Single Purpose Entity/Separateness. (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 applicable 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, leasing, maintenance and operation of such applicable Individual Property or Individual Properties, as applicable; (iii) merge into or consolidate with any Person, become subject to a Division 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) fail to observe all organizational formalities, or fail to comply with the provisions of its organizational 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 amend, modify, terminate or fail to comply with the special purpose entity/bankruptcy remote provisions of its organizational documents (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, Lender’s prior written consent and, if required by Lender, a Rating Agency Confirmation are first obtained); (v) own any subsidiary, or make any investment in, any Person (other than, with respect to any SPE Component Entity, in the applicable Borrower); (vi) commingle its funds or assets with the funds or assets of any other Person (except for one or more other Borrowers); (vii) incur any Indebtedness, secured or unsecured, direct or contingent (including guaranteeing any obligation), other than (A) the Debt, and/or (B) any prior mortgage-loan financing with respect to the Property that has been paid off in full as of the date hereof, and/or (C) 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 (D) such other liabilities as are permitted pursuant to this Agreement; provided however, the aggregate amount of the indebtedness described in clause (C) shall not exceed (I) five percent (5%) of the Allocated Loan Amount with respect to the applicable Individual Property, and (II) 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 may be secured (senior, subordinate or pari passu) by any Individual Property; (viii) fail to maintain all of its books, records, financial statements and bank accounts separate from those of any other Person (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); provided, however, that Borrower’s assets may be included in a consolidated financial statement of its Affiliates. Borrower has maintained and will maintain its books, records, resolutions and agreements as official records; (ix) except for capital contributions and distributions permitted under the terms and conditions of its organizational documents and properly reflected in its books and records, enter into any contract or agreement with any partner, member, shareholder, principal or Affiliate, except, in each case, upon terms and conditions that are 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) 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 for the benefit of any other Person or hold out its credit as being available to satisfy the obligations of any other Person; (xii) make any loans or advances under any loan to any Person; (xiii) fail to file its own tax 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 return by applicable Legal Requirements, or (B) if Borrower is required to file consolidated tax returns by applicable Legal Requirements; (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 (D) correct any known misunderstanding regarding its separate identity; (xv) fail 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 (to the extent there exists sufficient cash flow from the applicable Individual Property to do so); provided, however, that the foregoing shall not require any owners of Borrower to make additional capital contributions to Borrower; (xvi) without the prior unanimous written consent of all of its 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 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 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 such foregoing action); (xvii) fail to allocate shared expenses (including, without limitation, shared office space) or fail to use separate stationery, invoices and checks; (xviii) fail to pay its own liabilities (including, without limitation, salaries of its own employees and a fairly allocated portion of any personnel and overhead expenses that it shares with any Affiliate) from its own funds 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 any owners of Borrower to make additional capital contributions to Borrower; (xix) acquire obligations or securities of its partners, members, shareholders or other Affiliates, as applicable; (xx) identify its partners, members, shareholders or other Affiliates, as applicable, as a division or part of it; or (xxi) fail to conduct its business so that the material factual assumptions made with respect to Borrower in the Non-Consolidation Opinion or in any New Non-Consolidation Opinion cease to be materially true. (b) If Borrower is a partnership or limited liability company (other than an Acceptable LLC), each general partner (in the case of a partnership) and at least one member (in the case of a limited liability company) of Borrower, as applicable, shall be 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 such interest). Each SPE Component Entity (i) will at all times comply with each of the covenants, terms and provisions contained in Section 5.1(a)(iii) through (vi) (inclusive) and (viii) through (xxi) (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; (ii) will not engage in any business or activity unrelated to owning an interest in Borrower (and personal property incidental, ancillary or related to, or necessary or appropriate for, its ownership of such interest); (iii) will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower (and personal property incidental, ancillary or related to, or necessary or appropriate for, its ownership of such interest); (iv) will at all times continue to own no less than a 0.5% direct equity ownership interest in Borrower; (v) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation), except for trade payables not to exceed $10,000.00 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 (vi) will cause Borrower to comply with the provisions of this Section 5.1. Lender acknowledges that as of the Closing Date each Borrower is an Acceptable LLC and there are no SPE Component Entities. (c) In the event Borrower or the SPE Component Entity is an Acceptable LLC, the limited liability company agreement of Borrower or the SPE Component Entity (as applicable) (the “LLC Agreement”) shall provide that (i) upon the occurrence of any event that causes the last remaining member of Borrower or the SPE Component Entity (as applicable) (“Member”) to cease to be the member of Borrower or the SPE Component Entity (as applicable) (other than (A) upon an assignment by Member of all of its limited liability company interest in Borrower or the SPE Component Entity (as applicable) and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (B) the resignation of Member and the admission of an additional member of Borrower or the SPE Component Entity (as applicable) in accordance with the terms of the Loan Documents and the LLC Agreement), any person acting as Independent Director of Borrower or the SPE Component Entity (as applicable) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of Borrower or the SPE Component Entity (as applicable) automatically be admitted to Borrower or the SPE Component Entity (as applicable) as a member with a 0% economic interest (“Special Member”) and shall continue Borrower or the SPE Component Entity (as applicable) without dissolution and (ii) Special Member may not resign from Borrower or the SPE Component Entity (as applicable) or transfer its rights as Special Member unless (A) a successor Special Member has been admitted to Borrower or the SPE Component Entity (as applicable) as a Special Member in accordance with requirements of Delaware law and (B) after giving effect to such resignation or transfer, there remains at least two (2) Independent Directors of the SPE Component Entity or Borrower (as applicable) in accordance with Section 5.2 below. The LLC Agreement shall further provide that (i) Special Member shall automatically cease to be a member of Borrower or the SPE Component Entity (as applicable) upon the admission to Borrower or the SPE Component Entity (as applicable) of the first substitute member, (ii) Special Member shall be a member of Borrower or the SPE Component Entity (as applicable) that has no interest in the profits, losses and capital of Borrower or the SPE Component Entity (as applicable) and has no right to receive any distributions of the assets of Borrower or the SPE Component Entity (as applicable), (iii) pursuant to 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 SPE Component Entity (as applicable) and shall not receive a limited liability company interest in Borrower or the SPE Component Entity (as applicable), (iv) Special Member, in its capacity as Special Member, may not bind Borrower or the SPE Component Entity (as applicable) and (v) 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 SPE Component Entity (as applicable) including, without limitation, the merger, consolidation, Division or conversion of Borrower or the 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 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 SPE Component Entity (as applicable) as Special Member, Special Member shall not be a member of Borrower or the SPE Component Entity (as applicable), but Special Member may serve as an Independent Director of Borrower or the 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 SPE Component Entity (as applicable) and upon the occurrence of such an event, the business of Borrower or the SPE Component Entity (as applicable) shall continue without dissolution and (iii) each of Member and Special Member waives any right it might have to agree in writing to dissolve Borrower or the 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 SPE Component Entity (as applicable). (e) 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 has received all material permits necessary for such Borrower to operate and for which a failure to possess would materially and adversely affect the condition, financial or otherwise, of Borrower; (
Appears in 1 contract
Single Purpose Entity/Separateness. (a) Each 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 since its formation and will not:
(i) engage in any business or activity other than the leasing, ownership, operation and maintenance ownership of the applicable Individual PropertyCollateral, 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, leasing, maintenance and operation of such applicable Individual Property or Individual Properties, as applicableCollateral;
(iii) merge into or consolidate with any Person, become subject divide or otherwise engage in or permit any Division or have the power to a 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) fail to observe all organizational formalities, or fail formalities necessary to comply with the provisions of preserve its organizational documentsseparate 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 amend, modify, terminate or fail to comply with the special purpose entity/bankruptcy remote provisions of its organizational documents documents, in 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, LenderL▇▇▇▇▇’s prior written consent and, if required by Lender, a Rating Agency Confirmation are first obtained);
(v) own any subsidiary, or make any investment in, any Person (other thanthan in Mortgage Borrower or any Mortgage SPE Component Entity or, with respect to any SPE Component Entity, in the applicable Borrower);
(via) commingle its funds or assets with the funds or assets of any Person other Person than a co-Borrower, or (except for one or more b) other Borrowers)than as provided in the Cash Management Agreement, participate in any cash management system with any other Person;
(vii) incur any Indebtedness, secured or unsecured, direct or contingent (including guaranteeing any obligation), other than (A) the Debt, and/or (B) any prior mortgage-loan financing with respect to the Property that has been paid off in full as of the date hereof, and/or (C) trade and operational indebtedness 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 (D) such other liabilities as are permitted pursuant to this Agreement; provided however, the aggregate amount of the indebtedness described in clause (C) shall not exceed (I) five percent (5%) of the Allocated Loan Amount with respect to the applicable Individual Property, and (II) $25,000 at any time with respect to all Properties and not material in the aggregate, two percent (2%) aggregate that is incidental to B▇▇▇▇▇▇▇’s activities as a member of the outstanding amount of the LoanMortgage Borrower. No Indebtedness other than the Debt may be secured (senior, subordinate or pari passu) by any Individual Propertythe Collateral;
(viii) fail to maintain all of its books, records, financial statements and bank accounts separate from those of any other Person (except for one or more other Borrowersincluding, 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 for one or more other Borrowers)Person; provided, however, that Borrower’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 and such Affiliates and to indicate that Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliates or any other Person and (ii) such assets shall be listed on Borrower’s own separate balance sheet. Borrower B▇▇▇▇▇▇▇ has maintained and will maintain its books, records, resolutions and agreements as official records;
(ix) except for in connection with capital contributions and capital distributions permitted under pursuant to the terms and conditions of its such B▇▇▇▇▇▇▇’s organizational documents and properly reflected in its books and recordsnot prohibited under this Agreement, enter into any contract or agreement with any partner, member, shareholder, principal or Affiliate, except, in each case, upon terms and conditions that are 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 to Lender in connection with the Loan, assume or guaranty the debts or obligations of any Person other Personthan a co-Borrower, hold itself out to be responsible for the debts or obligations of any Person other Personthan a co-Borrower, or otherwise pledge its assets for the benefit of any Person other Person than a co-Borrower or hold out its credit as being available to satisfy the obligations of any Person other Personthan a co-Borrower; provided, that Borrowers shall be jointly and severally liable for all obligations of Borrowers under the Loan Documents;
(xii) make any loans or advances under any loan to any Person;
(xiii) fail to file its own tax returns, separate from those of any other Person, returns (except (A) to the extent that Borrower it was or is treated as a “disregarded entity” for tax purposes and is not required to file any tax return by applicable Legal Requirements, was or (B) if Borrower is required to file consolidated tax returns under applicable law) (unless prohibited by applicable Legal RequirementsRequirements 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 (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 (to the extent there exists sufficient net cash flow available from the applicable Individual Property Collateral to do so); providedso and Lender or Mortgage Administrative Agent permits such cash flow or loan proceeds to be applied for such purposes, howeveror if reserve funds held by Lender or Mortgage Administrative Agent and specifically allocated for such amount have not been made available to Borrower by Lender or to Mortgage Borrower by Mortgage Administrative Agent to pay such outstanding amounts, and provided that the foregoing shall not require any owners direct or indirect member, partner or 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, 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 each 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 Lender), (b) seek or consent to the appointment of a receiver, liquidator or any similar official (except with the written consent or direction of Lender), (c) take any Bankruptcy action that 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 are is at least two one (21) Independent Directors Director then serving in such capacity in accordance with the terms of the applicable organizational documents and each of such Independent Directors Director has consented to such foregoing action);
(xvii) fail to allocate shared expenses (including, without limitation, shared office space) or to the extent reasonably necessary in the operation of its business, fail to use separate stationery, invoices and checkschecks bearing its own name and not bearing the name of any other entity unless such entity 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, the Guaranty and the Payment Guaranty, fail to intend to pay its own liabilities (including, without limitation, salaries of its own employees and a fairly allocated portion of any personnel and overhead expenses that it shares with any AffiliateAffiliate and salaries of its own employees) from its own funds 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 applicable Individual Property Collateral to do so and except Lender or Mortgage Administrative Agent permits such cash flow or loan proceeds to be applied for payment of any Borrower’s liabilities such purposes, or if reserve funds held by one Lender or more other Borrowers Mortgage Administrative Agent and sharing of employees, personnel specifically allocated for such amounts have been made available to Borrower by Lender or overhead expenses by one or more BorrowersMortgage Administrative Agent to pay such outstanding amounts); provided, however, that the foregoing shall not require any owners direct or indirect member, partner or 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 Affiliates, as applicable;
(xx) identify its partners, members, shareholders or other Affiliates, as applicable, as a division or part of it; or;
(xxi) fail violate or cause to conduct its business so that be violated, in any material respect, the material 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 (a) if such violation is susceptible of cure, Borrower shall cure such violation within thirty (30) days, and (b) Borrower promptly delivers to Lender a New Non-Consolidation Opinion or modification to the original Non-Consolidation Opinion, as applicable, to the effect that such breach shall not in any way impair, negate or amend the opinion rendered in the original Non-Consolidation Opinion or any subsequent New Non-Consolidation Opinion cease (as applicable); or
(xxii) other than pursuant to be materially truethe Environmental Indemnity, the Guaranty and the Payment Guaranty, have any of its obligations guaranteed by any Affiliate or constituent party.
(b) If Borrower is a partnership or limited liability company (other than an Acceptable LLC), each general partner (in the case of a partnership) and at least one member (in the case of a limited liability company) of Borrower, as applicable, shall be a corporation or an Acceptable LLC (each 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 such interest)Borrower. Each SPE Component Entity (i) will at all times comply with each of the covenants, terms and provisions contained in Section 5.1(a)(iii) through - (vi) (inclusive) and (viii) through – (xxi) (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; (ii) will not engage in any business or activity unrelated to other than owning an interest in Borrower (and personal property incidental, ancillary or related to, or necessary or appropriate for, its ownership of such interest)Borrower; (iii) will not acquire or own any assets other than its partnership, membership, or other equity ownership interest in Borrower (and personal property incidental, ancillary or related to, or necessary or appropriate for, its ownership of such interest)Borrower; (iv) will at all times continue to own no less than a 0.5% direct equity ownership interest in Borrower; (v) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation), except for trade payables not to exceed $10,000.00 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 (vi) will cause Borrower to comply with the provisions of this Section 5.1. Lender acknowledges that as of the Closing Date each Borrower is an Acceptable LLC and there are no SPE Component Entities.
(c) In the event Borrower or the any SPE Component Entity is an Acceptable LLC, the limited liability company agreement of Borrower or the such SPE Component Entity (as applicable) (the “LLC Agreement”) shall provide that (i) upon the occurrence of any event that causes the last remaining member of Borrower or the such SPE Component Entity (as applicable) (“Member”) to cease to be the member of Borrower or the such SPE Component Entity (as applicable) (other than upon continuation of the Borrower or such SPE Component Entity (as applicable) without dissolution upon (A) upon an assignment by Member of all of its limited liability company interest in Borrower or the such SPE Component Entity (as applicable) and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (B) the resignation of Member and the admission of an additional member of Borrower or the such SPE Component Entity (as applicable) in accordance with the terms of the Loan Documents and the LLC Agreement), any person acting as Independent Director of Borrower or the such SPE Component Entity (as applicable) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of Borrower or the such SPE Component Entity (as applicable) automatically be admitted to Borrower or the such SPE Component Entity (as applicable) as a member with a 0% economic interest (“Special Member”) and shall continue Borrower or the such SPE Component Entity (as applicable) without dissolution and (ii) Special Member may not resign from Borrower or the such SPE Component Entity (as applicable) or transfer its rights as Special Member unless (A) a successor Special Member has been admitted to Borrower or the such SPE Component Entity (as applicable) as a Special Member in accordance with requirements of Delaware law the LLC Agreement and (B) after giving effect to such resignation or transfer, there remains at least two one (21) Independent Directors Director of the such SPE Component Entity or Borrower (as applicable) in accordance with Section 5.2 below. The LLC Agreement shall further provide that (i) Special Member shall automatically cease to be a member of Borrower or the such SPE Component Entity (as applicable) upon the admission to Borrower or the such SPE Component Entity (as applicable) of the first substitute member, (ii) Special Member shall be a member of Borrower or the such SPE Component Entity (as applicable) that has no interest in the profits, losses and capital of Borrower or the such SPE Component Entity (as applicable) and has no right to receive any distributions of the assets of Borrower or the such SPE Component Entity (as applicable), (iii) pursuant to 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 such SPE Component Entity (as applicable) and shall not receive a limited liability company interest in Borrower or the such SPE Component Entity (as applicable), (iv) Special Member, in its capacity as Special Member, may not bind Borrower or the such SPE Component Entity (as applicable) and (v) 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 such SPE Component Entity (as applicable) including, without limitation, the merger, consolidation, Division consolidation or conversion of Borrower or the 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 the such 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 such SPE Component Entity (as applicable) as Special Member, Special Member shall not be a member of Borrower or the such SPE Component Entity (as applicable), but Special Member may serve as an Independent Director of Borrower or the such 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 SPE Component Entity (as applicable) and upon the occurrence of such an event, the business of Borrower or the SPE Component Entity (as applicable) shall continue without dissolution and (iii) each of Member and Special Member waives any right it might have to agree in writing to dissolve Borrower or the 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 SPE Component Entity (as applicable).
(e) 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 has received all material permits necessary for such Borrower to operate and for which a failure to possess would materially and adversely affect the condition, financial or otherwise, of Borrower; (Bor
Appears in 1 contract
Sources: Mezzanine Loan Agreement (Industrial Logistics Properties Trust)
Single Purpose Entity/Separateness. (a) Each Borrower represents and warrants to, and covenants with, Administrative Agent and 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 since its formation and will not:
(i) except with respect to the Previously-Owned Property, engage in any business or activity other than the ownership, leasing, ownership, operation and maintenance of the applicable Individual Property, and activities incidental thereto;
(ii) acquire or own any assets other than (A) the applicable Individual Property and/or Individual PropertiesProperty, and (B) the Previously-Owned Property, (C) such incidental Personal Property as may be necessary for the ownership, leasing, operation maintenance and operation of such the applicable Individual Property Property, and (D) cash and other assets or Individual Properties, as applicablerevenues received from the activities set forth in clause (i) above;
(iii) merge into or consolidate with any Person, become subject divide or otherwise engage in or permit any Division or have the power to a 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;
(iv) fail . As used herein, the term “Division” shall mean, as to observe all organizational formalities, or fail to comply with the provisions of its organizational 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 amend, modify, terminate or fail to comply with the special purpose entity/bankruptcy remote provisions of its organizational documents (provided, thatany Person, such organizational documents may be amended or modified to the extent that, Person dividing and/or otherwise engaging in addition to the satisfaction of the requirements related thereto set forth therein, Lender’s prior written consent and, if required by Lender, a Rating Agency Confirmation are first obtained);
(v) own any subsidiary, or make any investment in, any Person (other than, with respect to any SPE Component Entity, in the applicable Borrower);
(vi) commingle its funds or assets with the funds or assets of any other Person (except for one or more other Borrowers);
(vii) incur any Indebtedness, secured or unsecured, direct or contingent (including guaranteeing any obligation), other than (A) the Debt, and/or (B) any prior mortgage-loan financing with respect to the Property that has been paid off in full as of the date hereof, and/or (C) 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 (D) such other liabilities as are permitted pursuant to this Agreement; provided however, the aggregate amount of the indebtedness described in clause (C) shall not exceed (I) five percent (5%) of the Allocated Loan Amount with respect to the applicable Individual Property, and (II) 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 may be secured (senior, subordinate or pari passu) by any Individual Property;
(viii) fail to maintain all of its books, records, financial statements and bank accounts separate from those of any other Person (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); provided, however, that Borrower’s assets may be included in a consolidated financial statement of its Affiliates. Borrower has maintained and will maintain its books, records, resolutions and agreements as official records;
(ix) except for capital contributions and distributions permitted under the terms and conditions of its organizational documents and properly reflected in its books and records, enter into any contract or agreement with any partner, member, shareholder, principal or Affiliate, exceptbecoming subject to, in each case, upon terms any division (whether pursuant to plan of division or otherwise), including, without limitation and conditions that are 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) 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 for the benefit of any other Person or hold out its credit as being available to satisfy the obligations of any other Person;
(xii) make any loans or advances under any loan to any Person;
(xiii) fail to file its own tax 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 return by applicable Legal Requirements, or (B) if Borrower is required to file consolidated tax returns by applicable Legal Requirements;
(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 (D) correct any known misunderstanding regarding its separate identity;
(xv) fail 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 (to the extent there exists sufficient cash flow from the applicable Individual Property to do so); provided, however, that the foregoing shall not require any owners of Borrower to make additional capital contributions to Borrower;
(xvi) without the prior unanimous written consent of all of its 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 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 pursuant 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 §18-217 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 such foregoing action);
(xvii) fail to allocate shared expenses (including, without limitation, shared office space) or fail to use separate stationery, invoices and checks;
(xviii) fail to pay its own liabilities (including, without limitation, salaries of its own employees and a fairly allocated portion of any personnel and overhead expenses that it shares with any Affiliate) from its own funds 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 any owners of Borrower to make additional capital contributions to Borrower;
(xix) acquire obligations or securities of its partners, members, shareholders or other Affiliates, as applicable;
(xx) identify its partners, members, shareholders or other Affiliates, as applicable, as a division or part of it; or
(xxi) fail to conduct its business so that the material factual assumptions made with respect to Borrower in the Non-Consolidation Opinion or in any New Non-Consolidation Opinion cease to be materially true.
(b) If Borrower is a partnership or limited liability company (other than an Acceptable LLC), each general partner (in the case of a partnership) and at least one member (in the case of a limited liability company) of Borrower, as applicable, shall be 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 such interest). Each SPE Component Entity (i) will at all times comply with each of the covenants, terms and provisions contained in Section 5.1(a)(iii) through (vi) (inclusive) and (viii) through (xxi) (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; (ii) will not engage in any business or activity unrelated to owning an interest in Borrower (and personal property incidental, ancillary or related to, or necessary or appropriate for, its ownership of such interest); (iii) will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower (and personal property incidental, ancillary or related to, or necessary or appropriate for, its ownership of such interest); (iv) will at all times continue to own no less than a 0.5% direct equity ownership interest in Borrower; (v) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation), except for trade payables not to exceed $10,000.00 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 (vi) will cause Borrower to comply with the provisions of this Section 5.1. Lender acknowledges that as of the Closing Date each Borrower is an Acceptable LLC and there are no SPE Component Entities.
(c) In the event Borrower or the SPE Component Entity is an Acceptable LLC, the limited liability company agreement of Borrower or the SPE Component Entity (as applicable) (the “LLC Agreement”) shall provide that (i) upon the occurrence of any event that causes the last remaining member of Borrower or the SPE Component Entity (as applicable) (“Member”) to cease to be the member of Borrower or the SPE Component Entity (as applicable) (other than (A) upon an assignment by Member of all of its limited liability company interest in Borrower or the SPE Component Entity (as applicable) and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (B) the resignation of Member and the admission of an additional member of Borrower or the SPE Component Entity (as applicable) in accordance with the terms of the Loan Documents and the LLC Agreement), any person acting as Independent Director of Borrower or the SPE Component Entity (as applicable) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of Borrower or the SPE Component Entity (as applicable) automatically be admitted to Borrower or the SPE Component Entity (as applicable) as a member with a 0% economic interest (“Special Member”) and shall continue Borrower or the SPE Component Entity (as applicable) without dissolution and (ii) Special Member may not resign from Borrower or the SPE Component Entity (as applicable) or transfer its rights as Special Member unless (A) a successor Special Member has been admitted to Borrower or the SPE Component Entity (as applicable) as a Special Member in accordance with requirements of Delaware law and (B) after giving effect to such resignation or transfer, there remains at least two (2) Independent Directors of the SPE Component Entity or Borrower (as applicable) in accordance with Section 5.2 below. The LLC Agreement shall further provide that (i) Special Member shall automatically cease to be a member of Borrower or the SPE Component Entity (as applicable) upon the admission to Borrower or the SPE Component Entity (as applicable) of the first substitute member, (ii) Special Member shall be a member of Borrower or the SPE Component Entity (as applicable) that has no interest in the profits, losses and capital of Borrower or the SPE Component Entity (as applicable) and has no right to receive any distributions of the assets of Borrower or the SPE Component Entity (as applicable), (iii) pursuant to the applicable provisions of the limited liability company act 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 SPE Component Entity (as applicable) and shall not receive a limited liability company interest in Borrower or the SPE Component Entity (as applicable), (iv) Special Member, in its capacity as Special Member, may not bind Borrower or the SPE Component Entity (as applicable) and (v) 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 SPE Component Entity (as applicable) including, without limitation, the merger, consolidation, Division or conversion of Borrower or the 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 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 SPE Component Entity (as applicable) as Special Member, Special Member shall not be a member of Borrower or the SPE Component Entity (as applicable), but Special Member may serve as an Independent Director of Borrower or the 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 SPE Component Entity (as applicable) and upon the occurrence of such an event, the business of Borrower or the SPE Component Entity (as applicable) shall continue without dissolution and (iii) each of Member and Special Member waives any right it might have to agree in writing to dissolve Borrower or the 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 SPE Component Entity (as applicable).
(e) 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 has received all material permits necessary for such Borrower to operate and for which a failure to possess would materially and adversely affect the condition, financial or otherwise, of Borrower; (Delaware;
Appears in 1 contract
Sources: Loan Agreement (Industrial Logistics Properties Trust)
Single Purpose Entity/Separateness. (a) Each 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 since its formation and will not:
(i) engage in any business or activity other than the leasing, ownership, operation and maintenance ownership of the applicable Individual PropertyCollateral, 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, leasing, maintenance and operation of such applicable Individual Property or Individual Properties, as applicableCollateral;
(iii) merge into or consolidate with any Person, become subject divide or otherwise engage in or permit any Division or have the power to a 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) fail to observe all organizational formalities, or fail formalities necessary to comply with the provisions of preserve its organizational documentsseparate 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 amend, modify, terminate or fail to comply with the special purpose entity/bankruptcy remote provisions of its organizational documents documents, in 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, LenderL▇▇▇▇▇’s prior written consent and, if required by Lender, a Rating Agency Confirmation are first obtained);
(v) own any subsidiary, or make any investment in, any Person (other thanthan in Mortgage Borrower or any Mortgage SPE Component Entity or, with respect to any SPE Component Entity, in the applicable Borrower);
(via) commingle its funds or assets with the funds or assets of any Person other Person than a co-Borrower, or (except for one or more b) other Borrowers)than as provided in the Cash Management Agreement, participate in any cash management system with any other Person;
(vii) incur any Indebtedness, secured or unsecured, direct or contingent (including guaranteeing any obligation), other than (A) the Debt, and/or (B) any prior mortgage-loan financing with respect to the Property that has been paid off in full as of the date hereof, and/or (C) trade and operational indebtedness 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 (D) such other liabilities as are permitted pursuant to this Agreement; provided however, the aggregate amount of the indebtedness described in clause (C) shall not exceed (I) five percent (5%) of the Allocated Loan Amount with respect to the applicable Individual Property, and (II) $25,000 at any time with respect to all Properties and not material in the aggregate, two percent (2%) aggregate that is incidental to B▇▇▇▇▇▇▇’s activities as a member of the outstanding amount of the LoanMortgage Borrower. No Indebtedness other than the Debt may be secured (senior, subordinate or pari passu) by any Individual Propertythe Collateral;
(viii) fail to maintain all of its books, records, financial statements and bank accounts separate from those of any other Person (except for one or more other Borrowersincluding, 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 for one or more other Borrowers)Person; provided, however, that Borrower’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 and such Affiliates and to indicate that Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliates or any other Person and (ii) such assets shall be listed on Borrower’s own separate balance sheet. Borrower B▇▇▇▇▇▇▇ has maintained and will maintain its books, records, resolutions and agreements as official records;
(ix) except for in connection with capital contributions and capital distributions permitted under pursuant to the terms and conditions of its such B▇▇▇▇▇▇▇’s organizational documents and properly reflected in its books and recordsnot prohibited under this Agreement, enter into any contract or agreement with any partner, member, shareholder, principal or Affiliate, except, in each case, upon terms and conditions that are 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 to Lender in connection with the Loan, assume or guaranty the debts or obligations of any Person other Personthan a co-Borrower, hold itself out to be responsible for the debts or obligations of any Person other Personthan a co-Borrower, or otherwise pledge its assets for the benefit of any Person other Person than a co-Borrower or hold out its credit as being available to satisfy the obligations of any Person other Personthan a co-Borrower; provided, that Borrowers shall be jointly and severally liable for all obligations of Borrowers under the Loan Documents;
(xii) make any loans or advances under any loan to any Person;
(xiii) fail to file its own tax returns, separate from those of any other Person, returns (except (A) to the extent that Borrower it was or is treated as a “disregarded entity” for tax purposes and is not required to file any tax return by applicable Legal Requirements, was or (B) if Borrower is required to file consolidated tax returns under applicable law) (unless prohibited by applicable Legal RequirementsRequirements 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 (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 (to the extent there exists sufficient net cash flow available from the applicable Individual Property Collateral to do so); providedso 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 any owners direct or indirect member, partner or 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, 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 each 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 Lender), (b) seek or consent to the appointment of a receiver, liquidator or any similar official (except with the written consent or direction of Lender), (c) take any Bankruptcy action that 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 are is at least two one (21) Independent Directors Director then serving in such capacity in accordance with the terms of the applicable organizational documents and each of such Independent Directors Director has consented to such foregoing action);
(xvii) fail to allocate shared expenses (including, without limitation, shared office space) or to the extent reasonably necessary in the operation of its business, fail to use separate stationery, invoices and checkschecks bearing its own name and not bearing the name of any other entity unless such entity 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 pay its own liabilities (including, without limitation, salaries of its own employees and a fairly allocated portion of any personnel and overhead expenses that it shares with any AffiliateAffiliate and salaries of its own employees) from its own funds 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 applicable Individual Property Collateral to do so and except Lender or Mortgage Lender permits such cash flow or loan proceeds to be applied for payment of any Borrower’s liabilities such purposes, or if reserve funds held by one Lender or more other Borrowers Mortgage Lender and sharing of employees, personnel specifically allocated for such amounts have been made available to Borrower by Lender or overhead expenses by one or more BorrowersMortgage Lender to pay such outstanding amounts); provided, however, that the foregoing shall not require any owners direct or indirect member, partner or 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 Affiliates, as applicable;
(xx) identify its partners, members, shareholders or other Affiliates, as applicable, as a division or part of it; or;
(xxi) fail violate or cause to conduct its business so that be violated, in any material respect, the material 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 (a) if such violation is susceptible of cure, Borrower shall cure such violation within thirty (30) days, and (b) Borrower promptly delivers to Lender a New Non-Consolidation Opinion or modification to the original Non-Consolidation Opinion, as applicable, to the effect that such breach shall not in any way impair, negate or amend the opinion rendered in the original Non-Consolidation Opinion or any subsequent New Non-Consolidation Opinion cease (as applicable); or
(xxii) other than pursuant to be materially truethe Environmental Indemnity and the Guaranty, have any of its obligations guaranteed by any Affiliate or constituent party.
(b) If Borrower is a partnership or limited liability company (other than an Acceptable LLC), each general partner (in the case of a partnership) and at least one member (in the case of a limited liability company) of Borrower, as applicable, shall be an Acceptable LLC (each 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 such interest)Borrower. Each SPE Component Entity (i) will at all times comply with each of the covenants, terms and provisions contained in Section 5.1(a)(iii) through - (vi) (inclusive) and (viii) through – (xxi) (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; (ii) will not engage in any business or activity unrelated to other than owning an interest in Borrower (and personal property incidental, ancillary or related to, or necessary or appropriate for, its ownership of such interest)Borrower; (iii) will not acquire or own any assets other than its partnership, membership, or other equity ownership interest in Borrower (and personal property incidental, ancillary or related to, or necessary or appropriate for, its ownership of such interest)Borrower; (iv) will at all times continue to own no less than a 0.5% direct equity ownership interest in Borrower; (v) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation), except for trade payables not to exceed $10,000.00 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 (vi) will cause Borrower to comply with the provisions of this Section 5.1. Lender acknowledges that as of the Closing Date each Borrower is an Acceptable LLC and there are no SPE Component Entities.
(c) In the event Borrower or the any SPE Component Entity is an Acceptable LLC, the limited liability company agreement of Borrower or the such SPE Component Entity (as applicable) (the “LLC Agreement”) shall provide that (i) upon the occurrence of any event that causes the last remaining member of Borrower or the such SPE Component Entity (as applicable) (“Member”) to cease to be the member of Borrower or the such SPE Component Entity (as applicable) (other than upon continuation of the Borrower or such SPE Component Entity (as applicable) without dissolution upon (A) upon an assignment by Member of all of its limited liability company interest in Borrower or the such SPE Component Entity (as applicable) and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (B) the resignation of Member and the admission of an additional member of Borrower or the such SPE Component Entity (as applicable) in accordance with the terms of the Loan Documents and the LLC Agreement), any person acting as Independent Director of Borrower or the such SPE Component Entity (as applicable) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of Borrower or the such SPE Component Entity (as applicable) automatically be admitted to Borrower or the such SPE Component Entity (as applicable) as a member with a 0% economic interest (“Special Member”) and shall continue Borrower or the such SPE Component Entity (as applicable) without dissolution and (ii) Special Member may not resign from Borrower or the such SPE Component Entity (as applicable) or transfer its rights as Special Member unless (A) a successor Special Member has been admitted to Borrower or the such SPE Component Entity (as applicable) as a Special Member in accordance with requirements of Delaware law the LLC Agreement and (B) after giving effect to such resignation or transfer, there remains at least two one (21) Independent Directors Director of the such SPE Component Entity or Borrower (as applicable) in accordance with Section 5.2 below. The LLC Agreement shall further provide that (i) Special Member shall automatically cease to be a member of Borrower or the such SPE Component Entity (as applicable) upon the admission to Borrower or the such SPE Component Entity (as applicable) of the first substitute member, (ii) Special Member shall be a member of Borrower or the such SPE Component Entity (as applicable) that has no interest in the profits, losses and capital of Borrower or the such SPE Component Entity (as applicable) and has no right to receive any distributions of the assets of Borrower or the such SPE Component Entity (as applicable), (iii) pursuant to 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 such SPE Component Entity (as applicable) and shall not receive a limited liability company interest in Borrower or the such SPE Component Entity (as applicable), (iv) Special Member, in its capacity as Special Member, may not bind Borrower or the such SPE Component Entity (as applicable) and (v) 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 such SPE Component Entity (as applicable) including, without limitation, the merger, consolidation, Division consolidation or conversion of Borrower or the 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 the such 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 such SPE Component Entity (as applicable) as Special Member, Special Member shall not be a member of Borrower or the such SPE Component Entity (as applicable), but Special Member may serve as an Independent Director of Borrower or the such SPE Component Entity (as applicable).
(d) The LLC Agreement shall further provide that (i) upon the occurrence of any event that causes the Special Member to cease to be a member of the Borrower or such SPE Component Entity (as applicable) or that causes the Member to cease to be a member of Borrower or the 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 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 SPE Component Entity (as applicable) and upon the occurrence of such an event, the business of Borrower or the SPE Component Entity (as applicable) shall continue without dissolution and (iii) each of Member and Special Member waives any right it might have to agree in writing to dissolve Borrower or the 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 SPE Component Entity (as applicable).
(e) 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 has received all material permits necessary for such Borrower to operate and for which a failure to possess would materially and adversely affect the condition, financial or otherwise, of Borrower; (as
Appears in 1 contract
Sources: Mezzanine Loan Agreement (Industrial Logistics Properties Trust)
Single Purpose Entity/Separateness. (a) Each 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 since its formation and will not:
(i) engage in any business or activity other than the leasing, ownership, operation and maintenance ownership of the applicable Individual PropertyCollateral, 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, leasing, maintenance and operation of such applicable Individual Property or Individual Properties, as applicableCollateral;
(iii) merge into or consolidate with any Person, become subject divide or otherwise engage in or permit any Division or have the power to a 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) fail to observe all organizational formalities, or fail formalities necessary to comply with the provisions of preserve its organizational documentsseparate 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 amend, modify, terminate or fail to comply with the special purpose entity/bankruptcy remote provisions of its organizational documents documents, in 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, Lender▇▇▇▇▇▇’s prior written consent and, if required by Lender, a Rating Agency Confirmation are first obtained);
(v) own any subsidiary, or make any investment in, any Person (other thanthan in Mezzanine A Borrower, any Mezzanine A SPE Component Entity, Mortgage Borrower or any Mortgage SPE Component Entity or, with respect to any SPE Component Entity, in the applicable Borrower);
(via) commingle its funds or assets with the funds or assets of any Person, or (b) other Person (except for one or more than as provided in the Cash Management Agreement, participate in any cash management system with any other Borrowers)Person;
(vii) incur any Indebtedness, secured or unsecured, direct or contingent (including guaranteeing any obligation), other than (A) the Debt, and/or (B) any prior mortgage-loan financing with respect to the Property that has been paid off in full as of the date hereof, and/or (C) trade and operational indebtedness 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 (D) such other liabilities as are permitted pursuant to this Agreement; provided however, the aggregate amount of the indebtedness described in clause (C) shall not exceed (I) five percent (5%) of the Allocated Loan Amount with respect to the applicable Individual Property, and (II) $25,000 at any time with respect to all Properties and not material in the aggregate, two percent (2%) aggregate that is incidental to ▇▇▇▇▇▇▇▇’s activities as a member of the outstanding amount of the LoanMezzanine A Borrower. No Indebtedness other than the Debt may be secured (senior, subordinate or pari passu) by any Individual Propertythe Collateral;
(viii) fail to maintain all of its books, records, financial statements and bank accounts separate from those of any other Person (except for one or more other Borrowersincluding, 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 for one or more other Borrowers)Person; provided, however, that Borrower’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 and such Affiliates and to indicate that Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliates or any other Person and (ii) such assets shall 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 in connection with capital contributions and capital distributions permitted under pursuant to the terms and conditions of its such ▇▇▇▇▇▇▇▇’s organizational documents and properly reflected in its books and recordsnot prohibited under this Agreement, enter into any contract or agreement with any partner, member, shareholder, principal or Affiliate, except, in each case, upon terms and conditions that are 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 to Lender in connection with the Loan, 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 for the benefit of any other Person or hold out its credit 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 under any loan to any Person;
(xiii) fail to file its own tax returns, separate from those of any other Person, returns (except (A) to the extent that Borrower it was or is treated as a “disregarded entity” for tax purposes and is not required to file any tax return by applicable Legal Requirements, was or (B) if Borrower is required to file consolidated tax returns under applicable law) (unless prohibited by applicable Legal RequirementsRequirements 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 (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 (to the extent there exists sufficient net cash flow available from the applicable Individual Property Collateral to do so); providedso and Lender, howeverMezzanine A Lender or Mortgage Lender permits such cash flow or loan proceeds to be applied for such purposes, or if reserve funds held by Lender, Mezzanine A Lender or Mortgage Lender and specifically allocated for such amount have not been made available to Borrower by ▇▇▇▇▇▇, to Mezzanine A Borrower by Mezzanine A Lender or to Mortgage Borrower by Mortgage Lender to pay such outstanding amounts, and provided that the foregoing shall not require any owners direct or indirect member, partner or 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, 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 each 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 Lender), (b) seek or consent to the appointment of a receiver, liquidator or any similar official (except with the written consent or direction of Lender), (c) take any Bankruptcy action that 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 are is at least two one (21) Independent Directors Director then serving in such capacity in accordance with the terms of the applicable organizational documents and each of such Independent Directors Director has consented to such foregoing action);
(xvii) fail to allocate shared expenses (including, without limitation, shared office space) or to the extent reasonably necessary in the operation of its business, fail to use separate stationery, invoices and checkschecks bearing its own name and not bearing the name of any other entity unless such entity 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 pay its own liabilities (including, without limitation, salaries of its own employees and a fairly allocated portion of any personnel and overhead expenses that it shares with any AffiliateAffiliate and salaries of its own employees) from its own funds 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 applicable Individual Property Collateral to do so and except Lender, Mezzanine A Lender or Mortgage Lender permits such cash flow or loan proceeds to be applied for payment of any Borrower’s liabilities such purposes, or if reserve funds held by one Lender, Mezzanine A Lender or more other Borrowers Mortgage Lender and sharing of employeesspecifically allocated for such amounts have been made available to Borrower by Lender, personnel to Mezzanine A Borrower by Mezzanine A Lender or overhead expenses to Mortgage Borrower by one or more BorrowersMortgage Lender to pay such outstanding amounts); provided, however, that the foregoing shall not require any owners direct or indirect member, partner or 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 Affiliates, as applicable;
(xx) identify its partners, members, shareholders or other Affiliates, as applicable, as a division or part of it; or;
(xxi) fail violate or cause to conduct its business so that be violated, in any material respect, the material 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 (a) if such violation is susceptible of cure, Borrower shall cure such violation within thirty (30) days, and (b) Borrower promptly delivers to Lender a New Non-Consolidation Opinion or modification to the original Non-Consolidation Opinion, as applicable, to the effect that such breach shall not in any way impair, negate or amend the opinion rendered in the original Non-Consolidation Opinion or any subsequent New Non-Consolidation Opinion cease (as applicable); or
(xxii) other than pursuant to be materially truethe Environmental Indemnity and the Guaranty, have any of its obligations guaranteed by any Affiliate or constituent party.
(b) If Borrower is a partnership or limited liability company (other than an Acceptable LLC), each general partner (in the case of a partnership) and at least one member (in the case of a limited liability company) of Borrower, as applicable, shall be a corporation or an Acceptable LLC (each 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 such interest)Borrower. Each SPE Component Entity (i) will at all times comply with each of the covenants, terms and provisions contained in Section 5.1(a)(iii) through - (vi) (inclusive) and (viii) through – (xxi) (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; (ii) will not engage in any business or activity unrelated to other than owning an interest in Borrower (and personal property incidental, ancillary or related to, or necessary or appropriate for, its ownership of such interest)Borrower; (iii) will not acquire or own any assets other than its partnership, membership, or other equity ownership interest in Borrower (and personal property incidental, ancillary or related to, or necessary or appropriate for, its ownership of such interest)Borrower; (iv) will at all times continue to own no less than a 0.5% direct equity ownership interest in Borrower; (v) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation), except for trade payables not to exceed $10,000.00 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 (vi) will cause Borrower to comply with the provisions of this Section 5.1. Lender acknowledges that as of the Closing Date each Borrower is an Acceptable LLC and there are no SPE Component Entities.
(c) In the event Borrower or the any SPE Component Entity is an Acceptable LLC, the limited liability company agreement of Borrower or the such SPE Component Entity (as applicable) (the “LLC Agreement”) shall provide that (i) upon the occurrence of any event that causes the last remaining member of Borrower or the such SPE Component Entity (as applicable) (“Member”) to cease to be the member of Borrower or the such SPE Component Entity (as applicable) (other than upon continuation of the Borrower or such SPE Component Entity (as applicable) without dissolution upon (A) upon an assignment by Member of all of its limited liability company interest in Borrower or the such SPE Component Entity (as applicable) and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (B) the resignation of Member and the admission of an additional member of Borrower or the such SPE Component Entity (as applicable) in accordance with the terms of the Loan Documents and the LLC Agreement), any person acting as Independent Director of Borrower or the such SPE Component Entity (as applicable) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of Borrower or the such SPE Component Entity (as applicable) automatically be admitted to Borrower or the such SPE Component Entity (as applicable) as a member with a 0% economic interest (“Special Member”) and shall continue Borrower or the such SPE Component Entity (as applicable) without dissolution and (ii) Special Member may not resign from Borrower or the such SPE Component Entity (as applicable) or transfer its rights as Special Member unless (A) a successor Special Member has been admitted to Borrower or the such SPE Component Entity (as applicable) as a Special Member in accordance with requirements of Delaware law the LLC Agreement and (B) after giving effect to such resignation or transfer, there remains at least two one (21) Independent Directors Director of the such SPE Component Entity or Borrower (as applicable) in accordance with Section 5.2 below. The LLC Agreement shall further provide that (i) Special Member shall automatically cease to be a member of Borrower or the such SPE Component Entity (as applicable) upon the admission to Borrower or the such SPE Component Entity (as applicable) of the first substitute member, (ii) Special Member shall be a member of Borrower or the such SPE Component Entity (as applicable) that has no interest in the profits, losses and capital of Borrower or the such SPE Component Entity (as applicable) and has no right to receive any distributions of the assets of Borrower or the such SPE Component Entity (as applicable), (iii) pursuant to 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 such SPE Component Entity (as applicable) and shall not receive a limited liability company interest in Borrower or the such SPE Component Entity (as applicable), (iv) Special Member, in its capacity as Special Member, may not bind Borrower or the such SPE Component Entity (as applicable) and (v) 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 such SPE Component Entity (as applicable) including, without limitation, the merger, consolidation, Division consolidation or conversion of Borrower or the 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 the such 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 such SPE Component Entity (as applicable) as Special Member, Special Member shall not be a member of Borrower or the such SPE Component Entity (as applicable), but Special Member may serve as an Independent Director of Borrower or the such 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 SPE Component Entity (as applicable) and upon the occurrence of such an event, the business of Borrower or the SPE Component Entity (as applicable) shall continue without dissolution and (iii) each of Member and Special Member waives any right it might have to agree in writing to dissolve Borrower or the 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 SPE Component Entity (as applicable).
(e) 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 has received all material permits necessary for such Borrower to operate and for which a failure to possess would materially and adversely affect the condition, financial or otherwise, of Borrower; (
Appears in 1 contract
Sources: Mezzanine Loan Agreement (Industrial Logistics Properties Trust)
Single Purpose Entity/Separateness. (a) Each 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 since its formation and will not:
(i) engage in any business or activity other than the leasing, ownership, operation and maintenance ownership of the applicable Individual PropertyCollateral, 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, leasing, maintenance and operation of such applicable Individual Property or Individual Properties, as applicableCollateral;
(iii) merge into or consolidate with any Person, become subject divide or otherwise engage in or permit any Division or have the power to a 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) fail to observe all organizational formalities, or fail formalities necessary to comply with the provisions of preserve its organizational documentsseparate 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 amend, modify, terminate or fail to comply with the special purpose entity/bankruptcy remote provisions of its organizational documents documents, in 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, Lender▇▇▇▇▇▇’s prior written consent and, if required by Lender, a Rating Agency Confirmation are first obtained);
(v) own any subsidiary, or make any investment in, any Person (other thanthan in Mortgage Borrower or any Mortgage SPE Component Entity or, with respect to any SPE Component Entity, in the applicable Borrower);
(via) commingle its funds or assets with the funds or assets of any Person, or (b) other Person (except for one or more than as provided in the Cash Management Agreement, participate in any cash management system with any other Borrowers)Person;
(vii) incur any Indebtedness, secured or unsecured, direct or contingent (including guaranteeing any obligation), other than (A) the Debt, and/or (B) any prior mortgage-loan financing with respect to the Property that has been paid off in full as of the date hereof, and/or (C) trade and operational indebtedness 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 (D) such other liabilities as are permitted pursuant to this Agreement; provided however, the aggregate amount of the indebtedness described in clause (C) shall not exceed (I) five percent (5%) of the Allocated Loan Amount with respect to the applicable Individual Property, and (II) $25,000 at any time with respect to all Properties and not material in the aggregate, two percent (2%) aggregate that is incidental to ▇▇▇▇▇▇▇▇’s activities as a member of the outstanding amount of the LoanMortgage Borrower. No Indebtedness other than the Debt may be secured (senior, subordinate or pari passu) by any Individual Propertythe Collateral;
(viii) fail to maintain all of its books, records, financial statements and bank accounts separate from those of any other Person (except for one or more other Borrowersincluding, 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 for one or more other Borrowers)Person; provided, however, that Borrower’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 and such Affiliates and to indicate that Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliates or any other Person and (ii) such assets shall 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 in connection with capital contributions and capital distributions permitted under pursuant to the terms and conditions of its such ▇▇▇▇▇▇▇▇’s organizational documents and properly reflected in its books and recordsnot prohibited under this Agreement, enter into any contract or agreement with any partner, member, shareholder, principal or Affiliate, except, in each case, upon terms and conditions that are 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 to Lender in connection with the Loan, 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 for the benefit of any other Person or hold out its credit 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 under any loan to any Person;
(xiii) fail to file its own tax returns, separate from those of any other Person, returns (except (A) to the extent that Borrower it was or is treated as a “disregarded entity” for tax purposes and is not required to file any tax return by applicable Legal Requirements, was or (B) if Borrower is required to file consolidated tax returns under applicable law) (unless prohibited by applicable Legal RequirementsRequirements 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 (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 (to the extent there exists sufficient net cash flow available from the applicable Individual Property Collateral to do so); providedso 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 any owners direct or indirect member, partner or 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, 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 each 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 Lender), (b) seek or consent to the appointment of a receiver, liquidator or any similar official (except with the written consent or direction of Lender), (c) take any Bankruptcy action that 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 are is at least two one (21) Independent Directors Director then serving in such capacity in accordance with the terms of the applicable organizational documents and each of such Independent Directors Director has consented to such foregoing action);
(xvii) fail to allocate shared expenses (including, without limitation, shared office space) or to the extent reasonably necessary in the operation of its business, fail to use separate stationery, invoices and checkschecks bearing its own name and not bearing the name of any other entity unless such entity 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 pay its own liabilities (including, without limitation, salaries of its own employees and a fairly allocated portion of any personnel and overhead expenses that it shares with any AffiliateAffiliate and salaries of its own employees) from its own funds 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 applicable Individual Property Collateral to do so and except Lender or Mortgage Lender permits such cash flow or loan proceeds to be applied for payment of any Borrower’s liabilities such purposes, or if reserve funds held by one Lender or more other Borrowers Mortgage Lender and sharing of employees, personnel specifically allocated for such amounts have been made available to Borrower by Lender or overhead expenses by one or more BorrowersMortgage Lender to pay such outstanding amounts); provided, however, that the foregoing shall not require any owners direct or indirect member, partner or 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 Affiliates, as applicable;
(xx) identify its partners, members, shareholders or other Affiliates, as applicable, as a division or part of it; or;
(xxi) fail violate or cause to conduct its business so that be violated, in any material respect, the material 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 (a) if such violation is susceptible of cure, Borrower shall cure such violation within thirty (30) days, and (b) Borrower promptly delivers to Lender a New Non-Consolidation Opinion or modification to the original Non-Consolidation Opinion, as applicable, to the effect that such breach shall not in any way impair, negate or amend the opinion rendered in the original Non-Consolidation Opinion or any subsequent New Non-Consolidation Opinion cease (as applicable); or
(xxii) other than pursuant to be materially truethe Environmental Indemnity and the Guaranty, have any of its obligations guaranteed by any Affiliate or constituent party.
(b) If Borrower is a partnership or limited liability company (other than an Acceptable LLC), each general partner (in the case of a partnership) and at least one member (in the case of a limited liability company) of Borrower, as applicable, shall be a corporation or an Acceptable LLC (each 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 such interest)Borrower. Each SPE Component Entity (i) will at all times comply with each of the covenants, terms and provisions contained in Section 5.1(a)(iii) through - (vi) (inclusive) and (viii) through – (xxi) (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; (ii) will not engage in any business or activity unrelated to other than owning an interest in Borrower (and personal property incidental, ancillary or related to, or necessary or appropriate for, its ownership of such interest)Borrower; (iii) will not acquire or own any assets other than its partnership, membership, or other equity ownership interest in Borrower (and personal property incidental, ancillary or related to, or necessary or appropriate for, its ownership of such interest)Borrower; (iv) will at all times continue to own no less than a 0.5% direct equity ownership interest in Borrower; (v) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation), except for trade payables not to exceed $10,000.00 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 (vi) will cause Borrower to comply with the provisions of this Section 5.1. Lender acknowledges that as of the Closing Date each Borrower is an Acceptable LLC and there are no SPE Component Entities.
(c) In the event Borrower or the any SPE Component Entity is an Acceptable LLC, the limited liability company agreement of Borrower or the such SPE Component Entity (as applicable) (the “LLC Agreement”) shall provide that (i) upon the occurrence of any event that causes the last remaining member of Borrower or the such SPE Component Entity (as applicable) (“Member”) to cease to be the member of Borrower or the such SPE Component Entity (as applicable) (other than upon continuation of the Borrower or such SPE Component Entity (as applicable) without dissolution upon (A) upon an assignment by Member of all of its limited liability company interest in Borrower or the such SPE Component Entity (as applicable) and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (B) the resignation of Member and the admission of an additional member of Borrower or the such SPE Component Entity (as applicable) in accordance with the terms of the Loan Documents and the LLC Agreement), any person acting as Independent Director of Borrower or the such SPE Component Entity (as applicable) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of Borrower or the such SPE Component Entity (as applicable) automatically be admitted to Borrower or the such SPE Component Entity (as applicable) as a member with a 0% economic interest (“Special Member”) and shall continue Borrower or the such SPE Component Entity (as applicable) without dissolution and (ii) Special Member may not resign from Borrower or the such SPE Component Entity (as applicable) or transfer its rights as Special Member unless (A) a successor Special Member has been admitted to Borrower or the such SPE Component Entity (as applicable) as a Special Member in accordance with requirements of Delaware law the LLC Agreement and (B) after giving effect to such resignation or transfer, there remains at least two one (21) Independent Directors Director of the such SPE Component Entity or Borrower (as applicable) in accordance with Section 5.2 below. The LLC Agreement shall further provide that (i) Special Member shall automatically cease to be a member of Borrower or the such SPE Component Entity (as applicable) upon the admission to Borrower or the such SPE Component Entity (as applicable) of the first substitute member, (ii) Special Member shall be a member of Borrower or the such SPE Component Entity (as applicable) that has no interest in the profits, losses and capital of Borrower or the such SPE Component Entity (as applicable) and has no right to receive any distributions of the assets of Borrower or the such SPE Component Entity (as applicable), (iii) pursuant to 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 such SPE Component Entity (as applicable) and shall not receive a limited liability company interest in Borrower or the such SPE Component Entity (as applicable), (iv) Special Member, in its capacity as Special Member, may not bind Borrower or the such SPE Component Entity (as applicable) and (v) 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 such SPE Component Entity (as applicable) including, without limitation, the merger, consolidation, Division consolidation or conversion of Borrower or the 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 the such 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 such SPE Component Entity (as applicable) as Special Member, Special Member shall not be a member of Borrower or the such SPE Component Entity (as applicable), but Special Member may serve as an Independent Director of Borrower or the such SPE Component Entity (as applicable).
(d) The LLC Agreement shall further provide that (i) upon the occurrence of any event that causes the Special Member to cease to be a member of the Borrower or such SPE Entity (as applicable) or that causes the Member to cease to be a member of Borrower or the 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 other than upon continuation of the event that terminated the continued membership of Member in Borrower or the such SPE Component Entity (as applicable) agree in writing without dissolution upon (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 SPE Component Entity (as applicable) and upon the occurrence of such an event, the business of Borrower or the SPE Component Entity (as applicable) shall continue without dissolution and (iii) each of Member and Special Member waives any right it might have to agree in writing to dissolve Borrower or the 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 SPE Component Entity (as applicable).
(e) 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 has received all material permits necessary for such Borrower to operate and for which a failure to possess would materially and adversely affect the condition, financial or otherwise, of Borrower; (
Appears in 1 contract
Sources: Mezzanine Loan Agreement (Industrial Logistics Properties Trust)
Single Purpose Entity/Separateness. (a) Each Borrower has not since its formation and will not:
(i) engage in any business or activity other than (A) in the case of each Individual Borrower (other than Parent Borrower), the ownership, management, operation, maintenance, financing, leasing, ownership, operation development and maintenance sale of the applicable Individual Property, and activities incidental thereto, and or (B) in the case of Parent Borrower, acting as the member of each other Individual Borrower that is a limited liability company, acting as the limited partner of each Individual Borrower that is a limited partnership, acting as the member of each SPE Component Entity, and transacting lawful business that is incident, necessary and appropriate to accomplish the foregoing;
(ii) acquire or own any assets other than (A) with respect to an Individual Borrower (other than Parent Borrower), the applicable Individual Property and/or Individual Properties, and (B) such incidental Personal Property as may be necessary for the ownership, leasingmanagement, maintenance operation, maintenance, financing, leasing and operation development of such the applicable Individual Property or Property, and (B) with respect to Parent Borrower, the equity ownership interests in each other Individual PropertiesBorrower and SPE Component Entity, as applicable;
(iii) merge into or consolidate with any Person, become subject divide or otherwise engage in or permit any Division or have the power to a engage in or permit any Division 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) fail to observe all organizational formalities, or fail to comply with the provisions of its organizational documents, or fail to preserve its existence except 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, modify, terminate or fail to comply with the special purpose entity/bankruptcy remote provisions of its organizational documents (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, Lender’s prior written consent and, if required by Lender, a Rating Agency Confirmation are first obtained);
(v) own any subsidiary, or make any investment in, any Person (other than, with respect to any SPE Component Entity, in the applicable Borrower);
(vi) commingle its funds or assets with the funds or assets of any other Person (except for one or more other Borrowers);
(vii) incur any Indebtedness, secured or unsecured, direct or contingent (including guaranteeing any obligation), other than (A) the Debt, and/or (B) any prior mortgage-loan financing with respect to the Property that has been paid off in full as of the date hereof, and/or (C) 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 (D) such other liabilities as are otherwise expressly permitted pursuant to the terms of this Agreement; provided however. As used herein, the aggregate amount of the indebtedness described term “Division” shall mean, as to any Person, such Person dividing and/or otherwise engaging in clause (C) shall not exceed (I) five percent (5%) of the Allocated Loan Amount with respect to the applicable Individual Property, and (II) 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 may be secured (senior, subordinate or pari passu) by any Individual Property;
(viii) fail to maintain all of its books, records, financial statements and bank accounts separate from those of any other Person (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); provided, however, that Borrower’s assets may be included in a consolidated financial statement of its Affiliates. Borrower has maintained and will maintain its books, records, resolutions and agreements as official records;
(ix) except for capital contributions and distributions permitted under the terms and conditions of its organizational documents and properly reflected in its books and records, enter into any contract or agreement with any partner, member, shareholder, principal or Affiliate, exceptand/or becoming subject to, in each case, upon terms any division (whether pursuant to plan of division or otherwise), including, without limitation and conditions that are 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) 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 for the benefit of any other Person or hold out its credit as being available to satisfy the obligations of any other Person;
(xii) make any loans or advances under any loan to any Person;
(xiii) fail to file its own tax 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 return by applicable Legal Requirements, or (B) if Borrower is required to file consolidated tax returns by applicable Legal Requirements;
(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 (D) correct any known misunderstanding regarding its separate identity;
(xv) fail 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 (to the extent there exists sufficient cash flow from the applicable Individual Property to do so); provided, however, that the foregoing shall not require any owners of Borrower to make additional capital contributions to Borrower;
(xvi) without the prior unanimous written consent of all of its 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 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 pursuant 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 §18-217 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 such foregoing action);
(xvii) fail to allocate shared expenses (including, without limitation, shared office space) or fail to use separate stationery, invoices and checks;
(xviii) fail to pay its own liabilities (including, without limitation, salaries of its own employees and a fairly allocated portion of any personnel and overhead expenses that it shares with any Affiliate) from its own funds 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 any owners of Borrower to make additional capital contributions to Borrower;
(xix) acquire obligations or securities of its partners, members, shareholders or other Affiliates, as applicable;
(xx) identify its partners, members, shareholders or other Affiliates, as applicable, as a division or part of it; or
(xxi) fail to conduct its business so that the material factual assumptions made with respect to Borrower in the Non-Consolidation Opinion or in any New Non-Consolidation Opinion cease to be materially true.
(b) If Borrower is a partnership or limited liability company (other than an Acceptable LLC), each general partner (in the case of a partnership) and at least one member (in the case of a limited liability company) of Borrower, as applicable, shall be 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 such interest). Each SPE Component Entity (i) will at all times comply with each of the covenants, terms and provisions contained in Section 5.1(a)(iii) through (vi) (inclusive) and (viii) through (xxi) (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; (ii) will not engage in any business or activity unrelated to owning an interest in Borrower (and personal property incidental, ancillary or related to, or necessary or appropriate for, its ownership of such interest); (iii) will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower (and personal property incidental, ancillary or related to, or necessary or appropriate for, its ownership of such interest); (iv) will at all times continue to own no less than a 0.5% direct equity ownership interest in Borrower; (v) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation), except for trade payables not to exceed $10,000.00 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 (vi) will cause Borrower to comply with the provisions of this Section 5.1. Lender acknowledges that as of the Closing Date each Borrower is an Acceptable LLC and there are no SPE Component Entities.
(c) In the event Borrower or the SPE Component Entity is an Acceptable LLC, the limited liability company agreement of Borrower or the SPE Component Entity (as applicable) (the “LLC Agreement”) shall provide that (i) upon the occurrence of any event that causes the last remaining member of Borrower or the SPE Component Entity (as applicable) (“Member”) to cease to be the member of Borrower or the SPE Component Entity (as applicable) (other than (A) upon an assignment by Member of all of its limited liability company interest in Borrower or the SPE Component Entity (as applicable) and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (B) the resignation of Member and the admission of an additional member of Borrower or the SPE Component Entity (as applicable) in accordance with the terms of the Loan Documents and the LLC Agreement), any person acting as Independent Director of Borrower or the SPE Component Entity (as applicable) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of Borrower or the SPE Component Entity (as applicable) automatically be admitted to Borrower or the SPE Component Entity (as applicable) as a member with a 0% economic interest (“Special Member”) and shall continue Borrower or the SPE Component Entity (as applicable) without dissolution and (ii) Special Member may not resign from Borrower or the SPE Component Entity (as applicable) or transfer its rights as Special Member unless (A) a successor Special Member has been admitted to Borrower or the SPE Component Entity (as applicable) as a Special Member in accordance with requirements of Delaware law and (B) after giving effect to such resignation or transfer, there remains at least two (2) Independent Directors of the SPE Component Entity or Borrower (as applicable) in accordance with Section 5.2 below. The LLC Agreement shall further provide that (i) Special Member shall automatically cease to be a member of Borrower or the SPE Component Entity (as applicable) upon the admission to Borrower or the SPE Component Entity (as applicable) of the first substitute member, (ii) Special Member shall be a member of Borrower or the SPE Component Entity (as applicable) that has no interest in the profits, losses and capital of Borrower or the SPE Component Entity (as applicable) and has no right to receive any distributions of the assets of Borrower or the SPE Component Entity (as applicable), (iii) pursuant to the applicable provisions of the limited liability company act Limited Liability Company Act of the State of Delaware (the “Act”), Special Member shall not be required to make or any capital contributions to Borrower or the SPE Component Entity (as applicable) and shall not receive a limited liability company interest in Borrower or the SPE Component Entity (as applicable), (iv) Special Member, in its capacity as Special Member, may not bind Borrower or the SPE Component Entity (as applicable) and (v) except as required by any mandatory similar 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 SPE Component Entity (as applicable) including, without limitation, the merger, consolidation, Division or conversion of Borrower or the 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 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 SPE Component Entity (as applicable) as Special Member, Special Member shall not be a member of Borrower or the SPE Component Entity (as applicable), but Special Member may serve as an Independent Director of Borrower or the 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 SPE Component Entity (as applicable) and upon the occurrence of such an event, the business of Borrower or the SPE Component Entity (as applicable) shall continue without dissolution and (iii) each of Member and Special Member waives any right it might have to agree in writing to dissolve Borrower or the 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 SPE Component Entity (as applicable).
(e) 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 has received all material permits necessary for such Borrower to operate and for which a failure to possess would materially and adversely affect the condition, financial or otherwise, of Borrower; (Legal Requirements;
Appears in 1 contract
Sources: Loan Agreement (Ares Real Estate Income Trust Inc.)