LOAN CONTRIBUTION AGREEMENT
LOAN CONTRIBUTION AGREEMENT
by and between Access Point Financial, LLC
a Delaware limited liability company, as Contributor,
Lodging Fund REIT III OP, LP a Delaware limited partnership, as Operating Partnership,
Legendary Capital REIT III, LLC
a Delaware limited liability company, as External Manager,
and Legendary Capital, LLC,
a North Dakota limited liability company, as Sponsor
in exchange for Series A Preferred Units
Dated as of December 24, 2024
ANNEX
I. Disclosure Schedule
LOAN CONTRIBUTION AGREEMENT
This Loan Contribution Agreement (this “Agreement”) is made and entered into as of December 24, 2024 (the “Effective Date”) by and between Lodging Fund REIT III OP, LP, a Delaware limited partnership (the “Operating Partnership”), Legendary Capital REIT III, LLC, a Delaware limited liability company (the “External Manager”), Legendary Capital, LLC, a North Dakota limited liability company (the “Sponsor”), and Access Point Financial, LLC, a Delaware limited liability company (the “Contributor”).
RECITALS
NOW, THEREFORE, in consideration of the foregoing premises, and the mutual undertakings set forth below, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
Section 1.1 Defined Terms. The following terms as used in this Agreement shall have the meanings attributed to them as set forth below unless the context clearly requires another meaning. Other capitalized terms used herein shall, unless the context otherwise requires, have the meanings assigned such terms herein.
“Affiliate” or “Affiliated” shall have the meaning ascribed to such term in Rule 405 under the Securities Act.
“Aggregate Liquidation Preference” shall mean $4,067,659.13
“Agreement” shall have the meaning as set forth in the Preamble.
“Basket” shall have the meaning as set forth in Section 5.2.
“Cash Distributions” shall mean the cash distributions (assuming available cash) on the stated value per unit of each unit of the Series A Preferred Units in an amount equal to the cash dividend being paid to the common shareholders of the Company.
“Cap” shall have the meaning as set forth in Section 5.2.
“Closing Date” shall have the meaning as set forth in Section 3.2.
“Closing Documents” shall have the meaning as set forth in Section 3.3.
“Code” shall mean the Internal Revenue Code of 1986, as amended.
“Company” shall mean Lodging Fund REIT III, Inc., a Maryland corporation, the Operating Partnership’s general partner, and its consolidated subsidiaries, including the Operating Partnership.
“Contingency Asset Pool” shall mean the Initial Contingency Asset Pool or the Additional Contingency Asset Pool, as applicable.
“Contribution” shall have the meaning as set forth in Section 2.1.
“Contributed Interest” shall have the meaning set forth in the Recitals.
“Contributor” shall have the meaning as set forth in the Preamble.
“Courtyard Aurora Borrowers” shall mean the Courtyard Xxxxxx XXX Borrower and the Courtyard Aurora TRS Borrower.
“Courtyard Xxxxxx XXX Borrower” shall mean LF3 Aurora, LLC, a Delaware limited liability company.
“Courtyard Aurora Loan” shall mean that certain loan agreement, dated as of February 4, 2021, by and between Contributor as lender and the Courtyard Aurora Borrowers, secured by a hotel property known as “Courtyard Aurora.”
“Courtyard Aurora TRS Borrower” shall mean LF3 Aurora TRS, LLC, a Delaware limited liability company.
“Delta Green Bay Borrowers” mean Delta Green Bay DRE Borrower and the Delta Green Bay TRS Borrower.
“Delta Green Bay DRE Borrower” means LOF2 Green Bay, LLC, a Michigan limited liability company.
“Delta Green Bay Loan” shall mean that certain loan agreement, dated as of March 20, 2020, by and between Contributor as lender and the Delta Green Bay Borrowers, secured by a hotel property known as “Delta Green Bay”.
“Delta Green Bay TRS Borrower” means LOF2 Green Bay TRS, LLC, a Michigan limited liability company.
“DRE Borrowers” shall mean the Delta Green DRE Borrower and Sonesta Grand Rapids DRE Borrower.
“Effective Date” shall have the meaning as set forth in the Preamble.
“Environmental Law” means all applicable statutes, regulations, rules, ordinances, codes, licenses, permits, orders, demands, approvals, authorizations and similar items of any Governmental Entity and all applicable judicial, administrative and regulatory decrees, judgments and orders relating to the protection of human health or the environment as in effect on the Closing Date, including but not limited to those pertaining to reporting, licensing, permitting, investigation, removal and remediation of Hazardous Materials, including without limitation (i) the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. Section 9601 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.), the Clean Air Act (42 U.S.C. Section 7401 et seq.), the Federal Water Pollution Control Act (33 U.S.C. Section 1251), the Safe Drinking Water Act (42 U.S.C. 300f et seq.), the Toxic Substances Control Act (15 U.S.C. 2601 et seq.), the Endangered Species Act (16 U.S.C. 1531 et seq.), the Emergency Planning and Community Right-to-Know Act of 1986 (42 U.S.C. 11001 et seq.), and (ii) applicable state and local statutory and regulatory laws, statutes and regulations pertaining to Hazardous Materials.
“Environmental Permits” means any and all licenses, certificates, permits, directives, requirements, registrations, government approvals, agreements, authorizations, and consents that are required under or are issued pursuant to any Environmental Laws.
“External Manager” shall have the meaning as set forth in the Preamble.
“Fixtures and Personal Property” shall mean all fixtures, furniture, furnishings, apparatus and fittings, equipment, machinery, appliances, building supplies, business supplies, software, tools, linens (in no event less than 2 par xxxxx and linen), inventories of standard supplies, services and amenities including without limitation paper goods, brochures, office supplies, unopened food and beverage inventory, chinaware, glassware, flatware, soap, gasoline, fuel oil, inventory held for sale, engineering, pool, maintenance and housekeeping supplies, TV, phone, and internet services, software and hardware, and other operation and guest supplies (each of which shall be maintained and transferred in accordance with brand standards), merchandise, goods, electronics, customer lists and records (including but not limited to customer, supplier, advertising, promotional material, sales, services, delivery and/or operations lists and records), goodwill, intellectual and/or proprietary information and property and applications therefor or licenses thereof and other items of personal property used in connection with the ownership, operation or maintenance of the Property, including all assets located off site from the Property but owned and used by the Contributor in connection with operation of the Property located on the Property on the Closing Date; excluding, however, all fixtures, furniture, furnishings, apparatus and fittings, equipment, machinery, appliances, building supplies, business supplies, software, tools, linens, merchandise, goods, electronics and other items of personal property owned by tenants, subtenants, guests, invitees, employees, easement holders, service contractors and other Persons who own any such property located on the Property.
"Fort Xxxxxxx Borrowers” shall mean the Fort Xxxxxxx DRE Borrowers and the Fort Xxxxxxx TRS Borrowers.
“Fort Xxxxxxx DRE Borrower” shall mean LF3 RIFC, LLC, a Delaware limited liability company.
“Fort Xxxxxxx Loans” shall mean that certain loan agreement, dated as of April 18, 2023, by and between Contributor as lender and the Fort Xxxxxxx Borrowers and that certain equipment loan and security agreement, dated as of May 2, 2023, by and between Contributor as lender and Fort Xxxxxxx TRS Borrower, each secured by a hotel property known as “ Residence Inn Fort Xxxxxxx.”
“Fort Xxxxxxx TRS Borrower” shall mean LF3 RIFC TRS, LLC, a Delaware limited liability company.”
“Governmental Entity” means any governmental agency or quasi-governmental agency, bureau, board, commission, court, department, official, political subdivision, tribunal or other instrumentality of any government, whether federal, state or local, domestic or foreign.
“Hazardous Material” means any substance:
| (f) | radon gas. |
"Knowledge” As used in this Agreement, the term “knowledge” or other similar phrases shall mean the actual knowledge (and not the implied or constructive knowledge) of Xxxx Xxxxxx on behalf of the Operating Partnership and Xxxxx Xxxx on behalf of the Contributor, without any personal liability or duty of investigation or inquiry.
“Legal Requirements” means, as the case might be, any one or more of all present and future laws, codes, ordinances, orders, judgments, decrees, injunctions, rules, regulations, and requirements, even if unforeseen or extraordinary, of every duly constituted Governmental Authority (but excluding those which by their terms are not applicable to and do not impose any obligation on the Operating Partnership or the Property), including, without limitation, the requirements and conditions of any permits and all covenants, restrictions, and conditions now or hereafter of record that is reasonably likely to be applicable to Operating Partnership or the Property or to the use, manner of use, occupancy, possession, operation, maintenance, alteration, repair, or reconstruction of the Property, even if compliance therewith (i) necessitates structural changes or improvements (including changes required to comply with access laws) or results in interference
with the use or enjoyment of the Property, or (ii) requires the Operating Partnership to carry insurance other than as required by the provisions of any loan document or any lease.
“Liens” means with respect to any real and personal property, all mortgages, pledges, liens, options, charges, security interests, mortgage deeds, restrictions, prior assignments, encumbrances, covenants, encroachments, assessments, purchase rights, rights of others, licenses, easements, voting agreements, liabilities or claims of any kind or nature whatsoever, direct or indirect, including, without limitation, interests in or claims to revenues generated by such property.
“Limitation Period” shall have the meaning as set forth in Section 5.1.
“Liquidation Preference” shall have the meaning set forth in the Partnership Unit Designation.
“Loans” shall have the meaning set forth in the Recitals.
“Losses” shall have the meaning as set forth in Section 5.2.
“Material Adverse Effect” means, with respect to any Person, any change or effect that (i) is or would be reasonably likely to be material and adverse to the financial condition, results of operations or business of such Person, or (ii) would materially impair the ability of such Person to perform its respective obligations under this Agreement or under any of the Closing Documents, or otherwise materially impede the consummation of the transactions contemplated hereby; provided, however, that “Material Adverse Effect” shall not be deemed to include the impact of (1) changes in banking and similar laws, rules or regulations of general applicability or interpretations thereof by Governmental Entities, (2) changes in GAAP or regulatory accounting requirements applicable to financial institutions and their holding companies generally, (3) changes after the date of this Agreement in general economic or capital market conditions affecting financial institutions or their market prices generally, including changes in interest rates, and not specifically related to the parties hereto, (4) direct effects of compliance with this Agreement on the operating performance of the parties hereto, including expenses incurred by the parties hereto in consummating the transactions contemplated by this Agreement, and (5) the effects of any natural disasters or other force majeure events or any epidemic, pandemic or disease outbreak. For the avoidance of doubt, any single instance of a change or effect with an impact to a Person of equal to or less than seventy-five thousand dollars ($75,000) shall not be deemed to be a Material Adverse Effect on such Person.
“Net CAP Proceeds” means the difference between (i) the aggregate projected gross sales proceeds of a hotel property based upon an average of three broker opinions of value obtained from hotel real estate brokerages mutually agreed upon by the Contributor and the Operating Partnership and (ii) amounts that will be owed by the Operating Partnership in respect of (A) indebtedness securing the hotel properties selected to be sold, including without limitation any prepayment penalties or exit fees, (B) customary closing costs, fees and expenses payable in connection with such sale, including, without limitation, costs to third party service providers, such as brokers and lawyers, title insurance costs, transfer taxes and other prorations (but excluding any fees and expenses to any of the Operating Partnership or Affiliates thereof), and (C) contractually agreed disposition fees payable by the Operating Partnership to its Affiliated sponsor or advisor.
“OFAC” shall have the meaning as set forth in Section 4.1(y).
“OP Agreement” shall have the meaning set forth in the recitals.
“OP Amendment” shall have the meaning as set forth in Section 2.1.
“Operating Partnership” shall have the meaning as set forth in the Preamble.
“Operating Statement ” means each operating statement, including income and expense statement and statement of cash flows, to be delivered by Operating Partnership to Contributor with respect to the Property and with respect to Operating Partnership, which shall be prepared in accordance with GAAP consistently applied throughout the periods covered by such statement and shall fairly present the financial condition of Operating Partnership and the Property as of the date thereof and the results of operations and changes in financial position of Operating Partnership and the Property for the periods then ended. Each Operating Statement shall be prepared on an accrual basis or, in the alternative, Operating Partnership shall provide Contributor all data necessary to constitute the adjustments necessary to convert such Operating Statement to an accrual basis Operating Statement.
“Other Loans” shall mean the Delta Green Bay Loan and the Sonesta Grand Rapids Loan, each secured by a hotel property and/or the membership interests of the property owners
“Partnership Unit Designation” shall mean a written document attached to and made an exhibit to the OP Agreement setting forth the designations, preferences, redemption rights, and other special rights, powers and duties of the Series A Preferred Units.
“Permitted Liens” means:
| (d) | any liens incurred in any financing of the related obligations or Properties; |
“Person” means any individual, corporation, limited liability company, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or governmental entity.
“Property” means the hotel properties owned and held by the Operating Partnership as of the Closing Date, including, but not limited to, those known as Holiday Inn Express, Cedar Rapids, IA, Hampton Inn & Suites, Pineville, NC, Hampton Inn, Xxxxx, MN, Home2 Suites, Prattville, AL, Home2 Suites, Lubbock, TX, Fairfield Inn & Suites, Lubbock TX, Homewood Suites, Southaven, MS, Courtyard by Marriot, Aurora, CO, Holiday Inn, El Paso, TX, Hilton Garden Inn, Houston, TX, Sheraton Hotel, Northbrook, IL, Hampton Inn & Suites, Fargo, ND, Courtyard by Marriot, El Paso, TX, Hilton Garden Inn, El Paso, TX, Fairfield Inn & Suites, Lakewood, CO, Residence Inn, Fort Xxxxxxx, Co, Xxxxxx Garden Inn, Pineville NC, Hilton Garden Inn, Charlotte, NC, Holiday Inn Express, Wichita, KS.
“Related Loan Documents” means the Sheraton Northbrook Loan together with its related loan agreement, promissory note, mortgage and security agreement, deed of trust, assignment of leases and rents, guaranties, certificates, pledge agreements, subordination, non-disturbance and attornment agreements,
financing statements and county recorded documentation and other documents executed by Contributors, Operating Partnership or any other person in connection with each Loan, in each case as amended or amended and restated through the Closing Date.
“Securities Act” shall mean the Securities Act of 1933, as amended.
“Sheraton Northbrook Borrowers” shall mean the Sheraton Northbrook DRE Borrowers and the Sheraton Northbrook TRS Borrowers.
“Sheraton Northbrook DRE Borrower” shall mean LF3 Northbrook, LLC, a Delaware limited liability company f/k/a APF Northbrook, LLC, an Illinois limited liability company.
“Sheraton Northbrook Loan” shall mean that certain loan agreement, dated as of December 3, 2021, by and between Contributor as lender and Sheraton Northbrook Borrowers, secured by a hotel property known as “Sheraton Northbrook.”
“Sheraton Northbrook TRS Borrower” shall mean LF3 Northbrook TRS, LLC, a Delaware limited liability company.
“Sonesta Grand Rapids Borrowers” shall mean Sonesta Grand Rapids DRE Borrower and the Sonesta Grand Rapids TRS Borrower.
“Sonesta Grand Rapids DRE Borrower” LOF Grand Rapids, LLC, a Delaware limited liability company
“Sonesta Grand Rapids Loan” shall mean that certain loan agreement, dated as of October 15, 2020, by and between Contributor as lender and the Sonesta Grand Rapids Borrowers, secured by a hotel property known as “Sonesta Grand Rapids.”
“Sonesta Grand Rapids TRS Borrower” LOF Grand Rapids JV TRS, LLC, a Delaware limited liability company.
“Sponsor” shall have the meaning as set forth in the Preamble.
“Stated Value” shall means $1 per unit.
“Tax” means any federal, state, provincial, local or foreign income, gross receipts, license, payroll, employment-related, excise, goods and services, harmonized sales, severance, stamp, occupation, premium, windfall profits, environmental, customs duties, capital stock, franchise, profits, withholding, social security, unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated, or other tax of any kind whatsoever, including any interest, penalty, or addition thereto, whether disputed or not, but expressly excluding any transfer, documentary stamp, recording or similar tax, levy, charge or fee incurred with respect to the transaction described in this Agreement.
“Tax Return” means any return, declaration, report, claim for refund, or information return or statement related to Taxes, including any schedule or attachment thereto, and including any amendment thereof.
“Transfer” shall have the meaning as set forth in Section 4.3(f)(i).
Section 1.2 Rules of Application. The definitions in Section 1.1 and elsewhere in this Agreement shall apply equally to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun used herein shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The words “herein,” “hereof,” “hereunder” and similar terms shall refer to this Agreement, unless the context otherwise requires.
ARTICLE II CONTRIBUTION OF THE LOANS
Section 2.1 Contribution. The Contributor agrees to contribute, assign, transfer, convey and deliver to the Operating Partnership, absolutely and unconditionally, and free and clear of all Liens all of its right, title and interest in and to the Contributed Interest and Related Loan Documents (the “Contribution”) on the Closing Date, subject to the terms and conditions of this Agreement. Immediately upon receipt, the Operating Partnership shall contribute, assign, transfer, convey and deliver the Contributed Interest and its Related Loan Documents to the Sheraton Northbrook DRE Borrower (the “DRE Borrower Assignment”). In consideration of the Contribution, and in reliance on the representations and warranties of the Contributor contained in or made pursuant to the terms of this Agreement, (i) the Operating Partnership agrees to acknowledge the assignment and assumption of the Contributed Interest and Related Documents and effect its subsequent assignment of such Contributed Interest and Related Documents to the Sheraton Northbrook DRE Borrower, (ii) the Operating Partnership shall cause the Sheraton Northbrook DRE Borrower to terminate the Sheraton Northbrook Loan and Related Loan Documents assigned to it immediately thereafter and release or cause the release of all security interests thereunder and (iii) the Operating Partnership shall issue to the Contributor at the Closing an aggregate number of Series A Preferred Units that are equal to (A) the Aggregate Liquidation Preference, divided by (B) the Stated Value. The issuance of the Series A Preferred Units to the Contributor shall be evidenced by an amendment (the “OP Amendment”) to the OP Agreement as agreed upon by the Operating Partnership and the Contributor, which shall include the adoption of the Partnership Unit Designation. The parties shall take such additional actions and execute such additional documentation as may be required by such party’s OP Agreement or as may be reasonably required by the OP Agreement in order to effect the transactions contemplated hereby.
Section 3.1Conditions Precedent.
Any or all of the foregoing conditions precedent may be waived by the Operating Partnership in its sole and absolute discretion.
Any or all of the foregoing conditions precedent may be waived by the Contributor in its sole and absolute discretion.
Section 3.2 Time and Place. Unless this Agreement is extended pursuant to its terms or unless otherwise agreed to in writing by the Contributor and the Operating Partnership, the closing of the transactions contemplated by this Agreement shall take place on the Effective Date (the “Closing Date”). All post-closing covenants in this Agreement shall survive the Closing Date until satisfied in full or waived by the Contributor, in the Contributor’s sole discretion.
Section 3.3 Closing Deliveries. On the Closing Date, the parties shall make, execute, acknowledge and deliver (as applicable), or cause to be made, executed, acknowledged and delivered the following (collectively, the “Closing Documents”):
| (a) | This Agreement; |
| (j) | The Contingent Purchase Agreement in form and substance acceptable to the |
parties;
| (k) | The OP Agreement and OP Amendment; |
| (l) | Contributor’s Internal Revenue Service Form W-9; and |
ARTICLE IV REPRESENTATIONS AND WARRANTIES
Section 4.1 Representations and Warranties of the Operating Partnership. The Operating Partnership hereby represents and warrants to the Contributor that, except as disclosed in Annex I, as of the Closing Date that:
constitutes, or when executed and delivered will constitute, the legal, valid and binding obligation of the Operating Partnership, each enforceable against the Operating Partnership in accordance with its terms, except to the extent that enforcement thereof may be limited by bankruptcy, insolvency, reorganization or other laws affecting enforcement of creditors’ rights or by general equitable principles or by the ability of any person to receive the remedies of injunctive relief, specific performance, liquidated damages or any similar remedies in any proceeding.
| (l) | Ownership of Property; Real Property Taxes; Zoning. |
time as such agreements were made available to the Operating Partnership, except for such amendments, modifications and supplements delivered or made available to the Operating Partnership.
| (p) | Licenses, Permits and Franchises. |
(b) have not received a notice of breach, default or termination with respect to any franchise agreement, and (c) are otherwise not in default on any obligations under any franchise agreement or subject to a material risk of such default.
| (r) | Trademarks and Tradenames; Proprietary Rights. |
| (s) | Condition of Property Improvements. |
the Property and the Fixtures and Personal Property. To the Operating Partnership’s knowledge, there have been no alterations to the exteriors of any of the buildings or other improvements on the Property that would render any surveys or plans provided to the Operating Partnership inaccurate or otherwise reflect a deficiency in title to such improvements that would reasonably be expected to result in a Material Adverse Effect on the Company.
the Property is located, and in all cases substantially in compliance with the existing financing arrangements. To the Operating Partnership’s knowledge, each of such policies is in full force and effect, and all premiums due and payable thereunder have been fully paid when due. No written notice of cancellation, default or non-renewal has been received or, to the Operating Partnership’s knowledge, threatened with respect thereto. There are no outstanding claims on the Operating Partnership’s insurance policies relating to the Property or any portion thereof.
Section 4.2 Exemption from Registration. Neither the Operating Partnership, nor any of its subsidiaries or affiliates, nor, to the Operating Partnership’s knowledge, any person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D under the Securities Act) in connection with the offer or sale of the Series A Preferred Units. Assuming the accuracy of the representations and warranties of the Contributor set forth in this Agreement, the Series A Preferred Units will be issued in a transaction exempt from the registration requirements of the Securities Act.
Section 4.3 Representations and Warranties of the Contributor. The Contributor hereby represents and warrants to the Operating Partnership as of the Closing Date:
reorganization or other laws affecting enforcement of creditors’ rights or by general equitable principles or by the ability of any person to receive the remedies of injunctive relief, specific performance, liquidated damages or any similar remedies in any proceeding.
the Series A Preferred Units. The Contributor agrees and acknowledges that it will not, directly or indirectly, offer, transfer, sell, assign, pledge, hypothecate or otherwise dispose of (a “Transfer”) any of the Series A Preferred Units, except as provided in the OP Agreement, unless (i) the Transfer is made pursuant to an effective registration statement under the Securities Act and qualification or other compliance under applicable blue sky or state securities laws, or (ii) Xxxxx Xxxxx, LLP, as counsel for the Contributor or other counsel reasonably acceptable to the Operating Partnership shall have furnished the Operating Partnership with an opinion, reasonably satisfactory in form and substance to the Operating Partnership, to the effect that no such registration is required because of the availability of an exemption from registration under the Securities Act and qualification or other compliance under applicable blue sky or state securities laws, and (iii) the Transfer is permitted pursuant to the terms of the Partnership Agreement. A “Transfer” shall not include any redemption of the Series A Preferred Units or exchange of the Series A Preferred Units pursuant to the terms of the OP Agreement or Partnership Unit Designation. Notwithstanding anything to the contrary in this Agreement, no Transfer shall be made unless it is permitted under the OP Agreement or Partnership Unit Designation.
Section 4.4 Representations and Warranties of the External Manager and Sponsor. The External Manager and Sponsor hereby jointly and severally represent and warrant to the Contributor as of the Closing Date:
Agreement and each management agreement, advisory agreement or other agreement by and between either of the External Manager and the Operating Partnership or the Sponsor and the Operating Partnership, to carry out the transactions contemplated hereby and thereby, on behalf of the Company, including to cause the Company to perform its obligations under the Partnership Unit Designation, and to carry on the Operating Partnership's business as described in the OP Agreement and, to the extent required under applicable law, the External Manager and Sponsor are each qualified to do business and are in good standing in each jurisdiction in which the nature of its business or the character of its property make such qualification necessary.
(iii) above, for any such default or violation that would not, individually or in the aggregate, have a Material Adverse Effect on the Company.
or contemplated against the Company, and its properties, that (i) has not been disclosed in writing to the Contributor, and (ii) will have (singularly or in the aggregate) a Material Adverse Effect on the Company. Neither the External Manager not the Sponsor is not bound by any outstanding order, writ, injunction or decree of any court, Governmental Entity or arbitration against or affecting the Company which would reasonably be expected to have a Material Adverse Effect on the Company. No bankruptcy, insolvency, reorganization or similar action or proceeding, whether voluntary or involuntary, is pending or, to the External Manager’s or Sponsor’s knowledge, has been threatened in writing, against the Company.
regulation implementing the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, and has not committed an offence under the Bribery Act 2010 of the United Kingdom or any other applicable anti-bribery or anti-corruption law; or (iv) made, offered, agreed, requested or taken an act in furtherance of any unlawful bribe or other unlawful benefit, including, without limitation, any rebate, payoff, influence payment, kickback or other unlawful or improper payment or benefit, to any Government Official or other person or entity. To the extent required by applicable law, the Manager has policies and procedures reasonably designed to comply with applicable anti-bribery and anti-corruption laws and will continue to maintain these policies and procedures and conduct its business in a manner reasonably designed to comply with such laws.
ARTICLE V LIMITATION OF LIABILITY
Section 5.1 Limitation of Liability Period. All representations and warranties of the parties set forth in this Agreement or in any of the Closing Documents shall survive the Closing Date for a period of 90 days following the public filing of the 10-K for Lodging Fund REIT III, Inc. with respect to the year ended December 31, 2024 (the “Limitation Period”). Upon the expiration of the Limitation Period there shall be no recourse for such breach pursuant to the terms of this Agreement. The Operating Partnership of Contributor, as the case may be, shall provide actual written notice to the other party of any breach of any of the other party’s warranties or representations of which such other party acquires knowledge, through any means, at any time after the Closing Date but prior to the expiration of the Limitation Period with respect to such representation or warranty, and shall allow sixty (60) days within which to cure such breach, or, if such breach is susceptible of cure but cannot reasonably be cured within sixty (60) days, an additional
thirty (30) day time period to effect such cure so long as such cure has been commenced within such thirty
(30) days and diligently pursued. If the other party fails to cure such breach after actual written notice and within such cure period (as extended), the noticing party’s sole remedy shall be an action at law for Losses as a consequence thereof, which must be commenced, if at all, within thirty (30) days after the expiration of such cure period (as extended). Notwithstanding the foregoing or anything to the contrary herein, in no event shall any either party hereto be liable to the other for any punitive, incidental, consequential, special or indirect damages, including loss of future revenue or income, loss of profits, loss of business reputation or opportunity relating to the breach or alleged breach of this Agreement, or diminution of value or any damages based on any type of multiple.
Section 5.2 Basket and Cap. Notwithstanding anything in this ARTICLE V to the contrary, (i) neither the Operating Partnership nor the Contributor, as the case may be, shall not be entitled to make a claim against the other party for a violation of their respective representations and warranties under this Agreement unless the amount of Losses to such parties equals or exceeds Two Hundred Thousand Dollars ($200,000) (the “Basket”) in any one instance, and (ii) the cumulative, maximum amount of liability that the Operating Partnership or Contributor shall have to the other party, in the aggregate, for breaches of their respective representations and warranties under this Agreement and in any document executed by such parties pursuant to this Agreement shall not exceed Seven Hundred Fifty Thousand Dollars ($750,000.00) (the “Cap”). “Losses” means any and all actual claims, losses, damages, liabilities and expenses, (in all cases, subject to the limitations in Section 5.1 above) including, without limitation, amounts paid in settlement, reasonable attorneys’ fees, costs of investigation, judicial and administrative proceedings or appeals therefrom, and costs of attachment or similar bonds asserted against, imposed upon, or incurred by the Operating Partnership or Contributor, as the case may be, in connection with or as a result of any breach of a representation or warranty of either party contained in this Agreement or any document executed in connection with this Agreement from and after the Closing Date until the expiration of the Limitation Period.
Section 5.3 Limitation on Post-Closing Change Liability. Further, notwithstanding anything in this ARTICLE V to the contrary, if any of the representations or warranties contained in this Agreement or in any document or instrument delivered in connection herewith are false, inaccurate or have changed due to the occurrence of events or circumstances from and after the Closing Date, or any party is in breach or default in any material respect of any of its respective obligations under this Agreement, and the other party nonetheless closes the transactions hereunder, such party shall not have any indemnification obligation or other liability respecting such false, or inaccurate or changed representations or warranties, breach or default (and any cause of action resulting therefrom shall terminate upon the Closing Date), except if, on or prior to the Closing Date, the other party shall have had actual knowledge of the false, inaccurate, changed representations or warranties or other breach or default.
ARTICLE VI
COVENANTS OF THE OPERATING PARTNERSHIP
Section 6.1 Information Rights. At all times while any Series A Preferred Units are outstanding, the Operating Partnership shall faithfully observe and perform that following covenants:
Property (including all bills, invoices and contracts for electrical service, gas service, water and sewer service, waste management service, telephone service, and management services).
Section 6.2 Tax Treatment. The Contributor and the Operating Partnership (i) agree that the Contribution pursuant to this Agreement shall constitute a “capital contribution” to the Operating Partnership and is intended to be governed by Section 721(a) of the Code and analogous provisions of state income tax laws (except as required for accrued interest pursuant to Section 1.721-1(d)(2) of the U.S. Treasury Regulations), (ii) intend that no gain or loss shall be recognized by the Contributor for income tax purposes as a result of such transaction (except as required for accrued interest pursuant to Section 1.721- 1(d)(2) of the U.S. Treasury Regulations), (iii) intend that no income from discharge of indebtedness be recognized by the Operating Partnership for income tax purposes as a result of such transaction, (iv) agree that the “fair market value” of the Series A Preferred Units issued pursuant to this Agreement is equal to the “adjusted issue price,” (within the meaning of the Code and U.S. Treasury Regulations) and principal amount of the Loan for which such Series A Preferred Units were issued pursuant to this Agreement; (v) agree that the Operating Partnership is properly treated as the sole borrower of the Sheraton Northbrook Loan for income tax purposes; (vi) shall report such transaction in a manner consistent with the foregoing provisions of this Section 6.2, except to the extent that a final determination within the meaning of Section 1313(a) of the Code requires otherwise and (vii) agree that they will not take any action that could jeopardize such tax treatment.
Section 6.3Contingency Asset Pools.
(7) business days of the offer.
Pool, including with respect to the collateral securing such loans or associated with the Initial Contingency Asset Pool or Additional Contingency Asset Pool.
Section 6.4Future Contribution and Issuances.
Section 7.1 Further Assurances. The Contributor and the Operating Partnership shall take such other actions and execute such additional documents following the Closing Date as the other may reasonably request in order to effect the transactions contemplated hereby.
Section 7.2 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. For purposes of this Agreement, scanned or .PDF signatures shall be deemed originals.
Section 7.3 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware.
Section 7.4 Amendment; Waiver. Any amendment hereto shall be in writing and signed by all parties hereto. No waiver of any provisions of this Agreement shall be valid unless in writing and signed by the party against whom enforcement is sought.
Section 7.5 Entire Agreement. This Agreement, the exhibits and schedules hereto constitutes the entire agreement and supersede conflicting provisions set forth in all other prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof and thereof, as the case may be.
Section 7.6 Assignability. This Agreement shall be binding upon, and shall be enforceable by and inure to the benefit of, the parties hereto and their respective heirs, legal representatives, successors and assigns; provided, however that this Agreement may not be assigned by any party without the prior written consent of the other parties, and any attempted assignment without such consent shall be void and of no effect.
Section 7.7 Titles. The titles and captions of the Articles, Sections and paragraphs of this Agreement are included for convenience of reference only and shall have no effect on the construction or meaning of this Agreement.
Section 7.8 Third Party Beneficiary. Except as may be expressly provided or incorporated by reference herein, including, without limitation, the indemnification provisions hereof, no provision of this Agreement is intended, nor shall it be interpreted, to provide or create any third party beneficiary rights or any other rights of any kind in any customer, affiliate, stockholder, partner, member, director, officer or employee of any party hereto or any other person or entity.
Section 7.9 Severability. If any provision of this Agreement, or the application thereof, is for any reason held to any extent to be invalid or unenforceable, the remainder of this Agreement and application of such provision to other persons or circumstances will be interpreted so as reasonably to effect the intent of the parties hereto. The parties further agree to replace such void or unenforceable provision of this Agreement with a valid and enforceable provision that will achieve, to the extent possible, the economic, business and other purposes of the void or unenforceable provision and to execute any amendment, consent or agreement deemed necessary or desirable by the Operating Partnership to effect such replacement.
Section 7.10 Fees and Expenses. In connection with the Closing Date, the Operating Partnership shall be responsible for reimbursing the Contributor for the reasonable and documented out-of-pocket expenses including the fees charged by counsel to the Contributor (“Expenses”), incurred through the Closing Date in connection with Contributor’s entry into this Agreement and the Closing Documents. With respect to post-closing obligations, the Operating Partnership shall be responsible for subsequently reimbursing the Contributor for additional Expenses.
Section 7.11 Reliance. Each party to this Agreement acknowledges and agrees that it is not relying on tax advice or other advice from the other party to this Agreement, and that it has consulted or will consult with its own advisors.
Section 7.12 Survival. Except as set forth in Article V herein, it is the express intention and agreement of the parties hereto that the representations, warranties and covenants of the Contributor and the Operating Partnership set forth in this Agreement shall survive the consummation of the transactions
contemplated hereby. The provisions of this Agreement that contemplate performance after the Closing Date of obligations of the parties not fully performed at the Closing Date shall survive the Closing Date and shall not be deemed to be merged into or waived by the instruments of closing.
Section 7.13 Days. All references to days in this Agreement will be construed as calendar days unless otherwise specified and a day will begin at 12:00 a.m. Eastern Standard Time and end at 11:59 p.m. Eastern Standard Time.
Section 7.14 Calculating Time Periods; Time is of the Essence. In calculating any time period prescribed or allowed by this Agreement, the day of the act or event from which the time period begins to run is not included and the last day of the time period is included. Time is of the essence in this Agreement.
Section 7.15 Incorporation of Exhibits. All exhibits, appendices and schedules attached and referred to in this Agreement are hereby incorporated and will be deemed to be a part of this Agreement.
Section 7.16 Notices. All notices, demands and other communications to be given or delivered under or by reason of the provisions of this Agreement will be in writing and will be deemed to have been given (a) when delivered if personally delivered by hand (with written confirmation of receipt), (b) one
(1) Business Day following the day sent by a nationally recognized overnight courier service, (c) three
(3) Business Days after being mailed, if sent by first class mail, return receipt requested, or (d) upon confirmation of read receipt if sent via email to the email address given below. Notices, demands and communications to the Company will, unless another address, facsimile number or email is specified in writing in accordance with the terms set forth herein, be sent to the address or email indicated below. If notice is sent via email, it shall also be provided via one of the other methods identified in this Section 7.16.
To the Contributor:
Access Point Financial
0 Xxxxxxx Xxxxx, 0xx Xxxxx Xxxxxxx, XX 00000
Attention: Xxxxx Xxxx, Xxx Xxxxx and Xxxxxxx Xxxxxxxx Telephone: 000.000.0000
Email: xxxxx@xxxxxxxxxxxxxxxxxxxx.xxx, xxxxxx@xxxxxxxxxxxxxxxxxxxx.xxx, xxxxxxxxx@xxxxxxxxxxxxxxxxxxxx.xxx
with a copy to (which shall not constitute notice): Xxxxx Xxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx Xxx Xxxx, Xxx Xxxx 00000 Attention: Xxxxx X. Xxxxxxx Telephone: (000) 000-0000
Email: xxxxxxxx@xxxxxxxxxx.xxx
To the Operating Partnership:
Lodging Opportunity Fund II, LP 0000 00xx Xxxxxx Xxxxx, Xxxxx 000, Xxxxx, Xxxxx Xxxxxx 00000 Attention: Xxxxxx Xxxxxx
Email: xxxxxxxx@xxxxxxxxx.xxx
with a copy to (which shall not constitute notice):
DLA Piper LLP
0000 Xxxxxxxxx Xxxxx, Xxxxx 0000 Xxx Xxxxx, Xxxxxxxxxx 00000 Attention: Xxxxxx Xxxxxxxxxx
Email: Xxxxxx.xxxxxxxxxx@xxxxxxxx.xxx
[signature page follows]
IN WITNESS WHEREOF, the parties have executed this Contribution Agreement as of the date first written
OPERATING PARTNERSHIP:
Lodging Fund REIT III OP, LP
a Delaware limited partnership
By: | Lodging Fund REIT III, Inc., A Maryland corporation, its General Partner |
By: /s/ Xxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Title: Chief Executive Officer
EXTERNAL MANAGER:
Legendary Capital REIT III, LLC
A Delaware limited liability company
By: /s/ Xxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Title: Chief Investment Officer & Treasurer
CONTRIBUTOR:
Access Point Financial, LLC,
a Delaware limited liability company
By. _ Name: Xxxxxxx X. Xxxxxx
Title: Chief Executive Officer
SPONSOR:
Legendary Capital, LLC,
a North Dakota limited liability company
By: /s/ Xxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Title: Chief Investment Officer and Treasurer
CONTRIBUTOR:
Access Point Financial, LLC,
a Delaware limited liability company
By: /s/ Xxxxxxx Xxxxxx
Name: Xxxxxxx Xxxxxx
Title: Chief Executive Officer
EXHIBIT 10.293
ANNEX I
Disclosure Schedule
In addition to the audited financial statements attached hereto, please note the following exceptions to the representations in the Agreement.
| • | Section 4.1(f) Litigation. |
| - | HGI El Paso Lien |
| - | Xx Xxxxxxx – contractor |
| • | Section 4.1(i) Dividend Restrictions. Lender covenants apply |
| • | Section 4.1(j) Absence of Default (written notice of foreclosure): |
| - | REIT III maintains a $5,000,000 Line of Credit (LOC) secured by second mortgages on three hotels, with a current outstanding balance of $4,000,000. The LOC has |
matured. REIT III is in the final stages of refinancing this balance through a credit facility secured by the Hampton Inn Fargo. This refinancing is expected to close on or before December 31, 2024, at which time the LOC will be fully paid off, and the second mortgages will be released.
| • | Section 4.1(i) The Operating Partnership is the sole owner of each Property |
| - | Hilton Garden El Paso |
| • | Section 4.1(s)(i) Condition of Property Improvements. |
| - | Wichita Holiday Express – Temporary closed – Water line burst – Restoration has commences. Insured Claim |
| - | HVAC Project – HGI Houston |
| • | Section 4.1(s)(ii) PIP Schedule expected to commence in 2025: |
| - | Homewood Southaven |
| - | Home2 Prattville |
| - | Residence Inn Fort Xxxxxxx |
| - | Holiday Inn Express Wichita |
| • | Section 4.1(t) Leases – No third party leases to report with exception of: |
| - | Land Lease - Northbrook |
| - | Multiple TRS entities owe base/performance rent to its REIT owned Landlord |
| • | Section 4.1(y) Full Disclosure. |
| - | Yes. Exceptions at property level are in excess of $200K. Also refer to auditor provided balance |
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