property to do so); provided, however, that the foregoing no Person shall not require Borrower’s members, partners or shareholders be required to make any direct or indirect additional capital contributions to BorrowerBorrower in order to comply with the foregoing;
(xvi) without the prior unanimous written consent of all of its partners partners, shareholders or members, as applicable, and the prior unanimous written consent of all its board of directors or managers managers, as applicable, and the prior written consent of each Independent Manager (regardless of whether such Independent Manager is engaged at the Borrower or each SPE Component EntityEntity level), as applicable including(a) file or consent to the filing of any petition, without limitationeither voluntary or involuntary, each Independent Directorto take advantage of any Creditors Rights Laws, (b) seek or consent to the appointment of a receiver, liquidator or any similar official unless such appointment is sought by Administrative Agent, (c) take any Material Action or action that is intended to might cause such entity to become insolvent, (d) make an assignment for the benefit of creditors or (e) take any Material Action with respect to Borrower or any SPE Component Entity (provided, that, none of any member, shareholder or partner (as applicable) of Borrower or any SPE Component Entity or any board of directors or managers (as applicable) of Borrower or any SPE Component Entity may vote on or otherwise authorize the taking of any of the foregoing actions unless, in each case, there are at least two (2) Independent Managers then serving in such capacity in accordance with the terms of the applicable organizational documents and each of such Independent Managers has consented to such foregoing action);
(xvii) fail to allocate fairly and reasonably allocate shared expenses with its Affiliates (including, without limitation, shared office space space) or fail to use separate stationery, invoices and services performed by an employee checks bearing its own name (or, for so long as the Manager is acting on behalf of an Affiliate) among Borrower, the Persons sharing such expensesname of the Manager on behalf of Borrower);
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, and pay its own liabilities (including, without limitation, salaries of its own employees, if any) only from its own fundsfunds or fail to maintain a sufficient number of employees (if any) in light of its contemplated business operations (in each case to the extent there exists sufficient cash flow from the Property to do so); provided, however, that the foregoing no Person shall not require Borrower’s members, partners or shareholders be required to make any direct or indirect additional capital contributions to BorrowerBorrower in order to comply with the foregoing;
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliatesAffiliates, as applicable;
(xx) identify its partners, members, shareholders or other Affiliates, as applicable, as a division, department or part of it;
(xxi) violate or cause to be violated the assumptions made with respect to Borrower and its principals in the Non-Consolidation Opinion or in any New Non-Consolidation Opinion;
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail hold itself out as having agreed to maintain and use separate stationery, invoices and checks bearing its own namepay indebtedness incurred by any Affiliate;
(xxiii) have hold out the assets or credit of any Affiliate as being available to satisfy any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan debts or guarantees relating to obligations under the Management Agreements or Franchise Agreementsobligations; or
(xxiv) identify itself as a department or division allow an Affiliate to act in its name, to the extent of any other Personits power to do so.
(ib) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner (in the case of a partnership, or the managing ) and at least one member (in the case of a limited liability company (each an “SPE Component Entity”company) of Borrower, as applicable, shall be a corporation or an Acceptable DE LLCLLC (each, an “SPE Component Entity”) whose sole asset is its interest in Borrower. Each SPE Component Entity (Ai) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iiiSection 5.1(a)(iii) through – (vi) (inclusive) and (viii) through – (xxivxxi) (inclusive) and, if such SPE Component Entity is an Acceptable LLC, Section 5.1(c) and (d) hereof, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (Bii) will not engage in any business or activity other than owning an interest in Borrower; (Ciii) will not acquire or own any assets other than its partnership, membership, or other equity ownership interest in Borrower; (Div) will not at all times continue to own any subsidiary, or make any investment in any Person other no less than its investment a 0.5% direct equity ownership interest in Borrower; (Ev) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (Fvi) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to 5.1.
(c) In the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is substantially similar to that of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors.
(ii) In the event Borrower or SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”)LLC, the limited liability company agreement of the Company Borrower or such SPE Component Entity (as applicable) (the “LLC Agreement”) shall provide that (Ai) upon the occurrence of any event that causes the sole last remaining member of the Company Borrower or such SPE Component Entity (as applicable) (“Member”) to cease to be the member of the Company Borrower or such SPE Component Entity (as applicable) (other than (1A) upon an assignment by Member of all of its limited liability company interest in the Company Borrower or such SPE Component Entity (as applicable) and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, Agreement or (2B) the resignation of Member and the admission of an additional member of the Company Borrower or such SPE Component Entity (as applicable) in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director Manager of the Company and executing the LLC Agreement Borrower or such SPE Component Entity (“Special Member”as applicable) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the Company, Borrower or such SPE Component Entity (as applicable) automatically be admitted to the Company Borrower or such SPE Component Entity (as applicable) as a member with a zero percent (0%) economic interest (“Special Member”) and shall continue the existence of the Company Borrower or such SPE Component Entity (as applicable) without dissolution, dissolution and (Bii) Special Member may not resign from the Company Borrower or such SPE Component Entity (as applicable) or transfer its rights as Special Member unless (1A) a successor Special Member has been admitted to the Company Borrower or such SPE Component Entity (as applicable) as a Special Member in accordance with the requirements of the Act Delaware law and (2B) after giving effect to such resignationresignation or transfer, there remains at least two (2) Independent Managers of such successor Special Member has also accepted its appointment SPE Component Entity or Borrower (as an Independent Directorapplicable) in accordance with Section 5.2 below. The LLC Agreement shall further provide that (vi) Special Member shall automatically cease to be a member of the Company Borrower or such SPE Component Entity (as applicable) upon the admission to Borrower or such SPE Component Entity (as applicable) of the Company of a first substitute Membermember, (wii) Special Member shall be a member of the Company Borrower or such SPE Component Entity (as applicable) that has no interest in the profits, losses and capital of the Company Borrower or such SPE Component Entity (as applicable) and has no right to receive any distributions of the assets of the CompanyBorrower or such SPE Component Entity (as applicable), (xiii) pursuant to Section 18-301 the applicable provisions of the limited liability company act of the State of Delaware (the “Act”), Special Member shall not be required to make any capital contributions to the Company Borrower or such SPE Component Entity (as applicable) and shall not receive a limited liability company interest in the CompanyBorrower or such SPE Component Entity (as applicable), (yiv) Special Member, in its capacity as Special Member, may not bind the Company, Borrower or such SPE Component Entity (as applicable) and (zv) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Company, Borrower or such SPE Component Entity (as applicable) including, without limitation, the merger, consolidation or conversion of the CompanyBorrower or such SPE Component Entity (as applicable); provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent DirectorManager, to vote on such matters required by the Loan Documents or the LLC Agreement. In order to implement the admission to Borrower or such SPE Component Entity (as applicable) of Special Member, Special Member shall execute a counterpart to the LLC Agreement. Prior to its admission to the Company Borrower or such SPE Component Entity (as applicable) as Special Member, Special Member shall not be a member of the CompanyBorrower or such SPE Component Entity (as applicable), but the Special Member may serve as an Independent Director Manager of Borrower or such SPE Component Entity (as applicable).
(d) In the event Borrower or any SPE Component Entity is an Acceptable LLC, the LLC Agreement shall further provide that (i) upon the occurrence of any event that causes the Member to cease to be a member of Borrower or such SPE Component Entity (as applicable) (other than upon continuation of the Company. Any Company without dissolution upon (A) an assignment by the Member of all of its limited liability company interest in the Company and the admission of the transferee in accordance with this Agreement, or (B) the resignation of the member and the admission of an additional member of the Company in accordance with the terms of this Agreement) to the fullest extent permitted by law, the personal representative of Member shall, within ninety (90) days after the occurrence of the event that terminated the continued membership of Member in Borrower or such SPE Component Entity (as applicable) agree in writing (A) to continue Borrower or such SPE Component Entity (as applicable) and (B) to the admission of the personal representative or its nominee or designee, as the case may be, as a substitute member of Borrower or such SPE Component Entity (as applicable) effective as of the occurrence of the event that terminated the continued membership of Member in Borrower or such SPE Component Entity (as applicable), (ii) any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company Borrower or such SPE Component Entity (as applicable) and upon the occurrence of such an event, the existence of the Company shall continue without dissolution. The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the Company.
(c) The organizational documents business of Borrower and each or such SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents.
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 1 contract
Sources: Loan Agreement (Brookfield DTLA Fund Office Trust Investor Inc.)
Single Purpose Entity/Separateness. Borrower represents, warrants and covenants as follows:
(a) Each Borrower has not and not, and, for so long as the Debt remains outstanding, will not:
(i) engage in any business or activity other than the ownership, operation and maintenance of the Properties, applicable Individual Property and activities incidental theretothereto and, with respect to MO Borrower, the Bonds;
(ii) acquire or own any assets other than (A) the Propertiesapplicable Individual Property, and (B) with respect to the MO Borrower only, the Bonds, and (C) such incidental Personal Property as may be necessary for the ownership ownership, leasing, maintenance and operation of the Propertiessuch Individual Property;
(iii) merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existenceformalities, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements Applicable Law of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;
(v) own any subsidiary, or make any investment in, any Person;
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its assets with the assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;
(vii) incur any debtIndebtedness, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than (A) the Debt, (B) trade and operational indebtedness incurred in the ordinary course of business with trade creditors, provided such indebtedness is (1) unsecured, (2) not evidenced by a note, (3) on commercially reasonable terms and conditions, and (4) due not more than sixty (60) days past the date incurred and paid on or prior to such date, (C) Permitted Equipment Leases and/or (D) Borrower’s obligations and liabilities under the Interest Rate Protection Agreement; provided however, the aggregate amount of the indebtedness described in (B) and (C) shall not exceed at any time two percent (2%) of the outstanding aggregate Allocated Loan Amounts associated with the portions of the Property owned by Borrower. No Indebtedness other than the Debt and Permitted Debt and prior loans that have been satisfied in full as of may be secured (subordinate or pari passu) by the date hereofProperty;
(viii) fail to maintain all of its books, records, books of account, financial statements and bank accounts, financial statements, accounting records and other entity documents accounts separate and apart from those of its affiliates and any constituent party. Borrower’s assets have not and will not be listed as assets on the financial statement of any other Person; except provided, however, that Borrower’s financial position, assets, liabilities, net worth and operating results assets may be included in the a consolidated financial statements statement of an Affiliate, its affiliates provided that (Ai) appropriate notation shall be made on such consolidated financial statements to indicate the separate identity separateness of Borrower from and such Affiliate affiliates and to indicate that Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate affiliates or any other Person, Person and (Bii) Borrower’s assets, liabilities and net worth such assets shall also be listed on Borrower’s own separate balance sheet. Borrower has maintained and will maintain its books, records, resolutions and agreements as official records;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, principal or any Affiliate of the foregoingaffiliate, except upon terms and conditions that are intrinsically fair, commercially reasonable fair and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure for the obligations benefit of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person, other than in the context of the cross-collateralization and cross-defaulting of the Loan;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other Person;
(xiii) fail to (A) file its own tax returns separate (unless prohibited by Applicable Law from those of any other Person, except to the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under applicable Legal Requirements and (B) pay any taxes required to be paid under applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrowerdoing so);
(xiv) fail either to (A) hold itself out to the public as a legal entity separate and distinct from any other Person, (B) Person or to conduct its business solely in its own name or (C) fail to correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, that operations (to the foregoing extent there exists sufficient cash flow from the applicable Individual Property to do so after the payment of all operating expenses and Debt Service and shall not require Borrower’s members, partners or shareholders any equity owner to make additional capital contributions to Borrower);
(xvi) without the unanimous written consent of all of its partners or members, as applicable, and the written consent of all directors or managers each Independent Director (regardless of whether such Independent Director is engaged at the Borrower or each SPE Component EntityEntity level), as applicable including(a) file or consent to the filing of any petition, without limitationeither voluntary or involuntary, each Independent Directorto take advantage of any Creditors’ Rights Laws, (b) seek or consent to the appointment of a receiver, liquidator or any similar official, (c) take any Material Action or action that is intended to might cause such entity to become insolvent, or (d) make an assignment for the benefit of creditors;
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space space) or fail to use separate stationery, invoices and services performed by an employee of an Affiliate) among the Persons sharing such expenseschecks;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, pay its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; provided, however, that funds or fail to maintain a sufficient number of employees in light of its contemplated business operations (in each case to the foregoing shall not require Borrower’s members, partners or shareholders extent there exists sufficient cash flow from the applicable Individual Property to make additional capital contributions to Borrowerdo so);
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable;; or
(xx) violate or cause to be violated the assumptions made with respect to Borrower and its principals in the Non-Consolidation Opinion or in any New Non-Consolidation Opinion;
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other Person.
(ib) If Borrower is a limited partnership or a limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner in the case of a partnership, or the managing member in the case of a limited liability company (each each, an “SPE Component Entity”) of shall be a corporation or an Acceptable LLC (I) whose sole asset is its interest in Borrower, as applicable, (II) which has not been and shall not be an Acceptable DE LLC. Each SPE Component Entity (A) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iii) through (vi) and (viii) through (xxiv) inclusive, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (B) will not permitted to engage in any business or activity other than owning an interest in Borrower; (CIII) will which has not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (D) will been and shall not own any subsidiary, or make any investment in any Person other than its investment in Borrower; (E) will not be permitted to incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (FIV) which has and will at all times own at least a 0.5% direct equity ownership interest in Borrower. Each such SPE Component Entity will at all times comply, and will cause Borrower to comply comply, with each of the provisions of representations, warranties, and covenants contained in this Section 6.1 and Section 6.4Article 5 (to the extent applicable) as if such representation, warranty or covenant was made directly by such SPE Component Entity. Prior to Upon the withdrawal or the disassociation of any an SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner SPE Component Entity whose articles of incorporation or managing member whose limited liability company agreement is organization are substantially similar to that those of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, and deliver a new opinion letter acceptable New Non-Consolidation Opinion to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding As of the foregoingdate hereof, to the extent Borrower is an Acceptable DE LLC, LLC and an SPE Component Entity is not required so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement continues to qualify as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent DirectorsLLC.
(iic) In the event Borrower or the SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”)LLC, the limited liability company agreement of Borrower or the Company SPE Component Entity (as applicable) (the “LLC Agreement”) shall provide that (Ai) upon the occurrence of any event that causes the sole last remaining member of Borrower or the Company SPE Component Entity (as applicable) (“Member”) to cease to be the member of Borrower or the Company SPE Component Entity (as applicable) (other than (1A) upon an assignment by Member of all of its limited liability company interest in Borrower or the Company SPE Component Entity (as applicable) and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2B) the resignation of Member and the admission of an additional member of Borrower or the Company SPE Component Entity (as applicable) in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of Borrower or the Company and executing the LLC Agreement SPE Component Entity (“Special Member”as applicable) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of Borrower or the Company, SPE Component Entity (as applicable) automatically be admitted to Borrower or the Company SPE Component Entity (as applicable) as a member with a 0% economic interest (“Special Member”) and shall continue Borrower or the existence of the Company SPE Component Entity (as applicable) without dissolution, dissolution and (Bii) Special Member may not resign from Borrower or the Company SPE Component Entity (as applicable) or transfer its rights as Special Member unless (1A) a successor Special Member has been admitted to Borrower or the Company SPE Component Entity (as applicable) as a Special Member in accordance with the requirements of the Act Delaware or Maryland law (as applicable) and (2B) after giving effect to such resignationresignation or transfer, such successor Special Member has also accepted its appointment there remains at least one (1) Independent Director of the SPE Component Entity or Borrower (as an Independent Directorapplicable) in accordance with Section 5.2 below. The LLC Agreement shall further provide that (vi) Special Member shall automatically cease to be a member of Borrower or the Company SPE Component Entity (as applicable) upon the admission to Borrower or the Company SPE Component Entity (as applicable) of a the first substitute Membermember, (wii) Special Member shall be a member of Borrower or the Company SPE Component Entity (as applicable) that has no interest in the profits, losses and capital of Borrower or the Company SPE Component Entity (as applicable) and has no right to receive any distributions of the assets of Borrower or the CompanySPE Component Entity (as applicable), (xiii) pursuant to Section 18-301 the applicable provisions of the limited liability company act of the State of Delaware or Maryland (as applicable, the “Act”), Special Member shall not be required to make any capital contributions to Borrower or the Company SPE Component Entity (as applicable) and shall not receive a limited liability company interest in Borrower or the CompanySPE Component Entity (as applicable), (yiv) Special Member, in its capacity as Special Member, may not bind Borrower or the Company, SPE Component Entity (as applicable) and (zv) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, Borrower or the Company, SPE Component Entity (as applicable) including, without limitation, the merger, consolidation or conversion of Borrower or the CompanySPE Component Entity (as applicable); provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. In order to implement the admission to Borrower or the SPE Component Entity (as applicable) of Special Member, Special Member shall execute a counterpart to the LLC Agreement. Prior to its admission to Borrower or the Company SPE Component Entity (as applicable) as Special Member, Special Member shall not be a member of Borrower or the CompanySPE Component Entity (as applicable), but the Special Member may serve as an Independent Director of Borrower or the Company. Any SPE Component Entity (as applicable).
(d) The LLC Agreement shall further provide that, (i) upon the occurrence of any event that causes the Member to cease to be a member of Borrower or the SPE Component Entity (as applicable) to the fullest extent permitted by law, the personal representative of Member shall, within ninety (90) days after the occurrence of the event that terminated the continued membership of Member in Borrower or the SPE Component Entity (as applicable) agree in writing (A) to continue Borrower or the SPE Component Entity (as applicable) and (B) to the admission of the personal representative or its nominee or designee, as the case may be, as a substitute member of Borrower or the SPE Component Entity (as applicable) effective as of the occurrence of the event that terminated the continued membership of Member in Borrower or the SPE Component Entity (as applicable), (ii) any action initiated by or brought against Member or Special Member under any Creditors Creditors’ Rights Laws shall not cause Member or Special Member to cease to be a member of Borrower or the Company SPE Component Entity (as applicable) and upon the occurrence of such an event, the existence business of Borrower or the Company SPE Component Entity (as applicable) shall continue without dissolution. The LLC Agreement shall also provide that , and (iii) each of Member and Special Member waives any right it might have to agree in writing to dissolve Borrower or the Company SPE Component Entity (as applicable) upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Creditors’ Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of Borrower or the Company.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents(as applicable).
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 1 contract
Sources: Loan Agreement (American Realty Capital Trust III, Inc.)
Single Purpose Entity/Separateness. Borrower represents, warrants and covenants as follows:
(a) The Borrower has not and will not:
shall solely conduct the business contemplated to be conducted by it pursuant to the Loan Documents, shall have no outstanding Indebtedness or other liabilities (i) engage in any business or activity other than the ownership, operation and maintenance of the PropertiesPermitted Indebtedness), and activities incidental thereto;
(ii) acquire or own any assets other than (A) the Propertiesshall be a party to, and (B) such incidental Personal Property as may be necessary for the ownership and operation of the Properties;
(iii) merge into or consolidate with any Personbound by, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existence, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;
(v) own any subsidiary, or make any investment in, any Person;
(vi) except as contemplated by solely the Loan Documents with respect to co-borrowers which it is a party, and no other contract, except for banking agreements, process agent agreements, similar agreements, and other agreements not otherwise prohibited under the Loan this Agreement which are incidental to conducting its business as permitted hereunder and prior loans that have been satisfied in full as of the date hereof, commingle under its assets with the assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;Organizational Documents.
(viib) incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)), other than the Debt and Permitted Debt and prior loans that The Borrower shall have been satisfied in full as of the date hereof;no Subsidiaries.
(viiic) fail to The Borrower shall maintain its records, separate bank accounts and separate books of account, bank accounts, financial statements, accounting records account from the other Loan Parties and all other entity documents Persons.
(d) The Borrower shall conduct its business and operations separate and apart from that of any other person (including the owners of its Equity Interests and their Affiliates) and solely in its own name in a manner not misleading to other persons as to its identity, and not identify itself as a division of any other entity, and shall generally hold itself out as a separate entity, correct any known misunderstanding regarding its separate identity, conduct its dealings with third parties (including the owners of its Equity Interests and their Affiliates) on an arm’s length, fair and reasonable basis, and observe all procedures and organizational formalities under applicable law, or pursuant to the terms of its Organizational Documents.
(e) The Borrower shall not commingle or pool its funds or other assets with those of any other Person; except that Borrower’s financial position, assets, liabilities, net worth person and operating results may be included in the consolidated financial statements of an Affiliate, provided that (A) appropriate notation shall be made on such consolidated financial statements to indicate the separate identity of Borrower from such Affiliate and that Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate or any other Person, and (B) Borrower’s assets, liabilities and net worth shall also be listed on Borrower’s own separate balance sheet;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, or any Affiliate of the foregoing, except upon terms and conditions that are intrinsically fair, commercially reasonable and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be is not costly or difficult to segregate, ascertain or otherwise identify its individual assets as separate from those of any other Person;person.
(xif) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunderThe Borrower shall not pay, assume or guaranty the debts of any other Personguarantee, become obligated for, hold itself out its credit as being available to be responsible for the debts of any other Personsatisfy, or otherwise pledge its assets to secure the obligations or liabilities of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other Person;
(xiii) fail to (A) file its own tax returns separate from those of any other Person, except to the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under applicable Legal Requirements and (B) pay any taxes required to be paid under applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrower;
(xiv) fail to (A) hold itself out to the public as a legal entity separate and distinct from any other Person, (B) conduct its business solely in its own name or (C) correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;
(xvi) without the unanimous written consent of all of its partners or members, as applicable, and the written consent of all directors or managers of Borrower or each SPE Component Entity, as applicable including, without limitation, each Independent Director, take any Material Action or action that is intended to cause such entity to become insolvent;
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space and services performed by an employee of an Affiliate) among the Persons sharing such expenses;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, pay its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable;
(xx) violate or cause to be violated the assumptions made with respect to Borrower and its principals in the Non-Consolidation Opinion or any New Non-Consolidation Opinion;
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other Person.
(i) If Borrower is a partnership or limited liability company person (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner in the case of a partnership, or the managing member in the case of a limited liability company (each an “SPE Component Entity”) of Borrower, as applicable, shall be an Acceptable DE LLC. Each SPE Component Entity (A) will at all times comply with each pledge of the covenants, terms and provisions contained in Sections 6.1(a)(iii) through (vi) and (viii) through (xxiv) inclusive, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (B) will not engage in any business or activity other than owning an interest in Borrower; (C) will not acquire or own any ’s assets other than its partnership, membership, or other equity interest in Borrower; (D) will not own any subsidiary, or make any investment in any Person other than its investment in Borrower; (E) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (F) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is substantially similar to that of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors.
(ii) In the event Borrower or SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”), the limited liability company agreement of the Company (the “LLC Agreement”) shall provide that (A) upon the occurrence of any event that causes the sole member of the Company (“Member”) to cease to be the member of the Company (other than (1) upon an assignment by Member of all of its limited liability company interest in the Company and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2) the resignation of Member and the admission of an additional member of the Company in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of the Company and executing the LLC Agreement (“Special Member”) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the Company, automatically be admitted to the Company and shall continue the existence of the Company without dissolution, and (B) Special Member may not resign from the Company or transfer its rights as Special Member unless (1) a successor Special Member has been admitted to the Company as Special Member in accordance with the requirements of the Act and (2) after giving effect to such resignation, such successor Special Member has also accepted its appointment as an Independent Director. The LLC Agreement shall further provide that (v) Special Member shall automatically cease to be a member of the Company upon the admission to the Company of a substitute Member, (w) Special Member shall be a member of the Company that has no interest in the profits, losses and capital of the Company and has no right to receive any distributions of the assets of the Company, (x) pursuant to Section 18-301 of the Act, Special Member shall not be required a Security Document to make any capital contributions to the Company and shall not receive which it is a limited liability company interest in the Company, (y) Special Member, in its capacity as Special Member, may not bind the Company, and (z) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Company, including, without limitation, the merger, consolidation or conversion of the Company; provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. Prior to its admission to the Company as Special Member, Special Member shall not be a member of the Company, but the Special Member may serve as an Independent Director of the Company. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company and upon the occurrence of such an event, the existence of the Company shall continue without dissolution. The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the Companyparty).
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents.
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 1 contract
Single Purpose Entity/Separateness. Borrower represents, warrants and covenants as follows:
(a) Borrower has not and will not:
(i) engage in any business or activity other than the ownership, operation and maintenance of the PropertiesProperty, and activities incidental thereto;
(ii) acquire or own any assets other than (A) the PropertiesProperty, and (B) such incidental Personal Property as may be necessary for the ownership ownership, leasing, maintenance and operation of the PropertiesProperty;
(iii) merge into or consolidate with any Person, or or, to the fullest extent permitted by law, dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existenceformalities, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements Applicable Law of the jurisdiction of its organization or formation, or (B) or, without the prior written consent of Lender, amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;
(v) own any subsidiary, or make any investment in, any Person;
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its assets with the assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;
(vii) incur any debtIndebtedness, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than (A) the Debt, (B) trade and operational indebtedness incurred in the ordinary course of business with trade creditors, provided such indebtedness is (1) unsecured, (2) not evidenced by a note, (3) on commercially reasonable terms and conditions, and (4) due not more than ninety (90) days past the date incurred and paid on or prior to such date, and/or (C) Permitted Equipment Leases; provided however, the aggregate amount of the indebtedness described in (B) and (C) shall not exceed at any time three percent (3%) of the outstanding principal amount of the Debt. No Indebtedness other than the Debt and Permitted Debt and prior loans that have been satisfied in full as of may be secured (subordinate or pari passu) by the date hereofProperty;
(viii) fail to maintain all of its books, records, books of account, financial statements and bank accounts, financial statements, accounting records and other entity documents accounts separate and apart from those of its affiliates and any constituent party. Borrower’s assets have not and will not be listed as assets on the financial statement of any other Person; except provided, however, that Borrower’s financial position, assets, liabilities, net worth and operating results assets may be included in the a consolidated financial statements statement of an Affiliate, its affiliates provided that (Ai) appropriate notation shall be made on such consolidated financial statements to indicate the separate identity separateness of Borrower from and such Affiliate affiliates and to indicate that Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate affiliates or any other Person, Person and (Bii) Borrower’s assets, liabilities and net worth such assets shall also be listed on Borrower’s own separate balance sheet. Borrower has maintained and will maintain its books, records, resolutions and agreements as official records;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, principal or any Affiliate of the foregoingaffiliate, except upon terms and conditions that are intrinsically fair, commercially reasonable fair and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure for the obligations benefit of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other Person;
(xiii) fail to (A) file its own tax returns separate unless prohibited by Applicable Law from those doing so (except that Borrower may file or may include its filing as part of any other Persona consolidated federal tax return, except to the extent required and/or permitted by Applicable Law, provided that there shall be an appropriate notation indicating the separate existence of Borrower is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under applicable Legal Requirements its assets and (B) pay any taxes required to be paid under applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrowerliabilities);
(xiv) fail either to (A) hold itself out to the public as a legal entity separate and distinct from any other Person, (B) Person and not as a division or part of any other Person or to conduct its business solely in its own name or (C) fail to correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, that operations (to the extent there exists sufficient net excess cash flow from the Property to do so after the payment of all operating expenses and Debt Service and the foregoing shall not require Borrower’s members, partners or shareholders any equity owner to make additional capital contributions to Borrower);
(xvi) without the unanimous written consent of all of its partners or members, as applicable, and the written consent of all directors or managers each Independent Director (regardless of whether such Independent Director is engaged at the Borrower or each SPE Component EntityEntity level), as applicable including(a) file or consent to the filing of any petition, without limitationeither voluntary or involuntary, each Independent Directorto take advantage of any Creditors Rights Laws, (b) seek or consent to the appointment of a receiver, liquidator or any similar official, (c) take any Material Action or action that is intended would reasonably be expected to cause such entity Borrower to become insolvent, or (d) make an assignment for the benefit of creditors;
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space space) or fail to use separate stationery, invoices and services performed by an employee of an Affiliate) among the Persons sharing such expenseschecks;
(xviii) fail to intend remain solvent, to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, pay its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; provided, however, that the foregoing shall not require Borrower’s members, partners funds or shareholders to make additional capital contributions to Borrower;
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable;
(xx) violate or cause to be violated the assumptions made with respect to Borrower and its principals in the Non-Consolidation Opinion or any New Non-Consolidation Opinion;
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
operations (xxii) fail in each case, to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of extent there exists sufficient net excess cash flow from the date hereof and (y) with respect Property to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreementsdo so); or
(xxivxix) acquire obligations or securities of its members or other Affiliates, as applicable, or identify itself its members or other Affiliates, as applicable, as a department division or division part of any other Personit.
(ib) If Borrower is a limited partnership or a limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner in the case of a partnership, or the managing member in the case of a limited liability company (each each, an “SPE Component Entity”) of shall be a corporation or an Acceptable LLC (I) whose sole asset is its interest in Borrower, as applicable, (II) which has not been and shall not be an Acceptable DE LLC. Each SPE Component Entity (A) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iii) through (vi) and (viii) through (xxiv) inclusive, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (B) will not permitted to engage in any business or activity other than owning an interest in Borrower; (CIII) will which has not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (D) will been and shall not own any subsidiary, or make any investment in any Person other than its investment in Borrower; (E) will not be permitted to incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (FIV) which has and will at all times own at least a 0.5% direct equity ownership interest in Borrower. Each such SPE Component Entity will at all times comply, and will cause Borrower to comply comply, with each of the provisions of representations, warranties, and covenants contained in this Section 6.1 and Section 6.4Article 5 (to the extent applicable) as if such representation, warranty or covenant was made directly by such SPE Component Entity. Prior to Upon the withdrawal or the disassociation of any an SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner SPE Component Entity whose articles of incorporation or managing member whose limited liability company agreement is organization are substantially similar to that those of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent DirectorsEntity.
(iic) In the event Borrower or the SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”)LLC, the limited liability company agreement of Borrower or the Company SPE Component Entity (as applicable) (the “LLC Agreement”) shall provide that (Ai) upon the occurrence of any event that causes the sole last remaining member of Borrower or the Company SPE Component Entity (as applicable) (“Member”) to cease to be the a member of Borrower or the Company SPE Component Entity (as applicable) (other than (1) upon continuation of Borrower without dissolution upon an assignment by Member of all of its limited liability company interest in Borrower or the Company SPE Component Entity (as applicable) and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2) the resignation of Member and the admission of an additional member of the Company in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as the Independent Director of Borrower or the Company and executing the LLC Agreement SPE Component Entity (“Special Member”as applicable) shall, without any action of any other Person and simultaneously with the Member ceasing to be the a member of Borrower or the Company, SPE Component Entity (as applicable) automatically be admitted to Borrower or the Company SPE Component Entity (as applicable) as a member with a 0% economic interest (“Special Member”) and shall continue Borrower or the existence of the Company SPE Component Entity (as applicable) without dissolution, dissolution and (Bii) any Special Member may not resign from Borrower or the Company SPE Component Entity (as applicable) or transfer its rights as a Special Member unless (1A) a successor Special Member has been admitted to Borrower or the Company SPE Component Entity (as applicable) as a Special Member in accordance with by executing a counterpart to the requirements of the Act LLC Agreement and (2B) after giving effect to such resignationresignation or transfer, such successor Special Member has also accepted its appointment there remains at least one (1) Independent Director of the SPE Component Entity or Borrower (as an Independent Directorapplicable) in accordance with Section 5.2 below. The LLC Agreement shall further provide that (vi) Special Member shall automatically cease to be a member of Borrower or the Company SPE Component Entity (as applicable) upon the admission to Borrower or the Company SPE Component Entity (as applicable) of a the first substitute Membermember, (wii) Special Member shall be a member of Borrower or the Company SPE Component Entity (as applicable) that has no interest in the profits, losses and capital of Borrower or the Company SPE Component Entity (as applicable) and has no right to receive any distributions of the assets of Borrower or the CompanySPE Component Entity (as applicable), (xiii) pursuant to Section 18-301 the applicable provisions of the limited liability company act of the State of Delaware (the “Act”), Special Member shall not be required to make any capital contributions to Borrower or the Company SPE Component Entity (as applicable) and shall not receive a limited liability company interest in Borrower or the CompanySPE Component Entity (as applicable), (yiv) Special Member, in its capacity as Special Member, may not bind Borrower or the Company, SPE Component Entity (as applicable) and (zv) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, Borrower or the Company, SPE Component Entity (as applicable) including, without limitation, the merger, consolidation or conversion of Borrower or the CompanySPE Component Entity (as applicable); provided, however, such prohibition shall not limit the obligations of any Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. In order to implement the admission to Borrower or the SPE Component Entity (as applicable) of Special Member, each Person acting as Independent Director shall execute a counterpart to the LLC Agreement. Prior to its admission to Borrower or the Company SPE Component Entity (as Special Memberapplicable) as a member, Special Member shall not be a member of Borrower or the CompanySPE Component Entity (as applicable).
(d) The LLC Agreement shall further provide that, but (i) upon the Special occurrence of any event that causes the Member may serve to cease to be a member of Borrower or the SPE Component Entity (as an Independent Director applicable) to the fullest extent permitted by law, the personal representative of Member shall, within ninety (90) days after the occurrence of the Company. Any event that terminated the continued membership of Member in Borrower or the SPE Component Entity (as applicable) agree in writing (A) to continue Borrower or the SPE Component Entity (as applicable) and (B) to the admission of the personal representative or its nominee or designee, as the case may be, as a substitute member of Borrower or the SPE Component Entity (as applicable) effective as of the occurrence of the event that terminated the continued membership of Member in Borrower or the SPE Component Entity (as applicable), (ii) any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of Borrower or the Company SPE Component Entity (as applicable) and upon the occurrence of such an event, the existence business of Borrower or the Company SPE Component Entity (as applicable) shall continue without dissolution. The LLC Agreement shall also provide that , and (iii) each of Member and Special Member waives any right it might have to agree in writing to dissolve Borrower or the Company SPE Component Entity (as applicable) upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of Borrower or the Company.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents(as applicable).
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 1 contract
Single Purpose Entity/Separateness. Each Borrower represents, warrants and covenants as follows:
(a) The purpose for which the Borrower has not is organized is and will not:
shall be limited solely to (i) owning, holding, selling, leasing, transferring, exchanging, operating and managing its respective Individual Property, (ii) entering into this Loan Agreement with the Lender, (iii) refinancing the Property in connection with a permitted repayment of the Loan and (iv) transacting any and all lawful business for which a Borrower may be organized under its constitutive law that is incident, necessary and appropriate to accomplish the foregoing.
(b) Borrower does not own and will not own any asset or property other than (i) its Individual Property, and (ii) incidental personal property necessary for and used or to be used in connection with the ownership or operation of the Property.
(c) Borrower will not engage in any business or activity other than the ownership, operation and maintenance of the Properties, and activities incidental thereto;
(ii) acquire or own any assets other than (A) the Properties, and (B) such incidental Personal Property as may be necessary for the ownership management and operation of the Properties;Individual Property.
(iiid) merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existence, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;
(v) own any subsidiary, or make any investment in, any Person;
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its assets with the assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;
(vii) incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)), other than the Debt and Permitted Debt and prior loans that have been satisfied in full as of the date hereof;
(viii) fail to maintain its records, books of account, bank accounts, financial statements, accounting records and other entity documents separate and apart from those of any other Person; except that Borrower’s financial position, assets, liabilities, net worth and operating results may be included in the consolidated financial statements of an Affiliate, provided that (A) appropriate notation shall be made on such consolidated financial statements to indicate the separate identity of Borrower from such Affiliate and that Borrower’s assets and credit are will not available to satisfy the debts and other obligations of such Affiliate or any other Person, and (B) Borrower’s assets, liabilities and net worth shall also be listed on Borrower’s own separate balance sheet;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partnerAffiliate of Borrower, memberany constituent party of Borrower, shareholderany owner of Borrower, principal, guarantor any guarantors of the obligations of Borrower, Borrower or any Affiliate of any constituent party, owner or guarantor (collectively, the foregoing"Related Parties"), 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 unaffiliated third parties;parties not so affiliated with the Borrower or such Related Parties.
(xe) maintain its assets Borrower has not incurred and will not incur any Indebtedness other than (i) the Loan, (ii) trade and operational debt incurred in the ordinary course of business with trade creditors in amounts as are normal and reasonable under the circumstances, provided such debt is not evidenced by a manner that it will be costly note, is not in excess of sixty days past due and does not exceed $50,000 per Individual Property, and (iii) Capital Expenditures having a cost in the aggregate (taking into account all Capital Expenditures which are ongoing or difficult to segregate, ascertain or identify its individual assets from those which have not been paid for in full) not in excess of any other Person;$1,000,000 for all the Property and is not in excess of 60 days past due.
(xif) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan Borrower has not made and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure the obligations of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;
(xii) will not make any loans or advances to any Person, or own any stock Person and shall not acquire obligations or securities of, of any Person, or buy or hold evidence of indebtedness issued by any other Person;Related Party.
(xiiig) fail Borrower is and will remain solvent and Borrower will pay its debts and liabilities (including, as applicable, shared personnel and overhead expenses) from its assets as the same shall become due.
(h) Borrower has done or caused to be done and will do all things necessary to observe organizational formalities and preserve its existence, and Borrower will not, nor will Borrower permit any Related Party to, amend, modify or otherwise change the partnership certificate, partnership agreement, articles of incorporation and bylaws, operating agreement, trust or other organizational documents of Borrower or such Related Party without the prior written consent of Lender, which consent will not be unreasonably withheld provided the change does not relate to the matters contained in this Section 4.1.30.
(Ai) file Borrower will maintain all of its own tax returns books, records, financial statements and bank accounts separate from those of any other Person and Borrower's assets will not be listed as assets on the financial statement of any other Person, except to the extent that . Borrower is treated as a “disregarded entity” for tax purposes and is not required to will file its own tax returns under applicable Legal Requirements and (B) pay will not file a consolidated federal income tax return with any taxes required to be paid under applicable Legal Requirements; provided, however, that other Person. Borrower shall not have any obligation to reimburse maintain its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur books, records, resolutions and agreements as a result of any profits or losses of Borrower;official records.
(xivj) fail to (A) Borrower will be, and at all times will hold itself out to the public as as, a legal entity separate and distinct from any other PersonPerson (including any Affiliate or other Related Party), (B) conduct its business solely in its own name or (C) shall correct any known misunderstanding regarding its status as a separate identity;entity, shall conduct business in its own name, shall not identify itself or any of 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.
(xvk) fail to intend to Borrower will maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;.
(xvil) without Neither Borrower nor any Related Party will seek the unanimous written consent dissolution, winding up, liquidation, consolidation or merger in whole or in part, or the sale of material assets of the Borrower.
(m) Borrower will not commingle its assets with those of any other Person and will hold all of its partners or members, as applicable, and the written consent of all directors or managers of Borrower or each SPE Component Entity, as applicable including, without limitation, each Independent Director, take any Material Action or action that is intended to cause such entity to become insolvent;
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space and services performed by an employee of an Affiliate) among the Persons sharing such expenses;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, pay its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable;
(xx) violate or cause to be violated the assumptions made with respect to Borrower and its principals assets in the Non-Consolidation Opinion or any New Non-Consolidation Opinion;
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiiin) have Borrower will not guarantee or become obligated for the debts of any of its other Person and does not and will not hold itself out as being responsible for the debts or obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other Person.
(io) If Borrower is Borrowers are all limited partnerships with the exception of GPT - Windsor, LLC, a partnership or Delaware limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”"GPTW"). Borrowers' sole general partner, each general partner or Managing Member in the case of a partnershipGPTW, or are the managing member in the case of a limited liability company single purpose corporate entities identified on Schedule B hereto (each each, an “SPE Component Entity”) of Borrower, as applicable, shall be an Acceptable DE LLC"SPC Party"). Each SPE Component Entity (A) SPC Party is a corporation whose sole asset is its interest in Borrower. Each such SPC Party will at all times comply comply, and will cause Borrower to comply, with each of the covenantsrepresentations, terms warranties, and provisions covenants contained in Sections 6.1(a)(iii) through (vi) and (viii) through (xxiv) inclusive, this Section 4.1.30 as if such representation, warranty or covenant was made directly by such SPE Component Entity; (B) will not engage in any business or activity other than owning an interest in Borrower; (C) will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (D) will not own any subsidiary, or make any investment in any Person other than its investment in Borrower; (E) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (F) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4SPC Party. Prior to Upon the withdrawal or the disassociation of any SPE Component Entity the SPC Party from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is articles of incorporation are substantially similar to that those of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, the SPC Party and deliver a new opinion letter acceptable Insolvency Opinion to Lender and the Rating Agencies Agency or Rating Agencies, as applicable, with respect to the new SPE Component Entity SPC Party and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors.
(iip) In the event Unless otherwise approved by Lender, each Borrower or SPE Component Entity is an Acceptable DE LLC (as referred shall at all times cause there to in this clause (ii), the “Company”), the limited liability company agreement of the Company (the “LLC Agreement”) shall provide that (A) upon the occurrence of any event that causes the sole be at least one duly appointed member of the Company board of directors (“Member”an "Independent Director") of Borrower (if a corporation) or of each SPC Party (if Borrower is a limited partnership or a limited liability company) reasonably satisfactory to cease to be Lender who is not at the member time of initial appointment and has not been at any time during the Company preceding five (5) years: (a) a stockholder, director, officer, employee, partner, attorney or counsel of Borrower or such SPC Party or any Affiliate of either of them; (b) a customer, supplier or other person who derives more than (1) upon an assignment by Member of all 10% of its limited liability company interest in the Company and the admission of the transferee in accordance purchases or revenues from its activities with the Loan Documents and the LLC AgreementBorrower or such SPC Party or any Affiliate of either of them; (c) a Person controlling or under common control with any such stockholder, partner, customer, supplier or other Person; or (2d) the resignation of Member and the admission of an additional member of the Company in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Companyimmediate family of any such stockholder, and director, officer, employee, partner, customer, supplier or other Person. (As used herein, the term "control" means the possession, directly or indirectly, of the power to direct or cause the direction of management, policies or activities of a natural person duly designated under Person, whether through ownership of voting securities, by contract or otherwise.) The appointment of the LLC Agreement any person initial Independent Director acting as a member of the Borrower's board of directors as of the date hereof has been approved by the Lender. Notwithstanding the foregoing requirements, the same individual serving as the initial Independent Director of the Company and executing the LLC Agreement (“Special Member”) shall, without any action Borrower's board of any other Person and simultaneously with the Member ceasing to be the member of the Company, automatically be admitted to the Company and shall continue the existence of the Company without dissolution, and (B) Special Member may not resign from the Company or transfer its rights as Special Member unless (1) a successor Special Member has been admitted to the Company as Special Member in accordance with the requirements of the Act and (2) after giving effect to such resignation, such successor Special Member has directors will also accepted its appointment as an Independent Director. The LLC Agreement shall further provide that (v) Special Member shall automatically cease to be a member of the Company upon the admission to the Company of a substitute Member, (w) Special Member shall be a member of the Company that has no interest in the profits, losses and capital of the Company and has no right to receive any distributions of the assets of the Company, (x) pursuant to Section 18-301 of the Act, Special Member shall not be required to make any capital contributions to the Company and shall not receive a limited liability company interest in the Company, (y) Special Member, in its capacity as Special Member, may not bind the Company, and (z) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Company, including, without limitation, the merger, consolidation or conversion of the Company; provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. Prior to its admission to the Company as Special Member, Special Member shall not be a member of the Company, but the Special Member may serve as an Independent Director of a number of corporate Affiliates of the CompanyBorrower and the Partnership (collectively, the "Other Corporate Affiliates"). Any Each of the Partnership and certain other borrowers (for which all of the Other Corporate Affiliates act as either a corporate general partner or corporate managing member) are co-borrowers (collectively, the "Co-Borrowers") under a Loan made by the Lender, which Loan is collateralized by properties owned by the Co- Borrowers. In addition, if the initial Independent Director or such other Independent Director is no longer able to serve as the Independent Director of the Corporation's board of directors for any reason, the Corporation shall promptly appoint another Independent Director as a replacement, provided that during the period of time following the resignation of any Independent Director and the replacement of such Independent Director, the Board of Directors shall not take any action initiated by or brought against Member or Special Member under any Creditors Rights Laws on behalf of the Corporation that would require the vote of an Independent Director. It is agreed that a single Independent Director may serve as the Independent Director for each of the Borrowers.
(q) Borrower shall not cause Member or Special Member permit the board of directors of an SPC Party to cease take any action which, under the terms of any certificate of incorporation, by-laws or any voting trust agreement with respect to be a member any common stock, requires the vote of any SPC Party unless at the Company and upon the occurrence time of such action there shall be at least one member who is an event, the existence of the Company shall continue without dissolution. The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the CompanyIndependent Director.
(cr) The organizational documents Borrower shall allocate fairly and reasonably any overhead expenses that are shared with an affiliate, including paying for office space and services performed by any employee of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documentsAffiliate or Related Party.
(ds) Borrower has executed shall not pledge its assets for the benefit of any other Person other than with respect to the Loan.
(t) Borrower shall maintain a sufficient number of employees in light of its contemplated business operations and delivered pay the salaries of its own employees from its own funds.
(u) Borrower shall conduct its business so that the assumptions made with respect to Lender Borrower in the certificate attached hereto as Exhibit D.Insolvency Opinion shall be true and correct in all respects.
Appears in 1 contract
Single Purpose Entity/Separateness. Borrower represents, warrants and covenants as follows:
(a) Borrower has not and will not:
(i) engage in any business or activity other than the ownership, operation and maintenance of the Properties, and activities incidental thereto;
(ii) acquire or own any assets other than (A) the Properties, and (B) such incidental Personal Property as may be necessary for the ownership and operation of the Properties;
(iii) merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existence, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;
(v) own any subsidiary, or make any investment in, any Person;
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its assets with the assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;
(vii) incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)), other than the Debt and Permitted Debt and prior loans that have been satisfied in full as of the date hereof;
(viii) fail to maintain its records, books of account, bank accounts, financial statements, accounting records and other entity documents separate and apart from those of any other Person; except that Borrower’s financial position, assets, liabilities, net worth and operating results may be included in the consolidated financial statements of an Affiliate, provided that (A) appropriate notation shall be made on such consolidated financial statements to indicate the separate identity of Borrower from such Affiliate and that Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate or any other Person, and (B) Borrower’s assets, liabilities and net worth shall also be listed on Borrower’s own separate balance sheet;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, or any Affiliate of the foregoing, except upon terms and conditions that are intrinsically fair, commercially reasonable and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure the obligations of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other Person;
(xiii) fail to (A) file its own tax returns separate from those of any other Person, except to the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under applicable Legal Requirements and (B) pay any taxes required to be paid under applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrower;
(xiv) fail to (A) hold itself out to the public as a legal entity separate and distinct from any other Person, (B) conduct its business solely in its own name or (C) correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;
(xvi) without the unanimous written consent of all of its partners or members, as applicable, and the written consent of all directors or managers of Borrower or each SPE Component Entity, as applicable including, without limitation, each Independent Director, take any Material Action or action that is intended to cause such entity to become insolvent;
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space and services performed by an employee of an Affiliate) among the Persons sharing such expenses;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, pay its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable;
(xx) violate or cause to be violated the assumptions made with respect to Borrower and its principals in the Non-Consolidation Opinion or any New Non-Consolidation Opinion;
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Ground Leases, Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other Person.
(i) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner in the case of a partnership, or the managing member in the case of a limited liability company (each an “SPE Component Entity”) of Borrower, as applicable, shall be an Acceptable DE LLC. Each SPE Component Entity (A) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iii) through (vi) and (viii) through (xxiv) inclusive, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (B) will not engage in any business or activity other than owning an interest in Borrower; (C) will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (D) will not own any subsidiary, or make any investment in any Person other than its investment in Borrower; (E) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (F) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is substantially similar to that of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors.
(ii) In the event Borrower or SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”), the limited liability company agreement of the Company (the “LLC Agreement”) shall provide that (A) upon the occurrence of any event that causes the sole member of the Company (“Member”) to cease to be the member of the Company (other than (1) upon an assignment by Member of all of its limited liability company interest in the Company and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2) the resignation of Member and the admission of an additional member of the Company in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of the Company and executing the LLC Agreement (“Special Member”) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the Company, automatically be admitted to the Company and shall continue the existence of the Company without dissolution, and (B) Special Member may not resign from the Company or transfer its rights as Special Member unless (1) a successor Special Member has been admitted to the Company as Special Member in accordance with the requirements of the Act and (2) after giving effect to such resignation, such successor Special Member has also accepted its appointment as an Independent Director. The LLC Agreement shall further provide that (v) Special Member shall automatically cease to be a member of the Company upon the admission to the Company of a substitute Member, (w) Special Member shall be a member of the Company that has no interest in the profits, losses and capital of the Company and has no right to receive any distributions of the assets of the Company, (x) pursuant to Section 18-301 of the Act, Special Member shall not be required to make any capital contributions to the Company and shall not receive a limited liability company interest in the Company, (y) Special Member, in its capacity as Special Member, may not bind the Company, and (z) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Company, including, without limitation, the merger, consolidation or conversion of the Company; provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. Prior to its admission to the Company as Special Member, Special Member shall not be a member of the Company, but the Special Member may serve as an Independent Director of the Company. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company and upon the occurrence of such an event, the existence of the Company shall continue without dissolution. The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the Company.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents.
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 1 contract
Single Purpose Entity/Separateness. Until the Debt has been paid in full, Borrower represents, warrants and covenants as follows:
(a) Borrower has not and will not:
(i) engage in any business or activity other than the ownership, operation and maintenance of the PropertiesProperty, and activities incidental thereto;
(ii) acquire or own any assets other than (A) the PropertiesProperty, and (B) such incidental Personal Property as may be necessary for the ownership and operation of the PropertiesProperty;
(iii) except as expressly provided in Article 7 hereof, merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existenceformalities, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;
(v) own any subsidiary, or make any investment in, any Person;
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its assets with the assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;
(vii) incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than (A) the Debt Debt, (B) trade and Permitted Debt operational indebtedness incurred in the ordinary course of business with trade creditors, provided such indebtedness is (1) unsecured, (2) not evidenced by a note, (3) on commercially reasonable terms and conditions, and (4) due not more than sixty (60) days past the date incurred and paid on or prior loans that have been satisfied to such date, and/or (C) financing leases and purchase money indebtedness incurred in full as the ordinary course of business relating to Personal Property on commercially reasonable terms and conditions; provided however, the aggregate amount of the date hereofindebtedness described in (B) and (C) shall not exceed at any time three percent (3%) of the outstanding principal amount of the Note;
(viii) fail to maintain permit its records, books of account, bank accounts, financial statements, statements and accounting records and other entity documents separate and apart from those of any other Person; except that Borrower’s (including with respect to financial position, assets, liabilities, net worth and operating results may results) to be included in shown on the consolidated financial statements of an Affiliate, provided that (A) appropriate notation shall be made on any holder of a beneficial interest in Borrower unless such consolidated financial statements to indicate shall contain a footnote indicating that Borrower is a separate legal entity and the separate identity assets of Borrower from such Affiliate and that Borrower’s assets and credit are not available as collateral to satisfy the debts and other obligations creditors of such Affiliate or any other Person, and (B) Borrower’s assets, liabilities and net worth shall also be listed on Borrower’s own separate balance sheetholder;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, or any Affiliate of the foregoing, except upon terms and conditions that are intrinsically fair, commercially reasonable and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty guarantee the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure for the obligations benefit of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other Person;
(xiii) fail to (A) file its own tax returns separate from those of or files a consolidated federal income tax return with any other PersonPerson (unless prohibited or required, except to as the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under applicable Legal Requirements and (B) pay any taxes required to be paid under case may be, by applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrower);
(xiv) fail either to (A) hold itself out to the public as a legal entity separate and distinct from any other Person, (B) Person or to conduct its business solely in its own name or (C) fail to correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, operations (provided that the foregoing shall not require Borrower’s membersfailure to do so solely because of a shortfall in cash flow derived from the operation of the Property shall not, partners or shareholders to make additional capital contributions to Borrowerby itself, constitute a breach of this covenant);
(xvi) without Without the unanimous written consent of all of its partners or members, as applicable, and the written consent of all directors or 100% of the managers of Borrower or each SPE Component EntityBorrower, as applicable including, without limitation, each the Independent Director, (a) file or consent to the filing of any petition, either voluntary or involuntary, to take advantage of any Creditors Rights Laws, (b) seek or consent to the appointment of a receiver, liquidator or any similar official, (c) take any Material Action or action that is intended to might cause such entity to become insolvent, or (d) make an assignment for the benefit of creditors;
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space and services performed by an employee of an Affiliate) among the Persons sharing such expensesexpenses and to use separate stationery, invoices and checks;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, or pay its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; provided, however, funds (provided that the foregoing shall not require Borrower’s membersfailure to do so solely because of a shortfall in cash flow derived from the operation of the Property shall not, partners or shareholders to make additional capital contributions to Borrowerby itself, constitute a breach of this covenant);
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable;
(xx) violate or cause to be violated the assumptions made with respect to Borrower Borrower, Manager (if applicable) and its principals their respective direct and/or indirect owners in any opinion letter pertaining to substantive consolidation delivered to Lender in connection with the Non-Consolidation Opinion or any New Non-Consolidation Opinion;Loan; or
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other Person.
(ib) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner in the case of a partnership, or the managing member in the case of a limited liability company (each an “SPE Component Entity”) of Borrower, as applicable, shall be an Acceptable DE LLC. Each SPE Component Entity (A) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iii) through (vi) and (viii) through (xxiv) inclusive, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (B) will not engage in any business or activity other than owning an interest in Borrower; (C) will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (D) will not own any subsidiary, or make any investment in any Person other than its investment in Borrower; (E) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (F) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is substantially similar to that of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors.
(ii) In the event Borrower or SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”), the The limited liability company agreement of the Company Borrower (the “LLC Agreement”) shall shall, provide that (Ai) upon the occurrence of any event that causes the sole member of the Company Borrower (“Member”) to cease to be the member of the Company Borrower (other than (1A) upon an assignment by Member of all of its limited liability company interest in the Company Borrower and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2B) the resignation of Member and the admission of an additional member of the Company Borrower in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of the Company and executing the LLC Agreement (“Special Member”) Borrower shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the CompanyBorrower, automatically be admitted to the Company Borrower (“Special Member”) and shall continue the existence of the Company Borrower without dissolution, dissolution and (Bii) Special Member may not resign from the Company Borrower or transfer its rights as Special Member unless (1A) a successor Special Member has been admitted to the Company Borrower as Special Member in accordance with the requirements of the Act Delaware law and (2B) after giving effect to such resignation, such successor Special Member has also accepted its appointment as an Independent Director. The LLC Agreement shall further provide that (vi) Special Member shall automatically cease to be a member of the Company Borrower upon the admission to the Company Borrower of a substitute Member, (wii) Special Member shall be a member of the Company Borrower that has no interest in the profits, losses and capital of the Company Borrower and has no right to receive any distributions of the assets of the CompanyBorrower assets, (xiii) pursuant to Section 18-301 of the Delaware Limited Liability Company Act (the “Act”), Special Member shall not be required to make any capital contributions to the Company Borrower and shall not receive a limited liability company interest in the CompanyBorrower, (yiv) Special Member, in its capacity as Special Member, may not bind the Company, Borrower and (zv) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the CompanyBorrower, including, without limitation, the merger, consolidation or conversion of the CompanyBorrower; provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. In order to implement the admission to Borrower of Special Member, Special Member shall execute a counterpart to the LLC Agreement. Prior to its admission to the Company Borrower as Special Member, Special Member shall not be a member of Borrower. Upon the Companyoccurrence of any event that causes the Member to cease to be a member of Borrower, but to the Special fullest extent permitted by law, the personal representative of Member may serve as an Independent Director shall, within ninety (90) days after the occurrence of the Companyevent that terminated the continued membership of Member in Borrower, agree in writing (i) to continue 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 Borrower, effective as of the occurrence of the event that terminated the continued membership of Member of Borrower in Borrower. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company Borrower and upon the occurrence of such an event, the existence business of the Company Borrower shall continue without dissolution. The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company Borrower upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the CompanyBorrower.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents.
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 1 contract
Sources: Loan Agreement (Inland Western Retail Real Estate Trust Inc)
Single Purpose Entity/Separateness. Borrower represents, warrants and covenants as follows:
(a) Borrower has not and will not:
(i) engage in any business or activity other than the ownership, operation ownership and maintenance management of the PropertiesCollateral, and activities incidental thereto;
(ii) acquire or own any assets other than (A) the PropertiesCollateral, and (B) such incidental Personal Property as may be necessary for the ownership and operation management of the PropertiesCollateral;
(iii) merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existence, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;
(v) own any subsidiary, or make any investment in, any PersonPerson other than the Senior Mezzanine Borrower;
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its assets with the assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;
(vii) incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than the Debt and Permitted Debt and prior loans that have been satisfied in full as of the date hereof;
(viii) fail to maintain its records, books of account, bank accounts, financial statements, accounting records and other entity documents separate and apart from those of any other Person; except that Borrower’s financial position, assets, liabilities, net worth and operating results may be included in the consolidated financial statements of an Affiliate, provided that (A) appropriate notation shall be made on such consolidated financial statements to indicate the separate identity of Borrower from such Affiliate and that Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate or any other Person, and (B) Borrower’s assets, liabilities and net worth shall also be listed on Borrower’s own separate balance sheet;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, or any Affiliate of the foregoing, except upon terms and conditions that are intrinsically fair, commercially reasonable and substantially similar to those that would be available on an arm’s-arm’s length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure the obligations of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;
(xii) make any loans or advances to any Person, or own any stock or securities of, any PersonPerson (other than the Collateral), or buy or hold evidence of indebtedness issued by any other Person;
(xiii) fail to (A) file its own tax returns separate from those of any other Person, except to the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under applicable Legal Requirements and (B) pay any taxes required to be paid under applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrower;
(xiv) fail to (A) hold itself out to the public as a legal entity separate and distinct from any other Person, (B) conduct its business solely in its own name or (C) correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;
(xvi) without the unanimous written consent of all of its partners or members, as applicable, and the written consent of all directors or managers of Borrower or each SPE Component Entity, as applicable including, without limitation, each Independent Director, take any Material Action or action that is intended to cause such entity to become insolvent;
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space and services performed by an employee of an Affiliate) among the Persons sharing such expenses;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-co borrowers under the Loan, pay its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable, other than the Collateral;
(xx) violate or cause to be violated the assumptions made with respect to Borrower and its principals in the Non-Consolidation Opinion or any New Non-Consolidation Opinion;
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreementshereof; or
(xxiv) identify itself as a department or division of any other Person.
(i) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner in the case of a partnership, or the managing member in the case of a limited liability company (each an “SPE Component Entity”) of Borrower, as applicable, shall be an Acceptable DE LLC. Each SPE Component Entity (A) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iii) through (vi) and (viii) through (xxiv) inclusive, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (B) will not engage in any business or activity other than owning an interest in Borrower; (C) will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (D) will not own any subsidiary, or make any investment in any Person other than its investment in Borrower; (E) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); ) and (F) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is substantially similar to that of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors.
(ii) In the event Borrower or SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”), the limited liability company agreement of the Company (the “LLC Agreement”) shall provide that (A) upon the occurrence of any event that causes the sole member of the Company (“Member”) to cease to be the member of the Company (other than (1) upon an assignment by Member of all of its limited liability company interest in the Company and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2) the resignation of Member and the admission of an additional member of the Company in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of the Company and executing the LLC Agreement (“Special Member”) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the Company, automatically be admitted to the Company and shall continue the existence of the Company without dissolution, and (B) Special Member may not resign from the Company or transfer its rights as Special Member unless (1) a successor Special Member has been admitted to the Company as Special Member in accordance with the requirements of the Act and (2) after giving effect to such resignation, such successor Special Member has also accepted its appointment as an Independent Director. The LLC Agreement shall further provide that (v) Special Member shall automatically cease to be a member of the Company upon the admission to the Company of a substitute Member, (w) Special Member shall be a member of the Company that has no interest in the profits, losses and capital of the Company and has no right to receive any distributions of the assets of the Company, (x) pursuant to Section 18-301 of the Act, Special Member shall not be required to make any capital contributions to the Company and shall not receive a limited liability company interest in the Company, (y) Special Member, in its capacity as Special Member, may not bind the Company, and (z) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Company, including, without limitation, the merger, consolidation or conversion of the Company; provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. Prior to its admission to the Company as Special Member, Special Member shall not be a member of the Company, but the Special Member may serve as an Independent Director of the Company. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company and upon the occurrence of such an event, the existence of the Company shall continue without dissolution. The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the Company.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-third party beneficiary of the “special purpose” provisions of such organizational documents.
(d) Borrower has executed shall cause Senior Mezzanine Borrower to cause Mortgage Borrower and delivered Mortgage Borrower SPE Component Entity to Lender comply with and to continue to comply with the certificate attached hereto as Exhibit D.provisions of Section 6.1 of the Mortgage Loan Agreement.
Appears in 1 contract
Sources: Junior Mezzanine Loan Agreement (Ashford Hospitality Trust Inc)
Single Purpose Entity/Separateness. Borrower represents, warrants and covenants as follows:
(a) Each Borrower has not and will not:
(i) engage in any business or activity other than the ownership, operation and maintenance of the Propertiesapplicable Individual Property, and activities incidental thereto;
(ii) acquire or own any assets other than (A) the Propertiesapplicable Individual Property, and (B) such incidental Personal Property as may be necessary for the ownership ownership, leasing, maintenance and operation of the Propertiessuch applicable Individual Property;
(iii) merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existenceformalities, or fail to preserve its existence as an entity duly organizedformed, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documentsdocuments (provided, that, such organizational documents may be amended or modified to the extent that, in each case without addition to the satisfaction of the requirements related thereto set forth therein, Lender’s prior written consent, such consent of not to be unreasonably withheld or delayed, and, if required by Lender, a Rating Agency Confirmation are first obtained);
(v) own any subsidiary, or make any investment in, any PersonPerson (other than, with respect to any SPE Component Entity, in the applicable Borrower);
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its funds or assets with the funds or assets of any other Person, Person (except for one or permit any Affiliate or constituent party independent access to its bank accountsmore other Borrowers);
(vii) incur any debtIndebtedness, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than (A) the Debt, (B) trade and operational indebtedness incurred in the ordinary course of business with trade creditors, provided such indebtedness is (1) unsecured, (2) not evidenced by a note, (3) on commercially reasonable terms and conditions, and (4) due not more than sixty (60) days past the date incurred and paid on or prior to such date, and/or (C) Permitted Equipment Leases; provided however, the aggregate amount of the indebtedness described in (B) and (C) shall not exceed at any time two percent (2%) of the outstanding aggregate Allocated Loan Amounts associated with the portions of the Property owned by the applicable Borrower. No Indebtedness other than the Debt and Permitted Debt and prior loans that have been satisfied in full as of the date hereofmay be secured (senior, subordinate or pari passu) by any Individual Property;
(viii) fail to maintain all of its recordsbooks, books of account, bank accounts, financial statements, accounting records and other entity documents financial statements (if any) separate and apart from those of any other Person (including, without limitation, any Affiliates) (except a bank account or accounts maintained by one Borrower for one or more other Borrowers (but for no other Person)). Borrower’s assets have not and will not be listed as assets on the financial statement of any other Person; except provided, however, that Borrower’s financial position, assets, liabilities, net worth and operating results assets may be included in the a consolidated financial statements statement of an Affiliate, its Affiliates provided that (Ai) appropriate notation shall be made on such consolidated financial statements to indicate the separate identity separateness of Borrower from and such Affiliate Affiliates and to indicate that Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate Affiliates or any other Person, Person and (Bii) Borrower’s assets, liabilities and net worth such assets shall also be listed on Borrower’s own separate balance sheet. B▇▇▇▇▇▇▇ has maintained and will maintain its books, records, resolutions and agreements as official records;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principalprincipal or Affiliate, guarantor of the obligations of Borrowerexcept, or any Affiliate of the foregoingin each case, except upon terms and conditions that are intrinsically fair, commercially reasonable fair and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts of any other PersonPerson (except for one or more other Borrowers), hold itself out to be responsible for the debts of any other PersonPerson (other than the statutory liability of any SPE Component Entity to its applicable limited partnership Borrower), or or, except pursuant to the Loan Documents, otherwise pledge its assets to secure for the obligations benefit of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other Person;
(xiii) fail to (A) file its own tax returns separate from those of any other Personreturns, except (A) to the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file any tax returns under return by applicable Legal Requirements, or (B) if Borrower is prohibited by applicable Legal Requirements and (B) pay any taxes required to be paid under applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrower;from doing so
(xiv) fail to (A) hold itself out to the public and identify itself, in each case, as a legal entity separate and distinct from any other Person and not as a division or part of any other Person, (B) conduct its business solely in its own name, (C) hold its assets in its own name or (CD) correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, that operations (to the foregoing shall not require Borrower’s members, partners or shareholders extent there exists sufficient cash flow from the applicable Individual Property to make additional do so and without any requirement for any investor in Borrower to contribute capital contributions to Borrower);
(xvi) without the prior unanimous written consent of all of its partners partners, shareholders or members, as applicable, and the prior unanimous written consent of all its board of directors or managers managers, as applicable, and the prior written consent of each Independent Director (regardless of whether such Independent Director is engaged at the Borrower or each SPE Component EntityEntity level), as applicable including(a) file or consent to the filing of any petition, without limitationeither voluntary or involuntary, each Independent Directorto take advantage of any Creditors Rights Laws, (b) seek or consent to the appointment of a receiver, liquidator or any similar official, (c) take any Material Action or action that is intended to might cause such entity to become insolvent, (d) make an assignment for the benefit of creditors or (e) take any Material Action with respect to Borrower or any SPE Component Entity (provided, that, none of any member, shareholder or partner (as applicable) of Borrower or any SPE Component Entity or any board of directors or managers (as applicable) of Borrower or any SPE Component Entity may vote on or otherwise authorize the taking of any of the foregoing actions unless, in each case, there are at least two (2) Independent Directors then serving in such capacity in accordance with the terms of the applicable organizational documents and each of such Independent Directors have consented to such foregoing action);
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space space) or fail to use separate stationery and services performed by an employee of an Affiliate) among the Persons sharing such expensesinvoices, except in each case for checks for a bank account shared with one or more other Borrowers (but with no other Person);
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, pay its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; provided, however, that funds or fail to maintain or contract for the foregoing shall not require Borrower’s members, partners or shareholders use of a sufficient number of employees in light of its contemplated business operations (in each case to make additional capital contributions the extent there exists sufficient cash flow from the applicable Individual Property to Borrowerdo so);
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliatesAffiliates, as applicable, except that any SPE Component Entity may acquire securities in any applicable Borrower and that any Borrower may be liable for obligations of one or more other Borrowers;
(xx) identify its partners, members, shareholders or other Affiliates, as applicable, as a division or part of it; or
(xxi) violate or cause to be violated the assumptions made with respect to Borrower and its principals in the Non-Consolidation Opinion or in any New Non-Consolidation Opinion;
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other Person.
(ib) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner (in the case of a partnership, or the managing ) and at least one member (in the case of a limited liability company (each an “SPE Component Entity”company) of Borrower, as applicable, shall be a corporation or an Acceptable DE LLCLLC (each, an “SPE Component Entity”) whose sole asset is its interest in Borrower. Each SPE Component Entity (Ai) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iiiSection 5.1(a)(iii) through - (vi) (inclusive) and (viii) through — (xxivxxi) (inclusive) and, if such SPE Component Entity is an Acceptable LLC, Section 5.1(c) and (d) hereof, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (Bii) will not engage in any business or activity other than owning an interest in Borrower; (Ciii) will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (Div) will not at all times continue to own any subsidiary, or make any investment in any Person other no less than its investment a 0.5% direct equity ownership interest in Borrower; (Ev) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation) (other than the statutory liability of any SPE Component Entity to its applicable limited partnership Borrower); and (Fvi) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to 5.1.
(c) In the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is substantially similar to that of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors.
(ii) In the event Borrower or SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”)LLC, the limited liability company agreement of the Company Borrower or such SPE Component Entity (as applicable) (the “LLC Agreement”) shall provide that (Ai) upon the occurrence of any event that causes the sole last remaining member of the Company Borrower or such SPE Component Entity (as applicable) (“Member”) to cease to be the member of the Company Borrower or such SPE Component Entity (as applicable) (other than (1A) upon an assignment by Member of all of its limited liability company interest in the Company Borrower or such SPE Component Entity (as applicable) and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2B) the resignation of Member and the admission of an additional member of the Company Borrower or such SPE Component Entity (as applicable) in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of the Company and executing the LLC Agreement Borrower or such SPE Component Entity (“Special Member”as applicable) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the Company, Borrower or such SPE Component Entity (as applicable) automatically be admitted to the Company Borrower or such SPE Component Entity (as applicable) as a member with a 0% economic interest (“Special Member”) and shall continue the existence of the Company Borrower or such SPE Component Entity (as applicable) without dissolution, dissolution and (Bii) Special Member may not resign from the Company Borrower or such SPE Component Entity (as applicable) or transfer its rights as Special Member unless (1A) a successor Special Member has been admitted to the Company Borrower or such SPE Component Entity (as applicable) as a Special Member in accordance with the requirements of the Act Delaware law and (2B) after giving effect to such resignationresignation or transfer, there remains at least two (2) Independent Directors of such successor Special Member has also accepted its appointment SPE Component Entity or Borrower (as an Independent Directorapplicable) in accordance with Section 5.2 below. The LLC Agreement shall further provide that (vi) Special Member shall automatically cease to be a member of the Company Borrower or such SPE Component Entity (as applicable) upon the admission to Borrower or such SPE Component Entity (as applicable) of the Company of a first substitute Membermember, (wii) Special Member shall be a member of the Company Borrower or such SPE Component Entity (as applicable) that has no interest in the profits, losses and capital of the Company Borrower or such SPE Component Entity (as applicable) and has no right to receive any distributions of the assets of the CompanyBorrower or such SPE Component Entity (as applicable), (xiii) pursuant to Section 18-301 the applicable provisions of the limited liability company act of the State of Delaware (the “Act”), Special Member shall not be required to make any capital contributions to the Company Borrower or such SPE Component Entity (as applicable) and shall not receive a limited liability company interest in the CompanyBorrower or such SPE Component Entity (as applicable), (yiv) Special Member, in its capacity as Special Member, may not bind the Company, Borrower or such SPE Component Entity (as applicable) and (zv) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Company, Borrower or such SPE Component Entity (as applicable) including, without limitation, the merger, consolidation or conversion of the CompanyBorrower or such SPE Component Entity (as applicable); provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. In order to implement the admission to Borrower or such SPE Component Entity (as applicable) of Special Member, Special Member shall execute a counterpart to the LLC Agreement. Prior to its admission to the Company Borrower or such SPE Component Entity (as applicable) as Special Member, Special Member shall not be a member of the CompanyBorrower or such SPE Component Entity (as applicable), but the Special Member may serve as an Independent Director of Borrower or such SPE Component Entity (as applicable).
(d) The LLC Agreement shall further provide that (i) upon the Company. Any occurrence of any event that causes the Member to cease to be a member of Borrower or such SPE Component Entity (as applicable) to the fullest extent permitted by law, the personal representative of Member shall, within ninety (90) days after the occurrence of the event that terminated the continued membership of Member in Borrower or such SPE Component Entity (as applicable) agree in writing (A) to continue Borrower or such SPE Component Entity (as applicable) and (B) to the admission of the personal representative or its nominee or designee, as the case may be, as a substitute member of Borrower or such SPE Component Entity (as applicable) effective as of the occurrence of the event that terminated the continued membership of Member in Borrower or such SPE Component Entity (as applicable), (ii) any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company Borrower or such SPE Component Entity (as applicable) and upon the occurrence of such an event, the existence business of the Company Borrower or such SPE Component Entity (as applicable) shall continue without dissolution. The LLC Agreement shall also provide that dissolution and (iii) each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company Borrower or such SPE Component Entity (as applicable) upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the Company.
(c) The organizational documents of Borrower and each or such SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents(as applicable).
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 1 contract
Sources: Loan Agreement (Istar Inc.)
Single Purpose Entity/Separateness. Until the Debt has been paid in full, Borrower represents, warrants and covenants as follows:
(a) Borrower has not and will not:
(i) engage in any business or activity other than the ownership, operation and maintenance of the PropertiesProperty, and activities incidental thereto;
(ii) acquire or own any assets other than (A) the PropertiesProperty, and (B) such incidental Personal Property as may be necessary for the ownership and operation of the PropertiesProperty;
(iii) except as otherwise expressly permitted hereunder, merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) except as otherwise permitted therein, fail to observe all organizational formalities necessary to maintain its separate existenceformalities, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity material provisions of its organizational documents, in each case without the prior written consent of Lender;
(v) own any subsidiary, or make any investment in, any Person;
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its assets with the assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;
(vii) incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than the Debt and Permitted Debt and prior loans that have been satisfied in full as of the date hereof;
(viii) fail to maintain its records, books of account, bank accounts, financial statements, accounting records and other entity documents separate and apart from those of any other Person; except that Borrower’s financial position, assets, liabilities, net worth and operating results may be included in the consolidated financial statements of an Affiliate, provided that (A) appropriate notation shall be made on such consolidated financial statements to indicate the separate identity of Borrower from such Affiliate and that Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate or any other Person, and (B) Borrower’s assets, liabilities and net worth shall also be listed on Borrower’s own separate balance sheet;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, or any Affiliate of the foregoing, except upon terms and conditions that are intrinsically fair, commercially reasonable and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure the obligations of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other Person;
(xiii) fail to (A) file its own tax returns separate from those of any other Person, except to the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under applicable Legal Requirements and (B) pay any taxes required to be paid under applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrower;
(xiv) fail to (A) hold itself out to the public as a legal entity separate and distinct from any other PersonDebt, (B) conduct its trade and operational indebtedness incurred in the ordinary course of business solely in its own name with trade creditors, provided such indebtedness is (1) unsecured, (2) not evidenced by a note, (3) on commercially reasonable terms and conditions, and (4) due not more than sixty (60) days past the date invoiced and paid on or prior to such date, and/or (C) correct any known misunderstanding regarding its separate identity;
(xv) fail financing leases and purchase money indebtedness incurred in the ordinary course of business relating to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size Personal Property on commercially reasonable terms and character and in light of its contemplated business operationsconditions; provided, provided however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;
(xvi) without the unanimous written consent of all of its partners or members, as applicable, and the written consent of all directors or managers of Borrower or each SPE Component Entity, as applicable including, without limitation, each Independent Director, take any Material Action or action that is intended to cause such entity to become insolvent;
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space and services performed by an employee of an Affiliate) among the Persons sharing such expenses;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, pay its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable;
(xx) violate or cause to be violated the assumptions made with respect to Borrower and its principals in the Non-Consolidation Opinion or any New Non-Consolidation Opinion;
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as aggregate amount of the date hereof and indebtedness described in (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other Person.
(i) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner in the case of a partnership, or the managing member in the case of a limited liability company (each an “SPE Component Entity”) of Borrower, as applicable, shall be an Acceptable DE LLC. Each SPE Component Entity (A) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iii) through (viB) and (viii) through (xxiv) inclusive, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (B) will not engage in any business or activity other than owning an interest in Borrower; (C) will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (D) will not own any subsidiary, or make any investment in any Person other than its investment in Borrower; (E) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (F) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is substantially similar to that of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or exceed at any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors.
time three percent (ii3%) In the event Borrower or SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”), the limited liability company agreement of the Company (the “LLC Agreement”) shall provide that (A) upon the occurrence of any event that causes the sole member outstanding principal amount of the Company (“Member”) to cease to be the member of the Company (other than (1) upon an assignment by Member of all of its limited liability company interest in the Company and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2) the resignation of Member and the admission of an additional member of the Company in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of the Company and executing the LLC Agreement (“Special Member”) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the Company, automatically be admitted to the Company and shall continue the existence of the Company without dissolution, and (B) Special Member may not resign from the Company or transfer its rights as Special Member unless (1) a successor Special Member has been admitted to the Company as Special Member in accordance with the requirements of the Act and (2) after giving effect to such resignation, such successor Special Member has also accepted its appointment as an Independent Director. The LLC Agreement shall further provide that (v) Special Member shall automatically cease to be a member of the Company upon the admission to the Company of a substitute Member, (w) Special Member shall be a member of the Company that has no interest in the profits, losses and capital of the Company and has no right to receive any distributions of the assets of the Company, (x) pursuant to Section 18-301 of the Act, Special Member shall not be required to make any capital contributions to the Company and shall not receive a limited liability company interest in the Company, (y) Special Member, in its capacity as Special Member, may not bind the Company, and (z) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Company, including, without limitation, the merger, consolidation or conversion of the Company; provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. Prior to its admission to the Company as Special Member, Special Member shall not be a member of the Company, but the Special Member may serve as an Independent Director of the Company. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company and upon the occurrence of such an event, the existence of the Company shall continue without dissolution. The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the Company.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents.
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.Note;
Appears in 1 contract
Sources: Loan Agreement (Sun Communities Inc)
Single Purpose Entity/Separateness. Borrower represents, warrants and covenants as follows:
(a) The purpose for which Borrower is organized is and shall be limited solely to (i) acquiring, owning, holding, leasing, operating, managing, maintaining, developing and improving the Property, (ii) entering into and performing its obligations under this Agreement and the other Loan Documents, (iii) selling, transferring, servicing, conveying, disposing of, pledging, assigning, borrowing money against, financing, refinancing or otherwise dealing with the Property to the extent permitted by this Agreement and the other Loan Documents, and (iv) engaging in any lawful act or activity and exercising any powers permitted to limited liability companies organized under the laws of the State of Delaware that are related or incidental to and necessary, convenient or advisable for the accomplishment of the above-mentioned purposes.
(b) Borrower does not own, has not owned and will not own any asset or property other than (i) the Property, and (ii) incidental personal property necessary for and used or to be used in connection with the ownership or operation of the Property.
(c) Borrower has not engaged in and will not:
(i) not engage in any business or activity other than the ownership, operation and maintenance of the Properties, and activities incidental thereto;
(ii) acquire or own any assets other than (A) the Properties, and (B) such incidental Personal Property as may be necessary for the ownership management and operation of the Properties;Property.
(iiid) merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existence, or fail to preserve its existence as an entity duly organized, validly existing Borrower has not entered and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;
(v) own any subsidiary, or make any investment in, any Person;
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its assets with the assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;
(vii) incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)), other than the Debt and Permitted Debt and prior loans that have been satisfied in full as of the date hereof;
(viii) fail to maintain its records, books of account, bank accounts, financial statements, accounting records and other entity documents separate and apart from those of any other Person; except that Borrower’s financial position, assets, liabilities, net worth and operating results may be included in the consolidated financial statements of an Affiliate, provided that (A) appropriate notation shall be made on such consolidated financial statements to indicate the separate identity of Borrower from such Affiliate and that Borrower’s assets and credit are will not available to satisfy the debts and other obligations of such Affiliate or any other Person, and (B) Borrower’s assets, liabilities and net worth shall also be listed on Borrower’s own separate balance sheet;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partnerAffiliate of Borrower, member, shareholder, principal, any guarantor of the obligations of Borrower, Borrower or any Affiliate of any such guarantor (individually, a “Related Party” and collectively, the foregoing“Related Parties”), 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 unaffiliated third parties;parties not so affiliated with Borrower or such Related Parties.
(xe) maintain its assets Borrower has not incurred and will not incur any Indebtedness other than (i) the Loan, (ii) trade and operational debt incurred in the ordinary course of business with trade creditors in amounts as are normal and reasonable under the circumstances, provided such debt is not evidenced by a manner note and is not in excess of sixty (60) days past due and which do not exceed, in the aggregate, an outstanding and unpaid amount of $5,000,000 and (iii) Capital Expenditures (taking into account all Capital Expenditures which are ongoing or which have not been paid in full), provided that it will the debt identified in clause (iii) in the aggregate does not exceed $5,000,000 from time to time. No Indebtedness other than the Debt may be costly secured (senior, subordinate or difficult to segregate, ascertain or identify its individual assets from those of any other Person;pari passu) by the Property.
(xif) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan Borrower has not made and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure the obligations of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;
(xii) will not make any loans or advances to any Person, or own any stock Person and shall not acquire obligations or securities of, of any Person, or buy or hold evidence of indebtedness issued by any other Person;Related Party.
(xiiig) fail Borrower is and will remain solvent and Borrower will pay its debts and liabilities (including, as applicable, shared personnel and overhead expenses) from its assets as the same shall become due.
(h) Borrower has done or caused to be done and will do all things necessary to observe organizational formalities and preserve its existence, and Borrower will not, nor will Borrower permit any Related Party to, amend, modify or otherwise change the partnership certificate, partnership agreement, articles of incorporation and bylaws, operating agreement, trust or other organizational documents of Borrower in any material respect without the prior written consent of Lender.
(Ai) file Borrower has maintained and will maintain all of its own tax returns books, records, financial statements and bank accounts separate from those of any other PersonPerson and, except as required or permitted under GAAP, its assets will not be listed as assets on the financial statement of any other Person. Borrower has filed and will file its own tax returns and will not file a consolidated federal income tax return with any other Person (except that Borrower may file or may be part of a consolidated federal tax return to the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under or permitted by applicable Legal Requirements and (B) pay any taxes required to be paid under applicable Legal Requirements; law), provided, however, that there shall be an appropriate notation indicating the separate existence of Borrower and its assets and liabilities. Borrower shall not have any obligation to reimburse maintain its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrower;books, records, resolutions and agreements.
(xivj) fail to (A) Borrower will be, and at all times will hold itself out to the public as as, a legal entity separate and distinct from any other PersonPerson (including any Affiliate or other Related Party), (B) conduct its business solely in its own name or (C) shall correct any known misunderstanding regarding its status as a separate identity;entity, shall conduct business in its own name, shall not identify itself or any of 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.
(xvk) fail to intend to Borrower will maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided.
(l) Neither Borrower nor any Related Party will seek the dissolution, howeverwinding up, that liquidation, consolidation or merger in whole or in part, or the foregoing shall sale of material assets of Borrower.
(m) Borrower will not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrowercommingle its assets with those of any other Person and will hold all of its assets in its own name;
(xvin) without Borrower will not guarantee or become obligated for the unanimous written consent debts of any other Person and does not and will not hold itself out as being responsible for the debts or obligations of any other Person.
(o) Borrower shall (i) be a single member limited liability company organized under the laws of the State of Delaware and (ii) contain in its operating agreement the representations, warranties and covenants contained in this Section 4.1.30.
(p) Borrower shall at all times cause there to be at least two (2) duly appointed Independent Managers of its partners Borrower.
(q) Borrower shall not cause or members, as applicable, and permit the written consent board of all directors or managers of Borrower or each SPE Component Entity, as applicable including, without limitation, each Independent Director, to take any Material Action or action that is intended to cause which, under the terms of any of its organizational documents requires the vote of the board of managers of Borrower unless at the time of such entity to become insolvent;action there shall be at least two (2) members of the board of managers of Borrower who are each an Independent Manager.
(xviir) fail to Borrower shall allocate fairly and reasonably allocate any overhead expenses that are shared expenses (includingwith an Affiliate, without limitation, shared including paying for office space and services performed by an any employee of an Affiliate) among the Persons sharing such expenses;Affiliate or Related Party.
(xviiis) fail to intend to remain solvent or, except as contemplated by Borrower has not pledged and will not pledge its assets for the Loan Documents benefit of any other Person other than with respect to co-borrowers under the Loan, pay its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;.
(xixt) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable;
(xx) violate or cause to be violated the assumptions made with respect to Borrower and its principals in the Non-Consolidation Opinion or any New Non-Consolidation Opinion;
(xxi) fail to shall maintain a sufficient number of employees in light of its contemplated business operations;operations and pay the salaries of its own employees from its own funds.
(xxiiu) fail to maintain and use separate stationery, invoices and checks bearing Borrower shall conduct its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by business so that the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) assumptions made with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other Person.
(i) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner in the case of a partnership, or the managing member in the case of a limited liability company (each an “SPE Component Entity”) of Borrower, as applicable, Insolvency Opinion shall be an Acceptable DE LLC. Each SPE Component Entity (A) will at true and correct in all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iii) through (vi) and (viii) through (xxiv) inclusive, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (B) will not engage in any business or activity other than owning an interest in Borrower; (C) will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (D) will not own any subsidiary, or make any investment in any Person other than its investment in Borrower; (E) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (F) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is substantially similar to that of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directorsrespects.
(ii) In the event Borrower or SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”), the limited liability company agreement of the Company (the “LLC Agreement”) shall provide that (A) upon the occurrence of any event that causes the sole member of the Company (“Member”) to cease to be the member of the Company (other than (1) upon an assignment by Member of all of its limited liability company interest in the Company and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2) the resignation of Member and the admission of an additional member of the Company in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of the Company and executing the LLC Agreement (“Special Member”) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the Company, automatically be admitted to the Company and shall continue the existence of the Company without dissolution, and (B) Special Member may not resign from the Company or transfer its rights as Special Member unless (1) a successor Special Member has been admitted to the Company as Special Member in accordance with the requirements of the Act and (2) after giving effect to such resignation, such successor Special Member has also accepted its appointment as an Independent Director. The LLC Agreement shall further provide that (v) Special Member shall automatically cease to be a member of the Company upon the admission to the Company of a substitute Member, (w) Special Member shall be a member of the Company that has no interest in the profits, losses and capital of the Company and has no right to receive any distributions of the assets of the Company, (x) pursuant to Section 18-301 of the Act, Special Member shall not be required to make any capital contributions to the Company and shall not receive a limited liability company interest in the Company, (y) Special Member, in its capacity as Special Member, may not bind the Company, and (z) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Company, including, without limitation, the merger, consolidation or conversion of the Company; provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. Prior to its admission to the Company as Special Member, Special Member shall not be a member of the Company, but the Special Member may serve as an Independent Director of the Company. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company and upon the occurrence of such an event, the existence of the Company shall continue without dissolution. The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the Company.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents.
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 1 contract
Single Purpose Entity/Separateness. Until the Debt has been paid in full, Borrower represents, warrants wan-ants and covenants as follows:
(a) Borrower has not and will not:
(i) engage in any business or activity other than the ownership, operation and maintenance of the PropertiesProperty, and activities incidental thereto;
(ii) acquire or own any assets other than (A) the PropertiesProperty, and (B) such incidental Personal Property as may be necessary for the ownership and operation of the PropertiesProperty;
(iii) merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all material organizational formalities necessary to maintain its separate existenceformalities, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;
(v) own any subsidiary, or make any investment in, any Person;
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its assets with the assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;
(vii) incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than (A) the Debt Debt, (B) trade and Permitted Debt operational indebtedness incurred in the ordinary course of business with trade creditors, provided such indebtedness is (1) unsecured, (2) not evidenced by a note, (3) on commercially reasonable terms and conditions, and (4) due not more than sixty (60) days past the date incurred and paid on or prior loans that have been satisfied to such date, and/or (C) financing leases and purchase money indebtedness incurred in full as the ordinary course of business relating to Personal Property on commercially reasonable terms and conditions; provided however, the aggregate amount of the date hereofindebtedness described in (B) and (C) shall not exceed at any time three percent (3%) of the outstanding principal amount of the Note;
(viii) fail to maintain its records, books of account, bank accounts, financial statements, accounting records and other entity documents separate and apart from those of any other Person; except that Borrower’s financial position, assets, liabilities, net worth and operating results may be included in the consolidated financial statements of an Affiliate, provided that (A) appropriate notation shall be made on such consolidated financial statements to indicate the contain a footnote indicating that Borrower is a separate identity of Borrower from such Affiliate legal entity and that Borrower’s assets it maintains separate books and credit are not available to satisfy the debts and other obligations of such Affiliate or any other Person, and (B) Borrower’s assets, liabilities and net worth shall also be listed on Borrower’s own separate balance sheetrecords;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, or any Affiliate of the foregoing, except upon terms and conditions that are intrinsically fair, commercially reasonable and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure for the obligations benefit of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other Person;
(xiii) fail to (A) file its own tax returns separate from those of or files a consolidated federal income tax return with any other PersonPerson (unless prohibited or required, except to as the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under applicable Legal Requirements and (B) pay any taxes required to be paid under case may be, by applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrower);
(xiv) fail either to (A) hold itself out to the public as a legal entity separate and distinct from any other Person, (B) Person or to conduct its business solely in its own name or (C) fail to correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;
(xvi) if it is a partnership or limited liability company, without the unanimous written consent of all of its partners or members, as applicable, and the written consent of all 100% of the directors or managers managers, as applicable, of Borrower or each SPE Component EntityEntity (if any), as applicable including(a) file or consent to the filing of any petition, without limitationeither voluntary or involuntary, each Independent Directorto take advantage of any Creditors Rights Laws, (b) seek or consent to the appointment of a receiver, liquidator or any similar official, (c) take any Material Action or action that is intended to might cause such entity to become insolvent, or (d) make an assignment for the benefit of creditors;
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space and services performed by an employee of an Affiliate) among the Persons sharing such expensesexpenses and to use separate stationery, invoices and checks;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, or pay its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; provided, however, provided that there are sufficient funds from the foregoing shall not require Borrower’s members, partners or shareholders operation of the Property to make additional capital contributions to Borrowerdo so;
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable;
(xx) violate or cause to be violated the assumptions made with respect to Borrower and its principals in any opinion letter pertaining to substantive consolidation delivered to Lender in connection with the Non-Consolidation Opinion or any New Non-Consolidation Opinion;Loan; or
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other Person.
(ib) If Borrower is a limited partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”)company, each general partner in the case of a limited partnership, or the managing member in the case of a limited liability company (each an “SPE Component Entity”) of Borrower, as applicable, shall be an Acceptable DE LLCa corporation or limited liability company whose sole asset is its interest in Borrower. Each SPE Component Entity (Ai) will at all times comply with each of the covenants, terms and provisions contained in Sections Section 6.1(a)(iii) through — (vi) and (viii) through — (xxiv) inclusivexxi), as if such representation, warranty or covenant was made directly by such SPE Component Entity; (Bii) will not engage in any business or activity other than owning an interest in Borrower; (Ciii) will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (D) will not own any subsidiary, or make any investment in any Person other than its investment in Borrower; (Eiv) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (Fv) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.46.1. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is articles of incorporation or organization, as applicable, are substantially similar to that those of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLCa single member Delaware limited liability company, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) belowstatus, the no SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directorsrequired.
(iic) In the event Borrower or SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”)a single member Delaware limited liability company, the limited liability company agreement of the Company Borrower (the “LLC Agreement”) shall provide that (Ai) upon the occurrence of any event that causes the sole member of the Company Borrower (“Member”) to cease to be the member of the Company Borrower (other than (1A) upon an assignment by Member of all of its limited liability company interest in the Company Borrower and the admission of the transferee in accordance with the Loan Documents and the LLC Agreementtransferee, or (2B) the resignation of Member and the admission of an additional member of the Company member, in either case in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of the Company and executing the LLC Agreement as a “Special Member” (as such term is defined in the LLC Agreement) (“Special Member”) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the CompanyBorrower, automatically be admitted to the Company Borrower and shall continue the existence of the Company Borrower without dissolution, dissolution and (Bii) Special Member may not resign from the Company Borrower or transfer its rights as Special Member unless (1) a successor Special Member has been admitted to the Company Borrower as Special Member in accordance with the requirements of the Act and (2) after giving effect to such resignation, such successor Special Member has also accepted its appointment as an Independent DirectorDelaware law. The LLC Agreement shall further provide that (vi) Special Member shall automatically cease to be a member of the Company Borrower upon the admission to the Company Borrower of a substitute Member, (wii) Special Member shall be a member of the Company Borrower that has no interest in the profits, losses and capital of the Company Borrower and has no right to receive any distributions of the assets of the CompanyBorrower assets, (xiii) pursuant to Section 18-301 of the Delaware Limited Liability Company Act (the “Act”), Special Member shall not be required to make any capital contributions to the Company Borrower and shall not receive a limited liability company interest in the CompanyBorrower, (yiv) Special Member, in its capacity as Special Member, may not bind the Company, Borrower and (zv) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the CompanyBorrower, including, without limitation, the merger, consolidation or conversion of Borrower. In order to implement the Company; provided, however, such prohibition shall not limit the obligations admission to Borrower of Special Member, in its capacity as Independent Director, Special Member shall execute a counterpart to vote on such matters required by the Loan Documents or the LLC Agreement. Prior to its admission to the Company Borrower as Special Member, Special Member shall not be a member of Borrower. Upon the Companyoccurrence of any event that causes the Member to cease to be a member of Borrower, but to the Special fullest extent permitted by law, the personal representative of Member may serve as an Independent Director shall, within ninety (90) days after the occurrence of the Companyevent that terminated the continued membership of Member in Borrower, agree in writing (i) to continue 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 Borrower, effective as of the occurrence of the event that terminated the continued membership of Member of Borrower in Borrower. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company Borrower and upon the occurrence of such an event, the existence business of the Company Borrower shall continue without dissolution. The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company Borrower upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the CompanyBorrower.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents.
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 1 contract
Sources: Loan Agreement (AmREIT, Inc.)
Single Purpose Entity/Separateness. Borrower represents, warrants and covenants as follows:
(a) Borrower has not and will not:
(i) engage in any business or activity other than the ownership, operation ownership and maintenance management of the PropertiesCollateral, and activities incidental thereto;
(ii) acquire or own any assets other than (A) the PropertiesCollateral, and (B) such incidental Personal Property as may be necessary for the ownership and operation management of the PropertiesCollateral;
(iii) merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existence, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;
(v) own any subsidiary, or make any investment in, any PersonPerson other than the Senior Mezzanine Borrower;
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its assets with the assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;
(vii) incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than the Debt and Permitted Debt and prior loans that have been satisfied in full as of the date hereof;
(viii) fail to maintain its records, books of account, bank accounts, financial statements, accounting records and other entity documents separate and apart from those of any other Person; except that Borrower’s financial position, assets, liabilities, net worth and operating results may be included in the consolidated financial statements of an Affiliate, provided that (A) appropriate notation shall be made on such consolidated financial statements to indicate the separate identity of Borrower from such Affiliate and that Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate or any other Person, and (B) Borrower’s assets, liabilities and net worth shall also be listed on Borrower’s own separate balance sheet;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, or any Affiliate of the foregoing, except upon terms and conditions that are intrinsically fair, commercially reasonable and substantially similar to those that would be available on an arm’s-arm’s length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure the obligations of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;
(xii) make any loans or advances to any Person, or own any stock or securities of, any PersonPerson (other than the Collateral), or buy or hold evidence of indebtedness issued by any other Person;
(xiii) fail to (A) file its own tax returns separate from those of any other Person, except to the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under applicable Legal Requirements and (B) pay any taxes required to be paid under applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrower;
(xiv) fail to (A) hold itself out to the public as a legal entity separate and distinct from any other Person, (B) conduct its business solely in its own name or (C) correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;
(xvi) without the unanimous written consent of all of its partners or members, as applicable, and the written consent of all directors or managers of Borrower or each SPE Component Entity, as applicable including, without limitation, each Independent Director, take any Material Action or action that is intended to cause such entity to become insolvent;
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space and services performed by an employee of an Affiliate) among the Persons sharing such expenses;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, or pay its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable, other than the Collateral;
(xx) violate or cause to be violated the assumptions made with respect to Borrower and its principals in the Non-Consolidation Opinion or any New Non-Consolidation Opinion;
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreementshereof; or
(xxiv) identify itself as a department or division of any other Person.
(i) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner in the case of a partnership, or the managing member in the case of a limited liability company (each an “SPE Component Entity”) of Borrower, as applicable, shall be an Acceptable DE LLC. Each SPE Component Entity (A) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iii) through (vi) and (viii) through (xxiv) inclusive, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (B) will not engage in any business or activity other than owning an interest in Borrower; (C) will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (D) will not own any subsidiary, or make any investment in any Person other than its investment in Borrower; (E) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); ) and (F) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is substantially similar to that of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors.
(ii) In the event Borrower or SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”), the limited liability company agreement of the Company (the “LLC Agreement”) shall provide that (A) upon the occurrence of any event that causes the sole member of the Company (“Member”) to cease to be the member of the Company (other than (1) upon an assignment by Member of all of its limited liability company interest in the Company and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2) the resignation of Member and the admission of an additional member of the Company in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of the Company and executing the LLC Agreement (“Special Member”) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the Company, automatically be admitted to the Company and shall continue the existence of the Company without dissolution, and (B) Special Member may not resign from the Company or transfer its rights as Special Member unless (1) a successor Special Member has been admitted to the Company as Special Member in accordance with the requirements of the Act and (2) after giving effect to such resignation, such successor Special Member has also accepted its appointment as an Independent Director. The LLC Agreement shall further provide that (v) Special Member shall automatically cease to be a member of the Company upon the admission to the Company of a substitute Member, (w) Special Member shall be a member of the Company that has no interest in the profits, losses and capital of the Company and has no right to receive any distributions of the assets of the Company, (x) pursuant to Section 18-18- 301 of the Act, Special Member shall not be required to make any capital contributions to the Company and shall not receive a limited liability company interest in the Company, (y) Special Member, in its capacity as Special Member, may not bind the Company, and (z) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Company, including, without limitation, the merger, consolidation or conversion of the Company; provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. Prior to its admission to the Company as Special Member, Special Member shall not be a member of the Company, but the Special Member may serve as an Independent Director of the Company. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company and upon the occurrence of such an event, the existence of the Company shall continue without dissolution. The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the Company.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-third party beneficiary of the “special purpose” provisions of such organizational documents.
(d) Borrower has executed shall cause Senior Mezzanine Borrower to cause Mortgage Borrower and delivered Mortgage Borrower SPE Component Entity to Lender comply with and to continue to comply with the certificate attached hereto as Exhibit D.provisions of Section 6.1 of the Mortgage Loan Agreement.
Appears in 1 contract
Sources: Junior Mezzanine Loan Agreement (Ashford Hospitality Trust Inc)
Single Purpose Entity/Separateness. Borrower represents, warrants and covenants as follows:
8.27.1 The purpose for which Borrower is organized shall be limited solely to (aA) Borrower has not owning, holding, selling, leasing, transferring, exchanging, operating and will not:
(i) engage in any business or activity other than the ownership, operation and maintenance of managing the Properties, (B) entering into the Loan Agreement with Lender, (C) refinancing the Properties in connection with a permitted repayment of the Loan and activities incidental thereto;
(iiD) acquire or transacting any and all lawful business for which Borrower may be organized under its constitutive law that is incident, necessary and appropriate to accomplish the foregoing. Borrower does not own and will not own any assets asset or property other than (Ai) the Properties, and (Bii) such incidental Personal Property as may be personal property necessary for the ownership or operation of the Properties.
8.27.2 Borrower will not engage in any business other than the ownership, management and operation of the Properties;Properties and Borrower will conduct and operate its business as presently conducted and operated.
(iii) merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existence, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;
(v) own any subsidiary, or make any investment in, any Person;
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its assets with the assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;
(vii) incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)), other than the Debt and Permitted Debt and prior loans that have been satisfied in full as of the date hereof;
(viii) fail to maintain its records, books of account, bank accounts, financial statements, accounting records and other entity documents separate and apart from those of any other Person; except that Borrower’s financial position, assets, liabilities, net worth and operating results may be included in the consolidated financial statements of an Affiliate, provided that (A) appropriate notation shall be made on such consolidated financial statements to indicate the separate identity of 8.27.3 Borrower from such Affiliate and that Borrower’s assets and credit are will not available to satisfy the debts and other obligations of such Affiliate or any other Person, and (B) Borrower’s assets, liabilities and net worth shall also be listed on Borrower’s own separate balance sheet;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations Affiliate of Borrower, any constituent party of Borrower, the guarantors or any Affiliate of the foregoingany constituent party or guarantor, except upon terms and conditions that are intrinsically fair, commercially reasonable fair and substantially similar to those that would be available on an arm’sarms-length basis with unaffiliated third parties;parties other than any such party.
8.27.4 Borrower has not incurred and will not incur any Indebtedness other than (xi) maintain its assets the Loan, (ii) trade and operational debt which is (A) incurred in the ordinary course of business, (B) not more than sixty (60) days past the date incurred, (C) with trade creditors, (D) in the aggregate, in an amount less than one percent (1%) of the original principal amount of the Loan, (E) not evidenced by a note, and (F) paid when due, and (iii) Indebtedness incurred in the ordinary course of business for the purpose of financing equipment and other personal property used on the Properties (including obligations pursuant to equipment leases) in amounts that are normal and reasonable under the circumstances, provided, that (1) such debt shall be fully amortizing over a manner that it will be costly term not to exceed five (5) years (or difficult to segregatethe term of the related equipment lease shall not exceed five (5) years), ascertain or identify its individual assets from those of any other Person;
and (xi2) except as contemplated by the Loan Documents such debt (which, with respect to co-borrowers under an equipment lease, shall be the annual rents payable thereunder for the then current calendar year) shall not in the aggregate outstanding at any one time exceed one percent (1%) of Operating Revenues. No Indebtedness other than the Loan may be secured (subordinate or pari passu) by the Properties.
8.27.5 Borrower has not made and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure the obligations of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;
(xii) will not make any loans or advances to any Personthird party (including any affiliate or constituent party, any guarantor or own any stock affiliate of any constituent party or guarantor), and shall not acquire obligations or securities ofof its affiliates or any constituent party.
8.27.6 Borrower is and will remain solvent and Borrower will pay its debts and liabilities (including, as applicable, shared personnel and overhead expenses) from its assets as the same shall become due.
8.27.7 Borrower has done or caused to be done and will do all things necessary to observe organizational formalities and preserve its existence, and Borrower will not, nor will Borrower permit any Personconstituent party or any guarantor to amend, modify or buy otherwise change the partnership certificate, partnership agreement, articles of incorporation and bylaws, operating agreement, trust or hold evidence other organizational documents of indebtedness issued by Borrower or such constituent party or guarantor without the prior written consent of Lender.
8.27.8 Borrower will maintain all of its books, records, financial statements and bank accounts separate from those of its Affiliates and any constituent party. Borrower's assets will not be listed as assets on the financial statement of any other Person;
(xiii) fail entity except as required by generally accepted accounting principles; provided, however, that any such consolidated financial statement shall contain a note indicating that its separate assets and liabilities are neither available to (A) pay the debts of the consolidated entity nor constitute obligations of the consolidated entity. Borrower will file its own tax returns separate from those of any other Personreturns, except to the extent that Borrower it is treated as a “disregarded entity” for tax purposes and is not required to file consolidated federal income tax returns under applicable Legal Requirements and (B) pay any taxes required to be paid under applicable Legal Requirements; provided, however, that by law. Borrower shall not have any obligation to reimburse maintain its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur books, records, resolutions and agreements as a result of any profits or losses of Borrower;official records.
(xiv) fail to (A) 8.27.9 Borrower will be, and at all times will hold itself out to the public as as, a legal entity separate and distinct from any other Personentity (including any Affiliate of Borrower, (B) conduct its business solely in its own name any constituent party of Borrower, any guarantor or (C) any Affiliate of any constituent party or guarantor), shall correct any known misunderstanding regarding its status as a separate identity;entity, shall conduct business in its own name, shall not identify itself as a division or part of any other person or entity.
(xv) fail to intend to 8.27.10 Borrower will maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided.
8.27.11 Neither Borrower nor any constituent party will seek the dissolution, howeverwinding up, that liquidation, consolidation or merger in whole or in part, of the foregoing shall Borrower.
8.27.12 Borrower will not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;
(xvi) without commingle the unanimous written consent of all of its partners or members, as applicable, funds and the written consent of all directors or managers other assets of Borrower with those of any Affiliate or each SPE Component Entityconstituent party, as applicable includingany guarantor, without limitation, each Independent Director, take any Material Action or action that is intended to cause such entity to become insolvent;
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space and services performed by an employee of an Affiliate) among the Persons sharing such expenses;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, pay its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable;
(xx) violate or cause to be violated the assumptions made with respect to Borrower and its principals in the Non-Consolidation Opinion or any New Non-Consolidation Opinion;Affiliate of any constituent party or guarantor, or any other person.
(xxi) fail 8.27.13 Borrower has and will maintain its assets in such a manner that it will not be costly or difficult to maintain a sufficient number segregate, ascertain or identify its individual assets from those of employees in light any Affiliate or constituent party, any guarantor, or any Affiliate of its contemplated business operations;any constituent party or guarantor, or any other person.
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by 8.27.14 Borrower will not guarantee or become obligated for the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division debts of any other Personentity or person and does not and will not hold itself out as being responsible for the debts or obligations of any other person.
(i) 8.27.15 If Borrower is a limited partnership or a limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”)company, each general partner in the case of a partnership, or the managing member in the case of a limited liability company (each each, an “SPE Component Entity”"SPC Party") of Borrower, as applicable, shall be an Acceptable DE LLC. Each SPE Component Entity (A) a corporation whose sole asset is its interest in Borrower and each such SPC Party will at all times comply comply, and will cause Borrower to comply, with each of the covenantsrepresentations, terms warranties, and provisions covenants contained in Sections 6.1(a)(iii) through (vi) and (viii) through (xxiv) inclusive, this Section 8.28 as if such representation, warranty or covenant was made directly by such SPE Component Entity; SPC Party.
8.27.16 Borrower shall at all times cause there to be at least two (2) duly appointed members of the board of directors (each an "Independent Director") of 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 SPC Party, and may not have been at any time during the preceding five years (i) a shareholder of, or an officer, director, partner or employee of, Borrower or any of its shareholders, subsidiaries or affiliates (except for serving as an independent director of (A) any single purpose corporations serving as general partners of other limited partnerships financing hotel properties with Lender or (B) will not engage in any business or activity other than owning an interest in Borrower; TRS Lessee), (Cii) will not acquire or own any assets other than its partnership, membershipa customer of, or other equity interest in Borrower; (D) will not own any subsidiarysupplier to, or make any investment in any Person other than its investment in Borrower; (E) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (F) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is substantially similar to that of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors.
(ii) In the event Borrower or SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”), the limited liability company agreement of the Company (the “LLC Agreement”) shall provide that (A) upon the occurrence of any event that causes the sole member of the Company (“Member”) to cease to be the member of the Company (other than (1) upon an assignment by Member of all of its limited liability company interest in the Company and the admission of the transferee in accordance shareholders, subsidiaries or affiliates, (iii) a person or other entity controlling or under common control with the Loan Documents and the LLC Agreementany such shareholder, partner, supplier or customer, or (2iv) the resignation of Member and the admission of an additional member of the Company in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Companyimmediate family of any such shareholder, and a natural person duly designated under officer, director, partner, employee, supplier or customer of Borrower. As used herein, the LLC Agreement any person acting as Independent Director term "control" means the possession, directly or indirectly, of the Company and executing power to direct or cause the LLC Agreement (“Special Member”) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member direction of the Company, automatically be admitted to the Company management and shall continue the existence of the Company without dissolution, and (B) Special Member may not resign from the Company or transfer its rights as Special Member unless (1) a successor Special Member has been admitted to the Company as Special Member in accordance with the requirements of the Act and (2) after giving effect to such resignation, such successor Special Member has also accepted its appointment as an Independent Director. The LLC Agreement shall further provide that (v) Special Member shall automatically cease to be a member of the Company upon the admission to the Company policies of a substitute Memberperson or entity, (w) Special Member shall be a member whether through ownership of the Company that has no interest in the profitsvoting securities, losses and capital of the Company and has no right to receive any distributions of the assets of the Company, (x) pursuant to Section 18-301 of the Act, Special Member shall not be required to make any capital contributions to the Company and shall not receive a limited liability company interest in the Company, (y) Special Member, in its capacity as Special Member, may not bind the Company, and (z) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve contract or otherwise consent to any action by, or matter relating to, the Company, including, without limitation, the merger, consolidation or conversion of the Company; provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. Prior to its admission to the Company as Special Member, Special Member shall not be a member of the Company, but the Special Member may serve as an Independent Director of the Company. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company and upon the occurrence of such an event, the existence of the Company shall continue without dissolution. The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the Companyotherwise.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents.
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 1 contract
Sources: Loan Agreement (Equity Inns Inc)
Single Purpose Entity/Separateness. Each Borrower representsrepresents and warrants, warrants until the Obligations have been paid and covenants as followssatisfied in full and the Total Commitment under this Agreement has been terminated and each Letter of Credit returned, that each Borrower:
(a) Borrower has except as expressly permitted by Section 8.4, will not and will not:
(i) engage in any business or activity other than the ownership, operation and maintenance of the Properties, and activities incidental thereto;
(ii) acquire or own any assets other than (A) the Properties, and (B) such incidental Personal Property as may be necessary for the ownership and operation of the Properties;
(iii) merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure (for the avoidance of doubt, change in ownership of such Borrower shall not be a change of its legal structure);
(ivb) except as expressly permitted by Section 8.4, has not and will not (Ai) fail to observe all organizational formalities necessary to maintain its separate existenceformalities, or (ii) fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements legal requirements of the jurisdiction of its organization or formation, or (Biii) amend, modifymodify (except for amendments and modifications prior to the Closing Date approved by Administrative Agent), terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;
(vc) own any subsidiary, or make any investment in, any Person;
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan is not and prior loans that have been satisfied in full as of the date hereof, will not commingle its funds or assets with the funds or assets of any other Person other than the other Borrowers (Administrative Agent and the Lenders acknowledge the making of Distributions by a Borrower does not constitute a commingling of funds or assets with another Person, or permit any Affiliate or constituent party independent access to its bank accounts);
(viid) incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)), other than the Debt and Permitted Debt and prior loans that have been satisfied in full as of the date hereof;
(viii) will not fail to maintain all of its books, records, books of account, financial statements and bank accounts, financial statements, accounting records and other entity documents accounts separate and apart from those of any other PersonPerson (including OpCo, its Subsidiaries and any other Affiliates) other than the other Borrowers; except will not fail to maintain its books, records, resolutions and agreements as official records; and will not list the assets of Borrowers and their Subsidiaries on the financial statement of any other Person (including OpCo, its Subsidiaries and any other Affiliates but excluding parents of Borrowers consolidated therewith in accordance with GAAP; provided, however, that Borrower’s financial position, assets, liabilities, net worth and operating results may be included in the consolidated financial statements of an Affiliate, provided that (A) appropriate notation shall be made on any such consolidated financial statements statement contains a note indicating that no Borrower’s separate assets and credit are available to indicate pay the separate identity debts of Borrower from such Affiliate and that no Borrower’s assets and credit are not available to satisfy the debts and other liabilities constitute obligations of such Affiliate or any other Person, and (B) Borrower’s assets, liabilities and net worth shall also be listed on Borrower’s own separate balance sheetthe consolidated entity);
(ixe) except for capital contributions or capital distributions permitted has not entered into (unless as of the “Initial Funding Date” under the terms Original Credit Agreement no longer in effect), and conditions of Borrower’s organizational documents and properly reflected on its books and recordswill not enter into, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, principal or any Affiliate of the foregoingAffiliate, except (i) upon terms and conditions that are intrinsically fair, commercially reasonable fair and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties, (ii) for Leases with OpCo Affiliates at Collateral Properties, so long as each such Lease is in the form delivered to and approved by Administrative Agent as provided in Section 8.16, and (iii) as otherwise permitted by Section 8.12;
(xf) has not maintained and will not maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other PersonPerson (other than other Borrowers);
(xii) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, will not assume or guaranty the debts of Trilogy Investors or any of its Subsidiaries (other Person, than other Borrowers) or hold itself out to be responsible for the debts of Trilogy Investors or any of its Subsidiaries (other Person, or than other Borrowers); and has not (unless as of the Closing Date no longer in effect) and will not otherwise pledge its assets to secure for the obligations benefit of Trilogy Investors or any of its Subsidiaries (other Person than other Borrowers) or hold out its credit or assets as being available to satisfy the obligations of Trilogy Investors or any of its Subsidiaries (other Personthan other Borrowers) and (ii) has not done any of the foregoing described in this subsection (g) (except to the extent as of the Closing Date no longer in effect) effective as of the Closing Date;
(xiih) has not made (unless as of the “Initial Funding Date” under the Original Credit Agreement no longer in effect) and will not make any loans or advances to Trilogy Investors or any Personof its Subsidiaries (other than other Borrowers), and has not (unless as of the Closing Date no longer in effect) and will not incur any Indebtedness or undertake any other obligations that are, or own would be, owed to Trilogy Investors or any stock or securities ofof its Subsidiaries (other than other Borrowers), any Person, or buy or hold evidence other than Leases that are in full force and effect as of indebtedness issued by any other Personthe Closing Date;
(xiiii) has not failed and will not fail to (A) file its own tax returns separate (unless prohibited by Applicable Law from those of any other Person, except to the extent that Borrower is treated as doing so or unless constituting a “disregarded entity” pass-through entity for tax purposes and is not required to file for which no tax returns under applicable Legal Requirements and (B) pay any taxes are required to be paid under applicable Legal Requirements; providedfiled), however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrowerappropriate;
(xivj) has not failed and will not fail to (Ai) hold itself out to the public and identify itself, in each case, as a legal entity separate and distinct from any other PersonPerson (other than other Borrowers) and not as a division or part of any other Person (other than other Borrowers), (Bii) conduct its business solely in its own name, (iii) hold its assets in its own name or (Civ) correct any known misunderstanding regarding its separate legal identity;
(xvk) has not failed and will not fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; , provided that the foregoing shall only apply to the extent it has available cash to maintain such capital and shall not require the contribution of additional capital to Borrowers;
(l) has not failed and will not fail to allocate shared expenses (including shared office space) or fail to use separate stationery, invoices and checks (provided, however, that the foregoing shall not require Borrower’s membersBorrowers may use combined stationery, partners or shareholders to make additional capital contributions to Borrowerinvoices and checks with other Borrowers and may operate under a tradename);
(xvim) without the unanimous written consent of all of its partners or members, as applicable, and the written consent of all directors or managers of Borrower or each SPE Component Entity, as applicable including, without limitation, each Independent Director, take any Material Action or action that is intended to cause such entity to become insolvent;
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space and services performed by an employee of an Affiliate) among the Persons sharing such expenses;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, will pay its own liabilities (including, without limitation, including salaries of its own employees, if any) only from its own funds; providedfunds (including amounts received pursuant to the Leases) (and, howeverwith respect to the Obligations, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrowerfunds of other Borrowers);
(xixn) has not acquired (unless as of the Closing Date no longer owned) and will not acquire obligations obligations, securities or securities other Equity Interests of its partners, members, shareholders or other affiliates, as applicable;
(xx) violate or cause to be violated the assumptions made with respect to Borrower and its principals in the Non-Consolidation Opinion or any New Non-Consolidation Opinion;
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other Person.
(i) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner in the case of a partnership, or the managing member in the case of a limited liability company (each an “SPE Component Entity”) of BorrowerAffiliates, as applicable, shall be an Acceptable DE LLC. Each SPE Component Entity other than other Borrowers (Aor as to Parent, its Subsidiaries which are Borrowers); and
(o) will at all times comply with each of the covenants, terms has not and provisions contained in Sections 6.1(a)(iii) through (vi) and (viii) through (xxiv) inclusive, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (B) will not engage in any business or activity other than owning an interest in Borrower; (C) will not acquire or own any assets other than identify its partnershippartners, membershipmembers, shareholders or other equity interest in Borrower; (D) will not own any subsidiary, or make any investment in any Person other than its investment in Borrower; (E) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (F) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is substantially similar to that of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors.
(ii) In the event Borrower or SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”), the limited liability company agreement of the Company (the “LLC Agreement”) shall provide that (A) upon the occurrence of any event that causes the sole member of the Company (“Member”) to cease to be the member of the Company Affiliates (other than other Borrowers or with an entity one hundred percent (1100%) upon an assignment owned by Member of all of its limited liability company interest in the Company and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2) the resignation of Member and the admission of an additional member of the Company in accordance with the terms of the Loan Documents and the LLC AgreementParent), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may beapplicable, as a substitute member division or part of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of the Company and executing the LLC Agreement (“Special Member”) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the Company, automatically be admitted to the Company and shall continue the existence of the Company without dissolution, and (B) Special Member may not resign from the Company or transfer its rights as Special Member unless (1) a successor Special Member has been admitted to the Company as Special Member in accordance with the requirements of the Act and (2) after giving effect to such resignation, such successor Special Member has also accepted its appointment as an Independent Director. The LLC Agreement shall further provide that (v) Special Member shall automatically cease to be a member of the Company upon the admission to the Company of a substitute Member, (w) Special Member shall be a member of the Company that has no interest in the profits, losses and capital of the Company and has no right to receive any distributions of the assets of the Company, (x) pursuant to Section 18-301 of the Act, Special Member shall not be required to make any capital contributions to the Company and shall not receive a limited liability company interest in the Company, (y) Special Member, in its capacity as Special Member, may not bind the Company, and (z) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Company, including, without limitation, the merger, consolidation or conversion of the Company; provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. Prior to its admission to the Company as Special Member, Special Member shall not be a member of the Company, but the Special Member may serve as an Independent Director of the Company. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company and upon the occurrence of such an event, the existence of the Company shall continue without dissolution. The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the Companyit.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents.
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 1 contract
Sources: Senior Secured Credit Agreement (Griffin-American Healthcare REIT III, Inc.)
Single Purpose Entity/Separateness. Until the Debt has been paid in full, Borrower represents, warrants and covenants as follows:
(a) Borrower has not and will not:
(i) engage in any business or activity other than the ownership, operation and maintenance of the PropertiesProperty, and activities incidental thereto;
(ii) acquire or own any assets other than (A) the PropertiesProperty, and (B) such incidental Personal Property as may be necessary for the ownership and operation of the PropertiesProperty;
(iii) merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existenceformalities, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;
(v) own any subsidiary, or make any investment in, any Person;
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its assets with the assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;
(vii) incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than (A) the Debt Debt, (B) trade and Permitted Debt operational indebtedness incurred in the ordinary course of business with trade creditors, provided such indebtedness is (1) unsecured, (2) not evidenced by a note, (3) on commercially reasonable terms and conditions, and (4) due not more than sixty (60) days past the date incurred and paid on or prior loans that have been satisfied to such date, and/or (C) financing leases and purchase money indebtedness incurred in full as the ordinary course of business relating to Personal Property on commercially reasonable terms and conditions; provided, however, the aggregate amount of the date hereofindebtedness described in (B) and (C) shall not exceed at any time two percent (2%) of the outstanding principal amount of the Note;
(viii) fail to maintain its records, books of account, bank accounts, financial statements, accounting records and other entity documents separate and apart from those of any other Person; except that Borrower’s financial position, assets, liabilities, net worth and operating results may be included in the consolidated financial statements of an Affiliate, provided that (A) appropriate notation shall be made on such consolidated financial statements to indicate the separate identity of Borrower from such Affiliate and that Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate or any other Person, and (B) Borrower’s assets, liabilities and net worth shall also be listed on Borrower’s own separate balance sheet;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, or any Affiliate of the foregoing, except upon terms and conditions that are intrinsically fair, commercially reasonable and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunderDocuments, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure the obligations of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other Person;
(xiii) fail to (A) file its own tax returns separate from those of any other Person, except to the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under applicable Legal Requirements Requirements, and (B) pay any taxes required to be paid under applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrower;
(xiv) fail either to (A) hold itself out to the public as a legal entity separate and distinct from any other Person, (B) Person or to conduct its business solely in its own name or (C) fail to correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;
(xvi) if it is a partnership or limited liability company, without the unanimous written consent of all of its partners or members, as applicable, and the written consent of all directors or 100% of the managers of Borrower or each SPE Component EntityBorrower, as applicable including, without limitation, each Independent Director, take any Material Action or action that is intended to might cause such entity to become insolvent;
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space and services performed by an employee of an Affiliate) among the Persons sharing such expensesexpenses and to use separate stationery, invoices and checks;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, or pay its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable;
(xx) violate or cause to be violated the assumptions made with respect to Borrower and its principals in any opinion letter pertaining to substantive consolidation delivered to Lender in connection with the Non-Consolidation Opinion or any New Non-Consolidation Opinion;Loan; or
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other Person.
(ib) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”)company, each general partner in the case of a partnership, or the managing member in the case of a limited liability company (each an “SPE Component Entity”) of Borrower, as applicable, shall be an Acceptable DE LLCa corporation or a limited liability company whose sole asset is its interest in Borrower, provided that if such SPE Component Entity is a limited liability company, each of its managing members shall also be a SPE Component Entity. Each SPE Component Entity (Ai) will at all times comply with each of the covenants, terms and provisions contained in Sections Section 6.1(a)(iii) through - (vi) and (viii) through - (xxiv) inclusivexxi), as if such representation, warranty or covenant was made directly by such SPE Component Entity; (Bii) will not engage in any business or activity other than owning an interest in Borrower; (Ciii) will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (D) will not own any subsidiary, or make any investment in any Person other than its investment in Borrower; (Eiv) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (Fv) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is articles of incorporation or organization, as applicable, are substantially similar to that those of such SPE Component Entity and, if an and deliver a new opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLCa single member Delaware limited liability company, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection subsections (b)(iic) and (d) below, the no SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directorsrequired.
(iic) In the event Borrower or SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”)a single-member Delaware limited liability company, the limited liability company agreement of the Company Borrower (the “LLC Agreement”) shall provide that (Ai) upon the occurrence of any event that causes the sole member of the Company Borrower (“Member”) to cease to be the member of the Company Borrower (other than (1A) upon an assignment by Member of all of its limited liability company interest in the Company Borrower and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2B) the resignation of Member and the admission of an additional member of the Company Borrower, in either case in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of the Company and executing the LLC Agreement Borrower (“Special Member”) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the CompanyBorrower, automatically be admitted to the Company Borrower and shall continue the existence of the Company Borrower without dissolution, dissolution and (Bii) Special Member may not resign from the Company Borrower or transfer its rights as Special Member unless (1A) a successor Special Member has been admitted to the Company Borrower as Special Member in accordance with the requirements of the Act Delaware law and (2B) after giving effect to such resignation, such successor Special Member has also accepted its appointment as an Independent Director. The LLC Agreement shall further provide that (vi) Special Member shall automatically cease to be a member of the Company Borrower upon the admission to the Company Borrower of a substitute Member, (wii) Special Member shall be a member of the Company Borrower that has no interest in the profits, losses and capital of the Company Borrower and has no right to receive any distributions of the assets of the CompanyBorrower assets, (xiii) pursuant to Section 18-301 of the Delaware Limited Liability Company Act (the “Act”), Special Member shall not be required to make any capital contributions to the Company Borrower and shall not receive a limited liability company interest in the CompanyBorrower, (yiv) Special Member, in its capacity as Special Member, may not bind the CompanyBorrower, and (zv) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the CompanyBorrower, including, without limitation, the merger, consolidation or conversion of the CompanyBorrower; provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. In order to implement the admission to Borrower of Special Member, Special Member shall execute a counterpart to the LLC Agreement. Prior to its admission to the Company Borrower as Special Member, Special Member shall not be a member of Borrower.
(d) In the Companyevent Borrower is a single-member Delaware limited liability company, but the Special LLC Agreement shall provide that upon the occurrence of any event that causes the Member may serve as an Independent Director to cease to be a member of Borrower, to the fullest extent permitted by law, the personal representative of Member shall, within ninety (90) days after the occurrence of the Companyevent that terminated the continued membership of Member in Borrower, agree in writing (i) to continue 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 Borrower, effective as of the occurrence of the event that terminated the continued membership of Member of Borrower in Borrower. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company Borrower and upon the occurrence of such an event, the existence business of the Company Borrower shall continue without dissolution. The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company Borrower upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the CompanyBorrower.
(ce) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents.
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 1 contract
Single Purpose Entity/Separateness. Borrower represents, warrants and covenants as follows:
(a) Borrower has not and will not:
(i) engage in any business or activity other than the ownership, operation and maintenance of the PropertiesProperty, and activities incidental thereto;
(ii) acquire or own any assets other than (A) the PropertiesProperty, and (B) such incidental Personal Property as may be necessary for the ownership ownership, leasing, maintenance and operation of the PropertiesProperty;
(iii) merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existenceformalities, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements Applicable Law of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;
(v) own any subsidiary, or make any investment in, any Person;
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its assets with the assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;
(vii) incur any debtIndebtedness, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than (A) the Debt, (B) trade and operational indebtedness incurred in the ordinary course of business with trade creditors, provided such indebtedness is (1) unsecured, (2) not evidenced by a note, (3) on commercially reasonable terms and conditions, and (4) due not more than sixty (60) days past the date incurred and paid on or prior to such date, and/or (C) Permitted Equipment Leases; provided however, the aggregate amount of the indebtedness described in (B) and (C) shall not exceed at any time two percent (2%) of the outstanding principal amount of the Debt. No Indebtedness other than the Debt and Permitted Debt and prior loans that have been satisfied in full as of may be secured (subordinate or pari passu) by the date hereofProperty;
(viii) fail to maintain all of its books, records, books of account, financial statements and bank accounts, financial statements, accounting records and other entity documents accounts separate and apart from those of its affiliates and any constituent party. Borrower’s assets have not and will not be listed as assets on the financial statement of any other Person; except provided, however, that Borrower’s financial position, assets, liabilities, net worth and operating results assets may be included in the a consolidated financial statements statement of an Affiliate, its affiliates provided that (Ai) appropriate notation shall be made on such consolidated financial statements to indicate the separate identity separateness of Borrower from and such Affiliate affiliates and to indicate that Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate affiliates or any other Person, Person and (Bii) Borrower’s assets, liabilities and net worth such assets shall also be listed on Borrower’s own separate balance sheet. Borrower has maintained and will maintain its books, records, resolutions and agreements as official records;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, principal or any Affiliate of the foregoingaffiliate, except upon terms and conditions that are intrinsically fair, commercially reasonable fair and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure for the obligations benefit of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other Person;
(xiii) fail to (A) file its own tax returns separate (unless prohibited by Applicable Law from those doing so), provided, that Borrower may file or be part of any other Person, except a consolidated federal tax return to the extent that required or permitted by Applicable Law and there is an appropriate notation indicating the separate existence of Borrower is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under applicable Legal Requirements its assets and (B) pay any taxes required to be paid under applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrowerliabilities;
(xiv) fail either to (A) hold itself out to the public as a legal entity separate and distinct from any other Person, (B) Person or to conduct its business solely in its own name or (C) fail to correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, that operations (to the foregoing extent there exists sufficient cash flow from the Property to do so after the payment of all operating expenses and Debt Service and shall not require Borrower’s members, partners or shareholders any equity owner to make additional capital contributions to Borrower);
(xvi) without the unanimous written consent of all of its partners or members, as applicable, and the written consent of all directors or managers each Independent Director (regardless of whether such Independent Director is engaged at the Borrower or each SPE Component EntityEntity level), as applicable including(a) file or consent to the filing of any petition, without limitationeither voluntary or involuntary, each Independent Directorto take advantage of any Creditors Rights Laws, (b) seek or consent to the appointment of a receiver, liquidator or any similar official, (c) take any Material Action or action that is intended to might cause such entity to become insolvent, or (d) make an assignment for the benefit of creditors;
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space space) or fail to use separate stationery, invoices and services performed by an employee of an Affiliate) among the Persons sharing such expenseschecks;
(xviii) fail to intend remain solvent, to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, pay its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; providedfunds or fail to maintain a sufficient number of employees in light of its contemplated business operations (in each case, however, that to the foregoing shall not require Borrower’s members, partners or shareholders extent there exists sufficient cash flow from the Property to make additional capital contributions to Borrowerdo so);
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable;; or
(xx) violate or cause to be violated the assumptions made with respect to Borrower and its principals in the Non-Consolidation Opinion or in any New Non-Consolidation Opinion;
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other Person.
(ib) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner in the case of a partnership, or the managing member in the case of a limited liability company (each an “SPE Component Entity”) of Borrower, as applicable, shall be an Acceptable DE LLC. Each SPE Component Entity (Aif any) will at all times comply with each of the covenantsshall be a corporation or an Acceptable LLC (I) whose sole asset is its interest in Borrower, terms (II) which has not been and provisions contained in Sections 6.1(a)(iii) through (vi) and (viii) through (xxiv) inclusive, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (B) will shall not be permitted to engage in any business or activity other than owning an interest in Borrower; (CIII) will which has not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (D) will been and shall not own any subsidiary, or make any investment in any Person other than its investment in Borrower; (E) will not be permitted to incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (FIV) which has and will at all times own at least a 0.5% direct equity ownership interest in Borrower. Each such SPE Component Entity will at all times comply, and will cause Borrower to comply comply, with each of the provisions of representations, warranties, and covenants contained in this Section 6.1 and Section 6.4Article 5 (to the extent applicable) as if such representation, warranty or covenant was made directly by such SPE Component Entity. Prior to Upon the withdrawal or the disassociation of any an SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner SPE Component Entity whose articles of incorporation or managing member whose limited liability company agreement is organization are substantially similar to that those of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, and deliver a new opinion letter acceptable New Non-Consolidation Opinion to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors.
(iic) In the event Borrower or the SPE Component Entity (if any) is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”)LLC, the limited liability company agreement of Borrower or the Company SPE Component Entity (as applicable) (the “LLC Agreement”) shall provide that (Ai) upon the occurrence of any event that causes the sole last remaining member of Borrower or the Company SPE Component Entity (as applicable) (“Member”) to cease to be the member of Borrower or the Company SPE Component Entity (as applicable) (other than (1A) upon an assignment by Member of all of its limited liability company interest in Borrower or the Company SPE Component Entity (as applicable) and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2B) the resignation of Member and the admission of an additional member of Borrower or the Company SPE Component Entity (as applicable) in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of Borrower or the Company and executing the LLC Agreement SPE Component Entity (“Special Member”as applicable) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of Borrower or the Company, SPE Component Entity (as applicable) automatically be admitted to Borrower or the Company SPE Component Entity (as applicable) as a member with a 0% economic interest (“Special Member”) and shall continue Borrower or the existence of the Company SPE Component Entity (as applicable) without dissolution, dissolution and (Bii) Special Member may not resign from Borrower or the Company SPE Component Entity (as applicable) or transfer its rights as Special Member unless (1A) a successor Special Member has been admitted to Borrower or the Company SPE Component Entity (as applicable) as a Special Member in accordance with the requirements of the Act Delaware or Maryland law (as applicable) and (2B) after giving effect to such resignationresignation or transfer, such successor Special Member has also accepted its appointment there remains at least one Independent Director of the SPE Component Entity or Borrower (as an Independent Directorapplicable) in accordance with Section 5.2 below. The LLC Agreement shall further provide that (vi) Special Member shall automatically cease to be a member of Borrower or the Company SPE Component Entity (as applicable) upon the admission to Borrower or the Company SPE Component Entity (as applicable) of a the first substitute Membermember, (wii) Special Member shall be a member of Borrower or the Company SPE Component Entity (as applicable) that has no interest in the profits, losses and capital of Borrower or the Company SPE Component Entity (as applicable) and has no right to receive any distributions of the assets of Borrower or the CompanySPE Component Entity (as applicable), (xiii) pursuant to Section 18-301 the applicable provisions of the limited liability company act of the State of Delaware or Maryland (as applicable, the “Act”), Special Member shall not be required to make any capital contributions to Borrower or the Company SPE Component Entity (as applicable) and shall not receive a limited liability company interest in Borrower or the CompanySPE Component Entity (as applicable), (yiv) Special Member, in its capacity as Special Member, may not bind Borrower or the Company, SPE Component Entity (as applicable) and (zv) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, Borrower or the Company, SPE Component Entity (as applicable) including, without limitation, the merger, consolidation or conversion of Borrower or the CompanySPE Component Entity (as applicable); provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. In order to implement the admission to Borrower or the SPE Component Entity (as applicable) of Special Member, Special Member shall execute a counterpart to the LLC Agreement. Prior to its admission to Borrower or the Company SPE Component Entity (as applicable) as Special Member, Special Member shall not be a member of Borrower or the CompanySPE Component Entity (as applicable), but the Special Member may serve as an Independent Director of Borrower or the Company. Any SPE Component Entity (as applicable).
(d) The LLC Agreement shall further provide that, (i) upon the occurrence of any event that causes the Member to cease to be a member of Borrower or the SPE Component Entity (as applicable) to the fullest extent permitted by law, the personal representative of Member shall, within ninety (90) days after the occurrence of the event that terminated the continued membership of Member in Borrower or the SPE Component Entity (as applicable) agree in writing (A) to continue Borrower or the SPE Component Entity (as applicable) and (B) to the admission of the personal representative or its nominee or designee, as the case may be, as a substitute member of Borrower or the SPE Component Entity (as applicable) effective as of the occurrence of the event that terminated the continued membership of Member in Borrower or the SPE Component Entity (as applicable), (ii) any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of Borrower or the Company SPE Component Entity (as applicable) and upon the occurrence of such an event, the existence business of Borrower or the Company SPE Component Entity (as applicable) shall continue without dissolution. The LLC Agreement shall also provide that , and (iii) each of Member and Special Member waives any right it might have to agree in writing to dissolve Borrower or the Company SPE Component Entity (as applicable) upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of Borrower or the Company.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents(as applicable).
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 1 contract
Single Purpose Entity/Separateness. Each Borrower represents, represents and warrants and covenants as follows:
(a) that while the Debt is outstanding, each Borrower has not and will not:
(i) engage in any business or activity other than the ownership, operation and maintenance of the Propertiesits Individual Property, and activities incidental thereto;
(ii) acquire or own any assets other than (A) the Propertiesits Individual Property, and (B) such incidental Personal Property as may be necessary for the ownership and operation of the Propertiessuch Individual Property;
(iii) unless in connection with a Permitted Transfer (as defined in and in accordance with the terms of this Agreement) merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existence, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions Special Purpose Provisions of its organizational documentsdocuments (as defined therein), in each case without the prior written consent of LenderLender and unless a Rating Agency Confirmation is received;
(v) own any subsidiary, or make any investment in, any PersonPerson (other than, with respect to any SPE Component Entity, in the applicable Borrower);
(vi) except as contemplated by the Loan Documents with respect to co-borrowers co‑borrowers under the Loan and prior loans that have been satisfied in full as of the date hereofLoan, commingle its assets with the assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accountsaccounts except for the Manager (including any officers thereof, notwithstanding that such officers may also be officers of another Person) in its capacity as agent of any Borrowers;
(vii) incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than the Debt and Permitted Debt and prior loans that have been satisfied in full as of the date hereofDebt;
(viii) fail to maintain its records, books of account, bank accountsaccounts (other than in accordance with the terms of this Agreement with respect to co-borrowers under the Loan), financial statements, accounting records and other entity documents separate and apart from those of any other Person; except that each Borrower’s financial position, assets, liabilities, net worth and operating results may be included in the consolidated financial statements of an Affiliate, provided that (A) appropriate notation shall be made on such consolidated financial statements to indicate the separate identity of each Borrower from such Affiliate and that each Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate or any other Person, other than with respect to co-borrowers under the Loan, and (B) each Borrower’s assets, liabilities and net worth shall also be listed on such Borrower’s own separate balance sheet;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of the each Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of such Borrower, or any Affiliate of the foregoing, except upon terms and conditions that are intrinsically fair, commercially reasonable and substantially similar to those that would be available on an arm’s-length arm’s‑length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be unreasonably costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers co‑borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunderLoan, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure the obligations of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other Person;
(xiii) fail to (A) file its own tax returns separate from those of any other Person, except to the extent that (x) such Borrower is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under applicable Legal Requirements (except as contested and resolved in good faith in accordance with applicable Legal Requirements and in accordance with this Agreement), or (y) it is allowed to file consolidated tax returns, in which case such Borrower may include its taxable income, loss, deductions, gains or other items as part of a consolidated tax return and (B) pay its share of any taxes required to be paid under applicable Legal Requirements; provided, however, that no Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of any Borrower;
(xiv) fail to (A) hold itself out to the public as a legal entity separate and distinct from any other Person, (B) conduct its business solely in its own name (except for services rendered under an arm’s length business management services agreement with an Affiliate that complies with the provisions of this Agreement, so long as such Borrower requires that such Affiliate expressly indicate in written communications on behalf of such Borrower that it is acting on behalf of such Borrower) or (C) correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, that the foregoing shall not require any Borrower’s members, partners or shareholders to make additional capital contributions to any Borrower;
(xvi) without the unanimous written consent of all of its partners or members, as applicable, and the written consent of all directors or managers of such Borrower or each SPE Component Entity, as applicable applicable, including, without limitation, each Independent Director, take any Material Action or action that is intended to cause such entity to become insolventAction;
(xvii) fail to fairly and reasonably allocate shared expenses other than de minimis expenses (including, without limitation, shared office space and services performed by an employee of an Affiliate) among the Persons sharing such expenses;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers co‑borrowers under the Loan, pay its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; provided, however, that the foregoing shall not require any Borrower’s members, partners or shareholders to make additional capital contributions to such Borrower;
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable;
(xx) violate or cause to be violated the assumptions made with respect to any Borrower and its principals in the Non-Consolidation Opinion or following the date of the issuance of any New Non-Consolidation Opinion, violate or cause to be violated the assumptions contained therein;
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers co‑borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; orLoan;
(xxiv) identify itself as a department or division of any other Person; or
(xxv) identify itself as a department or division of any other Person, although from a marketing standpoint, the Property may be disclosed as being associated with ▇▇▇▇▇▇▇ Capital LLC, and Manager may promote its services related to the Property using service marks or email signature blocks with the name of ▇▇▇▇▇▇▇ Capital LLC or its Affiliates; provided, however, that to the extent Manager acts on behalf of a Borrower in a formal written communication (eg, constituting formal notice thereunder) or in execution of a Lease or agreement, such Borrower will require that Manager expressly indicate that it is acting on behalf of such Borrower or alternatively such agreement or communication shall be in the actual name of the Borrower.
(i) If any Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner in the case of a partnership, or the managing member in the case of a limited liability company (each an “SPE Component Entity”) of such Borrower, as applicable, shall be a corporation or a limited liability company whose sole asset is its interest in such Borrower, provided that if such SPE Component Entity is a limited liability company (other than a single-member Delaware limited liability company), each of its managing members shall also be an Acceptable DE LLCSPE Component Entity. Each SPE Component Entity (A) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iii) through (vi) and (viii) through (xxiv) inclusive, as well as the requirements of clause (ii) below if such SPE Component Entity is a single member limited liability company formed under the Act, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (B) will not engage in any business or activity other than owning an interest in such Borrower; (C) will not acquire or own any assets other than its partnership, membership, or other equity interest in such Borrower; (D) will not own any subsidiary, or make any investment in any Person other than its investment in such Borrower; (E) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); ) and (F) will cause the applicable Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose articles of incorporation or limited liability company agreement is agreement, as applicable, are substantially similar to that those of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent any Borrower is an Acceptable DE LLCa single member Delaware limited liability company, so long as such Borrower maintains such formation status and complies with the requirements set forth in subsection subsections (b)(iiii) and (iii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no .
(i) In the event shall any Borrower or any SPE Component Entity be is a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without single member limited liability company formed under the vote of such Acceptable DE LLC and its Independent Directors.
(ii) In the event Borrower or SPE Component Entity is an Acceptable DE LLC Act (as referred to in this clause (ii)applicable, the “Company”), the limited liability company agreement of the Company (the “LLC Agreement”) shall provide that (A) upon the occurrence of any event that causes the sole member of the Company (“Member”) to cease to be the member of the Company (other than (1) upon an assignment by Member of all of its limited liability company interest in the Company and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2) the resignation of Member and the admission of an additional member of the Company in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of the Company and executing the LLC Agreement (“Special Member”) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the Company, automatically be admitted to the Company and shall continue the existence of the Company without dissolution, and (B) Special Member may not resign from the Company or transfer its rights as Special Member unless (1) a successor Special Member has been admitted to the Company as Special Member in accordance with the requirements of the Act and (2) after giving effect to such resignation, such successor Special Member has also accepted its appointment as an Independent Director. The LLC Agreement shall further provide that (v) Special Member shall automatically cease to be a member of the Company upon the admission to the Company of a substitute Member, (w) Special Member shall be a member of the Company that has no interest in the profits, losses and capital of the Company and has no right to receive any distributions of the assets of the Company, (x) pursuant to Section 18-301 of the Act, Special Member shall not be required to make any capital contributions to the Company and shall not receive a limited liability company interest in the Company, (y) Special Member, in its capacity as Special Member, may not bind the Company, and (z) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Company, including, without limitation, the merger, consolidation or conversion of the Company; provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. Prior to its admission to the Company as Special Member, Special Member shall not be a member of the Company, but the Special Member may serve as an Independent Director of the Company. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company and upon the occurrence of such an event, the existence of the Company shall continue without dissolution. The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the Company.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents.
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 1 contract
Sources: Loan Agreement (Griffin Capital Essential Asset REIT II, Inc.)
Single Purpose Entity/Separateness. Borrower represents, warrants and covenants as follows:
(a) Borrower represents and warrants to, and covenants with, Lender that since the date of its formation and at all times on and after the date hereof and until such time as the Debt shall be paid in full it has not and will not:
(i) engage in any business or activity other than the ownership, operation and maintenance ownership of the PropertiesCollateral, and activities incidental thereto;
(ii) acquire or own any assets other than (A) the Properties, and (B) such incidental Personal Property as may be necessary for the ownership and operation of the PropertiesCollateral;
(iii) merge into or consolidate with any Person, divide or otherwise engage in or permit any Division or have the power to engage in or permit any Division or dissolve, or to the fullest extent permitted by law, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets (unless such action results in the repayment, in full, of the Loan) or change its legal structure. As used herein, the term “Division” shall mean, as to any Person, such Person dividing and/or otherwise engaging in and/or becoming subject to, in each case, any division (whether pursuant to plan of division or otherwise), including, without limitation and to the extent applicable, pursuant to §18-217 of the Limited Liability Company Act of the State of Delaware;
(iv) (A) fail to observe all organizational formalities necessary to maintain preserve its separate existence, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without any manner that violates the single purpose covenants set forth in this Article 5 (provided, that, such organizational documents may be amended or modified to the extent that, in addition to the satisfaction of the requirements related thereto set forth therein, ▇▇▇▇▇▇’s prior written consent of and, if required by Lender, a Rating Agency Confirmation are first obtained);
(v) own any subsidiary, or make any investment in, any PersonPerson (other than in Mortgage Borrower or any Mortgage SPE Component Entity or, with respect to any SPE Component Entity, in Borrower);
(via) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its funds or assets with the funds or assets of any other Person, or permit (b) other than as provided in the Cash Management Agreement, participate in any Affiliate or constituent party independent access to its bank accountscash management system with any other Person;
(vii) incur any debtIndebtedness, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than the Debt, and Indebtedness incurred in the ordinary course of business not to exceed $25,000 at any time and not material in the aggregate that is incidental to ▇▇▇▇▇▇▇▇’s activities as a member of Mortgage Borrower. No Indebtedness other than the Debt and Permitted Debt and prior loans that have been satisfied in full as of may be secured (subordinate or pari passu) by the date hereofCollateral;
(viii) fail to maintain all of its books, records, books of account, financial statements and bank accounts, financial statements, accounting records and other entity documents accounts separate and apart from those of any other Person (including, without limitation, any Affiliates). Borrower’s assets have not and will not be listed as assets on the financial statement of any other Person; except provided, however, that Borrower’s financial position, assets, liabilities, net worth and operating results assets may be included in the a consolidated financial statements statement of an Affiliateits Affiliates, provided that (Ai) appropriate notation shall be made on such consolidated financial statements to indicate the separate identity separateness of Borrower from and such Affiliate Affiliates and to indicate that Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate Affiliates or any other Person, Person and (Bii) Borrower’s assets, liabilities and net worth such assets shall also be listed on Borrower’s own separate balance sheet. ▇▇▇▇▇▇▇▇ has maintained and will maintain its books, records, resolutions and agreements as official records;
(ix) except for in connection with capital contributions or and capital distributions permitted under pursuant to the terms and conditions of Borrowersuch ▇▇▇▇▇▇▇▇’s organizational documents and properly reflected on its books and recordsnot prohibited under this Agreement, enter into any transaction, contract or agreement with any general partner, member, shareholder, principalprincipal or Affiliate, guarantor of the obligations of Borrowerexcept, or any Affiliate of the foregoingin each case, except upon terms and conditions that are intrinsically fair, commercially reasonable and substantially similar comparable to those that would be available on an arm’s-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by to Lender in connection with the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunderLoan, assume or guaranty the debts or obligations of any other Person, hold itself out to be responsible for the debts or obligations of any other Person, or otherwise pledge its assets to secure for the obligations benefit of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person; provided, that Borrowers shall be jointly and severally liable for all obligations of Borrowers under the Loan Documents;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other Person;
(xiii) fail to (A) file its own tax returns separate from those of any other Person, (except to the extent that Borrower it was or is treated as a “disregarded entity” for tax purposes and was or is not required to file consolidated tax returns under applicable law) (unless prohibited by applicable Legal Requirements and (B) pay any taxes required to be paid under applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrowerfrom doing so);
(xiv) fail to (A) hold itself out to the public and identify itself, in each case, as a legal entity separate and distinct from any other Person and not as a division or part of any other Person, (B) conduct its business solely in its own name, (C) hold its assets in its own name or (CD) correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; providedoperations (to the extent there exists sufficient net cash flow available from the Collateral to do so and Lender or Mortgage Lender permits such cash flow or loan proceeds to be applied for such purposes, howeveror if reserve funds held by Lender or Mortgage Lender and specifically allocated for such amount have not been made available to Borrower by Lender or to Mortgage Borrower by Mortgage Lender to pay such outstanding amounts, and provided that the foregoing shall not require Borrower’s membersany direct or indirect member, partners partner or shareholders shareholder of a Borrower to make additional (or seek) any additional capital contributions contributions, equity infusions or loans to such Borrower);
(xvi) without the prior unanimous written consent of all of its partners partners, shareholders or members, as applicable, the prior unanimous written consent of its board of directors or managers, as applicable, and the prior written consent of the Independent Director (regardless of whether such Independent Director is engaged at the Borrower or SPE Component Entity level), (a) file or consent to the filing of any petition, either voluntary or involuntary, to take advantage of any Creditors Rights Laws (except with the written consent or direction of all directors Lender), (b) seek or managers consent to the appointment of Borrower a receiver, liquidator or each SPE Component Entityany similar official (except with the written consent or direction of Lender), as applicable including, without limitation, each Independent Director, (c) take any Material Action or action that is intended could reasonably be expected to cause such entity to become insolvent, (d) make an assignment for the benefit of creditors (except to Lender or at the request or with the consent of Lender) or (e) take any Material Action with respect to Borrower or any SPE Component Entity (provided, that, none of any member, shareholder or partner (as applicable) of Borrower or any SPE Component Entity or any board of directors or managers (as applicable) of Borrower or any SPE Component Entity may vote on or otherwise authorize the taking of any of the foregoing actions unless, in each case, there is at least one (1) Independent Director then serving in such capacity in accordance with the terms of the applicable organizational documents and such Independent Director has consented to such foregoing action);
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space space) or to the extent reasonably necessary in the operation of its business, fail to use separate stationery, invoices and services performed by an employee checks bearing its own name and not bearing the name of an Affiliate) among the Persons sharing any other entity unless such expensesentity holds itself out as and is clearly designated as being its agent;
(xviii) except for payments which may be made on Borrower’s behalf pursuant to the Environmental Indemnity and the Guaranty, fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, pay its own liabilities (including, without limitation, a fairly allocated portion of any personnel and overhead expenses that it shares with any Affiliate and salaries of its own employees) only from its own fundsfunds and assets (as distinguished from the funds and assets of another Person) or fail to maintain a sufficient number of employees in light of its contemplated business operations (in each case to the extent there exists sufficient net cash flow available from the Collateral to do so and Lender or Mortgage Lender permits such cash flow or loan proceeds to be applied for such purposes, or if reserve funds held by Lender or Mortgage Lender and specifically allocated for such amounts have been made available to Borrower by Lender or Mortgage Lender to pay such outstanding amounts); provided, however, that the foregoing shall not require Borrower’s membersany direct or indirect member, partners partner or shareholders shareholder of Borrower to make any additional capital contributions contributions, equity infusions or loans to such Borrower;
(xix) acquire obligations (other than in respect of a co-Borrower’s obligations under the Loan Documents) or securities of its partners, members, shareholders or other affiliatesAffiliates, as applicable;
(xx) identify its partners, members, shareholders or other Affiliates, as applicable, as a division or part of it;
(xxi) violate or cause to be violated violated, in any material respect, the factual assumptions made with respect to Borrower and its principals in the Non-Consolidation Opinion or in any New Non-Consolidation Opinion;
, provided, however, that (xxia) fail if such violation is susceptible of cure, Borrower shall cure such violation within thirty (30) days, and (b) Borrower promptly delivers to maintain Lender a sufficient number of employees New Non-Consolidation Opinion or modification to the original Non-Consolidation Opinion, as applicable, to the effect that such breach shall not in light of its contemplated business operations;any way impair, negate or amend the opinion rendered in the original Non-Consolidation Opinion or any subsequent New Non-Consolidation Opinion (as applicable); or
(xxii) fail other than pursuant to maintain the Environmental Indemnity and use separate stationerythe Guaranty, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan any Affiliate or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other Personconstituent party.
(ib) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner (in the case of a partnership, or the managing ) and at least one member (in the case of a limited liability company (each an “SPE Component Entity”company) of Borrower, as applicable, shall be a corporation or an Acceptable DE LLCLLC (each, an “SPE Component Entity”) whose sole asset is its interest in Borrower. Each SPE Component Entity (Ai) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iiiSection 5.1(a)(iii) through - (vi) (inclusive) and (viii) through – (xxivxxi) (inclusive) and, if such SPE Component Entity is an Acceptable LLC, Section 5.1(c) and (d) hereof, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (Bii) will not engage in any business or activity other than owning an interest in Borrower; (Ciii) will not acquire or own any assets other than its partnership, membership, or other equity ownership interest in Borrower; (Div) will not at all times continue to own any subsidiary, or make any investment in any Person other no less than its investment a 0.5% direct equity ownership interest in Borrower; (Ev) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (Fvi) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to 5.1.
(c) In the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is substantially similar to that of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors.
(ii) In the event Borrower or SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”)LLC, the limited liability company agreement of the Company Borrower or such SPE Component Entity (as applicable) (the “LLC Agreement”) shall provide that (Ai) upon the occurrence of any event that causes the sole last remaining member of the Company Borrower or such SPE Component Entity (as applicable) (“Member”) to cease to be the member of the Company Borrower or such SPE Component Entity (as applicable) (other than upon continuation of the Borrower or such SPE Component Entity (1as applicable) without dissolution upon (A) an assignment by Member of all of its limited liability company interest in the Company Borrower or such SPE Component Entity (as applicable) and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2B) the resignation of Member and the admission of an additional member of the Company Borrower or such SPE Component Entity (as applicable) in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of the Company and executing the LLC Agreement Borrower or such SPE Component Entity (“Special Member”as applicable) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the Company, Borrower or such SPE Component Entity (as applicable) automatically be admitted to the Company Borrower or such SPE Component Entity (as applicable) as a member with a 0% economic interest (“Special Member”) and shall continue the existence of the Company Borrower or such SPE Component Entity (as applicable) without dissolution, dissolution and (Bii) Special Member may not resign from the Company Borrower or such SPE Component Entity (as applicable) or transfer its rights as Special Member unless (1A) a successor Special Member has been admitted to the Company Borrower or such SPE Component Entity (as applicable) as a Special Member in accordance with the requirements of the Act LLC Agreement and (2B) after giving effect to such resignationresignation or transfer, there remains at least one (1) Independent Director of such successor Special Member has also accepted its appointment SPE Component Entity or Borrower (as an Independent Directorapplicable) in accordance with Section 5.2 below. The LLC Agreement shall further provide that (vi) Special Member shall automatically cease to be a member of the Company Borrower or such SPE Component Entity (as applicable) upon the admission to Borrower or such SPE Component Entity (as applicable) of the Company of a first substitute Membermember, (wii) Special Member shall be a member of the Company Borrower or such SPE Component Entity (as applicable) that has no interest in the profits, losses and capital of the Company Borrower or such SPE Component Entity (as applicable) and has no right to receive any distributions of the assets of the CompanyBorrower or such SPE Component Entity (as applicable), (xiii) pursuant to Section 18-301 the applicable provisions of the limited liability company act of the State of Delaware (the “Act”), Special Member shall not be required to make any capital contributions to the Company Borrower or such SPE Component Entity (as applicable) and shall not receive a limited liability company interest in the CompanyBorrower or such SPE Component Entity (as applicable), (yiv) Special Member, in its capacity as Special Member, may not bind the Company, Borrower or such SPE Component Entity (as applicable) and (zv) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Company, Borrower or such SPE Component Entity (as applicable) including, without limitation, the merger, consolidation or conversion of the CompanyBorrower or such SPE Component Entity (as applicable); provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. In order to implement the admission to Borrower or such SPE Component Entity (as applicable) of Special Member, Special Member shall execute a counterpart to the LLC Agreement. Prior to its admission to the Company Borrower or such SPE Component Entity (as applicable) as Special Member, Special Member shall not be a member of the CompanyBorrower or such SPE Component Entity (as applicable), but the Special Member may serve as an Independent Director of Borrower or such SPE Component Entity (as applicable).
(d) The LLC Agreement shall further provide that (i) upon the Company. Any action initiated by or brought against Member or Special Member under occurrence of any Creditors Rights Laws shall not cause Member or event that causes the Special Member to cease to be a member of the Company and upon the occurrence of Borrower or such an event, the existence of the Company shall continue without dissolution. The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company upon the occurrence of any action initiated by SPE Entity (as applicable) or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special the Member to cease to be a member of the Company.
(c) The organizational documents of Borrower and each or such SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary (as applicable) (other than upon continuation of the “special purpose” provisions of Borrower or such organizational documents.
SPE Entity (das applicable) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.without dissolution upon (A)
Appears in 1 contract
Sources: Mezzanine Loan Agreement (Industrial Logistics Properties Trust)
Single Purpose Entity/Separateness. Until the Debt has been paid in full, Borrower represents, warrants and covenants as follows:
(a) : Borrower has not and will not:
(i) engage in any business or activity other than the ownership, operation and maintenance of the PropertiesProperty, and activities incidental thereto;
(ii) acquire or own any assets other than (A) the PropertiesProperty, and (B) such incidental Personal Property as may be necessary for the ownership and operation of the PropertiesProperty;
(iii) except as expressly provided in Article 7 hereof, merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existenceformalities, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;
(v) own any subsidiary, or make any investment in, any Person;
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its assets with the assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;
(vii) incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than (A) the Debt Debt, (B) trade and Permitted Debt operational indebtedness incurred in the ordinary course of business with trade creditors, provided such indebtedness is (1) unsecured, (2) not evidenced by a note, (3) on commercially reasonable terms and conditions, and (4) due not more than sixty (60) days past the date incurred and paid on or prior loans that have been satisfied to such date, (C) financing leases and purchase money indebtedness incurred in full as the ordinary course of business relating to Personal Property on commercially reasonable terms and conditions, and/or (D) a loan with the Borrower Principal, which is subordinate to the Loan with Lender, to fund a portion of the date hereofequity required to purchase the Property; provided however, the aggregate amount of the indebtedness described in (B) and (C) shall not exceed at any time three percent (3%) of the outstanding principal amount of the Note;
(viii) fail to maintain permit its records, books of account, bank accounts, financial statements, statements and accounting records and other entity documents separate and apart from those of any other Person; except that Borrower’s (including with respect to financial position, assets, liabilities, net worth and operating results may results) to be included in shown on the consolidated financial statements of an Affiliate, provided that (A) appropriate notation shall be made on any holder of a beneficial interest in Borrower unless such consolidated financial statements to indicate shall contain a footnote indicating that Borrower is a separate legal entity and the separate identity assets of Borrower from such Affiliate and that Borrower’s assets and credit are not available as collateral to satisfy the debts and other obligations creditors of such Affiliate or any other Person, and (B) Borrower’s assets, liabilities and net worth shall also be listed on Borrower’s own separate balance sheetholder;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, or any Affiliate of the foregoing, except upon terms and conditions that are intrinsically fair, commercially reasonable and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty guarantee the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure for the obligations benefit of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other Person;
(xiii) fail to (A) file its own tax returns separate from those of or files a consolidated federal income tax return with any other PersonPerson (unless prohibited or required, except to as the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under applicable Legal Requirements and (B) pay any taxes required to be paid under case may be, by applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrower);
(xiv) fail either to (A) hold itself out to the public as a legal entity separate and distinct from any other Person, (B) Person or to conduct its business solely in its own name or (C) fail to correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, operations (provided that the foregoing shall not require Borrower’s membersfailure to do so solely because of a shortfall in cash flow derived from the operation of the Property shall not, partners or shareholders to make additional capital contributions to Borrowerby itself, constitute a breach of this covenant);
(xvi) without Without the unanimous written consent of all of its partners or members, as applicable, and the written consent of all 100% of the directors or managers of Borrower or each SPE Component EntityBorrower, as applicable including, without limitation, each the Independent Director, (a) file or consent to the filing of any petition, either voluntary or involuntary, to take advantage of any Creditors Rights Laws, (b) seek or consent to the appointment of a receiver, liquidator or any similar official, (c) take any Material Action or action that is intended to might cause such entity to become insolvent, or (d) make an assignment for the benefit of creditors;
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space and services performed by an employee of an Affiliate) among the Persons sharing such expensesexpenses and to use separate stationery, invoices and checks;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, or pay its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; provided, however, funds (provided that the foregoing shall not require Borrower’s membersfailure to do so solely because of a shortfall in cash flow derived from the operation of the Property shall not, partners or shareholders to make additional capital contributions to Borrowerby itself, constitute a breach of this covenant);
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable;
(xx) violate or cause to be violated the assumptions made with respect to Borrower Borrower, Manager (if applicable) and its principals their respective direct and/or indirect owners in any opinion letter pertaining to substantive consolidation delivered to Lender in connection with the Non-Consolidation Opinion or any New Non-Consolidation Opinion;Loan; or
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other Person.
(i) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner in the case of a partnership, or the managing member in the case of a limited liability company (each an “SPE Component Entity”) of Borrower, as applicable, shall be an Acceptable DE LLC. Each SPE Component Entity (A) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iii) through (vi) and (viii) through (xxiv) inclusive, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (B) will not engage in any business or activity other than owning an interest in Borrower; (C) will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (D) will not own any subsidiary, or make any investment in any Person other than its investment in Borrower; (E) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (F) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is substantially similar to that of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors.
(ii) In the event Borrower or SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”), the limited liability company agreement of the Company (the “LLC Agreement”) shall provide that (A) upon the occurrence of any event that causes the sole member of the Company (“Member”) to cease to be the member of the Company (other than (1) upon an assignment by Member of all of its limited liability company interest in the Company and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2) the resignation of Member and the admission of an additional member of the Company in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of the Company and executing the LLC Agreement (“Special Member”) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the Company, automatically be admitted to the Company and shall continue the existence of the Company without dissolution, and (B) Special Member may not resign from the Company or transfer its rights as Special Member unless (1) a successor Special Member has been admitted to the Company as Special Member in accordance with the requirements of the Act and (2) after giving effect to such resignation, such successor Special Member has also accepted its appointment as an Independent Director. The LLC Agreement shall further provide that (v) Special Member shall automatically cease to be a member of the Company upon the admission to the Company of a substitute Member, (w) Special Member shall be a member of the Company that has no interest in the profits, losses and capital of the Company and has no right to receive any distributions of the assets of the Company, (x) pursuant to Section 18-301 of the Act, Special Member shall not be required to make any capital contributions to the Company and shall not receive a limited liability company interest in the Company, (y) Special Member, in its capacity as Special Member, may not bind the Company, and (z) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Company, including, without limitation, the merger, consolidation or conversion of the Company; provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. Prior to its admission to the Company as Special Member, Special Member shall not be a member of the Company, but the Special Member may serve as an Independent Director of the Company. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company and upon the occurrence of such an event, the existence of the Company shall continue without dissolution. The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the Company.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents.
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 1 contract
Sources: Loan Agreement (Inland Western Retail Real Estate Trust Inc)
Single Purpose Entity/Separateness. Borrower represents, warrants and covenants as follows:
(a) Borrower has and Panache Distillery have not and will not:
: (i) engage in any business or activity other than the ownership, ownership and operation and maintenance of the Properties, its business and activities incidental thereto;
; (ii) acquire or own any assets other than (A) the Propertiesproperty owned by Borrower, and (B) the Property; and (C) such incidental Personal Property property as may be necessary for the ownership and operation of the Properties;
its business; (iii) merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
; (iv) (A) fail to observe all organizational formalities necessary to maintain its separate existenceformalities, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements law of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;
. (v) own any subsidiary, or make any investment in, any Person;
, other than those currently owned as respect Borrower other than Panache Distillery; (vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its assets with the assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;
; (vii) incur any debtIndebtedness, except as related in the Intercreditor Agreement, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than (A) the Debt loan, and Permitted Debt (B) trade and prior loans that have been satisfied operational indebtedness incurred in full as the ordinary course of business with trade creditors, provided such indebtedness is (1) unsecured, (2) not evidenced by a note, (3) on commercially reasonable terms and conditions, and (4) due not more than sixty (60) days past the date hereof;
incurred and paid on or prior to such date; (viii) fail to maintain all of its books, records, books of account, financial statements and bank accounts, financial statements, accounting records and other entity documents accounts separate and apart from those of its affiliates and any constituent party. No Borrower's assets have or will not be listed as assets on the financial statement of any other Person; except provided, however, that any Borrower’s financial position, assets, liabilities, net worth and operating results 's assets may be included in the a consolidated financial statements statement of an Affiliate, its affiliates provided that (Ai) appropriate notation shall be made on such consolidated financial statements to indicate the separate identity separateness of such Borrower from and such Affiliate affiliates and to indicate that such Borrower’s 's assets and credit are not available to satisfy the debts and other obligations of such Affiliate affiliates or any other Person, Person and (Bii) Borrower’s assets, liabilities and net worth such assets shall also be listed on each Borrower’s 's own separate balance sheet;
. Each Borrower has maintained and will maintain its books, records, resolutions and agreements as official records; (ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, principal or any Affiliate of the foregoingaffiliate, except upon terms and conditions that are intrinsically fair, commercially reasonable fair and substantially similar to those that would be available on an arm’sarm's-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure the obligations of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other Person;
(xiii) fail to (A) file its own tax returns separate from those of any other Person, except to the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under applicable Legal Requirements and (B) pay any taxes required to be paid under applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrower;
(xiv) fail to (A) hold itself out to the public as a legal entity separate and distinct from any other Person, (B) conduct its business solely in its own name or (C) correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;
(xvi) without the unanimous written consent of all of its partners or members, as applicable, and the written consent of all directors or managers of Borrower or each SPE Component Entity, as applicable including, without limitation, each Independent Director, take any Material Action or action that is intended to cause such entity to become insolvent;
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space and services performed by an employee of an Affiliate) among the Persons sharing such expenses;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, pay its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable;
(xx) violate or cause to be violated the assumptions made with respect to Borrower and its principals in the Non-Consolidation Opinion or any New Non-Consolidation Opinion;
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other Person.
(i) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner in the case of a partnership, or the managing member in the case of a limited liability company (each an “SPE Component Entity”) of Borrower, as applicable, shall be an Acceptable DE LLC. Each SPE Component Entity (A) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iii) through (vi) and (viii) through (xxiv) inclusive, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (B) will not engage in any business or activity other than owning an interest in Borrower; (C) will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (D) will not own any subsidiary, or make any investment in any Person other than its investment in Borrower; (E) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (F) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is substantially similar to that of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors.
(ii) In the event Borrower or SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”), the limited liability company agreement of the Company (the “LLC Agreement”) shall provide that (A) upon the occurrence of any event that causes the sole member of the Company (“Member”) to cease to be the member of the Company (other than (1) upon an assignment by Member of all of its limited liability company interest in the Company and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2) the resignation of Member and the admission of an additional member of the Company in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of the Company and executing the LLC Agreement (“Special Member”) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the Company, automatically be admitted to the Company and shall continue the existence of the Company without dissolution, and (B) Special Member may not resign from the Company or transfer its rights as Special Member unless (1) a successor Special Member has been admitted to the Company as Special Member in accordance with the requirements of the Act and (2) after giving effect to such resignation, such successor Special Member has also accepted its appointment as an Independent Director. The LLC Agreement shall further provide that (v) Special Member shall automatically cease to be a member of the Company upon the admission to the Company of a substitute Member, (w) Special Member shall be a member of the Company that has no interest in the profits, losses and capital of the Company and has no right to receive any distributions of the assets of the Company, (x) pursuant to Section 18-301 of the Act, Special Member shall not be required to make any capital contributions to the Company and shall not receive a limited liability company interest in the Company, (y) Special Member, in its capacity as Special Member, may not bind the Company, and (z) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Company, including, without limitation, the merger, consolidation or conversion of the Company; provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. Prior to its admission to the Company as Special Member, Special Member shall not be a member of the Company, but the Special Member may serve as an Independent Director of the Company. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company and upon the occurrence of such an event, the existence of the Company shall continue without dissolution. The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the Company.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents.
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.33
Appears in 1 contract
Sources: Loan Agreement
Single Purpose Entity/Separateness. Borrower represents, warrants and covenants as follows:
8.28.1 The purpose for which Borrower is organized shall be limited solely to (aA) Borrower has not owning, holding, selling, leasing, transferring, exchanging, operating and will not:
(i) engage in any business or activity other than the ownership, operation and maintenance of managing the Properties, (B) entering into the Loan Agreement with Lender, (C) refinancing the Properties in connection with a permitted repayment of the Loan and activities incidental thereto;
(iiD) acquire or transacting any and all lawful business for which Borrower may be organized under its constitutive law that is incident, necessary and appropriate to accomplish the foregoing. Borrower does not own and will not own any assets asset or property other than (Ai) the Properties, and (Bii) such incidental Personal Property as may be personal property necessary for the ownership or operation of the Properties.
8.28.2 Borrower will not engage in any business other than the ownership, management and operation of the Properties;Properties and Borrower will conduct and operate its business as presently conducted and operated.
(iii) merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existence, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;
(v) own any subsidiary, or make any investment in, any Person;
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its assets with the assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;
(vii) incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)), other than the Debt and Permitted Debt and prior loans that have been satisfied in full as of the date hereof;
(viii) fail to maintain its records, books of account, bank accounts, financial statements, accounting records and other entity documents separate and apart from those of any other Person; except that Borrower’s financial position, assets, liabilities, net worth and operating results may be included in the consolidated financial statements of an Affiliate, provided that (A) appropriate notation shall be made on such consolidated financial statements to indicate the separate identity of 8.28.3 Borrower from such Affiliate and that Borrower’s assets and credit are will not available to satisfy the debts and other obligations of such Affiliate or any other Person, and (B) Borrower’s assets, liabilities and net worth shall also be listed on Borrower’s own separate balance sheet;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations Affiliate of Borrower, any constituent party of Borrower, the guarantors or any Affiliate of the foregoingany constituent party or guarantor, except upon terms and conditions that are intrinsically fair, commercially reasonable fair and substantially similar to those that would be available on an arm’sarms-length basis with unaffiliated third parties;parties other than any such party.
8.28.4 Borrower has not incurred and will not incur any Indebtedness other than (xi) maintain its assets the Loan, (ii) trade and operational debt which is (A) incurred in the ordinary course of business, (B) not more than sixty (60) days past the date incurred, (C) with trade creditors, (D) in the aggregate, in an amount less than one percent (1%) of the original principal amount of the Loan, (E) not evidenced by a note, and (F) paid when due, and (iii) Indebtedness incurred in the ordinary course of business for the purpose of financing equipment and other personal property used on the Properties (including obligations pursuant to equipment leases) in amounts that are normal and reasonable under the circumstances, provided, that (1) such debt shall be fully amortizing over a manner that it will be costly term not to exceed five (5) years (or difficult to segregatethe term of the related equipment lease shall not exceed five (5) years), ascertain or identify its individual assets from those of any other Person;
and (xi2) except as contemplated by the Loan Documents such debt (which, with respect to co-borrowers under an equipment lease, shall be the annual rents payable thereunder for the then current calendar year) shall not in the aggregate outstanding at any one time exceed one percent (1%) of Operating Revenues. No Indebtedness other than the Loan may be secured (subordinate or pari passu) by the Properties.
8.28.5 Borrower has not made and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure the obligations of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;
(xii) will not make any loans or advances to any Personthird party (including any affiliate or constituent party, any guarantor or own any stock affiliate of any constituent party or guarantor), and shall not acquire obligations or securities ofof its affiliates or any constituent party.
8.28.6 Borrower is and will remain solvent and Borrower will pay its debts and liabilities (including, as applicable, shared personnel and overhead expenses) from its assets as the same shall become due.
8.28.7 Borrower has done or caused to be done and will do all things necessary to observe organizational formalities and preserve its existence, and Borrower will not, nor will Borrower permit any Personconstituent party or any guarantor to amend, modify or buy otherwise change the partnership certificate, partnership agreement, articles of incorporation and bylaws, operating agreement, trust or hold evidence other organizational documents of indebtedness issued by Borrower or such constituent party or guarantor without the prior written consent of Lender.
8.28.8 Borrower will maintain all of its books, records, financial statements and bank accounts separate from those of its Affiliates and any constituent party. Borrower's assets will not be listed as assets on the financial statement of any other Person;
(xiii) fail entity except as required by generally accepted accounting principles; provided, however, that any such consolidated financial statement shall contain a note indicating that its separate assets and liabilities are neither available to (A) pay the debts of the consolidated entity nor constitute obligations of the consolidated entity. Borrower will file its own tax returns separate from those of any other Personreturns, except to the extent that Borrower it is treated as a “disregarded entity” for tax purposes and is not required to file consolidated federal income tax returns under applicable Legal Requirements and (B) pay any taxes required to be paid under applicable Legal Requirements; provided, however, that by law. Borrower shall not have any obligation to reimburse maintain its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur books, records, resolutions and agreements as a result of any profits or losses of Borrower;official records.
(xiv) fail to (A) 8.28.9 Borrower will be, and at all times will hold itself out to the public as as, a legal entity separate and distinct from any other Personentity (including any Affiliate of Borrower, (B) conduct its business solely in its own name any constituent party of Borrower, any guarantor or (C) any Affiliate of any constituent party or guarantor), shall correct any known misunderstanding regarding its status as a separate identity;entity, 0shall conduct business in its own name, shall not identify itself as a division or part of any other person or entity.
(xv) fail to intend to 8.28.10 Borrower will maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided.
8.28.11 Neither Borrower nor any constituent party will seek the dissolution, howeverwinding up, that liquidation, consolidation or merger in whole or in part, of the foregoing shall Borrower.
8.28.12 Borrower will not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;
(xvi) without commingle the unanimous written consent of all of its partners or members, as applicable, funds and the written consent of all directors or managers other assets of Borrower with those of any Affiliate or each SPE Component Entityconstituent party, as applicable includingany guarantor, without limitation, each Independent Director, take any Material Action or action that is intended to cause such entity to become insolvent;
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space and services performed by an employee of an Affiliate) among the Persons sharing such expenses;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, pay its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable;
(xx) violate or cause to be violated the assumptions made with respect to Borrower and its principals in the Non-Consolidation Opinion or any New Non-Consolidation Opinion;Affiliate of any constituent party or guarantor, or any other person.
(xxi) fail 8.28.13 Borrower has and will maintain its assets in such a manner that it will not be costly or difficult to maintain a sufficient number segregate, ascertain or identify its individual assets from those of employees in light any Affiliate or constituent party, any guarantor, or any Affiliate of its contemplated business operations;any constituent party or guarantor, or any other person.
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by 8.28.14 Borrower will not guarantee or become obligated for the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division debts of any other Personentity or person and does not and will not hold itself out as being responsible for the debts or obligations of any other person.
(i) 8.28.15 If Borrower is a limited partnership or a limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”)company, each general partner in the case of a partnership, or the managing member in the case of a limited liability company (each each, an “SPE Component Entity”"SPC Party") of Borrower, as applicable, shall be an Acceptable DE LLC. Each SPE Component Entity (A) a corporation whose sole asset is its interest in Borrower and each such SPC Party will at all times comply comply, and will cause Borrower to comply, with each of the covenantsrepresentations, terms warranties, and provisions covenants contained in Sections 6.1(a)(iii) through (vi) and (viii) through (xxiv) inclusive, this Section 8.28 as if such representation, warranty or covenant was made directly by such SPE Component Entity; SPC Party.
8.28.16 Borrower shall at all times cause there to be at least two (2) duly appointed members of the board of directors (each an "Independent Director") of 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 SPC Party, and may not have been at any time during the preceding five years (i) a shareholder of, or an officer, director, partner or employee of, Borrower or any of its shareholders, subsidiaries or affiliates (except for serving as an independent director of (A) any single purpose corporations serving as general partners of other limited partnerships financing hotel properties with Lender or (B) will not engage in any business or activity other than owning an interest in Borrower; TRS Lessee), (Cii) will not acquire or own any assets other than its partnership, membershipa customer of, or other equity interest in Borrower; (D) will not own any subsidiarysupplier to, or make any investment in any Person other than its investment in Borrower; (E) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (F) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is substantially similar to that of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors.
(ii) In the event Borrower or SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”), the limited liability company agreement of the Company (the “LLC Agreement”) shall provide that (A) upon the occurrence of any event that causes the sole member of the Company (“Member”) to cease to be the member of the Company (other than (1) upon an assignment by Member of all of its limited liability company interest in the Company and the admission of the transferee in accordance shareholders, subsidiaries or affiliates, (iii) a person or other entity controlling or under common control with the Loan Documents and the LLC Agreementany such shareholder, partner, supplier or customer, or (2iv) the resignation of Member and the admission of an additional member of the Company in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Companyimmediate family of any such shareholder, and a natural person duly designated under officer, director, partner, employee, supplier or customer of Borrower. As used herein, the LLC Agreement any person acting as Independent Director term "control" means the possession, directly or indirectly, of the Company and executing power to direct or cause the LLC Agreement (“Special Member”) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member direction of the Company, automatically be admitted to the Company management and shall continue the existence of the Company without dissolution, and (B) Special Member may not resign from the Company or transfer its rights as Special Member unless (1) a successor Special Member has been admitted to the Company as Special Member in accordance with the requirements of the Act and (2) after giving effect to such resignation, such successor Special Member has also accepted its appointment as an Independent Director. The LLC Agreement shall further provide that (v) Special Member shall automatically cease to be a member of the Company upon the admission to the Company policies of a substitute Memberperson or entity, (w) Special Member shall be a member whether through ownership of the Company that has no interest in the profitsvoting securities, losses and capital of the Company and has no right to receive any distributions of the assets of the Company, (x) pursuant to Section 18-301 of the Act, Special Member shall not be required to make any capital contributions to the Company and shall not receive a limited liability company interest in the Company, (y) Special Member, in its capacity as Special Member, may not bind the Company, and (z) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve contract or otherwise consent to any action by, or matter relating to, the Company, including, without limitation, the merger, consolidation or conversion of the Company; provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. Prior to its admission to the Company as Special Member, Special Member shall not be a member of the Company, but the Special Member may serve as an Independent Director of the Company. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company and upon the occurrence of such an event, the existence of the Company shall continue without dissolution. The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the Companyotherwise.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents.
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 1 contract
Sources: Loan Agreement (Equity Inns Inc)
Single Purpose Entity/Separateness. Borrower represents, warrants and covenants as follows:
(a) At all times since its respective date of formation, each Individual Borrower and Maryland Owner has not and will notcomplied in all material respects with the separateness covenants set forth in its organizational documents, or, if no separateness covenants are set forth therein, it:
(i) engage in any business or activity other than the ownershipground leases entered into with another Individual Borrower, operation and maintenance of the Properties, and activities incidental thereto;
(ii) acquire or own any assets other than (A) the Properties, and (B) such incidental Personal Property as may be necessary for the ownership and operation of the Properties;
(iii) merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existence, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;
(v) own any subsidiary, or make any investment in, any Person;
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its assets with the assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;
(vii) incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)), other than the Debt and Permitted Debt and prior loans that have been satisfied in full as of the date hereof;
(viii) fail to maintain its records, books of account, bank accounts, financial statements, accounting records and other entity documents separate and apart from those of any other Person; except that Borrower’s financial position, assets, liabilities, net worth and operating results may be included in the consolidated financial statements of an Affiliate, provided that (A) appropriate notation shall be made on such consolidated financial statements to indicate the separate identity of Borrower from such Affiliate and that Borrower’s assets and credit are has not available to satisfy the debts and other obligations of such Affiliate or any other Person, and (B) Borrower’s assets, liabilities and net worth shall also be listed on Borrower’s own separate balance sheet;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter entered into any transaction, contract or agreement with any general partnerof its Affiliates, memberconstituents, shareholderor owners, principal, guarantor or any guarantors of the any of its obligations of Borrower, or any Affiliate of any of the foregoingforegoing (individually, a “Related Party” and collectively, the “Related Parties”), except upon terms and conditions that are intrinsically fair, commercially reasonable and substantially similar to those that would be available on in an arm’s-length basis transaction with unaffiliated third partiesan unrelated party;
(xii) maintain has paid all of its debts and liabilities from its assets;
(iii) has done or caused to be done all things necessary to observe all organizational formalities applicable to it and to preserve its existence;
(iv) has maintained all of its books, records, financial statements and bank accounts separate from those of any other Person ;
(v) has not had its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual listed as assets from those on the financial statement of any other Person;
(xivi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure the obligations of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other Person;
(xiii) fail to (A) file has filed its own tax returns separate from those of any other Person, (except to the extent that Borrower is treated as it has been a “tax-disregarded entity” for tax purposes and is entity not required to file tax returns under applicable Legal Requirements and (Blaw) pay and, if it is a corporation, has not filed a consolidated federal income tax return with any taxes required to be paid under applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrowerother Person;
(xivvii) fail to (A) hold has been, and at all times has held itself out to the public as as, a legal entity separate and distinct from any other Person, Person (Bincluding any Affiliate or other Related Party);
(viii) conduct its business solely in its own name or (C) correct has corrected any known misunderstanding regarding its status as a separate identityentity;
(xvix) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business has conducted all of its size business and character and in light held all of its contemplated business operations; provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrowerassets in its own name;
(xvix) without the unanimous written consent of all has not identified itself or any of its partners affiliates as a division or members, as applicable, and part of the written consent of all directors or managers of Borrower or each SPE Component Entity, as applicable including, without limitation, each Independent Director, take any Material Action or action that is intended to cause such entity to become insolventother;
(xviixi) fail to fairly has maintained and reasonably allocate shared expenses (including, without limitation, shared office space and services performed by an employee of an Affiliate) among the Persons sharing such expenses;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, pay its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable;
(xx) violate or cause to be violated the assumptions made with respect to Borrower and its principals in the Non-Consolidation Opinion or any New Non-Consolidation Opinion;
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use utilized separate stationery, invoices and checks bearing its own name;
(xxiiixii) has not commingled its assets with those of any other Person and has held all of its assets in its own name;
(xiii) has not guaranteed or become obligated for the debts of any other Person;
(xiv) has not held itself out as being responsible for the debts or obligations of any other Person;
(xv) has allocated fairly and reasonably any overhead expenses that have been shared with an Affiliate, including paying for office space and services performed by any employee of an Affiliate or Related Party;
(xvi) has not pledged its assets to secure the obligations of any other Person and no such pledge remains outstanding except in connection with the Loan;
(xvii) has maintained adequate capital in light of its contemplated business operations;
(xviii) has maintained a sufficient number of employees in light of its contemplated business operations and has paid the salaries of its own employees from its own funds;
(xix) has not owned any subsidiary or any equity interest in any other entity;
(xx) has not incurred any indebtedness that is still outstanding other than Permitted Debt; and
(xxi) has not had any of its obligations guaranteed by an Affiliateaffiliate, except for guarantees that have been either released or discharged (xor that will be discharged as a result of the closing of the Loan) as or guarantees that are expressly contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other PersonDocuments.
(i) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner in the case of a partnership, or the managing member in the case of a limited liability company (each an “SPE Component Entity”) of Borrower, as applicable, shall be an Acceptable DE LLC. Each SPE Component Entity (A) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iii) through (vi) and (viii) through (xxiv) inclusive, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (B) will not engage in any business or activity other than owning an interest in Borrower; (C) will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (D) will not own any subsidiary, or make any investment in any Person other than its investment in Borrower; (E) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (F) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is substantially similar to that of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors.
(ii) In the event Borrower or SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”), the limited liability company agreement of the Company (the “LLC Agreement”) shall provide that (A) upon the occurrence of any event that causes the sole member of the Company (“Member”) to cease to be the member of the Company (other than (1) upon an assignment by Member of all of its limited liability company interest in the Company and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2) the resignation of Member and the admission of an additional member of the Company in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of the Company and executing the LLC Agreement (“Special Member”) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the Company, automatically be admitted to the Company and shall continue the existence of the Company without dissolution, and (B) Special Member may not resign from the Company or transfer its rights as Special Member unless (1) a successor Special Member has been admitted to the Company as Special Member in accordance with the requirements of the Act and (2) after giving effect to such resignation, such successor Special Member has also accepted its appointment as an Independent Director. The LLC Agreement shall further provide that (v) Special Member shall automatically cease to be a member of the Company upon the admission to the Company of a substitute Member, (w) Special Member shall be a member of the Company that has no interest in the profits, losses and capital of the Company and has no right to receive any distributions of the assets of the Company, (x) pursuant to Section 18-301 of the Act, Special Member shall not be required to make any capital contributions to the Company and shall not receive a limited liability company interest in the Company, (y) Special Member, in its capacity as Special Member, may not bind the Company, and (z) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Company, including, without limitation, the merger, consolidation or conversion of the Company; provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. Prior to its admission to the Company as Special Member, Special Member shall not be a member of the Company, but the Special Member may serve as an Independent Director of the Company. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company and upon the occurrence of such an event, the existence of the Company shall continue without dissolution. The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the Company.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents.
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 1 contract
Sources: Loan and Security Agreement (Urban Edge Properties)
Single Purpose Entity/Separateness. Until the Debt has been paid in full, Borrower represents, warrants and covenants as follows:
(a) Borrower has not and will not:
(i) engage in any business or activity other than the ownership, operation and maintenance of the PropertiesProperty, and activities incidental thereto;
(ii) acquire or own any assets other than (A) the PropertiesProperty, and (B) such incidental Personal Property as may be necessary for the ownership and operation of the PropertiesProperty;
(iii) merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existenceformalities, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;
(v) own any subsidiary, or make any investment in, any Person;
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its assets with the assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;
(vii) incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than (A) the Debt Debt, (B) trade and Permitted Debt operational indebtedness incurred in the ordinary course of business with trade creditors, provided such indebtedness is (1) unsecured, (2) not evidenced by a note, (3) on commercially reasonable terms and conditions, and (4) due not more than sixty (60) days past the date incurred and paid on or prior loans that have been satisfied to such date (subject to Borrower’s right to contest the same in full as accordance with Section 3.5(b) of the date hereofMortgage), and/or (C) financing leases and purchase money indebtedness incurred in the ordinary course of business relating to Personal Property on commercially reasonable terms and conditions; provided however, the aggregate amount of the indebtedness described in (B) and (C) shall not exceed at any time three percent (3%) of the outstanding principal amount of the Note;
(viii) fail to maintain its records, books of account, bank accounts, financial statements, accounting records and other entity documents separate and apart from those of any other Person; except that Borrower’s financial position, assets, liabilities, net worth and operating results may be included in the consolidated financial statements of an Affiliate, provided that (A) appropriate notation shall be made on such consolidated financial statements to indicate the contain a footnote indicating that Borrower is a separate identity of Borrower from such Affiliate legal entity and that Borrower’s assets it maintains separate books and credit are not available to satisfy the debts and other obligations of such Affiliate or any other Person, and (B) Borrower’s assets, liabilities and net worth shall also be listed on Borrower’s own separate balance sheetrecords;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, or any Affiliate of the foregoing, except upon terms and conditions that are intrinsically fair, commercially reasonable and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure for the obligations benefit of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other Person;
(xiii) fail to (A) file its own tax returns separate from those of or files a consolidated federal income tax return with any other PersonPerson (unless prohibited or required, except to as the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under applicable Legal Requirements and (B) pay any taxes required to be paid under case may be, by applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrower);
(xiv) fail either to (A) hold itself out to the public as a legal entity separate and distinct from any other Person, (B) Person or to conduct its business solely in its own name or (C) fail to correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;
(xvi) if it is a partnership or limited liability company, without the unanimous written consent of all of its partners or members, as applicable, and the written consent of all 100% of the directors or managers of Borrower or each SPE Component EntityEntity (if any), as applicable including, without limitation, each Independent Director, (a) file or consent to the filing of any petition, either voluntary or involuntary, to take advantage of any Creditors Rights Laws, (b) seek or consent to the appointment of a receiver, liquidator or any similar official, (c) take any Material Action or action that is intended to might cause such entity to become insolvent, or (d) make an assignment for the benefit of creditors;
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space and services performed by an employee of an Affiliate) among the Persons sharing such expensesexpenses and to use separate stationery, invoices and checks;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, or pay its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; provided, however, that any such failure to remain solvent will not constitute a breach of this covenant if cash flow from the foregoing shall not require Borrower’s members, partners or shareholders Property is insufficient for Borrower to make additional capital contributions to Borrowerremain solvent;
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable;
(xx) violate or cause to be violated the assumptions made with respect to Borrower and its principals in any opinion letter pertaining to substantive consolidation delivered to Lender in connection with the Non-Consolidation Opinion or any New Non-Consolidation Opinion;Loan; or
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other Person.
(ib) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”)company, each general partner in the case of a general partnership, each general partner in the case of a limited partnership (or, if Borrower is a Delaware limited partnership, at least one general partner in the case of a limited partnership), or the managing member in the case of a limited liability company (each an “SPE Component Entity”) of Borrower, as applicable, shall be an Acceptable DE LLCa corporation or a Delaware limited liability company (meeting the criteria set forth in Section 6.1(c) below) whose sole asset is its interest in Borrower. Each SPE Component Entity (Ai) will at all times comply with each of the covenants, terms and provisions contained in Sections Section 6.1(a)(iii) through - (vi) and (viii) through - (xxiv) inclusivexxi), as if such representation, warranty or covenant was made directly by such SPE Component Entity; (Bii) will not engage in any business or activity other than owning an interest in Borrower; (Ciii) will at all times own at least a 0.5% general partnership or managing membership interest in Borrower and will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (D) will not own any subsidiary, or make any investment in any Person other than its investment in Borrower; (Eiv) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (Fv) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is articles of incorporation are substantially similar to that those of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLCa single member Delaware limited liability company satisfying the covenants related thereto contained herein, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) belowstatus, the no SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no required.
(c) In the event shall Borrower or any SPE Component Entity be is a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors.
(ii) In the event Borrower or SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”)single member Delaware limited liability company, the limited liability company agreement of the Company Borrower or such SPE Component Entity (as applicable) (the “LLC Agreement”) shall provide that (Ai) upon the occurrence of any event that causes the sole member of the Company Borrower or such SPE Component Entity (as applicable) (“Member”) to cease to be the member of the Company Borrower or such SPE Component Entity (as applicable) (other than (1A) upon an assignment by Member of all of its limited liability company interest in the Company Borrower or such SPE Component Entity (as applicable) and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2B) the resignation of Member and the admission of an additional member of the Company Borrower or such SPE Component Entity (as applicable) in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of the Company and executing the LLC Agreement Borrower or such SPE Component Entity (“Special Member”as applicable) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the CompanyBorrower or such SPE Component Entity (as applicable), automatically be admitted to the Company Borrower or such SPE Component Entity (as applicable) (“Special Member”) and shall continue the existence of the Company Borrower or such SPE Component Entity (as applicable) without dissolution, dissolution and (Bii) Special Member may not resign from the Company Borrower or such SPE Component Entity (as applicable) or transfer its rights as Special Member unless (1A) a successor Special Member has been admitted to the Company Borrower or such SPE Component Entity (as applicable) as Special Member in accordance with the requirements of the Act Delaware law and (2B) after giving effect to such resignation, such successor Special Member has also accepted its appointment as an Independent Director. The LLC Agreement shall further provide that (vi) Special Member shall automatically cease to be a member of the Company Borrower or such SPE Component Entity (as applicable) upon the admission to the Company Borrower or such SPE Component Entity (as applicable) of a substitute Member, (wii) Special Member shall be a member of the Company Borrower or such SPE Component Entity (as applicable) that has no interest in the profits, losses and capital of the Company Borrower or such SPE Component Entity (as applicable) and has no right to receive any distributions of the assets of the CompanyBorrower’s or such SPE Component Entity’s (as applicable) assets, (xiii) pursuant to Section 18-301 of the Delaware Limited Liability Company Act (the “Act”), Special Member shall not be required to make any capital contributions to the Company Borrower or such SPE Component Entity (as applicable) and shall not receive a limited liability company interest in the CompanyBorrower or such SPE Component Entity (as applicable), (yiv) Special Member, in its capacity as Special Member, may not bind the Company, Borrower or such SPE Component Entity (as applicable) and (zv) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the CompanyBorrower or such SPE Component Entity (as applicable), including, without limitation, the merger, consolidation or conversion of the CompanyBorrower or such SPE Component Entity (as applicable); provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. In order to implement Confidential Treatment Requested by BANA ▇▇▇▇-▇▇▇▇-00124 the admission to Borrower or such SPE Component Entity (as applicable) of Special Member, Special Member shall execute a counterpart to the LLC Agreement. Prior to its admission to the Company Borrower or such SPE Component Entity (as applicable) as Special Member, Special Member shall not be a member of Borrower or such SPE Component Entity (as applicable). Upon the Companyoccurrence of any event that causes the Member to cease to be a member of Borrower or such SPE Component Entity (as applicable), but to the Special fullest extent permitted by law, the personal representative of Member may serve as an Independent Director shall, within ninety (90) days after the occurrence of the Companyevent that terminated the continued membership of Member in Borrower or such SPE Component Entity (as applicable), agree in writing (i) to continue Borrower or such SPE Component Entity (as applicable) and (ii) to the admission of the personal representative or its nominee or designee, as the case may be, as a substitute member of Borrower or such SPE Component Entity (as applicable), effective as of the occurrence of the event that terminated the continued membership of Member of Borrower or such SPE Component Entity (as applicable) in Borrower or such SPE Component Entity (as applicable). Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company Borrower or such SPE Component Entity (as applicable) and upon the occurrence of such an event, the existence business of the Company Borrower or such SPE Component Entity (as applicable) shall continue without dissolution. The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company Borrower or such SPE Component Entity (as applicable) upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the Company.
(c) The organizational documents of Borrower and each or such SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents(as applicable).
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 1 contract
Sources: Loan Agreement (Sothebys)
Single Purpose Entity/Separateness. Each Borrower representsrepresents and warrants, warrants until the Obligations have been paid and covenants as followssatisfied in full and the Total Commitment under this Agreement has been terminated, that each Borrower:
(a) Borrower except as expressly permitted by Section 8.4, has not (except in connection with the transactions contemplated by the Acquisition Documents) and will not:
(i) engage in any business or activity other than the ownership, operation and maintenance of the Properties, and activities incidental thereto;
(ii) acquire or own any assets other than (A) the Properties, and (B) such incidental Personal Property as may be necessary for the ownership and operation of the Properties;
(iii) not merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(ivb) except as expressly permitted by Section 8.4, has not and will not (Ai) fail to observe all organizational formalities necessary to maintain its separate existenceformalities, or (ii) fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements legal requirements of the jurisdiction of its organization or formation, or (Biii) amend, modify, (except for amendments and modifications prior to the Closing Date and those amendments and modifications in connection with the transactions contemplated by this Agreement) terminate or fail to comply with the single purpose entity provisions of its organizational documents, in each case without the prior written consent of Lender;
(vc) own any subsidiary, or make any investment in, any Person;
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan has not and prior loans that have been satisfied in full as of the date hereof, will not commingle its funds or assets with the funds or assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accountsPerson other than the other Borrowers;
(viid) incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)), other than the Debt and Permitted Debt and prior loans that have been satisfied in full as of the date hereof;
(viii) will not fail to maintain all of its books, records, books of account, financial statements and bank accounts, financial statements, accounting records and other entity documents accounts separate and apart from those of any other PersonPerson (including OpCo, its Subsidiaries and any other Affiliates) other than the other Borrowers; except will not fail to maintain its books, records, resolutions and agreements as official records; and will not list the assets of Borrowers and their Subsidiaries on the financial statement of any other Person (including OpCo, its Subsidiaries and any other Affiliates but excluding parents of Borrowers consolidated therewith in accordance with GAAP; provided, however, that Borrower’s financial position, assets, liabilities, net worth and operating results may be included in the consolidated financial statements of an Affiliate, provided that (A) appropriate notation shall be made on any such consolidated financial statements statement contains a note indicating that no Borrower’s separate assets and credit are available to indicate pay the separate identity debts of Borrower from such Affiliate and that no Borrower’s assets and credit are not available to satisfy the debts and other liabilities constitute obligations of such Affiliate or any other Person, and (B) Borrower’s assets, liabilities and net worth shall also be listed on Borrower’s own separate balance sheetthe consolidated entity);
(ixe) except for capital contributions or capital distributions permitted under has not entered into (unless as of the terms Initial Funding Date no longer in effect) and conditions of Borrower’s organizational documents and properly reflected on its books and records, will not enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, principal or any Affiliate of the foregoingAffiliate, except (i) upon terms and conditions that are intrinsically fair, commercially reasonable fair and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties, (ii) for Leases with OpCo Affiliates at Collateral Properties and other Real Estate, so long as each such Lease is in the form delivered to and approved by Administrative Agent as provided in Section 8.16, and (iii) as otherwise permitted by Section 8.12;
(xf) has not maintained and will not maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other PersonPerson (other than other Borrowers);
(xii) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, will not assume or guaranty the debts of Trilogy Investors or any of its Subsidiaries (other Person, than other Borrowers) or hold itself out to be responsible for the debts of Trilogy Investors or any of its Subsidiaries (other Person, or than other Borrowers); and has not (unless as of the Initial Funding Date no longer in effect) and will not otherwise pledge its assets for the benefit of Trilogy Investors or any of its Subsidiaries (other than other Borrowers) and (ii) has not previously done any of the foregoing described in this subsection (g) (except to secure the obligations extent as of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;Initial Funding Date no longer in effect).
(xiih) has not made (unless as of the Initial Funding Date no longer n effect) and will not make any loans or advances to Trilogy Investors or any Personof its Subsidiaries (other than other Borrowers), and has not, (unless as of the Initial Funding Date no longer in effect) and will not incur any Indebtedness or undertake any other obligations that are, or own would be, owed to Trilogy Investors or any stock or securities ofof its Subsidiaries (other than other Borrowers), any Person, or buy or hold evidence other than Leases that are in full force and effect as of indebtedness issued by any other Personthe Initial Funding Date;
(xiiii) has not failed and will not fail to (A) file its own tax returns separate (unless prohibited by Applicable Law from those of any other Persondoing so), except to the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under applicable Legal Requirements and (B) pay any taxes required to be paid under applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrowerappropriate;
(xivj) has not failed and will not fail to (Ai) hold itself out to the public and identify itself, in each case, as a legal entity separate and distinct from any other PersonPerson (other than other Borrowers) and not as a division or part of any other Person (other than other Borrowers), (Bii) conduct its business solely in its own name, (iii) hold its assets in its own name or (Civ) correct any known misunderstanding regarding its separate identity;
(xvk) has not failed and will not fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; , provided that the foregoing shall only apply to the extent it has available cash to maintain such capital and shall not require the contribution of additional capital to Borrowers;
(l) has not failed and will not fail to allocate shared expenses (including shared office space) or fail to use separate stationery, invoices and checks (provided, however, that the foregoing shall not require Borrower’s membersBorrowers may use combined stationery, partners or shareholders to make additional capital contributions to Borrowerinvoices and checks with other Borrowers);
(xvim) without the unanimous written consent of all of its partners or members, as applicable, and the written consent of all directors or managers of Borrower or each SPE Component Entity, as applicable including, without limitation, each Independent Director, take any Material Action or action that is intended to cause such entity to become insolvent;
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space and services performed by an employee of an Affiliate) among the Persons sharing such expenses;
(xviii) fail to intend to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, will pay its own liabilities (including, without limitation, including salaries of its own employees, if any) only from its own funds; providedfunds (and, howeverwith respect to the Obligations, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrowerfunds of other Borrowers);
(xixn) has not acquired (unless as of the Initial Funding Date no longer owned) and will not acquire obligations obligations, securities or securities other Equity Interests of its partners, members, shareholders or other affiliates, as applicable;
(xx) violate or cause to be violated the assumptions made with respect to Borrower and its principals in the Non-Consolidation Opinion or any New Non-Consolidation Opinion;
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other Person.
(i) If Borrower is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner in the case of a partnership, or the managing member in the case of a limited liability company (each an “SPE Component Entity”) of BorrowerAffiliates, as applicable, shall be an Acceptable DE LLC. Each SPE Component Entity other than other Borrowers and their Wholly-Owned Domestic Subsidiaries; and
(Ao) will at all times comply with each of the covenants, terms has not and provisions contained in Sections 6.1(a)(iii) through (vi) and (viii) through (xxiv) inclusive, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (B) will not engage in any business or activity other than owning an interest in Borrower; (C) will not acquire or own any assets other than identify its partnershippartners, membershipmembers, shareholders or other equity interest in Borrower; (D) will not own any subsidiary, or make any investment in any Person other than its investment in Borrower; (E) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (F) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is substantially similar to that of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors.
(ii) In the event Borrower or SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”), the limited liability company agreement of the Company (the “LLC Agreement”) shall provide that (A) upon the occurrence of any event that causes the sole member of the Company (“Member”) to cease to be the member of the Company Affiliates (other than other Borrowers or with an entity one hundred percent (1100%) upon an assignment owned by Member of all of its limited liability company interest in the Company and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2) the resignation of Member and the admission of an additional member of the Company in accordance with the terms of the Loan Documents and the LLC AgreementParent), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may beapplicable, as a substitute member division or part of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of the Company and executing the LLC Agreement (“Special Member”) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the Company, automatically be admitted to the Company and shall continue the existence of the Company without dissolution, and (B) Special Member may not resign from the Company or transfer its rights as Special Member unless (1) a successor Special Member has been admitted to the Company as Special Member in accordance with the requirements of the Act and (2) after giving effect to such resignation, such successor Special Member has also accepted its appointment as an Independent Director. The LLC Agreement shall further provide that (v) Special Member shall automatically cease to be a member of the Company upon the admission to the Company of a substitute Member, (w) Special Member shall be a member of the Company that has no interest in the profits, losses and capital of the Company and has no right to receive any distributions of the assets of the Company, (x) pursuant to Section 18-301 of the Act, Special Member shall not be required to make any capital contributions to the Company and shall not receive a limited liability company interest in the Company, (y) Special Member, in its capacity as Special Member, may not bind the Company, and (z) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Company, including, without limitation, the merger, consolidation or conversion of the Company; provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. Prior to its admission to the Company as Special Member, Special Member shall not be a member of the Company, but the Special Member may serve as an Independent Director of the Company. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company and upon the occurrence of such an event, the existence of the Company shall continue without dissolution. The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the Companyit.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents.
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 1 contract
Sources: Senior Secured Credit Agreement (Griffin-American Healthcare REIT III, Inc.)
Single Purpose Entity/Separateness. Borrower represents, warrants and covenants as follows:
(a) (I) Each Borrower (other than a Recycled SPE Borrower/SPE Component Entity), each SPE Component Entity, Additional Obligor and each Pledgor has not since its formation, (II) each Recycled SPE Borrower/SPE Component Entity has complied with clauses (i)(A), (ii)(A) and (vii) below since its formation and (III) each Borrower, each SPE Component Entity, Additional Obligor and each Pledgor will not, except as may be provided for in this Agreement or as set forth in Section 5.5:
(i) (A) with respect to Borrower, except with respect to the Previously-Owned Properties, engage in any business or activity other than the ownership, operation operation, management, leasing and maintenance of the Propertiesapplicable Individual Property, and activities related or incidental thereto, and refinancing the Properties in connection with a repayment of the Loan or any subsequent or other Loan, (B) with respect to Pledgor, own its interest in the Collateral and engage in activities related or incidental thereto, (C) with respect to SPE Component Entity, act as a general partner of the limited partnership that owns the related Individual Property or as member of the limited liability company that owns the related Individual Property and transact lawful business that is incident, necessary and appropriate to accomplish the foregoing and (D) with respect to Additional Obligor, act as the account holder under the Cash Management Account for the benefit of each Borrower;
(ii) (A) with respect to Borrower, except with respect to the Previously-Owned Properties, acquire or own any assets other than (Ax) the Propertiesapplicable Individual Property, and (By) such incidental Personal Property as may be necessary for the ownership ownership, leasing, maintenance and operation of such applicable Individual Property and activities related or incidental thereof, (B) with respect to Pledgor, own its interest in the PropertiesCollateral and engage in activities related or incidental thereto, (C) with respect to SPE Component Entity and Pledgor, own the limited partnership or limited liability company interests in the related Borrower and personal property necessary or incidental to its ownership of such interests and (D) with respect to Additional Obligor, act as the account holder under the Cash Management Account for the benefit of each Borrower;
(iii) divide or otherwise engage in or permit any Division or have the power to engage in or permit any Division, merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer (other than with respect to any transfer permitted pursuant to Section 6.3(iii) hereof) or otherwise dispose of all or substantially all of its assets or change its legal structurestructure and has not been the product of, the subject of or otherwise involved in, in each case, any limited liability company division (whether pursuant to a plan of Division or otherwise);
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existenceformalities, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or (B) amend, modify, terminate or fail to comply with the single purpose entity provisions of its organizational documentsdocuments (provided, that, such organizational documents may be amended or modified to the extent that, in each case without addition to the satisfaction of the requirements related thereto set forth therein, Lender’s prior written consent, such consent of not to be unreasonably withheld, conditioned or delayed and, if required by Lender, a Rating Agency Confirmation are first obtained);
(v) own any subsidiary, or make any investment in, any PersonPerson (other than, with respect to any SPE Component Entity or Pledgor (as applicable), in the applicable Borrower);
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its funds or assets with the funds or assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accountsPerson (other than another Person comprising Borrower hereunder);
(vii) other than as permitted by this Agreement, and except with respect to debt that has been paid in full prior to the date of this Agreement, incur any debtIndebtedness, secured or unsecured, direct or contingent (including guaranteeing any obligation (other than certain obligations of Operating Lessee or a predecessor operating lessee)obligation), other than, with respect to Borrower (A) the Debt, (B) trade and operational indebtedness incurred in the ordinary course of business with trade creditors, provided such indebtedness is (1) unsecured, (2) not evidenced by a note, (3) on commercially reasonable terms and conditions, and (4) due not more than ninety (90) days past the date incurred and paid on or prior to such date, and/or (C) Permitted Equipment Leases, (D) obligations pursuant to the Ground Leases, (E) obligations pursuant to the Previously-Owned Property Sale Agreements; (F) real estate taxes not yet delinquent, (G) Capital Expenditures spent and completed in accordance with this Agreement and paid when due, and (H) tenant allowances and tenant improvements incurred pursuant to Leases entered into in accordance with this Agreement and paid when due; provided however, the aggregate amount of the indebtedness described in (B) and (C) shall not exceed at any time (I) with respect to the Plaza del Sol Borrower and any individual Continental Borrower, two percent (2%) of the outstanding aggregate Allocated Loan Amounts associated with the Plaza del Sol Property or Individual Continental Property, as applicable, owned by the Plaza del Sol Borrower or such Continental Borrower, as applicable, and (II) with respect to all of the Borrowers, in the aggregate, two percent (2%) of the outstanding principal amount of the Loan. No Indebtedness other than the Debt and Permitted Debt and prior loans that have been satisfied in full as of may be secured (senior, subordinate or pari passu) by the date hereofProperty or Collateral;
(viii) fail to maintain all of its books, records, books of account, financial statements and bank accounts, financial statements, accounting records and other entity documents accounts separate and apart from those of any other Person; Person (including, without limitation, any Affiliates), except that Borrower’s, Pledgor’s, Additional Obligor’s financial position, assets, liabilities, net worth or SPE Component Entity’s assets and operating results liabilities may be included in the a consolidated financial statements statement of an Affiliate, provided that (A) its Affiliates so long as appropriate notation shall be is made on such consolidated financial statements to indicate the separate identity separateness of Borrower Borrower, Pledgor, Additional Obligor or SPE Component Entity from such Affiliate Affiliates and to indicate that Borrower’s, Pledgor, Additional Obligor or SPE Component Entity’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate Affiliates or any other Person. Borrower’s, Pledgor’s, Additional Obligor’s or SPE Component Entity’s assets have not and will not be listed as assets on the financial statement of any other Person; provided, however, that Borrower’s, Pledgor’s, Additional Obligor’s or SPE Component Entity’s assets may be included in a consolidated financial statement of its Affiliates provided that (i) appropriate notation shall be made on such consolidated financial statements to indicate the separateness of Borrower, Pledgor, Additional Obligor or SPE Component Entity and such Affiliates and to indicate that Borrower’s, Pledgor’s, Additional Obligor’s or SPE Component Entity’s assets and credit are not available to satisfy the debts and other obligations of such Affiliates or any other Person and (Bii) Borrower’s assets, liabilities and net worth such assets shall also be listed on Borrower’s, Pledgor’s, Additional Obligor’s or SPE Component Entity’s own separate balance sheet. Borrower, Pledgor, Additional Obligor or SPE Component Entity has maintained and will maintain its books, records, resolutions and agreements as official records;
(ix) except for capital contributions or capital distributions permitted under the terms and conditions of Borrower’s organizational documents and properly reflected on its books and records, enter into any transaction, contract or agreement with any general partner, member, shareholder, principalprincipal or Affiliate including the Management Agreement, guarantor except, in each case in the ordinary course of the obligations of Borrower, or any Affiliate of the foregoing, except business and upon terms and conditions that are intrinsically fair, commercially reasonable fair and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person, except for the other Persons comprising Borrower hereunder;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunder, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure for the obligations benefit of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person, except in each case for the other Persons comprising Borrower, Additional Obligor or Pledgor hereunder in connection with this Agreement and the other Loan Documents;
(xii) make any loans or advances to any Person, or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other Person;
(xiii) fail to (A) file its own tax Tax returns separate from those of any other Person, Person (unless prohibited by applicable Legal Requirements from doing so or except to the extent that Borrower Borrower, SPE Component Entity, Additional Obligor or Pledgor is treated as a “disregarded entity” for tax purposes and is not required to file tax such Tax returns under applicable Legal Requirements and (B) pay any taxes required to be paid under applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrower);
(xiv) fail to (A) hold itself out to the public and identify itself, in each case, as a legal entity separate and distinct from any other Person and not as a division or part of any other Person, (B) conduct its business solely in its own name, (C) hold its assets solely in its own name (or the name of other Persons comprising Borrower hereunder) or (CD) correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; operations (to the extent there exists sufficient cash flow from the applicable Individual Property to do so), provided, however, that the foregoing no Person shall not require Borrower’s members, partners or shareholders be required to make additional any direct or indirect capital contributions to Borrower, Pledgor, Additional Obligor or SPE Component Entity in order to comply with the foregoing;
(xvi) without the prior unanimous written consent of all of its partners partners, shareholders or members, as applicable, and the prior unanimous written consent of all its board of directors or managers managers, as applicable, and the prior written consent of Borrower each Independent Director (regardless of whether such Independent Director is engaged at the Borrower, Pledgor, Additional Obligor or each SPE Component EntityEntity level), as applicable including(a) file or consent to the filing of any petition, without limitationeither voluntary or involuntary, each Independent Directorto take advantage of any Creditors Rights Laws, (b) seek or consent to the appointment of a receiver, liquidator or any similar official, (c) take any Material Action or action that is intended with the intent to cause such entity to become insolvent, (d) make an assignment for the benefit of creditors or (e) take any Material Action with respect to Borrower, Pledgor, Additional Obligor or any SPE Component Entity (provided, that, none of any member, shareholder or partner (as applicable) of Borrower, Pledgor or any SPE Component Entity or any board of directors or managers (as applicable) of Borrower, Pledgor, Additional Obligor or any SPE Component Entity may vote on or otherwise authorize the taking of any of the foregoing actions unless, in each case, there are at least two (2) Independent Directors then serving in such capacity in accordance with the terms of the applicable organizational documents and each of such Independent Directors have consented to such foregoing action);
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space space) or fail to use separate invoices and services performed checks bearing its own name; provided, however, that it is acknowledged and agreed that the Accounts and the Borrower’s operating account may be opened in the name of one Borrower (on behalf of the other Borrowers) or Additional Obligor (with respect to the Cash Management Account) and that it shall not be a breach of this Agreement if checks on behalf of any Borrower entity are issued by an employee the name of an Affiliate) among the Persons sharing such expensesaccount-holding Borrower entity or, with respect to the Cash Management Account, the Additional Obligor;
(xviii) fail to intend pay (or cause to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, pay be paid) its own liabilities (including, without limitation, salaries of its own employees) only from its own funds; funds or fail to maintain a sufficient number of employees (if any) in light of its contemplated business operations (in each case to the extent there exists sufficient cash flow from the applicable Individual Property to do so), provided, however, that the foregoing no Person shall not require Borrower’s members, partners or shareholders be required to make any direct or indirect additional capital contributions to BorrowerBorrower in order to comply with the foregoing;
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliatesAffiliates, as applicable;
(xx) identify its partners, members, shareholders or other Affiliates, as applicable, as a division or part of it; or
(xxi) violate or cause to be violated the assumptions made with respect to Borrower Borrower, Pledgor, Additional Obligor and its principals each SPE Component Entity in the Non-Consolidation Opinion or in any New Non-Consolidation Opinion;
(xxi) fail to maintain a sufficient number of employees in light of its contemplated business operations;
(xxii) fail to maintain and use separate stationery, invoices and checks bearing its own name;
(xxiii) have any of its obligations guaranteed by an Affiliate, except (x) as contemplated by the Loan Documents and prior loans that have been satisfied in full as of the date hereof and (y) with respect to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other Person.
(ib) If Borrower Borrower, Additional Obligor or Pledgor is a partnership or limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner (in the case of a partnership, ) or the managing at least one member (in the case of a limited liability company (each an “SPE Component Entity”company) of Borrower, Additional Obligor or Pledgor, as applicable, shall be an Acceptable DE LLCLLC (each, an “SPE Component Entity”) whose sole asset is its interest in Borrower, Additional Obligor or Pledgor, as applicable. Each SPE Component Entity Entity, Additional Obligor and Pledgor (Ai) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iiiSection 5.1(a)(iii) through – (vi) (inclusive) and (viii) through – (xxivxxi) (inclusive) and, if such SPE Component Entity, Additional Obligor or Pledgor is an Acceptable LLC, Section 5.1(c) and (d) hereof, as if such representation, warranty or covenant was made directly by such SPE Component Entity, Additional Obligor or Pledgor, as applicable; (Bii) will not engage in any business or activity other than owning an interest in Borrower; (Ciii) will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (Div) will not at all times continue to own any subsidiary, or make any investment in any Person other no less than its investment a 0.5% direct equity ownership interest in Borrower; (Ev) other than as permitted by this Agreement, will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (Fvi) will cause Borrower to comply with the provisions of this Section 6.1 and Section 6.4. Prior to the withdrawal or the disassociation of any SPE Component Entity from Borrower, Borrower shall immediately appoint a new general partner or managing member whose limited liability company agreement is substantially similar to that of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent Directors5.1.
(iic) In the event Borrower Borrower, Pledgor, Additional Obligor or any SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”)LLC, the limited liability company agreement of the Company Borrower, Pledgor, Additional Obligor or such SPE Component Entity (as applicable) (the “LLC Agreement”) shall provide that (Ai) upon the occurrence of any event that causes the sole last remaining member of the Company Borrower, Pledgor, Additional Obligor or such SPE Component Entity (as applicable) (“Member”) to cease to be the member of the Company Borrower, Pledgor, Additional Obligor or such SPE Component Entity (as applicable) (other than upon the continuation of such Borrower, Pledgor, Additional Obligor or SPE Component Entity without dissolution or division upon (1A) upon an assignment by Member of all of its limited liability company interest in the Company Borrower, Pledgor, Additional Obligor or such SPE Component Entity (as applicable) and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2B) the resignation of Member and the admission of an additional member of the Company Borrower, Pledgor, Additional Obligor or such SPE Component Entity (as applicable) in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of the Company and executing the LLC Agreement Borrower, Pledgor, Additional Obligor or such SPE Component Entity (“Special Member”as applicable) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the CompanyBorrower, Pledgor, Additional Obligor or such SPE Component Entity (as applicable) automatically be admitted to the Company Borrower, Pledgor, Additional Obligor or such SPE Component Entity (as applicable) as a member with a 0% economic interest (“Special Member”) and shall continue the existence of the Company Borrower, Pledgor, Additional Obligor or such SPE Component Entity (as applicable) without dissolution, dissolution or Division and (Bii) Special Member may not resign from the Company Borrower, Pledgor, Additional Obligor or transfer its rights as Special Member unless (1) a successor Special Member has been admitted to the Company as Special Member in accordance with the requirements of the Act and (2) after giving effect to such resignation, such successor Special Member has also accepted its appointment as an Independent Director. The LLC Agreement shall further provide that (v) Special Member shall automatically cease to be a member of the Company upon the admission to the Company of a substitute Member, (w) Special Member shall be a member of the Company that has no interest in the profits, losses and capital of the Company and has no right to receive any distributions of the assets of the Company, (x) pursuant to Section 18-301 of the Act, Special Member shall not be required to make any capital contributions to the Company and shall not receive a limited liability company interest in the Company, (y) Special Member, in its capacity as Special Member, may not bind the Company, and (z) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Company, including, without limitation, the merger, consolidation or conversion of the Company; provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. Prior to its admission to the Company as Special Member, Special Member shall not be a member of the Company, but the Special Member may serve as an Independent Director of the Company. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company and upon the occurrence of such an event, the existence of the Company shall continue without dissolution. The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the Company.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents.
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.En
Appears in 1 contract
Sources: Loan Agreement (Retail Value Inc.)
Single Purpose Entity/Separateness. Borrower represents, warrants and covenants as follows:
(a) Borrower has not and will not:
(i) engage in any business or activity other than the ownership, leasing, operation and maintenance of the PropertiesProperty, and activities incidental thereto;
(ii) acquire or own any assets other than (A) the PropertiesProperty, and (B) such incidental Personal Property as may be necessary for the ownership ownership, leasing, maintenance and operation of the PropertiesProperty;
(iii) merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets (except as otherwise permitted hereunder) or change its legal structure;
(iv) (A) fail to observe all organizational formalities necessary to maintain its separate existenceformalities, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements Applicable Law of the jurisdiction of its organization or formation, or (B) amend, materially amend or modify, terminate or fail to comply with the single purpose entity material provisions of its organizational documents, in each case without the prior written consent of Lender;
(v) own any subsidiary, or make any investment in, any Person;
(vi) except as contemplated by the Loan Documents with respect to co-borrowers under the Loan and prior loans that have been satisfied in full as of the date hereof, commingle its assets with the assets of any other Person, or permit any Affiliate or constituent party independent access to its bank accounts;
(vii) incur any debtIndebtedness, secured or unsecured, direct or contingent (including guaranteeing any obligation (obligation), other than certain (A) the Debt and the Prior Loan, (B) trade and operational indebtedness incurred in the ordinary course of business with trade creditors, provided such indebtedness is (1) unsecured, (2) not evidenced by a note, (3) on commercially reasonable terms and conditions, and (4) due not more than ninety (90) days past the date incurred and paid on or prior to such date, (C) Permitted Equipment Leases and purchase money Indebtedness and/or (D) Borrower’s obligations and liabilities under the Interest Rate Protection Agreement; provided however, the aggregate amount of Operating Lessee or a predecessor operating lessee)), the indebtedness described in (B) and (C) shall not exceed at any time five percent (5%) of the outstanding principal amount of the Debt. No Indebtedness other than the Debt and Permitted Debt Equipment Leases and prior loans purchase money Indebtedness may be secured (subordinate or pari passu) by the Property; provided that have been satisfied in full as of the date hereofsecurity for the Permitted Equipment Leases and purchase money Indebtedness shall only be the equipment being leased or the Property being purchased;
(viii) fail to maintain all of its books, records, books of account, financial statements and bank accounts, financial statements, accounting records and other entity documents accounts separate and apart from those of its affiliates and any constituent party. Borrower’s assets have not and will not be listed as assets on the financial statement of any other Person; except provided, however, that Borrower’s financial position, assets, liabilities, net worth and operating results assets may be included in the a consolidated financial statements statement of an Affiliate, its affiliates provided that (Ai) appropriate notation shall be made on such consolidated financial statements to indicate the separate identity separateness of Borrower from and such Affiliate affiliates and to indicate that Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate affiliates or any other Person, Person and (Bii) Borrower’s assets, liabilities and net worth such assets shall also be listed on Borrower’s own separate balance sheet. Borrower has maintained and will maintain its books, records, resolutions and agreements as official records;
(ix) except for capital contributions or capital distributions permitted under the terms Operating Lease and conditions of Borrower’s organizational documents and properly reflected on its books and recordsas otherwise expressly provided in the Loan Documents, enter into any transaction, contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of Borrower, principal or any Affiliate of the foregoingaffiliate, except upon terms and conditions that are intrinsically fair, commercially reasonable fair and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xi) except as contemplated by the Loan Documents with respect to co-borrowers under other Borrowers of the Loan and prior loans that have been satisfied or as otherwise expressly permitted in full as of the date hereof and certain obligations of Operating Lessee (or a predecessor operating lessee) thereunderLoan Documents, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure for the obligations benefit of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;
(xii) make any loans or advances to any Person; provided, that the foregoing and no other provision hereof shall prohibit Borrower from making distributions to its members of available cash unless an Event of Default or own any stock or securities of, any Person, or buy or hold evidence of indebtedness issued by any other PersonCash Trap Event Period is continuing;
(xiii) fail to (A) file its own tax returns separate unless prohibited by Applicable Law from those doing so (except that Borrower may file or may include its filing as part of any other Persona consolidated federal tax return, except to the extent that required and/or permitted by Applicable Law, provided that, there shall be an appropriate notation indicating the separate existence of Borrower is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under applicable Legal Requirements its assets and (B) pay any taxes required to be paid under applicable Legal Requirements; provided, however, that Borrower shall not have any obligation to reimburse its equityholders or their Affiliates for any taxes that such equityholders or their Affiliates may incur as a result of any profits or losses of Borrowerliabilities);
(xiv) fail either to (A) hold itself out to the public as a legal entity separate and distinct from any other Person, (B) Person and not as a division or part of any other Person or to conduct its business solely in its own name or (C) fail to correct any known misunderstanding regarding its separate identity;
(xv) fail to intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, that operations (to the foregoing extent there exists sufficient cash flow from the Property to do so after the payment of all operating expenses and Debt Service and shall not require Borrower’s members, partners or shareholders any equity owner to make additional capital contributions to Borrower);
(xvi) without the unanimous written consent of all of its partners or members, as applicable, and (a) file or consent to the written filing of any petition, either voluntary or involuntary, to take advantage of any Creditors Rights Laws, (b) seek or consent to the appointment of all directors a receiver, liquidator or managers of Borrower or each SPE Component Entityany similar official, as applicable including, without limitation, each Independent Director, (c) take any Material Action or action that is intended to might cause such entity to become insolvent, or (d) make an assignment for the benefit of creditors;
(xvii) fail to fairly and reasonably allocate shared expenses (including, without limitation, shared office space space) or fail to use separate stationery, invoices and services performed by an employee of an Affiliate) among the Persons sharing such expenseschecks;
(xviii) fail to intend remain solvent, to remain solvent or, except as contemplated by the Loan Documents with respect to co-borrowers under the Loan, pay its own liabilities (including, without limitation, salaries of its own employees) only from its own fundsfunds or fail to maintain a sufficient number of employees in light of its contemplated business operations (in each case to the extent there exists sufficient cash flow from the Property to do so); provided, however, that the foregoing shall not require Borrower’s members, partners or shareholders to make additional capital contributions to Borrower;or
(xix) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable or identify its partners, members or shareholders or other affiliates, as applicable;, as a division or part of it.
(xxb) violate or cause to be violated the assumptions made with respect to Borrower hereby represents and its principals warrants that (I) Borrower (i) is and has always been duly formed, validly existing and in good standing in the Non-Consolidation Opinion or any New Non-Consolidation Opinion;
(xxi) fail to maintain a sufficient number of employees in light state of its contemplated business operations;
incorporation and in all other jurisdictions where it is qualified to do business; (xxiiii) fail to maintain has not had and use separate stationery, invoices and checks bearing its own name;
(xxiii) does not have any judgments or liens of any nature against it (except for tax liens not yet due and Permitted Encumbrances); (iii) has been and is in material compliance with all Applicable Law and has received all permits necessary for it to operate its contemplated business; (iv) is not the subject of, or currently involved in any capacity in, any pending or threatened litigation; (v) is not, and has not been, involved in any dispute with any taxing authority; (vi) has paid all Taxes and Other Charges; (vii) has never owned any property other than the Property and has never engaged in any business except the ownership and operation of the Property; (viii) is not now and has not ever been a party to any lawsuit, arbitration, summons or legal proceeding; (ix) has not failed to provide Lender with complete financial statements that reflect a fair and accurate view of its obligations guaranteed by an Affiliate, except financial condition; and (x) as contemplated by has no material contingent or actual obligations not related to the Property; and (II)(A) the Prior Loan Documents and prior loans that have has been satisfied in full as of on or before the date hereof hereof, (B) neither Borrower, SPE Component Entity, nor Guarantor have any remaining liabilities or obligations in connection with the Prior Loan (other than environmental and other limited and customary indemnity obligations), and (yC) with respect all collateral and security for the Prior Loan has been released on or prior to co-borrowers under the Loan or guarantees relating to obligations under the Management Agreements or Franchise Agreements; or
(xxiv) identify itself as a department or division of any other Persondate hereof.
(ic) If Borrower or Operating Tenant is a limited partnership or a limited liability company (other than a single-member Delaware limited liability company formed under the Act which complies with the requirements of subsection (b)(ii) below) (an “Acceptable DE LLC”), each general partner in the case of a partnership, or the managing member in the case of a limited liability company (each each, an “SPE Component Entity”) of Borrowershall be a corporation or an Acceptable LLC (I) whose sole asset is its interest in Borrower and/or Operating Tenant, as applicable, (II) which has not been and shall not be an Acceptable DE LLC. Each SPE Component Entity (A) will at all times comply with each of the covenants, terms and provisions contained in Sections 6.1(a)(iii) through (vi) and (viii) through (xxiv) inclusive, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (B) will not permitted to engage in any business or activity other than owning an interest in BorrowerBorrower and/or Operating Tenant, as applicable; (CIII) will which has not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower; (D) will been and shall not own any subsidiary, or make any investment in any Person other than its investment in Borrower; (E) will not be permitted to incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (FIV) which has and will at all times own at least a 0.5% direct equity ownership interest in Borrower and/or Operating Tenant, as applicable. Each such SPE Component Entity will at all times comply, and will cause Borrower and Operating Tenant, as applicable, to comply comply, with each of the provisions of representations, warranties, and covenants contained in this Section 6.1 and Section 6.4Article 5 (to the extent applicable) as if such representation, warranty or covenant was made directly by such SPE Component Entity. Prior to Upon the withdrawal or the disassociation of any an SPE Component Entity from BorrowerBorrower or Operating Tenant, as applicable, Borrower and Operating Tenant, as applicable, shall immediately appoint a new general partner SPE Component Entity whose articles of incorporation or managing member whose limited liability company agreement is organization are substantially similar to that those of such SPE Component Entity and, if an opinion letter pertaining to substantive consolidation was required at closing, deliver a new opinion letter acceptable to Lender and the Rating Agencies with respect to the new SPE Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is an Acceptable DE LLC, so long as Borrower maintains such formation status and complies with the requirements set forth in subsection (b)(ii) below, the SPE Component Entity requirement as set forth in this section shall not be applicable. Furthermore, in no event shall Borrower or any SPE Component Entity be a corporation unless such corporation has a shareholder that is an Acceptable DE LLC that complies with Section 6.4 hereof and no Material Action may be taken with respect to such corporation without the vote of such Acceptable DE LLC and its Independent DirectorsEntity.
(ii) In the event Borrower or SPE Component Entity is an Acceptable DE LLC (as referred to in this clause (ii), the “Company”), the limited liability company agreement of the Company (the “LLC Agreement”) shall provide that (A) upon the occurrence of any event that causes the sole member of the Company (“Member”) to cease to be the member of the Company (other than (1) upon an assignment by Member of all of its limited liability company interest in the Company and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (2) the resignation of Member and the admission of an additional member of the Company in accordance with the terms of the Loan Documents and the LLC Agreement), the personal representative of Member shall, within ninety (90) days, agree in writing to continue the existence of the Company and to the admission of such personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that caused the Member to cease to be a member of the Company, and a natural person duly designated under the LLC Agreement any person acting as Independent Director of the Company and executing the LLC Agreement (“Special Member”) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of the Company, automatically be admitted to the Company and shall continue the existence of the Company without dissolution, and (B) Special Member may not resign from the Company or transfer its rights as Special Member unless (1) a successor Special Member has been admitted to the Company as Special Member in accordance with the requirements of the Act and (2) after giving effect to such resignation, such successor Special Member has also accepted its appointment as an Independent Director. The LLC Agreement shall further provide that (v) Special Member shall automatically cease to be a member of the Company upon the admission to the Company of a substitute Member, (w) Special Member shall be a member of the Company that has no interest in the profits, losses and capital of the Company and has no right to receive any distributions of the assets of the Company, (x) pursuant to Section 18-301 of the Act, Special Member shall not be required to make any capital contributions to the Company and shall not receive a limited liability company interest in the Company, (y) Special Member, in its capacity as Special Member, may not bind the Company, and (z) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Company, including, without limitation, the merger, consolidation or conversion of the Company; provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. Prior to its admission to the Company as Special Member, Special Member shall not be a member of the Company, but the Special Member may serve as an Independent Director of the Company. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of the Company and upon the occurrence of such an event, the existence of the Company shall continue without dissolution. The LLC Agreement shall also provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve the Company upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of the Company.
(c) The organizational documents of Borrower and each SPE Component Entity shall provide an express acknowledgment that Lender is an intended third-party beneficiary of the “special purpose” provisions of such organizational documents.
(d) Borrower has executed and delivered to Lender the certificate attached hereto as Exhibit D.
Appears in 1 contract