BUSINESS LOANS OF UTAH (BLU) - Agreement with Utah Small Business Growth Initiative (USBGI) to Fund Small Business Loans in Ogden
Adopt or Not Adopt Resolution
The Council will consider authorization of a proposed program for funding small business loans in Ogden. Under the program, Ogden City-- together with other political entities from throughout the state--will contribute funds to a loan fund managed by the Utah Small Business Growth Initiative dba Business Loans of Utah. Ogden City funds contributed to the loan program will fund only loans in Ogden City. An initial amount of $50,000 will be loaned to BLU. These funds were previously appropriated with adoption of the FY18 Budget.
Utah Small Business Growth Initiative (USBGI) In January 2013, the State of Utah Housing and Community Development Division contracted with the Utah Small Business Growth Initiative (USBGI) to administer $12,800,000 in State Small Business Credit Initiative (SSBCI) funds. The SSBCI was part of the 2010 US Jobs Act adopted to address the decline in bank loans resulting from the 2008 recession. The SSBCI funds helped stimulate job growth during that difficult time. USBGI focuses on promoting a healthy small business economy to accomplish its mission of stabilizing Utah’s neighborhoods. Because of USBGI’s leadership, SSBCI funds continue to help stimulate job growth in Utah.
USBGI partners with financial institutions to help small businesses who cannot access credit from traditional sources obtain the financing needed to grow and create or maintain jobs. To do this, USBGI offers two programs – a loan guarantee program and a loan participation program. Any Utah-based small business can apply. In addition, USBGI partners with multiple business assistance organizations that provide a variety of
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free or low cost business counseling services to local small businesses. Additional information regarding USBGI can be found on their website here.
Business Loans of Utah (BLU) Business Loans of Utah will administer loan funds for a consortium of political sub-divisions throughout Utah. Zions Bank has agreed to invest $7 M into the BLU fund. USBGI will invest $600,000 to be used as a long loss guarantee and participating political subdivisions will each determine their own investment amounts. Currently Ogden, Provo, Orem and Spanish Fork cities, and Weber and Box Elder counties have agreed to participate. It is anticipated that others cities and counties will also take advantage of the program. BLU also hopes to attract other large lenders to expand the loan fund.
August 9, 2017 The City Council adopted the FY2018 Budget which included a $50,000 appropriation for the “State Cooperative Loan Fund.” The source of the funding was BDO lease revenues.
October 3, 2017 The City Council Office received an Administrative Transmittal requesting approval of a contract with BLU to participate in a small business loan program. The Administration also requested that consideration of this program track with consideration of the Annual Action Plan Amendment #1.
November 14, 2017 The Council held a work session to review and discuss the BLU program.
The Administration is seeking Council approval to participate in the Business Loans of Utah (BLU) Program. BLU will provide a source of loan funds for developing Ogden City businesses and other businesses in participating cities and counties.
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The program will operate as follows: Class A Lenders (commercial banks) will provide the primary source of loan funds o Zions Bank is currently the only Class A Lender. It will make an initial loan of $7,000,000 to the BLU program as a Community Reinvestment Act investment Class B Lenders (participating cities and counties or their affiliates) will contribute their own funds to the pool o Orem City, Provo City, Spanish Fork City, Ogden City, Weber County and Box Elder County are participating o Class B Lenders will provide 14.2857% (hereinafter 14%) of any given Project Loan up to the amount each Class B Lender has contributed to the fund It is anticipated that as the program grows, additional Class A and Class B Lenders will join the BLU program, providing substantial amounts of additional funds to the program Utah Small Business Growth Initiative, LLC (“USBGI”) dba Business Loans of Utah (“BLU”) will be a Class C Lender and will also administer Project Loans o BLU will allocate $600,000 of USBGI Funds to the BLU program as a loan loss reserve (LLR) o The USBGI Funds will remain in the BLU program to provide a loan loss reserve to cover possible losses in excess of the 14% Class B Project Loan Contribution o Ogden City funds loaned to the BLU program will fund 14% of each small business project loan awarded to an Ogden City business approved under the BLU program o A loan made to a business located in another city will include a 14% Class B Project Loan Contribution from that city. Ogden City loan funds will not be used o If a Project Loan becomes uncollectable, the losses will be borne first by the sponsoring Class B Lender up to its 14% Class B Project Loan Contribution to the Project Loan o The remaining Class B Lender loan funds held by USBGI will not be used to pay losses in excess of the 14% Class B Project Loan
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Contribution o Class B Lenders are not acting as guarantors of Project Loans beyond its 14% Class B Project Loan Contribution o Losses incurred under a Project Loan in excess of the 14% Class B Project Loan Contribution will be borne by the Class C Lender and paid out of its LLR. Thereafter, any losses beyond the 14% Class B Project Loan Contribution and the Class C Lender LLR will be borne by the Class A Lender(s) All Class B Lender funds, including interest earned on those funds, will be tracked and accounted for separately by USBGI Ogden City has budgeted its first Class B Lender loan of $50,000 to the BLU program For each dollar Ogden City lends to the BLU program, BLU will allocate and make available loan funds of up to seven dollars to Ogden City based businesses in accordance with BLU lending guidelines. Ogden City’s initial loan of $50,000 will enable BLU to lend up to $350,000 to local Ogden City based small businesses o The City’s Business Information Center will continue to review loan applications to ensure each loan meets the City’s loan criteria. The BIC will then package the Project Loan documents and present them to BLU for final consideration and approval o If approved, USBGI will receive all loan payments made by borrowers on Project Loans. USBGI will disburse all loan payments first to the applicable Class A Lender. All further payments will be credited to the loan account of the sponsoring Class B Lender, until the principle on the Project Loan is paid in full, which will equal payment of the Class B Lender’s 14% share of the Project Loan o As payments are credited to the Class B Lender’s loan account held by USBGI, it is anticipated, but not required, that the Class B Lender loan funds will remain with USBGI to make future loans to Ogden City based businesses Project Loans will bear interest at the published LIBOR rate, plus 3.5%, or as otherwise amended Subject to Ogden City Council approval, Ogden City will have the
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opportunity to make additional loans to USBGI to provide additional loans funds available to Ogden City small businesses USBGI will seek to find additional CRA lenders like Zions Bank to lend funds to the BLU program and grow the loan fund
Proposed Resolution The proposed Resolution authorizes participation in the program by loaning $50,000 to USBGI. It also authorizes the Mayor to execute any documents necessary to put the loan program into effect.
Graphic Showing Relationship of Parties in BLU Program Administration Transmittal Resolution BLU Loan Program Documents
1. Please review the BLU loan program.
2. Does the BLU loan program replace existing loan programs that the BIC is currently offering?
3. What is the Administration’s goal for total contribution to the loan fund?
Council Staff Contact: Janene Eller-Smith, (801)629-8165
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BIC
Zions Bank Ogden City USBGI dba BLU (Class A Lender) (Class B Lender) (Class C Lender)
$7,000,000 $50,000 $600,000 (Loss Reserve)
USBGI dba BLU (Borrower/Administrator)
Note: Proposed contract addresses the relationship between Lenders and USBGI as Borrower. Other contracts will govern Project Loans. Project Loan Project Loan $100,000 $100,000 ($14,000 Ogden, ($14,000 Ogden, $86,000 Zions Bank) $86,000 Zions Bank)
Project Loan Project Loan Project Loan $50,000 $50,000 $50,000 ($7,000 Ogden, ($7,000 Ogden, ($7,000 Ogden, $43,000 Zions Bank) $43,000 Zions Bank) $43,000 Zions Bank)
OGDEN CITY COUNCIL TRANSMITTAL
______Date Received: ______Mark Johnson, CAO Date Sent to Council: ______
DATE: October ___, 2017
TO: Ogden City Council
FROM: Tom Christopulos, CED Director ______TC
SUBJECT: Business Loans of Utah “BLU” Program – Resolution for participation in the BLU Program
STAFF CONTACT: Sara Stoffers, CED Deputy Director ______SS
REQUESTED TIMELINE: Work Session – Tuesday, October ____, 2017 Action – Tuesday, October _____, 2017
RECOMMENDATION: Administration recommends the City Council adopt the resolution for Ogden City to participate in the Business Loans of Utah “BLU” Program, administered by the Utah Small Business Growth Initiative, LLC. This program will significantly augment funding opportunities for Ogden City small businesses to create jobs and improve commercial properties.
DOCUMENTS: 1. Resolution creating the Business Loans of Utah Program partnership. ______MS 2. Attachment A: Program Guidelines ______MS 3. Attachment B: Credit Agreement ______MS
DISCUSSION:
Background Small businesses account for 99.7 percent of all of the employers in the U.S. Small businesses employ over 56 million people in the United States, and, according to the Small Business Administration, that is equal to 48.4 percent of the private sector employees in the nation1.
Non-predatory lending opportunities are very limited for emerging Ogden City small businesses to expand. The Utah Small Business Grow Initiative, LLC has developed an economic development tool for local municipalities and counties to provide their local small businesses reasonable lending opportunities, when they are not traditionally bankable through their Business Loans of Utah (BLU) Program.
1 https://www.sba.gov/sites/default/files/Small_Business_Advocate_Feb_2015.pdf
Fiscal Impact
“Class A Lenders” will be commercial banks. The first “Class A Lender” to join the program is Zions Bank. It will make an initial loan of $7,000,000 to the BLU program as a Community Reinvestment Act (“CRA”) investment. “Class B Lenders” will be cities and counties, or their affiliates. At present, Orem City, Provo City, Spanish Fork City, Ogden City, Weber County and Box Elder County are planning to participate. It is expected that as the program succeeds, and as other lenders and communities see the benefits of joining the program, additional Class A Lenders (i.e. additional commercial banks) and additional Class B Lenders (i.e. additional cities and counties) will be added to the BLU program, thereby providing substantial amounts of additional funds to the program. The sole “Class C Lender” will be the Utah Small Business Growth Initiative, LLC (“USBGI”) dba Business Loans of Utah (“BLU”). BLU will allocate $600,000 of its funds (“USBGI Funds”) to the BLU program as a loan loss reserve (“LLR”). o The USBGI Funds will remain in the BLU program to provide a loan loss reserve to cover possible losses in excess of the 14% Class B Project Loan Contribution, as defined below, from loans made under BLU program guidelines (“Project Loans”). o Ogden City funds loaned to the BLU program will fund 14.2857% (“14% Class B Project Loan Contribution” – for convenience, 14% shall be used hereinafter instead of 14.2857%) of each small business loan awarded to an Ogden City business approved under the BLU program. o A loan made to a business located in another city will include a 14% Class B Project Loan Contribution from that city and not from Ogden City loan funds. o Should a Project Loan become uncollectable, the losses will be borne first by the sponsoring Class B Lender up to its 14% Class B Project Loan Contribution to the Project Loan. The remaining Class B Lender loan funds held by USBGI will not be used to pay losses in excess of the 14% Class B Project Loan Contribution. o Class B Lenders are not acting as guarantors of Project Loans beyond its 14% Class B Project Loan Contribution. o Losses incurred under a Project Loan in excess of the 14% Class B Project Loan Contribution will be borne by the Class C Lender and paid out of its LLR. Thereafter, any losses beyond the 14% Class B Project Loan Contribution and the Class C Lender LLR will be borne by the Class A Lender(s). For each dollar Ogden City lends to the BLU program, BLU will allocate and make available loan funds of up to seven dollars to Ogden City based businesses in accordance with BLU lending guidelines. All Class B Lender funds, including interest earned on those funds, will be tracked and accounted for separately by USBGI. Class B Lender Ogden City has budgeted its first loan of $50,000 to the BLU program. Ogden City’s initial loan of $50,000 will enable BLU to lend up to $350,000 to local Ogden City based small businesses. o Project Loans will bear interest at the published LIBOR rate, plus 3.5%, or as otherwise amended. o USBGI will receive all loan payments made by borrowers on Project Loans. USBGI will disburse all loan payments first to the applicable Class A Lender. Once the Class A Lender portion of the loan has been paid in full, including payment of all accrued interest on the loan to date of the last payment to the Class A Lender, all further payments will be credited to the loan account of the sponsoring Class B Lender, until the principle on the Project Loan is paid in full,
which will equal payment of the Class B Lender’s 14% share of the Project Loan, together with all accrued interest thereon, including interest accruing on the outstanding Class B Lender funds on loan during the time payments were being made to the Class A Lender. o As payments are credited to the Class B Lender’s loan account held by USBGI, it is anticipated, but not required, that the Class B Lender loan funds will remain with USBGI to make future loans to Ogden City based businesses. Subject to Ogden City Council approval, Ogden City will have the opportunity to make additional loans to USBGI to provide additional loans to Ogden City based, small businesses. USBGI will continue to find additional CRA lenders, like Zions Bank, to lend funds to the BLU program, as the loan pool grows.
Recommendation
The Administration recommends that the Ogden City Council adopt the attached resolution, approving (i) the $50,000 loan to USBGI and (ii) Ogden City’s participation in the Business Loans of Utah “BLU” Program as outlined above. The activities, services, and events that are funded by BLU are vital to the promotion and growth of the small businesses in Ogden City.
ATTACHMENTS:
Attachment A – BLU Summary Attachment B – Draft of Credit Agreement and Exhibits Resolution – Accept study and participate
Utah Small Business Growth Initiative dba Business Loans of Utah (BLU) Fund Structure
Total Fund Size - $8,000,000 Sample Loan - $100,000
$1,000,000 Subordinate Debt - Cities and Counties $14,286 Subordinate Debt - Cities and Counties (Class B Lenders)
$7,000,000 1st lien position - Banks (Class A Lenders) $85,714 1st lien position - Banks
$600,000 Loan Loss Reserve USBGI (dba BLU) $600,000 Loan Loss Reserve USBGI (dba BLU) (Class C Lender)
Cities and Counties will be allocated $350,000 in loan funds, for Cities and Counties will fund a minimum of 1/7th (14.285%) of the every $50,000 in Top Loss. The total fund size will be $8,000,000. loan amount as subordinate debt. This subordinate debt will be in USBGI will provide a Loan Loss Reserve of $600,000. Top Loss position. The Credit Committee may require additional subordinate debt. USBGI's Loan Loss Reserve of $600,000 will be pooled for all loans and is in 2nd loss position. Utah Small Business Growth Initiative dba Business Loans of Utah (BLU) Referral & Application Process
Referrals can be BLU contacts the BLU sends summary of Community submitted to BLU by small business and information to the determines if the community banks or gathers preliminary community for approval to loan meets their others information proceed with underwriting parameters
NO
BLU prepares loan BLU meets with the approval package Small Business and for Credit gathers all information Small Business is notified Committee Review for the application by BLU that their loan request does not meet the fund parameters
Small Business is Decline letter is notified and closing sent by BLU to the is scheduled Small Business Utah Small Business Growth Initiative dba Business Loans of Utah (BLU) Payment and Loss Waterfall
PAYMENTS: LOSSES: Monthly payments from the small businesses will be applied as follows:
Servicing Principal Interest Rate Fee Loss Waterfall Class A Lenders All principal goes to LIBOR + 3.50% N/A Class B Lenders The Class B subordinate loan reduce the Class A paid monthly. will be in first loss position and loan until it is paid off the only funds at risk for Class B lenders. Class B Lenders Recieves principal LIBOR + 3.50% N/A Loan Loss The USBGI loan loss reserve when the loan is paid paid when the Reserve will cover losses over and off. loan is paid above the subordinate loan. off. USBGI N/A If the total Top 1.5% of the Class A Lenders Should the loan loss reserve Loss is full loan become depleted, the Class A USBGI get the balance. lender will cover any excess spread additional losses. Loan Loss Reserve N/A If the total Top N/A Example Loan Assume that a $100,000 loan Loss is not full, Loss: (Class A $85,714 and Class C the excess $14,286) defaults and the spread goes to collateral is liquidated for Loan Loss $20,000. The Class C lender Reserve. would lose $14,286 and the balance of $65,714 would be covered by the loan loss reserve. Utah Small Business Growth Initiative dba Business Loans of Utah (BLU) Shareholders
Shareholders Role Amount Credit Committee
Class A Lenders: Currently the only Class A lender is Zions Provide the majority of the funding for the small $7,000,000 Class A Lenders Bank. We anticipate that once the fund business loans. Each loan must be approved by will each have 1 closes, additional lenders will be added the majority of the Class A lenders. seat with a as needed. minimum of 3 total. Class B Lenders: Currently we anticipate six communities Provide top loss, subordinate loans of at least $50,000 for every Each Class B to be part of the initial fund closing. 14.2857% (1/7th) for loans in the community's $350,000 in lender will have 1 Those communtiies include, Box Elder target area. Class B lenders will take a preliminary allocated funds or seat. Only the County, Weber County, Ogden City, look at each loan request in their area and give a 7 to 1 leverage community Orem, Provo, and Spanish Fork. We approval to proceed with underwriting. They will of public funds. providing the anticipate adding additional have 1 of at least 5 seats on committee. subordinate loan communities once the fund closes. will have a vote.
USBGI dba BLU: Fund manager, administrative agent and Provide $600,000 in loan loss reserves. Originate $600,000 in loan One seat. servicer. Over the past 4 years USBGI and service the loans. Work with small businesses loss reserve administered the SSBCI program for the to help them prepare for traditional bank State of Utah. That program officially financing. They will collect payments and in the ended on 12/31/2016. event of a default, pursue legal action and if necessary liquidate the collateral. UCNS: Parent organization of USBGI . Utah Center for Neighborhood Stabilization stabilizes neighborhoods through its subsidiary organizations by providing single and multi-family N/A N/A affordable housing, neighborhood revitalization, foreclosure prevention, and small business lending and investing. Utah Small Business Growth Initiative dba Business Loans of Utah (BLU) Frequently Asked Questions
Index of FAQ’s Application and approval process
1 - Who refers the loans? 2 - What is the process after a loan request is referred to BLU? 3 - Who underwrites the loans? 4 - Who determines the loan structure and terms? 5 - Who sets the interest rate? 6 - Who determines if the loan will meet the parameters set by the city or county councils? 7 What types of loans can be financed with this fund? 8 - What are the maximum and minimum loan size? 9 - Who approves the loan? 10 - Who closes the loan? 11 - Who services the loan after closing? 12 - Can a community underwrite their own loans? 13 - Can a community approve their own loans? 14 - Can a community decline a loan?
Fund Structure
15 - How big is the fund? 16 - Who are the members of the fund? 17 - How is the amount of funds allocated to each community determined? 18 - Can new members enter the fund after closing? 19 - What is the interest rate on the Class B subordinate loans? 20 - When is that interest paid to the lenders? 21 - How much is the total top loss? 22 - Who is in first loss position? 23 - How much subordinate debt is required on each loan? 24 - How is the $600,000 loan loss used? 25 - Is the Class B lender’s loss limited on each loan? 26 - Who collects the payments and services the loan? 27 - In the event of a default, who pursues legal action and liquidates the collateral? 28 - Can a Class B lender stop participating in the fund?
Application and approval process:
1. Who refers the loans? Referrals can come from many sources. They can come from the cities and counties’ Economic Development Department, local financial institutions or the small business owner may contact BLU directly or through their website www.utsbgi.com.
2. What is the process after a loan is referred to BLU? When BLU receives the application, they will contact the small business and gather preliminary information. BLU then sends a summary of the information to the community where the small business is located.
The community determines if the small business meets their parameters and, if so, the community gives approval to proceed with the full underwriting.
BLU works with the small business to gather all the information required in the application.
3. Who underwrites the loans? Once the application is complete, BLU will underwrite the loan and prepare a loan approval package for the BLU Credit Committee to review.
4. Who determine the loan structure and terms? BLU will recommend a loan structure and loan terms to the Credit Committee. The Credit Committee may change or modify the recommended structure and terms.
5. Who sets the interest rate? The interest rate is recommended by BLU based on the credit risk of the loan request. The minimum interest rate will be the maximum rate on an SBA loan and the maximum rate on the BLU loan will be 18%. The Credit Committee can change or modify the rate as part of the approval.
6. Who determines if the loan will meet the parameters set by the city or county council? The city or county will have two opportunities to review the loan and determine if it meets the approved parameters. The first opportunity will be soon after the referral is received by BLU. Once the referral is received, a preliminary summary of the request will be prepared and sent to the community for their review and approval to proceed with the full underwriting.
The second opportunity will be at Credit Committee. When the loan is presented to the Credit Committee, the community will also be able to review the full approval package and if it is determined that the loan request does not meet the community parameters, the loan will not be approved.
7. What types of loans can be financed with the fund? The loan products will be based on recommendations from USBGI and the lending needs in the markets of government members. The final loan products must be approved by the loan committee.
The loan products are anticipated to include the following:
• Equipment Loans • Working Capital Loans • Accounts Receivable Loans • Unsecured Loans • Real Estate Loans
8. What are the maximum and minimum loan amounts? The minimum loan amount is $50,000 and the maximum loan amount is the lesser of 10% of the total fund ($700,000) or 25% of the funds allocated to the community that is providing the subordinated debt for the small business. For example, if the community committed $100,000 in subordinate debt, they would be allocated $700,000 in loan funds. The maximum loan for that community would be $700,000 X 25% = $175,000.
Exceptions to the maximum and minimum loan amounts can be approved by the Credit Committee.
9. Who approves the loan? All loans will be approved by the BLU Credit Committee. Members of the committee will be representatives from the shareholders in the fund. Each Class A lender (financial institutions) will have one vote. If there are less than 3 Class A lenders, they will have a minimum of 3 votes total. The community that is providing the subordinated debt will have 1 vote and BLU will have 1 vote.
Credit Committee has the option to decline a loan, approve a loan as presented or approve the loan will additional conditions. Those conditions may include increasing the amount of subordinate debt.
10. Who closes the loan? The loan will be closed by BLU.
11. Who services the loan after closing? All servicing on the loan will be done by BLU. BLU will collect and process the payments, track loan balances, oversee all reporting requirements, troubleshoot problems and recommend solutions.
12. Can a community underwrite their own loan? We will generally work with an experienced lender to underwrite the loans and prepare credit presentations for Credit Committee. A community may participate in that underwriting process and be compensated for their efforts, provided that they can demonstrate the ability to do so and follow the established BLU underwriting and presentation procedures.
13. Can a community approve their own loan? Each community will have a representative on the Credit Committee. Communities will only be able to vote on loans for which they provide the subordinate debt. The Credit Committee will have representatives from each of the banks that participate in the fund and one representative from BLU. All loans will require approval by the Credit Committee.
14. Can a community decline a loan? As part of the application and approval process, each community will receive preliminary information on each loan request in their geographical area. The community will approve BLU to proceed with underwriting, if the business and loan meet the parameters established by the community.
When the loan goes to Credit Committee, the community will be able to review the credit presentation after full underwriting and determine if the loan meets the community parameters. Also, should Credit Committee approve a loan with a requirement for a larger subordinate debt, the community may also decline the loan if they do not wish to fund additional subordinate debt.
Fund Structure
15. How big is the fund? Initially the fund will have a total of $8MM available for small business loans. Lenders will provide $7MM in funding and cities and counties will provide $1MM in subordinated debt. It is intended that additional lenders and cities and counties will be added after the fund’s initial close.
16. Who are the members of the fund? The fund will consist of three classes of members. The Class A lenders are financial institutions that provide most of the debt for the project. The initial Class A lender is Zions Bank. It is anticipated that additional Class A lenders will be added as the demand for small business loans grows.
Class B lenders are the cities and counties that participate in the fund. The Class B lenders provide a minimum of 14.29% of subordinated debt of each loan. It is anticipated that the initial Class B lenders will be Box Elder County, Weber County, Ogden City, Orem, Provo and Spanish Fork. It is anticipated that additional Class B lender will be added after closing.
BLU is the Class C lender and will initially provide $600,000 in loan loss reserve. The loan loss will be increased from the interest spread as additional Class A and B lenders join the fund.
17. How is the amount of funds allocated to each community determined? Funds are allocated to cities and counties on a 1 to 7 ratio. For every $1 that the community commits to fund as subordinate debt they are allocated $7. The minimum commitment amount is $50,000 in subordinate debt, which equates to $350,000 in allocated funds.
18. Can new members be added after closing? The fund is set up so that additional Class A and B lenders can be added at any time.
19. What is the interest rate on the Class B subordinate loans? The current rate on the loans for Class A and Class B lenders is the LIBOR/Swap rate, plus 3.50%. The Credit Committee sets the final rate.
20. When is the interest paid to the lenders? Interest is paid monthly by the borrowers. The Class A lenders will receive their interest as the payments are made monthly. The Class B lenders interest will be held in an account until the Class A lenders are repaid in full. When the Class A lender’s portion of the loan is repaid, the community will be paid their interest.
21. How much is the total top loss? Initially the total top loss will be a minimum of 14.2857% (1/7th) provided in the form of subordinate debt from the Class B lenders (cities and counties) and $600,000 from USBGI in a loan loss reserve. Additional loan loss reserve will be collected from the excess spread, until the total top loss reaches 25% of the allocated funds.
22. Who is in first loss position? The Class B lender’s (cities and counties) subordinate loans will be in first loss position. For any losses greater than the subordinated loans, the loss will be paid from the BLU loan loss reserve, if the loan loss reserve is depleted, the Class A lender will lose money.
23. How much subordinate debt is required on each loan? The required subordinate debt is determined by the Credit Committee and will be a minimum of 14.2857% (1/7th) of the total loan amount. The Credit Committee may require additional subordinated debt based on the risk profile of the loan.
24. How is the $600,000 loan loss used? The BLU loan loss reserve (initially $600,000) will be used to cover losses greater than the subordinate debt. For example, assume that we make a $100,000 loan ($14,286 of subordinate debt and $85,714 of lender debt) and that the loan goes into default and we must liquidate the collateral. If the total loss is $50,000 then the $14,286 in subordinate debt is not repaid. The remaining loss of $35,714 would be paid from BLU loan loss reserve.
25. Is the Class B lender’s loss limited on each loan? Yes, the Class B lender’s loss is limited by the amount of the subordinated debt.
26. Who collects the payments and services the loan? BLU will collect payment and service the loans. Reporting will be sent by BLU to all lenders on a regular basis.
27. In the event of a default, who pursues legal action and liquidates the collateral? All work out plans are approved by the Credit Committee. BLU would pursue any legal action and liquidate the collateral if that becomes necessary.
28. Can a Class B lender (city or county) stop participating in the fund? A Class B lender may withdraw from the fund with 30 days notice. The Class B lender would be obligated to continue funding on any loan that had been approved and on any loans that were not yet totally funded. The Class B lender may also stop participating by withholding their approval to proceed with underwriting on any loan.
RESOLUTION NO. ______
A RESOLUTION OF THE OGDEN CITY COUNCIL APPROVING A LOAN IN THE AMOUNT OF $50,000 TO THE BUSINESS LOANS OF UTAH AND APPROVING PARTICIPATION IN THE BLU LOAN PROGRAM WHICH WILL PROVIDE CRITICAL INVESTMENT CAPITAL TO LOCAL BUSINESSES THAT ARE UNDERSERVED AND LACK ACCESS TO NON-PREDATORY LENDING OPPORTUNITIES IN OGDEN, UTAH. WHEREAS, Ogden City has contemplated current economic conditions in Ogden City and has deemed it desirable to participate in the small business loan program administered by the Utah Small Business Growth Initiative, LLC (“USBGI”), dba Business Loans of Utah (“BLU”) as described in Attachment “A” (“BLU Loan Program”); and WHEREAS, participation in the BLU Loan Program requires Ogden City to lend, at a minimum, $50,000 to USBGI; and WHEREAS, participation in the BLU Loan Program will provide needed business loans to Ogden City based small businesses which will help them grow, create and retain jobs, provide economic opportunities, and stimulate the redevelopment and utilization of commercial and industrial properties. NOW, THEREFORE, BE IT RESOLVED by the Ogden city Council as follows: 1. The Ogden City Council hereby finds it beneficial for Ogden City to participate in the BLU Loan Program by making a loan in the amount of $50,000 to BLU, which will make non- predatory loans available to small businesses located in Ogden City. 2. The Mayor of Ogden City is hereby authorized to execute and deliver any and all documents necessary to make the $50,000 loan to BLU and to fully participate in the BLU program. 3. This Resolution becomes effective immediately upon adoption by the Ogden City Council.
PASSED AND ADOPTED BY THE OGDEN CITY COUNCIL THIS ____ DAY OF ______, 2017.
Chair, Ogden City Council
ATTEST:
Ogden City Recorder
APPROVED AS TO FORM:
______Ogden City Attorney DRAFT: September 14, 2017
CREDIT AGREEMENT
among
UTAH SMALL BUSINESS GROWTH INITIATIVE LLC, DBA BUSINESS LOANS OF UTAH as Borrower,
and
UTAH SMALL BUSINESS GROWTH INITIATIVE LLC, DBA BUSINESS LOANS OF UTAH, as Administrative Agent,
and
ZB, N.A., DBA ZIONS FIRST NATIONAL BANK, as Class A Lender,
and
BOX ELDER COUNTY, CITY OF OREM, OGDEN CITY CORPORATION, PROVO CITY, SPANISH FORK CITY, AND WEBER COUNTY, as Class B Lenders,
and
UTAH SMALL BUSINESS GROWTH INITIATIVE LLC, DBA BUSINESS LOANS OF UTAH as Class C Lender.
Dated as of October _____, 2017
4829-2834-4907.7
TABLE OF CONTENTS
Page
ARTICLE I LOANS TO BORROWER ...... 1
Section 1.1 Making of Loans ...... 1 Section 1.2 The Lenders ...... 3 Section 1.3 Origination of Project Loans ...... 4 Section 1.4 Funding Requests ...... 5 Section 1.5 Borrowing Funding ...... 6 Section 1.6 Records of Lenders ...... 7 Section 1.7 Notes; Principal and Interest ...... 7 Section 1.8 Characterization of Loans ...... 9 Section 1.9 Increased Costs; Increased Capital; Taxes .... Error! Bookmark not defined. Section 1.10 Payments in Full; Taxes ...... 11 Section 1.11 Sharing of Payments ...... 12 Section 1.12 CRA Sub-Allocation ...... 12 ARTICLE II PROJECT LOAN DOCUMENTS ...... 12
Section 2.1 Project Loan Documentation...... 12 Section 2.2 Required Project Loan Documents ...... 12 Section 2.3 Servicing of Project Loans ...... 13 Section 2.4 Required Deliveries to Servicer ...... 13 ARTICLE III CLOSING PROCESS AND PROCEDURES ...... 13
Section 3.1 Timing of Closings ...... 13 Section 3.2 Conditions Precedent to Effectiveness of the Agreement ...... 14 Section 3.3 Conditions Precedent to each Draw ...... 14 ARTICLE IV REPRESENTATIONS AND WARRANTIES ...... 15
Section 4.1 Status; Ownership; Single Purpose Entity ...... 15 Section 4.2 Authorization ...... 15 Section 4.3 Litigation ...... 15 Section 4.4 Regulation U ...... 16 Section 4.5 Binding Obligations ...... 16
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Section 4.6 No Debt ...... 16 Section 4.7 Not on Government Lists ...... 16 Section 4.8 No Borrower Material Adverse Effect ...... 16 Section 4.9 Consents ...... 16 Section 4.10 Additional Representations and Warranties ...... 16 Section 4.11 Representations and Warranties Regarding the Project Loans ...... 17 Section 4.12 No “accumulated funding deficiency” ...... 18 ARTICLE V COVENANTS ...... 18
Section 5.1 Enforcement of Project Loans ...... 18 Section 5.2 Accounting and Tax Reporting ...... 18 Section 5.3 Equity Investments ...... 18 Section 5.4 Exercise of Rights with Respect to Servicer ...... 18 Section 5.5 Increases in Fees to Any Person...... 18 Section 5.6 Intentionally Omitted ...... 18 Section 5.7 Preservation of Business ...... 18 Section 5.8 Credit Manual and Underwriting Guidelines ...... 19 Section 5.9 Deposits into Borrower Operating Account ...... 19 Section 5.10 Guarantees ...... 19 Section 5.11 Other Indebtedness ...... 19 Section 5.12 Amendment of Organizational Documents ...... 19 Section 5.13 Change of Control ...... 19 Section 5.14 Additional Covenants ...... 19 Section 5.15 Delivery of Original Project Notes, Project Loan Agreements and Project Guarantees ...... 20 Section 5.16 Delinquent Loans ...... 20 Section 5.17 No Pledges ...... 21 Section 5.18 Change in Management...... 21 Section 5.19 Financial Covenants ...... 21 Section 5.20 Sunshine Requirements ...... 21 ARTICLE VI THE ADMINISTRATIVE AGENT ...... 21
Section 6.1 Authorization and Action ...... 21 Section 6.2 Administrative Agent’s Reliance, Etc ...... 22
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Section 6.3 USBGI and Affiliates ...... 22 Section 6.4 Lender Credit Decision ...... 23 Section 6.5 Indemnification; General Immunity ...... 23 Section 6.6 Successor Administrative Agent ...... 23 Section 6.7 Disclosures ...... 24 Section 6.8 Compensation ...... 24 Section 6.9 Additional Services ...... 25 Section 6.10 Beneficiaries ...... 25 Section 6.11 Financial Covenants...... 25 Section 6.12 Grant of Security Interests...... 25 ARTICLE VII EVENTS OF DEFAULT AND REMEDIES ...... 27
Section 7.1 Events of Default...... 27 Section 7.2 Remedies ...... 29 Section 7.3 Waiver of Defaults and Other Actions ...... 30 Section 7.4 Remedies are Cumulative ...... 30 Section 7.5 Set-Off ...... 30 Section 7.6 Application of Proceeds ...... 31 ARTICLE VIII FEES AND EXPENSES ...... 31
Section 8.1 Expenses Generally ...... 31 Section 8.2 Claims Against Lenders ...... 31 ARTICLE IX INDEMNITIES; LIMITATIONS OF LIABILITY ...... 32
Section 9.1 Indemnity ...... 32 Section 9.2 No Liability on Part of Any Indemnified Party ...... 32 Section 9.3 No Joint Venture, Etc ...... 32 ARTICLE X BORROWER ACCOUNTS; APPLICATION OF PROJECT LOAN PROCEEDS ...... 33
Section 10.1 Borrower Accounts ...... 33 Section 10.2 Application of Project Loan Proceeds...... 33 Section 10.3 Sharing of Project Loan Losses...... 35 Section 10.4 35 Section 10.5 Full Release Upon Repayment ...... 35 ARTICLE XI REPORTING REQUIREMENTS ...... 35
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Section 11.1 Financial Statements and Information; Annual Portfolio Management Reports ...... 35 Section 11.2 Quarterly and Monthly Reports ...... 36 Section 11.3 Notices of Default; Material Adverse Change ...... 37 Section 11.4 Litigation ...... 37 Section 11.5 Charge-Offs or Write-Downs ...... 37 Section 11.6 Other ...... 38 ARTICLE XII OBLIGATIONS OF JUNIOR LENDERS ...... 38
Section 12.1 Bankruptcy ...... 38 ARTICLE XIII COMMITTEES ...... 39
Section 13.1 Credit Committee ...... 39 Section 13.2 Advisory Committee ...... 39 Section 13.3 Pricing Committee ...... 39 ARTICLE XIV MISCELLANEOUS ...... 39
Section 14.1 Further Assurances ...... 39 Section 14.2 Examination of Records ...... 40 Section 14.3 Amendments and Waivers ...... 40 Section 14.4 GOVERNING LAW ...... 41 Section 14.5 CONSENT TO JURISDICTION AND VENUE; WAIVER OF JURY TRIAL ...... 41 Section 14.6 Headings ...... 42 Section 14.7 Integration ...... 42 Section 14.8 Notices ...... 42 Section 14.9 Assignments ...... 44 Section 14.10 Disgorgement ...... 45 Section 14.11 Conclusiveness of Statements by Lenders ...... 45 Section 14.12 Severability ...... 45 Section 14.13 Counterparts ...... 45 Section 14.14 Survival ...... 45 Section 14.15 Consent ...... 45 Section 14.16 No Strict Construction ...... 46
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EXHIBITS
EXHIBIT A Definitions
EXHIBIT B Form of Facility Note
EXHIBIT C Form of Borrowing Request
EXHIBIT D Form of Portfolio Report
EXHIBIT E Form of Covenant Compliance Certificate
EXHIBIT F Loan Originating and Servicing Manual
EXHIBIT G Form of Approval Package
EXHIBIT H Underwriting Guidelines for Project Loans including requirements of the Lenders
EXHIBIT I Conflict of Interest Policy
EXHIBIT J Project Underwriting Checklist
EXHIBIT K Intentionally Omitted
EXHIBIT L Intentionally Omitted
EXHIBIT M Form of Project Commitment Letter
EXHIBIT N Insurance Requirements
EXHIBIT O Form of Credit Memorandum
EXHIBIT P Form of Class A Joinder Agreement
EXHIBIT Q Form of Class B Lender Joinder Agreement
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CREDIT AGREEMENT
THIS AGREEMENT is made as of October _____ 2017, among (i) Utah Small Business Growth Initiative, LLC, a Utah limited liability company, dba Business Loans of Utah (the “Borrower”), (ii) Utah Small Business Growth Initiative, LLC, a Utah limited liability company, dba Business Loans of Utah (“USBGI”), in its capacity as the Administrative Agent for the Lenders (in such capacity, the “Administrative Agent”), (iii) ZB, N.A., dba Zions First National Bank, in its capacity as the Class A Lender, (iv) Box Elder County, a body corporate and politic of the State of Utah, City of Orem, a municipal corporation and political subdivision of the State of Utah, Ogden City Corporation, a Utah municipal corporation, also known and referred to as Ogden City or the City of Ogden, Provo City, a municipal corporation and political subdivision of the State of Utah, Spanish Fork City, a body corporate and politic of the State of Utah, and Weber County, a body corporate and politic of the State of Utah, in their capacities as Class B Lenders (in such capacity, each a “Class B Lender”); and (v) USBGI in its capacity as the Class C Lender (in such capacity, the “Class C Lender”). Capitalized terms used herein shall, unless otherwise expressly defined in the text of this Agreement, have the meanings assigned to them in Exhibit A hereof.
WITNESSETH
WHEREAS, Borrower is engaged in the business of originating Project Loans;
WHEREAS, Borrower wishes to obtain loans from the Lenders to enable Borrower to originate Project Loans which Project Loans comply with the requirements of this Agreement as to, among other matters, amount, term, use of proceeds and time of origination;
WHEREAS, but for the execution and delivery by the Borrower of this Agreement the Class A Lender, the Class B Lenders, and the Class C Lender would not enter into this Agreement or make the Loans to the Borrower; and
WHEREAS, the Lenders have indicated to Borrower their willingness to lend funds to Borrower on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the promises hereinafter set forth, the parties hereto do hereby agree as follows:
ARTICLE I LOANS TO BORROWER
Section 1.1 Making of Loans.
(a) Subject to the terms and conditions set forth in this Agreement, including without limitation, the limitations set forth in this Section 1.1, the Class A Lender and the Class B Lenders agree to make Loans to Borrower during the period commencing on the date of this Agreement and terminating on the Borrowing Termination Date, in an aggregate principal amount at any one time outstanding not to exceed the Class A Total Loan Amount and the Class B Total Loan Amount, respectively. In no event shall any advance of funds be made with
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respect to any Loan, other than a Project Loan Protective Advance, after 12:00 noon Mountain Time on that date which is the last Business Day preceding the Borrowing Termination Date.
(b) Except for Project Loan Protective Advances, Borrower shall use Loan proceeds only to make Project Loans in accordance with the terms of this Agreement, including, without limitation, Section 1.2.
(c) The portion of all Loans (including Project Loan Protective Advances) funded by the Class A Lender and the Class B Lenders shall not exceed the Class A Total Loan Amount and the Class B Total Loan Amount, respectively, without the consent of the Class A Lender, the Class B Lenders, and the Class C Lender, respectively, and, in no event shall the outstanding principal amount of the Loans (including Project Loan Protective Advances made by (i) a Class A Lender exceed such Class A Lender’s Commitment, and (ii) a Class B Lender exceed the Class B Lender’s Commitment. Once repaid, funds borrowed pursuant to this Agreement may be re-borrowed until the Borrowing Termination Date. Notwithstanding anything to the contrary contained in this Agreement or any other Loan Document, Borrower shall not make any Project Loan if the proposed outstanding principal balance of such proposed Project Loan would exceed the funding commitments available to the Borrower from the Class A Lender and the Class B Lender.
(d) The Administrative Agent may from time to time request that the Lenders fund a Project Loan Protective Advance to protect any Collateral securing the Project Loan. Project Loan Protective Advances must be approved by Lenders and upon approval, shall be funded by the Lenders participating in a Project Loan as follows: (i) the first portion of the Project Loan Protective Advance shall be funded by any amount available under the subject Class B Lender Top Loss, (ii) if the subject Class B Lender Top Loss fails to pay the Project Loan Protective Advance, the balance thereof shall be funded by the Class A Lender; provided, however, no Lender shall be required to participate to the extent such participation requires a Lender to exceed its Commitment. Each Project Loan Protective Advance shall (i) bear interest at a rate per annum equal at all times to the Default Interest Rate, and (ii) be repaid in the priority set forth in Article X, as applicable.
(e) The Facility shall have a twenty-four (24) month draw period ending on the Borrowing Termination Date and each Project Loan shall have up to a five (5) year term from the date of initial draw, but in no case shall the term of any Project Loan have a maturity date beyond October 30, 2024 (subject to approved extensions as described herein). Not earlier than fourteen (14) months and not later than sixty (60) days prior to the end of the Borrowing Termination Date then in effect, the Administrative Agent may request an extension of the Borrowing Termination Date for an additional year. The Administrative Agent shall provide due diligence materials, including financial statements, internal portfolio performance reports and organizational information reasonably required to support such request. Within sixty (60) days after receipt of the notice and due diligence materials, each Lender shall notify the Administrative Agent whether or not it will agree to extend the Borrowing Termination Date, which decision shall be made in the sole and absolute discretion of each such Lender. In the event that a Lender does not notify the Administrative Agent of its consent to the extension of the Borrowing Termination Date, such Lender shall be deemed to have objected to and withheld consent from such extension and will not be obligated to make additional loans after the current
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Borrowing Termination Date. If the Borrowing Termination Date is extended, the Facility Maturity Date then in effect will also be extended for an additional year; provided, however, an extension of the Facility Maturity Date shall not automatically extend the maturity of a Project Loan.
(f) The Administrative Agent may request that the Credit Committee extend the maturity of a Project Loan and the Credit Committee shall have the power in its discretion to extend such maturity; provided however, any extension of a Project Loan maturity date that would exceed the Facility Maturity Date, or the extended Facility Maturity Date provided by any Senior Lender, that is not in connection with an approved Work-Out Plan, shall require the approval of all of the Senior Lenders participating in such Project Loan.
Section 1.2 The Lenders.
(a) The Class A Lender commits to loan funds to Borrower, subject to the terms and conditions set forth in this Agreement, in aggregate amounts as set forth next to its signature block on its signature page hereto and including any additional amount it may agree to make in accordance with the terms of this Agreement (the “Class A Lender Commitment”). The Administrative Agent shall utilize funds from Class A Lender Commitment to fund Project Loans which conform to the Credit Manual attached hereto as Exhibit F and the terms and conditions herein.
(b) Each Class B Lender commits to fund loan loss reserves for Project Loans, subject to the terms and conditions set forth in this Agreement, in aggregate amounts as set forth next to its signature block on its respective signature page hereto and including any additional amount it may agree to make in accordance with the terms of this Agreement (the “Class B Lender Commitment”). The Administrative Agent shall utilize funds from Class B Lender Commitment to fund loan loss reserves for Project Loans.
(c) The Class C Lender commits to fund loan loss reserves for Project Loans, subject to the terms and conditions set forth in this Agreement, in aggregate amount as set forth next to its signature block on its respective signature page hereto and including any additional amount it may agree to make in accordance with the terms of this Agreement (the “Class C Lender Commitment”). The Administrative Agent shall utilize funds from Class C Lender Commitment to fund loan loss reserves for Project Loans.
(d) Any Lender may agree to increase its Commitment by executing an amendment to this Agreement and its Facility Note with the consent of the Borrower and the Administrative Agent on behalf of the other Lenders. In addition, an Eligible Institution may become a Class A Lender by executing the Class A Lender Joinder Agreement in the form attached as Exhibit P with the consent of the Borrower, the Administrative Agent, and the Class A Lender. In addition, a county, city or town in the State of Utah, or such other entity as approved by a majority of the Class A Lenders, a majority of the Class B Lenders, and the Class C Lender, may become a Class B Lender by executing the Class B Lender Joinder Agreement in the form attached as Exhibit Q with the consent of the Borrower, the Administrative Agent and the Class A Lender.
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(e) Subject to the terms and conditions set forth in this Agreement, including without limitation, the limitations set forth in this Section 1.2, the Lenders agree to provide funding for the Facility during the period commencing on the date of this Agreement and terminating on the Borrowing Termination Date, in an aggregate principal amount at any one time outstanding not to exceed the Commitments. In no event shall any Advance of funds be made under the Facility, other than a Project Loan Protective Advance, after 12:00 noon Mountain Time on that date which is the last Business Day preceding the Borrowing Termination Date.
(f) Any Lender may agree to increase its Commitment by executing an amendment to this Agreement and its Facility Note with the consent of the Borrower and the Administrative Agent on behalf of the other Lenders. In addition, an Eligible Institution may become a Class A Lender by executing the Joinder Agreement in the form attached as Exhibit P with the consent of the Borrower, the Administrative Agent and the Class A Lenders. In either event described in this Section 1.2(f), the Administrative Agent is authorized to amend Schedule 1 to reflect such increased Commitment or new Class A Lender and the definition of “Class A Total Loan Amount” will be automatically amended to reflect those amendments to Schedule 1.
Section 1.3 Origination of Project Loans
(a) The Administrative Agent shall underwrite each proposed Project Loan in accordance with the Credit Manual. Each Project Loan shall be funded by the Class A Lender.
(b) The Class B Lender in whose Geographical Area a Project Loan has been approved by the Credit Committee will fund a portion of the Project Loan equal to 14.2857% thereof or such greater amount as may be required by the Credit Committee in its reasonable discretion (“Class B Lender Top Loss”). If the Credit Committee determines the Class B Lender Top Loss for a Project Loan should be greater than 14.2857% of the Project Loan and the subject Class B Lender fails to increase its Class B Lender Top Loss for the Project Loan, the Credit Committee may in its discretion reduce the amount of the Project Loan. In such a case, the subject Class B Lender may withdraw its approval of the subject Project Loan and, if such approval is withdrawn, the subject Project Loan will not be made. The Class B Lender Top Loss reserve will be held by the Administrative Agent or its designee. Any loss incurred under a Project Loan shall first be paid by the Class B Lender Top Loss to the extent it is available.
(c) The Class C Lender shall initially fund a total of $600,000.00 for loan loss reserves for Project Loans made under this Agreement (“Class C Lender Top Loss”). The Class C Lender Top Loss reserve will be held by the Administrative Agent or its designee. Any loss incurred under a Project Loan in excess of the Class B Lender Top Loss shall first be paid by the Class C Lender Top Loss to the extent it is available.
(d) Any loss incurred under a Project Loan in excess of the Class B Lender Top Loss and the Class C Lender Top Loss shall be incurred by the Class A Lender.
(e) Notwithstanding anything to the contrary contained in this Agreement, if at any time during the term of this Agreement, an amount equal to twenty-five percent (25%) of the Class A Lender Commitment exceeds the sum of the Class B Lender Commitment and the
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Class C Lender Commitment (“Total Top Loss”), then the Excess Spread shall be contributed to the Class C Lender Top Loss until an amount equal to twenty-five percent (25%) of the Class A Lender Commitment is less than or equal to the Total Top Loss, at which time the Administrative Agent shall be entitled to the Excess Spread.
(f) The Administrative Agent shall deliver to the Credit Committee all of the information and documents listed on Exhibit G hereto (the “Approval Package”). The Approval Package shall state whether the proposed Project Loan is a Conforming Loan as defined in the Credit Manual. If the Administrative Agent determines such proposed Project Loan is not a Conforming Loan, the Approval Package shall include an analysis of the risks associated with the characteristics of the proposed Project Loan that make it a non-Conforming Loan. Following submission of any Approval Package with respect to any Project Loan, the Administrative Agent shall promptly provide to the Credit Committee such additional information with respect to such proposed Project Loan as the Credit Committee may reasonably request. The parties acknowledge and agree, and the Administrative Agent hereby covenants that the proceeds of any Project Loan made shall be used only in accordance with Schedule I attached hereto.
The Administrative Agent shall schedule meetings on a monthly basis for the Credit Committee, either in person or by teleconference (each, a “Credit Committee Meeting”). Approval Packages for proposed Project Loans shall be provided by the Administrative Agent to each member of the Credit Committee no later than five (5) days prior to the Credit Committee Meeting. After receipt of Approval Packages, members of the Credit Committee may correspond with the Administrative Agent to ask for more information and/or ask clarifying questions about each proposed Project Loan. At the Credit Committee Meeting, each Credit Committee member entitled to vote shall vote (either in-person or by proxy) to approve or disapprove the proposed Project Loan. Determinations made by the Credit Committee shall require a majority of the members of the full Credit Committee and shall include, without limitation, the interest rate, term, and amount of Project Loans.
(g) The Administrative Agent shall charge the Project Borrowers an Origination Fee of 2.0% of the principal amount of the Project Loan (the “Origination Fee”), which may be paid from the proceeds of such Project Loan. Any changes must be approved by the Credit Committee. The Administrative Agent may be entitled to other fees or reimbursement of expenses incurred in accordance with the Credit Manual.
(h) Notwithstanding anything to the contrary contained in this Agreement or any other Loan Document, the Administrative Agent shall not submit an Approval Package for a proposed Project Loan that would cause the sum of (i) the proposed outstanding principal balance of all outstanding previously approved proposed Project Loans and (ii) the proposed outstanding principal balance of such proposed Project Loan, to exceed the remaining funding commitments available to the Borrower from the Class A Lender, the Class B Lenders, and the Class C Lender to originate all of such proposed Project Loans set forth in clauses (i) and (ii) of this sentence.
Section 1.4 Funding Requests.
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(a) Each Draw (other than a Loan for a Project Loan Protective Advance shall be requested by a Borrowing Request, substantially in the form of Exhibit C given by the Borrower to the Lenders not later than 12:00 noon (Mountain Time) five (5) Business Days prior to the proposed Funding Date. Not later than 12:00 noon (Mountain Time) on the proposed Funding Date and no earlier than the Business Day before the proposed Funding Date the Class A Lender and the Class B Lenders, as applicable, shall transfer to the Borrower Operating Account, by wire transfer in same day funds, the amount of their respective shares of such Borrowing. Notwithstanding the foregoing, a Lender may elect to fund its portion of a Loan earlier than the Business Day before the Funding Date provided that no interest shall accrue on such portion of the Loan until the Business Day before the Borrowing Date. Upon receipt of all such funds, the Administrative Agent, the Class A Lender, the Class B Lenders, and the Class C Lender, as applicable, shall be deemed to have authorized the release of such funds from the Borrower Operating Account to originate the Project Loans. The Class C Lender Top Loss shall be funded upon the closing of this Agreement.
(b) Funding requests may be made to the Lenders not more often than twice monthly and shall be in a principal amount of not less than $10,000 for each Project Loan in the aggregate based on projected lending activity during the period prior to the Borrowing Termination Date.
Section 1.5 Borrowing Funding.
(a) Each Loan (other than a Loan for a Project Protective Advance) shall be used by the Borrower to fund Project Loan(s).
(b) Except as otherwise provided below, each Borrowing will be funded as set forth in Section 1.3(a), provided, that after giving effect to such Borrowing, the aggregate principal amount of all Loans made by (i) the Class A Lender (including Loans for a Project Protective Advance) shall not exceed the Class A Lender’s Commitment, (ii) the Class B Lender (including Loans for a Project Protective Advance) shall not exceed such Class B Lender’s Commitment, and (iii) the Class C Lender (including Loans for a Project Protective Advance) shall not exceed the Class C Lender’s Commitment.
(c) The size of a Project Loan shall be limited as follows:
(i) The amount of a Project Loan shall not exceed twenty-five percent (25%) of the applicable Class B Lender’s Commitment unless approved by all members of the Credit Committee having a vote on the proposed subject Project Loan.
(ii) The amount of a Project Loan shall not exceed ten percent (10%) of the Total Loan Amount unless approved by all members of the Credit Committee having a vote on the proposed subject Project Loan.
(iii)The amount of a Project Loan shall not be less than $50,000 unless approved by all members of the Credit Committee having a vote on the proposed subject Project Loan.
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Section 1.6 Records of Lenders. The records of a Lender shall be presumptive proof (absent manifest error) of the amount of the indebtedness of Borrower to such Lender hereunder and under the applicable Facility Note. Borrower hereby authorizes the Lenders to endorse each Facility Note at any time with appropriate notations evidencing the date and the principal amount borrowed or repaid in accordance with the Lenders’ records. At Borrower’s request, Administrative Agent shall provide a monthly accounting of all unpaid and accrued interest under each Loan.
Section 1.7 Notes; Principal and Interest.
(a) The Loans shall be evidenced by the Facility Note received by each Lender. Each Facility Note shall be substantially in the form of Exhibit B annexed hereto.
(b) Facility Notes.
(i) Interest.
A. Borrower shall pay interest on the unpaid principal amount thereof advanced thereunder from the date of such borrowing under the Facility Note until payment in full at an interest rate equal to the Interest Rate.
B. Each Facility Note that is not amortized shall accrue interest on a 365/360 basis; that is, by applying the ratio of the interest rate over a year of 360 days, multiplied by the outstanding principal balance, multiplied by the actual number of days the principal balance is outstanding. All interest payable under such a Facility Note shall be computed using this method. This calculation method results in a higher effective interest rate than the numeric interest rate stated in such Note.
C. Each Facility Note that is amortized shall accrue interest on the basis of a 360-day year consisting of twelve 30-day months, compounded monthly, and shall be payable for the actual number of days elapsed in any period. [OPEN ISSUE UNDER THIS PARAGRAPH CONCERNING COMPOUNDING, PARAGRAPH SUBJECT TO REVISION]
D. The Interest Rate under a Facility Note may be fixed or variable as set forth in the following two subparagraphs:
• Variable Interest Rate language:
3 Month LIBOR RATE. The interest rate on a Facility Note shall be subject to change from time to time based on changes in an independent index which shall be the 3 Month LIBOR rate plus the applicable percentage points. The LIBOR rate shall be strictly interpreted and shall not be intended to serve any purpose other than providing an index to determine the Interest Rate used under a Facility Note. The LIBOR rate may not necessarily be the same as the quoted offered side in the Eurodollar time deposit market by any particular institution or service applicable to any interest period. As used herein, the LIBOR rate shall mean the rates per annum quoted by ZB, N.A., dba Zions First National Bank as its 3 Month LIBOR rate based upon quotes from the London Interbank Offered Rate from the ICE
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Benchmark Administration Interest Settlement Rates, as quoted for U.S. Dollars by Bloomberg, or other comparable services selected by the Lender (the "Index"). The Index is not necessarily the lowest rate charged by ZB, N.A., dba Zions First National Bank on its loans. If the Index becomes unavailable during the term of this Agreement, ZB, N.A., dba Zions First National Bank may designate a substitute index after notifying Borrower. ZB, N.A., dba Zions First National Bank will apprise Borrower of the current Index rate upon Borrower's request. The interest rate change will not occur more often than each once each month and will be the rate on the day which is two (2) business days prior to the first (1st) day of each month. NOTICE: Under no circumstances will the interest rate on this Note be more than the maximum rate allowed by applicable law.
• Fixed Interest Rate language:
LIBOR/Swap Rate. The interest rate on a Facility Note shall be subject to change from time to time based on changes in an independent index which is the 1,2,3,4, or 5 year LIBOR/Swap rate plus the applicable percentage points. The LIBOR/Swap rate shall be strictly interpreted and shall not be intended to serve any other purpose other than providing an index to determine the interest rate used herein. The LIBOR/Swap rate may not necessarily be the same as the quoted offer side in the Eurodollar time deposit market by any particular institution or service applicable to any interest period. As used herein, the LIBOR/Swap rate shall mean the rate per annum quoted by ZB, N.A., dba Zions First National Bank as its 1,2,3,4, or 5 year LIBOR/Swap rate based upon the US Swap Rate for the applicable period rate as quoted to ZB, N.A., dba Zions First National Bank for U.S. Dollars by Bloomberg or other comparable pricing services selected by ZB, N.A., dba Zions First National Bank (the "LIBOR Index"). The LIBOR Index shall not necessarily be the lowest rate charged by ZB, N.A., dba Zions First National Bank on its loans. If the LIBOR Index is unavailable, ZB, N.A., dba Zions First National Bank may designate a substitute index after notifying Borrower. ZB, N.A., dba Zions First National Bank will apprise Borrower of the current LIBOR Index rate upon Borrower's request. NOTICE: Under no circumstances will the interest rate on a Facility Note be more than the maximum rate.
E. Whenever increases occur in the interest rate, Lender, at its option, may do one or more of the following: increase Borrower's payments to ensure Borrower's loan will pay off by its original final maturity date, increase Borrower's payments to cover accruing interest, increase the number of Borrower's payments, and continue Borrower's payments at the same amount and increase Borrower's final payment.
F. Notwithstanding any language to the contrary contained in this Agreement, Borrower shall only be required to pay principal or interest payments under a Facility Note to the extent Borrower receives such principal payments or interest payments on the Underlying Project Loans, unless such principal payments or interest payments on underlying Project Loans are more than thirty (30) days late. In such a case, the ZB, N.A., dba Zions First National Bank may debit an amount equal to such late payments from the Class B Lender Top Loss held in the Restricted Account to the extent such funds are available, provided the ZB, N.A., dba Zions First National Bank notifies Borrower of such debit when it is made.
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(ii) Each Facility Note shall mature on the applicable Facility Maturity Date and the Borrower shall pay the unpaid principal amount and any accrued but unpaid interest of such Facility Note on such Facility Maturity Date.
(iii) Each Facility Note shall be pre-payable in whole or in part without penalty, provided that, Borrower shall give the Administrative Agent no less than five (5) Business Days’ notice of such prepayment. In the event of any prepayment of a Facility Note, whether voluntary or involuntary and whether or not due to acceleration of the maturity of such Facility Note or the Underlying Project Loan or any other reason whatsoever, such prepayment shall be accompanied by all interest accrued on the amount prepaid through such Prepayment Date. Until the expiration of the Borrowing Termination Date, Borrower shall have the right to reborrow funds that have been previously prepaid in accordance with Section 1.5 hereof at any time prior to the Borrowing Termination Date.
(iv) In addition to all other rights and remedies of any Lender under this Agreement or any other Loan Document, in the event that Borrower shall fail to make any payment due under the terms of a Facility Note after the expiration of any applicable grace periods or upon the occurrence of any other Event of Default under this Agreement, the outstanding principal amount of such Facility Note, shall bear interest at the Default Interest Rate.
(v) Notwithstanding anything to the contrary contained in this Agreement or any other Loan Document, the interest paid or agreed to be paid under the Loan Documents to any Lender shall not exceed the Maximum Rate. If any Lender shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal amount of such Lender’s Facility Note, or, if it exceeds such unpaid principal, refunded to the Borrower. In determining whether the interest contracted for, charged, or received by any Lender exceeds the Maximum Rate, the Lenders may, to the extent permitted by any applicable law, rule or regulation (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the obligations hereunder.
Section 1.8 Characterization of Loans. Each of the parties hereto agrees that the Loans made hereunder shall be treated as debt and agree not to challenge such characterization of the Loans as debt. Each of the parties hereto agrees that there are no participations created in the Loans or any other debt under this Agreement except as permitted or contemplated by this Agreement.
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Section 1.9 Increased Costs; Increased Capital; Taxes.
(a) Increased Costs. If (i) there shall be any increase in the cost to any Affected Party of agreeing to make or making, funding or maintaining the Lenders’ Commitment, including, without limitation, due to a Change in Law, or (ii) any reduction in any amount receivable in respect thereof or otherwise under this Agreement, and such increased cost or reduced amount receivable is due to either:
(i) the introduction of or any change (including, without limitation, any change by way of imposition or increase of reserve requirements) in the interpretation of any law or regulation after the date hereof; or
(ii) the compliance with any guideline or request from any central bank or other Governmental Authority (whether or not having the force of law),
then from time to time, such Affected Party may request that Borrower pay such Affected Party additional amounts sufficient to compensate such Affected Party for such increased cost or reduced amount receivable, including, without limitation, all interest and penalties thereon or with respect thereto, and all out of pocket expenses (including the reasonable fees and expenses of counsel in defending against the same), as reasonably determined by such Affected Party. Promptly, but in any event, within five (5) Business Days after receiving such request, Borrower will pay such additional amounts to such Affected Party.
(b) Increased Capital. If after the date hereof any Lender determines that (i) the adoption or implementation of or any change in or in the interpretation or administration of any law or regulation or any guideline or request from any central bank or other Governmental Authority or quasi-governmental authority exercising jurisdiction, power or control over such Lender or banks or financial institutions generally (whether or not having the force of law), compliance with which affects or would affect the amount of capital required or expected to be maintained by such Lender or any entity controlling such Lender and (ii) the amount of such capital is increased by or based upon the making or maintenance by such Lender of its Loans or the existence of such Lender’s obligation to make Loans, then, in any such case, upon written demand by such Lender, Borrower agrees immediately to pay to such Lender, from time to time as specified by such Lender, additional amounts sufficient to compensate such Lender or such entity therefor. Such demand shall be accompanied by a statement as to the amount of such compensation and include a summary of the basis for such demand with detailed calculations. Such statement shall be conclusive and bind for all purposes, in the absence of manifest error.
(c) Taxes.
(i) Any and all payments made by Borrower to any Lender under this Agreement or under such Lender’s Facility Note or any other Loan Document shall be made free and clear of, and without reduction for or on account of, any and all present or future income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority, excluding net income taxes and franchise taxes or any other tax based upon net income, profits and/or gain imposed on an Affected Party as a result of a present or former connection between
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such Affected Party and the jurisdiction of the Governmental Authority imposing such tax or any political subdivision or taxing authority thereof or therein (other than any such connection arising solely from such Affected Party having executed, delivered, registered or performed its obligations or received a payment under, or enforced, this Agreement). If any such non- excluded taxes, levies, imposts, duties, charges, fees, deductions or withholdings (“Non- Excluded Taxes”) are required to be withheld from any amounts payable to such Affected Party hereunder, the amounts so payable to such Affected Party shall be increased to the extent necessary to yield to such Affected Party (after payment of all Non-Excluded Taxes) a payment equal to the amount that would have been paid but for the Non-Excluded Tax; provided, however, that Borrower shall not be required to increase any such amounts payable to any Affected Party that is not organized under the laws of the United States of America or a state thereof if such Affected Party fails to comply with the requirements of this Section 1.9(c). Whenever any Non-Excluded Taxes are payable by Borrower, as promptly as possible thereafter, Borrower shall send to the affected Lender for its own account or for the account of such Affected Party, as the case may be, a certified copy of an original official receipt received by Borrower showing payment thereof. If Borrower fails to pay any Non-Excluded Taxes when due to the appropriate taxing authority or fails to remit to such affected Lender the required receipts or other required documentary evidence, Borrower shall indemnify the applicable Affected Party for any incremental taxes, interest or penalties that may become payable by such Affected Party as a result of any such failure.
(ii) Each Affected Party shall deliver to Borrower (A) if such Affected Party is not a “United States person” within the meaning of Section 7701(a)(30) of the Code, or is a “disregarded entity” within the meaning of Treasury Regulation 301.7701 2 owned by an Affected Party which is not a “United States person” within the meaning of Section 7701(a)(30) of the Code, two (2) duly completed copies of Internal Revenue Service Form W 8BEN indicating that no United States withholding tax is due on any payment to such Affected Party pursuant to this Agreement or W 8ECI, as applicable, or the applicable successor form, or (B) otherwise, two (2) duly completed copies of Internal Revenue Service Form W 9, or the applicable successor form, as the case may be.
(d) Notification. In the event that any Affected Party becomes aware that any amounts are or will be owed to it pursuant to this Section 1.9, then it shall promptly notify Borrower as soon as possible thereafter. Such Affected Party shall submit to Borrower a certificate indicating the amount owing to it and the calculation thereof in reasonable detail. The amounts set forth in such certificate shall, in the absence of demonstrable error, be conclusive and binding. Subject to Article X hereof, promptly, but in any event within ten (10) Business Days after receiving such request, Borrower will pay such amounts to such Affected Party.
(e) Survival. Without prejudice to the survival of any other agreement of Borrower hereunder, the agreements and obligations of Borrower contained in this Section 1.9 shall survive the termination of this Agreement.
Section 1.10 Payments in Full; Taxes. All sums payable by Borrower hereunder shall be paid in full, free of any deductions or withholdings. Borrower shall pay directly to the appropriate taxing authority or reimburse the Lenders for any and all present and future taxes and charges relating to this transaction, except for taxes which are imposed on or measured by any
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Lender’s net income, profits and/or gain, or the execution, delivery, performance and enforcement of the Loan Documents and all taxes on such payments and reimbursements.
Section 1.11 Sharing of Payments. If any Lender shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) on account of principal of or interest on any of its Loans to Borrower or other Obligations of Borrower hereunder (other than pursuant to Section 1.7) in excess of its ratable share of such payments (as determined pursuant to Article X or Article VII, in the case following an Event of Default and the exercise of remedies as contemplated thereby), such Lender shall forthwith purchase from the other Lenders such participations in the Loans made by them or such other Obligations as shall be necessary to cause such purchasing Lender to share the excess payment ratably with each of such other Lenders, provided, however, that if all or any portion of such excess payment is thereafter recovered from such purchasing Lender, such purchase from each Lender shall be rescinded and each other Lender shall repay to the purchasing Lender the purchase price paid for such participation to the extent of such recovery together with an amount equal to such Lender’s ratable share (according to the proportion of (i) the amount of such Lender’s required repayment to (ii) the total amount so recovered from the purchasing Lender) of any principal, interest or other Obligations paid or payable by the purchasing Lender in respect of the total amount so recovered. The Borrower agrees that any Lender so purchasing a participation from another Lender pursuant to this Section 1.11 may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off) with respect to such participation as fully as if such Lender were the direct creditor of the Borrower in the amount of such participation.
Section 1.12 CRA Sub-Allocation. Each Class A Lender may receive credit for Community Reinvestment Act purposes in accordance with the amount respective Percentage Interest of such Lenders in each of the Project Loan.
ARTICLE II PROJECT LOAN DOCUMENTS
Section 2.1 Project Loan Documentation. The Borrower will use standard Project Loan documents provided by the Servicer to make Project Loans. Borrower shall make available upon request by any Lender copies of duly, properly and fully executed copies of all of the Required Loan Documentation and the documents described in Section 2.2, all of which shall be materially in the form of the Project Loan Documentation.
Section 2.2 Required Project Loan Documents. The Administrative Agent shall, concurrently with each Borrowing used to fund such Underlying Project Loan (other than Borrowings constituting Loans for Project Loan Protective Advances) deliver to the Lenders copies of the following documents:
(a) A copy of (i) all fully executed Required Loan Documentation, which shall include a personal guaranty from each person owning, directly or indirectly, twenty percent (20%) or more of the Project Borrower;
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(b) Copies of policies or certificates of insurance, wherein Borrower shall be named as an additional insured and as additional payee to the extent required pursuant to the Credit Manual, from an insurance rated “A/X” or better by Best and otherwise acceptable to the Administrative Agent and in a form acceptable to the Administrative Agent and in an amount required under the Credit Manual.
(c) Conformed copies of filed UCC financing statements given to the Borrower as secured party, by the applicable Project Borrower;
(d) The payment schedule for each Project Loan;
(e) Conformed copies of resolutions of the Project Borrower’s board of directors or other comparable documents for a Project Borrower that is, or its controlling entity is, a partnership or limited liability company authorizing entering into and executing the Project Loan Agreement, the other Project Loan Documentation and all agreements and other documents in connection therewith, certified by the secretary or an assistant secretary or other authorized officer of such Project Borrower to be a true copy of resolutions or comparable documents duly adopted, unmodified and in full force and effect;
(f) A copy of a title insurance policy, if applicable;
(g) Intentionally deleted;
(h) Intentionally deleted;;
(i) Any other deliverables specified in the Credit Manual; and
(j) Such reports and accountings as required by Lenders reconciling how payments of principal and interest will be applied and allocated to the Lenders participating in such Project Loan.
Section 2.3 Servicing of Project Loans. Borrower shall enter into a Servicing Agreement with Servicer requiring Servicer to service each Project Loan in the manner required thereby and in accordance with this Agreement and Borrower’s governing documents, in form and substance acceptable to each of Lenders.
Section 2.4 Required Deliveries to Servicer. In connection with the security described in Section 2.1 and in order to permit Servicer to service each Project Loan, Borrower shall, concurrently with the funding of each Loan (other than Loans for Project Loan Protective Advances) deliver to Servicer a copy of all Required Project Loan documents identified in Section 2.2.
ARTICLE III CLOSING PROCESS AND PROCEDURES
Section 3.1 Timing of Closings.
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(a) The obligation of the Class A Lender and the Class B Lenders to lend any funds to Borrower shall be subject to compliance, on the Funding Date with the conditions set forth in Article I, Article II and Sections 3.2 and 3.3 hereof, on which date the Class A Lender the Class B Lenders shall fund the Loans in accordance with Section 1.4 hereof. The Class C Lender Top Loss shall be funded upon the closing of this Agreement.
(b) The Borrower shall originate and fully fund Project Loans in its own name prior to the Borrowing Termination Date and on or prior to the applicable Loan Settlement Date, as applicable.
Section 3.2 Conditions Precedent to Effectiveness of the Agreement.
Prior to or concurrent with the Effective Date of this Agreement, Borrower shall:
(a) Execute and deliver to the Administrative Agent and/or any of the Lenders fully executed original sets of all Loan Documents, other documents, instruments and forms of evidence or other materials reasonably requested by the Administrative Agent and the Lenders, under the terms of this Agreement or any of the other Loan Documents; and
(b) Deliver to the Lenders a certificate from an Authorized Officer of the Administrative Agent (including in its capacity as the Member) dated as of the Effective Date certifying that attached thereto are (i) true and correct copies of Borrower’s and Administrative Agent’s certificate of formation, certificate of incorporation, operating agreement, bylaws or other governing documents, (ii) good standing certificates of Borrower and Administrative Agent, (iii) true and correct copies of the resolutions (which certificate shall state that such resolutions have been duly adopted, unmodified and in full force and effect as of the Effective Date) of (A) Borrower and the Administrative Agent authorizing Borrower to execute all of the applicable Loan Documents to which it is a party and (B) the board of directors, or other governing body, of Administrative Agent authorizing Administrative to execute all applicable Loan Documents to which it is a party, and (iv) such other items as may be reasonably requested by the Lenders;
(c) Deliver to the Lenders, in form satisfactory to each of them, an opinion of counsel to Borrower, addressed to the Administrative Agent and the Lenders, covering such matters as reasonably requested by the Administrative Agent and/or any of the Lenders, including, without limitation, opinions as to the due formation and valid existence of Borrower, authority to execute, deliver and perform under the Loan Documents then executed, and the binding, valid and enforceable nature of the Loan Documents then executed.
Section 3.3 Conditions Precedent to each Draw. In addition to the satisfaction of all conditions set forth in Articles I and II hereof and concurrently with and as a condition precedent to each Draw:
(a) Except in the case of Project Loan Protective Advances, Borrower shall:
(i) reaffirm to each Lender providing a Draw that the representations and warranties contained in Article IV of this Agreement shall be true in all material respects on and as of each date of funding of such Loan hereunder; 14 4829-2834-4907
(ii) represent to each Lender providing a Draw that there exists no Event of Default and that no event has occurred or failed to occur as of any such date which with the passage of time or the giving of notice, or both, would constitute an Event of Default; and
(iii) represent to each Lender providing a Draw that no Borrower Material Adverse Effect shall have occurred since the Effective Date.
(b) No Event of Default or Unmatured Event of Default shall have occurred and be continuing.
ARTICLE IV REPRESENTATIONS AND WARRANTIES
In order to induce the Administrative Agent and the Lenders to enter into this Agreement and to make the Loans, Borrower represents and warrants to each of the Lenders and the Administrative Agent the following, and further covenants and agrees that if it shall hereafter make any request for a Loan that the acceptance of funding of such request shall be deemed to be a reaffirmation by Borrower that such representations and warranties are then still true, accurate and complete in all material respects:
Section 4.1 Status; Ownership; Single Purpose Entity.
(a) Borrower is a limited liability company, duly formed, validly existing and in existence to do the business contemplated in this Agreement under the laws of the State of Utah, is not in violation of any provision of its organizational documents and has the power to own its property and assets, to carry on its activities as now being conducted by it, to execute, deliver and perform this Agreement and the other Loan Documents, to borrow hereunder and to consummate all of its transactions contemplated herein and thereby.
(b) Intentionally Omitted.
(c) The sole member of Borrower is recognized by the Internal Revenue Service as tax-exempt under Section 501(c)(3) of the Code, and because Borrower is a disregarded entity for federal income tax purposes, Borrower is also tax-exempt.
Section 4.2 Authorization. Borrower has taken all necessary limited liability company and legal action to authorize it to obtain the Loans and to originate or purchase Project Loans with the proceeds thereof; this Agreement and the other Loan Documents are or will be when executed and delivered duly authorized by all requisite action on the part of Borrower; and neither the execution and delivery of this Agreement nor any other Loan Document violates or will when executed and delivered violate any applicable provisions of law or any applicable order of any court or agency of government, or conflict with, result in the breach of, or constitute a default under, the certificate of formation or operating agreement of Borrower or (with due notice or lapse of time or both) any indenture, agreement or other instrument to which Borrower is party or by which it is bound.
Section 4.3 Litigation. Except with respect to any act, event or occurrence described in this Section 4.3 that would not have a Borrower Material Adverse Effect, there are
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no actions or proceedings pending or, to Borrower’s knowledge, threatened by or against Borrower before any court or administrative agency and Borrower has no knowledge of any pending, threatened, or imminent litigation, governmental investigations or claims, complaints, actions, prosecutions, judgments or orders involving it. If any of the foregoing arise prior to termination of this Agreement, Borrower shall notify the Administrative Agent and Lenders in writing within ten (10) Business Days of obtaining knowledge thereof.
Section 4.4 Regulation U. Borrower is not engaged principally or as one of its important activities in the business of extending credit for the purpose of purchasing or carrying margin stock (in each case within the meaning of Regulation U of the Board of Governors of the Federal Reserve) and no part of the proceeds of any Loan hereunder will be used to purchase or carry margin stock or for the purpose of extending credit to any other person or entity for purchasing or carrying margin stock.
Section 4.5 Binding Obligations. This Agreement and the other Loan Documents to which it is a party constitute or, when executed and delivered, shall constitute, the legal, valid and binding obligations of Borrower enforceable against Borrower in accordance with their terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and subject to general rules of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity).
Section 4.6 No Debt. Borrower has no Debt except pursuant to Section 5.11 hereof.
Section 4.7 Not on Government Lists. The Borrower is not now, nor has it ever been (i) listed on any Government Lists, (ii) a person who has been determined by competent authority to be subject to the prohibitions contained in Presidential Executive Order No. 13224 (Sept. 23, 2001) or any other similar prohibitions contained in the rules and regulations of OFAC or in any enabling legislation or other Presidential Executive Orders in respect thereof, (iii) indicted for or convicted of any felony involving a crime or crimes of moral turpitude or for any Patriot Act Offense, or (iv) under investigation by any Governmental Authority for alleged criminal activity.
Section 4.8 No Borrower Material Adverse Effect. Since the date of the last financial statement delivered pursuant to Section 12.1 hereof, there has been no event or circumstance, either individually or in the aggregate, that has had or could reasonably be expected to have a Borrower Material Adverse Effect.
Section 4.9 Consents. No consent of any other party and no consent, license, approval or authorization of, exemption by or registration or declaration with, any governmental instrumentality, domestic or foreign, is required to be obtained by Borrower in connection with the execution, delivery or performance of this Agreement or any of the other Loan Documents.
Section 4.10 Additional Representations and Warranties.
(a) All financial statements and related financial information heretofore and hereafter delivered to any Lender or the Administrative Agent by Borrower, including, without 16 4829-2834-4907
limitation, information relating to the financial condition of Borrower fairly and accurately represent the financial condition of the subject thereof and have been prepared (except as noted therein) in accordance with generally accepted accounting principles consistently applied.
(b) Borrower is in compliance in all material respects with, or exempt from, all applicable laws, rules, regulations and orders applicable to it, including without limitation all applicable labor, environmental, tax and employment laws, and has obtained all licenses and permits required under any such laws.
(c) Borrower has paid and discharged before the same has become delinquent all applicable taxes for which Borrower is liable or to which its income or property is subject, except any taxes the validity or amount of which is being contested in good faith by Borrower in appropriate proceedings with provision having been made to the satisfaction of Administrative Agent for the payment thereof in the event the contest is determined adversely to Borrower. Borrower is not subject to, nor are there pending, any tax audits.
(d) Borrower is not the subject of any pending, or to Borrower’s knowledge threatened, bankruptcy, receivership, insolvency or creditors’ rights Proceedings, whether voluntary or involuntary.
(e) Borrower is not an “investment company” as that term is defined in, and is not otherwise subject to regulation under, the Investment Company Act of 1940, as amended, and Borrower is not a “holding company” as that term is defined in, and is not otherwise subject to regulation under, the Public Utility Holding Company Act of 1935, as amended.
(f) Neither the Borrower nor any of the Borrower’s Affiliates has any outstanding publicly-traded Debt or equity.
Section 4.11 Representations and Warranties Regarding the Project Loans. The Borrower hereby represents and warrants to the Lenders and the Administrative Agent with respect to each Project Loan originated by the Borrower, unless otherwise disclosed in writing to the Lenders, that:
(a) Such Project Loan will be a legal, valid and binding full recourse obligation of the Project Borrower thereunder and any other obligor thereunder (i.e., guarantor), enforceable in accordance with the written terms of the related Project Loan Documents.
(b) To the Borrower’s knowledge, the transaction evidenced by such Project Loan is and the Project Loan Documents are in conformity with all applicable statutes, laws, rules and regulations and fully enforceable in accordance therewith.
(c) There will be only one original executed Project Note evidencing such Project Loan.
(d) Such Project Loan will be originated in compliance with the Credit Manual, and the Underwriting Guidelines.
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Section 4.12 No “accumulated funding deficiency”. No “accumulated funding deficiency” (as defined in Section 302 of ERISA) exists with respect to any “employee pension benefit plan,” as such term is defined in Section 3(2) of ERISA, maintained by Borrower or any of its ERISA Affiliates.
ARTICLE V COVENANTS
Borrower covenants and agrees that, unless otherwise agreed to in writing by the Lenders, until each of the Obligations shall have been paid in full and the Lenders’ Commitments have terminated, as follows:
Section 5.1 Enforcement of Project Loans. Subject to the terms of this Agreement and the Servicing Agreement, Borrower shall at all times diligently, expeditiously and in a commercially reasonable manner, pursue and enforce Borrower’s rights as owner of the Project Loans, provided, however, that no member of Borrower shall be required to contribute funds for the purpose of satisfying any of the obligations imposed on Borrower pursuant to this Section 5.1.
Section 5.2 Accounting and Tax Reporting. Borrower shall not make any change (a) in accounting treatment and reporting practices except as permitted or required by generally accepted accounting principles or (b) in tax reporting treatment except as permitted or required by law.
Section 5.3 Equity Investments. Borrower will make no equity investments in any other person or entity, including partnerships and joint ventures.
Section 5.4 Exercise of Rights with Respect to Servicer. Borrower will not replace the Servicer, or amend, modify or terminate the Servicing Agreement, without the prior unanimous written approval of the Disinterested Lenders; provided, however, that no such approval shall be required to terminate the Servicer if such termination or replacement is in accordance with the Servicing Agreement.
Section 5.5 Increases in Fees to Any Person. Notwithstanding any provision of this Agreement to the contrary, Borrower will not agree to any increase in the amount of, nor any acceleration of the payment of, any fees payable by Borrower to the Administrative Agent, the Servicer or any other Person without the prior written unanimous consent of the Disinterested Lenders.
Section 5.6 Intentionally Deleted.
Section 5.7 Preservation of Business. Borrower shall preserve, renew and keep in full force and effect its limited liability company existence and take all reasonable action to maintain and conduct its business and shall not, without the prior written consent of all of the Lenders enter into any merger, consolidation or amalgamation or liquidate, wind up or dissolve itself.
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Section 5.8 Credit Manual and Underwriting Guidelines. Borrower shall comply in all material respects with the Credit Manual and the Underwriting Guidelines when financing new Project Loans.
Section 5.9 Deposits into Borrower Operating Account. The Borrower shall cause each Project Borrower to remit all payments with respect to each Project Loan solely to the Borrower Operating Account and shall deposit all collections received by the Borrower or any Affiliate of the Borrower in respect of a Project Loan into the Borrower Operating Account within two (2) Business Days of receipt thereof. Borrower shall instruct each Project Borrower to clearly identify the Underlying Project Loan as to which each payment is being made.
Section 5.10 Guarantees. Borrower shall not guaranty or become liable in any way as a surety, endorser (other than as endorser of negotiable instruments in the ordinary course of business) or accommodation endorser or otherwise for debt or obligations of any other person or entity.
Section 5.11 Other Indebtedness.
(a) Borrower shall not create, incur, assume or permit to exist any Debt or liabilities resulting from borrowings, loans or advances, by guaranty or otherwise, whether secured or unsecured, except for customary trade payables in the ordinary course of the Borrower’s business and the liabilities of Borrower to the Lenders for money borrowed hereunder.
(b) Borrower shall not make loans, advances or investments to or in any person or entity except Project Loans originated or purchased by Borrower.
Section 5.12 Amendment of Organizational Documents. Borrower shall not materially amend or permit the amendment of, any of the organizational documents of Borrower (including Borrower’s Operating Agreement), and shall not make any change in the objectives of the Borrower, without the prior unanimous consent of the Disinterested Lenders.
Section 5.13 Change of Control. Borrower shall not cause or permit the occurrence of a Change of Control. Borrower shall promptly deliver notice to Lenders should the Managing Member cease to be recognized by the Internal Revenue Service as tax-exempt under Section 501(c)(3) of the Code.
Section 5.14 Additional Covenants. Borrower additionally covenants and agrees that it shall:
(a) Comply in all material respects with all applicable federal, state and local laws, rules and regulations necessary for the transaction of its business, including without limitation all applicable labor, environmental, tax and employment laws, and shall obtain and maintain all licenses and permits required under any such laws which, if not obtained or maintained, could cause Borrower to be in breach in any material respect of any of the foregoing laws, rules and regulations or otherwise result in a Borrower Material Adverse Effect;
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(b) Pay and discharge before the same shall become delinquent all applicable taxes for which Borrower is liable or to which its income or property is subject, except any taxes the validity or amount of which is being contested in good faith by Borrower in appropriate proceedings with provision having been made to the satisfaction of the Administrative Agent for the payment thereof in the event the contest is determined adversely to Borrower;
(c) Use (or cause to be used) the proceeds of the Loans solely to originate Project Loans or, as provided in Section 1.3, fund advances for Project Loan Protective Advances to the extent permitted hereunder;
(d) Maintain (or cause to be maintained) with respect to all of its properties and operations policies of insurance carried with responsible companies in such amounts and covering all such risks as shall be reasonably satisfactory to the Administrative Agent, and furnish to the Administrative Agent upon request of any Lender certificates of insurance or duplicate policies evidencing such coverage;
(e) Maintain separate complete books of account and other records for disbursement and use of the Loans, and the same shall be available for inspection and copying by any Lender, upon request of such Lender, at any time, upon reasonable prior notice, except that no such prior notice shall be required following the occurrence of an Event of Default or Unmatured Event of Default; and
(f) Comply with the Conflict of Interest Policy attached as Exhibit I.
Section 5.15 Delivery of Original Project Notes, Project Loan Agreements and Project Guarantees. The Borrower shall deliver to the Administrative Agent (i) the originals of the Project Note, the Project Loan Agreement and the Project Guaranty, as applicable, with respect to each Project Loan originated under the Facility on the Loan Settlement Date and (ii) if applicable, a copy of the final a title insurance policy, if applicable, with respect to each Loan and Project Loan originated under the Facility promptly upon its receipt thereof.
Section 5.16 Delinquent Loans.
(a) Within 15 days from the date on which any Project Loan becomes a Delinquent Loan, the Administrative Agent shall provide notice to the Lenders. Within thirty (30) days from the date on which any Project Loan becomes a Delinquent Loan, the Borrower, the Administrative Agent and the Servicer shall work with the Project Borrower to expeditiously develop a work-out plan (“Work-Out Plan”) in accordance with the Credit Manual. If there is no Work-Out-Plan in effect within 75 days [CORRESPONDING CHANGE TO BE MADE IN THE CREDIT MANUAL] after a Project Loan becomes a Delinquent Loan, the Borrower will pursue its legal remedies to collect payment under the Project Loan documents. A Work- Out-Plan will not be implemented unless approved by the Credit Committee.
(b) On the Facility Maturity Date, Borrower shall assign all Delinquent Loans and/or Defaulted Loans funded with Loan proceeds hereunder and remaining outstanding on such date to Administrative Agent and the Administrative Agent shall thereafter manage such Delinquent Loans (including the liquidation thereof) for the benefit of the Lenders in accordance with the provisions of this Agreement. 20 4829-2834-4907
Section 5.17 No Pledges. Borrower will not create, incur, assume, or suffer to exist any lien, security interest, pledge or other encumbrance on any of its property, including, without limitation, the Project Notes and any collateral securing the obligations of such Project Notes, whether now owned, or hereafter acquired, without the prior written consent of the Lenders holding a Majority-in-Interest.
Section 5.18 Change in Management. Borrower shall give (or cause to be given) to the Lenders five (5) days’ advance notice of any change in the President, Chief Financial Officer, or Executive Director of USBGI.
Section 5.19 Financial Covenants.
(a) Beginning on the earlier to occur of December 31, 2018, or the Closing of five (5) Project Loans, the total principal amount of all Project Loans delinquent for sixty days or longer must not exceed 12% of the total principal amount of all outstanding Project Loans.
(b) Borrower shall at all times maintain a ratio of Current Assets to Current Liabilities of greater than 1.0:1.0. This ratio will be calculated at the end of each reporting period for which Lenders require financial statements, using the results of that reporting period.
Section 5.20 Sunshine Requirements. Borrower and its subsidiaries, if any, shall comply with applicable local, state and federal laws and regulations, to include without limitation, environmental laws and regulations and the Community Reinvestment Act “Sunshine Requirements” set forth in 12 U.S.C. § 1831y, and shall notify Lender of the institution or threatened institution of any action, suit, investigation or proceeding against or affecting the Borrower or any of its subsidiaries, including any such investigation or proceeding by any governmental authority or private party with respect to any of their respective properties, or, to Borrower’s knowledge, against any person or entity to whom any of Borrower’s or its subsidiaries’ loans are outstanding or with respect to any of such person’s or entity’s properties securing such loan, except for such action, suit, investigation or proceeding which if adversely determined would not have a Borrower Material Adverse Effect.
ARTICLE VI THE ADMINISTRATIVE AGENT
Section 6.1 Authorization and Action.
(a) Each Lender hereby appoints and authorizes the Administrative Agent as its representative to take such action as agent on its behalf and to exercise such powers under this Agreement and the other Loan Documents as are delegated to the Administrative Agent by the terms hereof, together with such powers as are reasonably incidental thereto. As to any matters not expressly provided for by this Agreement and the other Loan Documents, the Administrative Agent, acting in such capacity, shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of Lenders holding a Majority-in-Interest (or other required voting interests as set forth herein), and such instructions shall be binding upon all Lenders of such Loan; provided, however, that the Administrative Agent shall not be required to take any action which is contrary to this Agreement or applicable law. The Administrative 21 4829-2834-4907
Agent agrees to give to each Lender prompt notice of each notice given to it by the Borrower pursuant to the terms of this Agreement.
(b) Notwithstanding the use of the defined term “Administrative Agent,” it is expressly understood and agreed that the Administrative Agent shall not have any fiduciary responsibilities to any Lender by reason of this Agreement or any other Loan Document and that the Administrative Agent is merely acting as the contractual representative of the Lenders with only those duties as are expressly set forth in this Agreement and the other Loan Documents. In its capacity as the Lenders’ contractual representative, the Administrative Agent (i) does not hereby assume any fiduciary duties to any of the Lenders, (ii) is a “representative” of the Lenders within the meaning of the term “secured party” as defined in the UCC and (iii) is acting as an independent contractor, the rights and duties of which are limited to those expressly set forth in this Agreement and the other Loan Documents.
Section 6.2 Administrative Agent’s Reliance, Etc. Neither the Administrative Agent nor any of its directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by it or them under or in connection with this Agreement or any other Loan Document, except for its or their own gross negligence or willful misconduct. Without limiting the generality of the foregoing, the Administrative Agent, acting in such capacity: (i) may consult with legal counsel (including counsel for the Borrower), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (ii) except as expressly provided herein, makes no warranty or representation to any Lender and shall not be responsible to any Lender for any statements, warranties or representations (whether written or oral) made in or in connection with this Agreement or any other Loan Document; (iii) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement or any other Loan Document on the part of the Borrower or any Lender or to inspect the property (including the books and records) of the Borrower or any Lender; (iv) shall not be responsible to any Lender for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other Loan Document or any other instrument or document furnished pursuant hereto or thereto; and (v) shall incur no liability under or in respect of this Agreement by acting upon any notice, consent, certificate or other instrument or writing (which may be by registered or certified mail or electronic mail) believed by it to be genuine and signed or sent by the proper party or parties.
Section 6.3 USBGI and Affiliates. With respect to its Commitment as a Class C Lender and the advances made by it, USBGI shall have the same rights and powers under this Agreement as any other Lender and may exercise the same as though it were not the Administrative Agent; and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated, include USBGI in its individual capacity, as applicable. USBGI and its Affiliates may accept deposits from, lend money to, act as trustee under indentures of, and generally engage in any kind of business with, the Borrower or any Lender, any of their respective Affiliates and any Person who may do business with or own securities of the Borrower or any Lender or any such Affiliate, all as if USBGI were not the Administrative Agent and without any duty to account therefor to the Lenders.
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Section 6.4 Lender Credit Decision. Each Lender acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender received and reviewed such documents and information as it has deemed appropriate, and made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement.
Section 6.5 Indemnification; General Immunity.
(a) The Lenders agree to indemnify the Administrative Agent (to the extent not indemnified by the Borrower pursuant to Section 9.1 of this Agreement or reimbursed by the Borrower pursuant to Section 10.2 and without any prejudice to the Lenders’ ability to seek contribution, indemnity or reimbursement from the Borrower for the same under Section 9.1 of this Agreement), ratably according to their respective Commitment Percentages, and not to exceed, each Lender’s respective unfunded portion of the Commitment, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against the Administrative Agent in any way relating to or arising out of this Agreement or any other Loan Document or any action taken or omitted by the Administrative Agent under this Agreement or any other Loan Document, provided that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Administrative Agent’s gross negligence or willful misconduct and provided further that the Administrative Agent shall have exhausted all recourse against Borrower before seeking indemnification from the Lenders. Without limitation of the foregoing, each Lender agrees to reimburse the Administrative Agent promptly upon demand for its ratable share according to their respective Commitment Percentages, at the time of determination, of any reasonable out-of-pocket expenses (including counsel fees) incurred by the Administrative Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement or any other Loan Document, to the extent that the Administrative Agent is not reimbursed for such expenses by the Borrower. The Administrative Agent shall use its best efforts to provide Lenders with notice of expenses incurred by it pursuant to this Section 6.5, and, to the extent reasonably possible, seek the prior approval of the Lenders prior to incurring such expenses.
(b) Neither the Administrative Agent nor any of its directors, officers, agents or employees shall be liable to the Borrower, the Lenders or any Lender for any action taken or omitted to be taken by it or them in good faith hereunder or under any other Loan Document or in connection herewith or therewith except to the extent such action or inaction is determined in a final non-appealable judgment by a court of competent jurisdiction to have arisen from the gross negligence or willful misconduct of such Person.
Section 6.6 Successor Administrative Agent. The Administrative Agent may resign at any time by giving no less than sixty (60) days’ prior written notice thereof to the Lenders and the Borrower and, (a) in the event that the Administrative Agent breaches its
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obligations hereunder, or (b) the Class A Lender otherwise determines, in its reasonable discretion exercised in good faith, that such removal is necessary, then the Administrative Agent may be removed by the vote of the Class A Lender. Upon any such notice of resignation or removal, a successor Administrative Agent shall be selected and appointed by at least two thirds (2/3) of the Class A Lenders and two thirds (2/3) of the Class B Lenders. The resignation of the Administrative Agent shall take effect upon the acceptance by a successor Administrative Agent of appointment under this Section 6.6 or as otherwise provided herein. If no successor Administrative Agent shall have been so appointed, and shall have accepted such appointment, within thirty (30) days after the retiring Administrative Agent’s giving of notice of resignation or the removal of the retiring Administrative Agent, then the Class A Lender may elect to appoint itself or one of its Affiliates, to perform the Administrative Agent’s duties until a successor Administrative Agent is appointed, such appointment to be made promptly in accordance with the terms of this Section 6.6, or if the Class A Lender is elected to perform such duties, the retiring Administrative Agent may, on behalf of the Lenders, appoint a successor Administrative Agent. In the event that a successor Administrative Agent has not been appointed and has not accepted its appointment within sixty (60) days after the retiring Administrative Agent’s giving of notice of resignation, the Borrower shall petition a court of competent jurisdiction to appoint any established financial institution having a net worth of not less than $500,000,000, and experience in performing the duties of an administrative and collateral agent for credit facilities involving multiple lenders and of similar size as the Loan. Upon the acceptance of any appointment as Administrative Agent hereunder by a successor Administrative Agent, such successor Administrative Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations under this Agreement. After any retiring Administrative Agent’s resignation or removal hereunder as Administrative Agent, the provisions of this Article VI shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement. In the event that Administrative Agent fails to perform its duties hereunder, and does not cure such failure within thirty (30) days of notice thereof from the Class A Lender, or during any period before a replacement Administrative Agent is appointed following the removal of the Administrative Agent in accordance with this Section 6.6, the Class A Lender, or its Affiliates, may perform all or certain of such Administrative Agent duties until either the Administrative Agent properly performs its duties as determined by the Class A Lender in its reasonable discretion exercised in good faith, or a replacement Administrative Agent is appointed, as applicable.
Section 6.7 Disclosures. The Borrower and each Lender hereby acknowledge and agree that Administrative Agent and the Class C Lender, is the sole member of the Borrower and that USBGI will have certain rights as a Lender limited hereunder. USBGI shall have the same rights and powers under this Agreement as any other Lender and may exercise the same as though it were not the sole member of the Borrower or Administrative Agent, and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated, include USBGI. Notwithstanding the foregoing, all matters requiring the approval of the Lenders shall include the approval of the Class A Lender.
Section 6.8 Compensation. The parties hereto agree that the Origination Fee is commercially reasonable compensation for the services performed by the Administrative Agent hereunder, similar to compensation that would be agreed upon by unrelated third parties.
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Section 6.9 Additional Services. The Administrative Agent may, at the request of the Borrower, perform such other services as may be mutually agreeable to the Administrative Agent and the Borrower; provided that such services are upon terms that are (i) arm’s length, (ii) relate to financial services and receive the consent of a Majority In Interest of the Disinterested Lenders.
Section 6.10 Beneficiaries. Except as expressly provided herein, the provisions of this Article VI are solely for the benefit of the Administrative Agent and the Lenders, and the Borrower shall have no right to rely on or enforce any of the provisions hereof.
Section 6.11 Financial Covenants.
(a) Beginning on the earlier to occur of December 31, 2018, or the Closing of five (5) Project Loans, the total principal amount of all Project Loans delinquent for sixty days or longer must not exceed 20% of the total principal amount of all outstanding Project Loans.
(b) Administrative Agent shall at all times maintain a ratio of Current Assets to Current Liabilities of greater than 1.0:1.0. This ratio will be calculated at the end of each reporting period for which Lenders require financial statements pursuant to Section 11.1, using the results of that reporting period.
(c) The Administrative Agent’s average change in net assets (determined in accordance with GAAP) for a trailing three (3) year period, as reflected in the financial statements to be delivered pursuant to Section 11.1, must at all times be greater than $0.
Section 6.12 Grant of Security Interests.
(a) Borrower hereby grants to Lenders, to secure the payment and performance in full of all of the Obligations under this Agreement and the Facility Notes, a security interest in and so pledges and assigns to Lenders the following: (i) all of the Project Loans, the Project Notes, Project Note, the Project Loan Agreements, the Project Guaranties, as applicable, with respect to each Project Loan originated under the Facility; (ii) all accessions, additions, and substitutions of any of the foregoing; and (iii) all proceeds of any of the foregoing, whether any of the foregoing is owned now or acquired later; all accessions, additions, and substitutions of any of the foregoing; and all proceeds of any of the foregoing (all of the same being hereinafter called the “Facility Collateral”), and all insurance claims and other proceeds or products thereof, whether now owned or existing or hereafter acquired or arising, wherever located and whether in Borrower’s possession and control or in the possession and control of a third party.
(b) Borrower hereby irrevocably authorizes Lenders, or the Administrative Agent on behalf of the Lenders, at any time and from time to time to file in any filing office in any Uniform Commercial Code jurisdiction any amendments to any previously filed financing statements and file such additional financing statements and amendments thereto that (a) indicate the Facility Collateral, and (b) provide any other information required by Article 9a of the Uniform Commercial Code, for the sufficiency or filing office acceptance of any financing statement or amendment, including (i) whether Borrower is an organization, the type of
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organization and any organizational identification number issued to Borrower. Borrower agrees to furnish any such information to Lenders promptly upon Lenders’ request.
(c) To further the attachment, perfection and first priority of, and the ability of Lenders to enforce, Lenders’ security interest in the Facility Collateral, and without limitation on Borrower’s other obligations in this Agreement, Borrower agrees, in each case at Borrower’s expense, to take the following actions with respect to the following Facility Collateral:
(i) If any Facility Collateral is at any time in the possession of a bailee, Borrower shall promptly notify Lenders, or the Administrative Agent on behalf of the Lenders, thereof and, at Lenders’ request and option, shall promptly obtain an acknowledgement from the bailee, in form and substance satisfactory to Lenders, that the bailee holds such Facility Collateral for the benefit of Lenders, and that such bailee agrees to comply, without further consent of Borrower, with instructions from Lenders as to such Facility Collateral. Lenders agrees with Borrower that Lenders shall not give any such instructions unless an Event of Default has occurred and is continuing or would occur after taking into account any action by Borrower with respect to the bailee.
(ii) Borrower further agrees, at the request and option of Lenders, to take any and all other actions Lenders may determine to be necessary or useful for the attachment, perfection and first priority of, and the ability of Lenders to enforce, Lenders’ security interest in any and all of the Facility Collateral, including, without limitation, (a) executing, delivering and, where appropriate, filing financing statements and amendments relating thereto under the Uniform Commercial Code, to the extent, if any, that Borrower’s signature thereon is required therefor, (b) causing Lenders’ name to be noted as Lenders on any certificate of title for a titled good if such notation is a condition to attachment, perfection or priority of, or ability of Lenders to enforce, Lenders’ security interest in such Facility Collateral, (c) complying with any provision of any statute, regulation or treaty of the United States as to any Facility Collateral if compliance with such provision is a condition to attachment, perfection or priority of, or ability of Lenders to enforce, Lenders’ security interest in such Facility Collateral, (d) obtaining governmental and other third party waivers, consents and approvals in form and substance satisfactory to Lenders, including, without limitation, any consent of any licensor, lessor or other person obligated on Facility Collateral, (e) obtaining waivers from mortgagees and landlords in form and substance satisfactory to Lenders and (f) taking all actions under any earlier versions of the Uniform Commercial Code or under any other law, as reasonably determined by Lenders to be applicable in any relevant Uniform Commercial Code or other jurisdiction, including any foreign jurisdiction.
(b) Borrower further represents and warrants to Lenders as follows: (a) Borrower is or will be the owner of or has other rights in or power to transfer the Facility Collateral, free from any right or claim or any person or any adverse lien, security interest or other encumbrance, except for the security interest created by this Agreement and other liens permitted by the Loan Agreement and (b) the security interests granted herein are perfected and are of first priority.
(c) Borrower covenants with Lenders as follows: (a) the Facility Collateral, to the extent not delivered to Lenders pursuant to Section 2.2, will be promptly delivered upon
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request, (b) except for the security interest herein granted and liens permitted by the Loan Documents, Borrower shall be the owner of or have other rights in the Facility Collateral free from any right or claim of any other person, lien, security interest or other encumbrance, and Borrower shall defend the same against all claims and demands of all persons at any time claiming the same or any interests therein adverse to Lenders, (c) Borrower shall not pledge, mortgage or create, or suffer to exist any right of any person in or claim by any person to the Facility Collateral, or any security interest, lien or encumbrance in the Facility Collateral in favor of any person, other than Lenders, except for liens permitted by the Loan Documents, (d) Borrower will pay promptly when due all taxes, assessments, governmental charges and levies upon the Facility Collateral or incurred in connection with the use or operation of such Facility Collateral or incurred in connection with this Agreement, and (e) Borrower will not sell or otherwise dispose, or offer to sell or otherwise dispose, of the Facility Collateral or any interest therein.
(d) The powers conferred on Lenders hereunder are solely to protect its interests in the Facility Collateral and shall not impose any duty upon it to exercise any such powers. Lenders shall be accountable only for the amounts that it actually receives as a result of the exercise of such powers, and neither it nor any of its officers, directors, employees or agents shall be responsible to Borrower for any act or failure to act, except for Lenders’ own gross negligence or willful misconduct.
ARTICLE VII EVENTS OF DEFAULT AND REMEDIES
Section 7.1 Events of Default. The occurrence of any of the following events shall be an Event of Default hereunder:
(a) Failure by Borrower to pay any (i) principal or interest that is due and payable on any Facility Note pertaining to a Project Loan payment actually made by a Project Borrower to Borrower, which failure shall remain unremedied for ten (10) days after written notice thereof has been provided by any Lender to Borrower, or (ii) other amount required to be paid hereunder or under one or more of the Loan Documents (that Borrower has received from a Project Borrower with respect to the underlying Project Loan other than principal or interest on any Facility Note), which failure shall remain unremedied for thirty (30) days after written notice thereof has been provided by any Lender to Borrower. Borrower will no longer be entitled to either such ten (10) or thirty (30) day cure period after the first two (2) such failures). Notwithstanding any language to the contrary contained in this Agreement, Borrower shall only be required to pay principal or interest payments under a Facility Note to the extent the Class C Lender Top Loss has not already been depleted. [ISSUE REGARDING LOSS PRIORITY WITH CLASS B LENDERS]
(b) Borrower shall generally not pay its debts as such debts become due, or shall admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors; or any Proceeding shall be instituted by or against Borrower seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of
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an order for relief or the appointment of a receiver, trustee, custodian or other similar official for it or for any substantial part of its property and, in the case of any such Proceeding instituted against it (but not instituted by it), either such Proceeding shall remain undismissed or unstayed for a period of sixty (60) days, or any of the actions sought in such Proceeding (including, without limitation, the entry of an order for relief against, or the appointment of a receiver, trustee, custodian or other similar official for, it or for any substantial part of its property) shall occur; or Borrower shall take any action to authorize any of the actions set forth above in this subsection (b); or
(c) Borrower shall fail to pay any principal of or premium or interest on any Debt (but excluding Debt evidenced by any Facility Note or by a Project Loan Protective Advance, which is separately addressed by clause (a) above) of Borrower when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument relating to such Debt; or any such Debt shall be declared to be due and payable, or required to be prepaid (other than by a regularly scheduled required prepayment), redeemed, purchased or defeased, or an offer to prepay, redeem, purchase or defease such Debt shall be required to be made, in each case prior to the stated maturity thereof; or
(d) Borrower fails to comply with or perform as and when required or to observe any of the material terms, conditions or covenants contained in this Agreement; or
(e) If Borrower shall fail to perform or observe any other material term, covenant or agreement to be performed or observed by such Person contained herein or in any other Loan Document to which it is a party (except for any term or covenant which is the subject of another subsection of this Section 7.1), in each case, if such failure shall remain unremedied for thirty (30) days after notice from the Administrative Agent or any Lender with respect thereto; or
(f) (i) Any uninsured judgment or order for the payment of money in excess of $250,000 shall be rendered against Borrower and (ii) (A) enforcement proceedings shall have been commenced by any creditor upon such judgment or order or (B) there shall be any period of thirty (30) consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; or
(g) Any Change of Control shall occur; or
(h) Any provision of this Agreement, any Facility Note, or any other Loan Document shall for any reason cease to be valid and binding on Borrower or the Administrative Agent (as the case may be), or Borrower or the Administrative Agent shall so state in writing; or
(i) Any representation, warranty, certification or statement made in writing by Borrower (i) made herein or in any other Loan Document or (ii) made in any certification or documentation required to be provided by any of such parties during the term of the Facility and/or in connection with any borrowing, shall prove to have been incorrect in any material respect when made or deemed made.
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Section 7.2 Remedies. If an Event of Default shall occur and be continuing then, in addition to all other rights the Lenders may have under this Agreement, the other Loan Documents and any other applicable laws (including, without limitation the imposition of the Default Interest Rate with respect to the Obligations in accordance with Section 1.7(b)(v)), the Administrative Agent (with the permission or at the direction of Disinterested Lenders holding a Majority-in-Interest) may, without notice to Borrower (which notice is hereby expressly waived by Borrower):
(a) declare the Commitment and the obligation of the Lenders to make Loans to be terminated, whereupon the same shall forthwith terminate; and
(b) declare the Facility Notes, all interest thereon and all other Obligations payable under this Agreement to be forthwith due and payable, whereupon the Facility Notes, all such interest and all such other Obligations shall become and be forthwith due and payable, without presentment, demand, protest, or further notice of any kind, all of which are hereby expressly waived by Borrower;
(c) Upon the occurrence and during the continuance of an Event of Default, generally to sell, transfer, pledge, make any agreement with respect to or otherwise dispose of or deal with any of the Facility Collateral in such manner as is consistent with the Uniform Commercial Code and as fully and completely as though Lenders were the absolute owner thereof for all purposes, and to do, at Borrower’s expense, at any time, or from time to time, all acts and things which Lenders deem necessary or useful to protect, preserve or realize upon the Facility Collateral and Lenders’ security interest therein, in order to effect the intent of this Agreement, all at least as fully and effectively as Borrower might do, including, without limitation, (i) the transfer of the Project Loans, Project Notes, and Project Loan Documentation to Lenders and (ii) the execution, delivery and recording, in connection with any sale or other disposition of any Facility Collateral, of the endorsements, assignments or other instruments of conveyance or transfer with respect to such Facility Collateral; and
(d) to the extent that Borrower’s authorization given in this Agreement is not sufficient, to file such financing statements with respect hereto, with or without Borrower’s signature, or a photocopy of this Agreement in substitution for a financing statement, as Lenders may deem appropriate and to execute in Borrower’s name such financing statements and amendments thereto and continuation statements which may require Borrower’s signature.
(e) Lenders shall not be deemed to have waived any of their rights or remedies in respect of the Obligations or the Facility Collateral unless such waiver shall be in writing and signed by Lenders. No delay or omission on the part of Lenders in exercising any right or remedy shall operate as a waiver of such right or remedy or any other right or remedy. A waiver on any one occasion shall not be construed as a bar to or waiver of any right or remedy on any future occasion. All rights and remedies of Lenders with respect to the Obligations or the Facility Collateral, whether evidenced hereby or by any other instrument or papers, shall be cumulative and may be exercised singularly, alternatively, successively or concurrently at such time or at such times as Lenders deems expedient.
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(f) Borrower waives demand, notice, protest, notice of acceptance of this Agreement, notice of loans made, credit extended, Facility Collateral received or delivered or other action taken in reliance hereon and all other demands and notices of any description. With respect to both the Obligations and the Facility Collateral, Borrower assents to any extension or postponement of the time of payment or any other indulgence, to any substitution, exchange or release of or failure to perfect any security interest in any Facility Collateral, to the addition or release of any party or person primarily or secondarily liable, to the acceptance of partial payment thereon and the settlement, compromising or adjusting of any thereof, all in such manner and at such time or times as Lenders may deem advisable. Lenders shall have no duty as to the collection or protection of the Facility Collateral or any income therefrom, the preservation of rights against prior parties, or the preservation of any rights pertaining thereto beyond the safe custody thereof as set forth in this Agreement. Borrower further waives any and all other suretyship defenses.
Section 7.3 Proceeds of Dispositions; Expenses. Borrower shall pay to Lenders on demand any and all expenses, including reasonable attorneys’ fees and disbursements, incurred or paid by Lenders in protecting, preserving or enforcing Lenders’ rights and remedies under or in respect of any of the Obligations or any of the Facility Collateral. After deducting all of said expenses, the residue of any proceeds of collection or sale or other disposition of the Facility Collateral shall, to the extent actually received in cash, be applied to the payment of the Obligations in such order or preference as Lenders may determine, proper allowance and provision being made for any Obligations not then due. Upon the final payment and satisfaction in full of all of the Obligations and after making any payments required by Sections 9- 608(a)(1)(C) or 9a-615(a)(3) of the Uniform Commercial Code, any excess shall be returned to Borrower. In the absence of final payment and satisfaction in full of all of the Obligations, Borrower shall remain liable for any deficiency; provided, however, that upon the occurrence of an Event of Default described in Subsection 7.1(b) whether or not a notice of such default is issued by the Administrative Agent, (A) the Commitment and the obligations of the Lenders to make Loans shall automatically be terminated and (B) the Loans, the Facility Notes, all such interest, accruing at the Default Interest Rate, and all such Obligations shall automatically become and be due and payable, without presentment, demand, protest or any notice of any kind, all of which are hereby expressly waived by Borrower.
Section 7.3 Waiver of Defaults and Other Actions. If an Event of Default shall occur and be continuing, the Administrative Agent may, and at the direction of the Disinterested Lenders holding a Super Majority-in-Interest shall, waive such Event of Default.
Section 7.4 Remedies are Cumulative. All remedies afforded to the Lenders pursuant to this Agreement are separate and cumulative remedies and it is agreed that no one of such remedies, whether or not exercised by the Lenders shall be deemed to be an exclusion of any of the other remedies available to the Lenders and shall not limit or prejudice any other legal or equitable remedy which the Lenders may have.
Section 7.5 Set-Off. Upon the occurrence and during the continuance of any Event of Default, each Lender is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set-off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other amounts at any time owing by such
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Lender to or for the credit or the account of the Borrower (including, without limitation, any indebtedness or grants to be made by such Lender to the Borrower) against any and all of the obligations of the Borrower now or hereafter existing under any Loan Document, whether or not such Lender shall have made any demand under such Loan Document and although such obligations may be unmatured. The Lenders and the Administrative Agent agree that all set-offs and other recoveries from the Borrower shall be shared among the Lenders and the Administrative Agent in accordance with the provisions of Section 1.11 (it being understood that such amounts will be applied in accordance with the priorities set forth in Section 7.6). Each Lender agrees promptly to notify the Borrower after any such set-off and application, provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of the Lenders under this Section 7.5 are in addition to other rights and remedies (including, without limitation, other rights of set-off) which the Lenders may have.
Section 7.6 Application of Proceeds. From and after the date on which the Administrative Agent has taken action pursuant to Section 7.2 and until all of the Obligations of Borrower have been paid in full, any and all proceeds received by the Administrative Agent from the exercise of any remedy by the Administrative Agent against the Borrower shall be applied as follows:
(a) First, to reimburse the Administrative Agent and the Lenders for out-of- pocket costs, expenses and disbursements, including reasonable attorneys’ fees and legal expenses, incurred by the Administrative Agent or the Lenders in connection with the collection of any Obligations, and the exercise of any remedies contemplated hereby or under the Loan Documents; provided that any such reimbursements owed to any Senior Lender shall be paid prior to any Junior Lender; and
(b) Second, in accordance with section 10.2.
ARTICLE VIII FEES AND EXPENSES
Section 8.1 Expenses Generally. All reasonable third party out-of-pocket expenses, including but not limited to, reasonable attorneys’ fees and expenses, recording fees, mortgage fees, wiring charges, and postage incurred by or on behalf of Administrative Agent relating to the negotiation, documentation and closing of this credit facility, the administration hereof, or the extension, amendment or other modification hereof or of any of the other Loan Documents and payment for which is not otherwise provided for under this Agreement will be paid by Borrower within five (5) Business Days of Administrative Agent’s written request therefor, which shall include documentation substantiating such request.
Section 8.2 Claims Against Lenders. If a claim or action is ever made upon or commenced against Administrative Agent or any Lender for repayment or recovery of any amount or amounts received by such Person in payment or on account of any of the Obligations of Borrower due under this Agreement or any of the Facility Notes or other Loan Documents, including, but not limited to, a preference action pursuant to 11 U.S.C. §§547 and 550, and such Person repays all or part of said amount by reason of (a) any judgment, decree or order of any court or administrative body, or (b) any settlement or compromise of any such claim effected by
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such Person with any such claimant (including Borrower), then and in such event Borrower agrees that any such judgment, decree, order, settlement or compromise shall be binding upon Borrower, notwithstanding any revocation hereof, or the return, release, or cancellation of this Agreement or the cancellation of any note or other instrument evidencing any liability of Borrower, and Borrower shall be and remain liable and obligated to indemnify such Person for its reasonable attorneys’ fees incurred in defending against such claim or action and for the amount so repaid or recovered to the same extent as if such amount had never originally been received by such Person.
ARTICLE IX INDEMNITIES; LIMITATIONS OF LIABILITY
Section 9.1 Indemnity. Borrower will indemnify, defend and hold harmless each of the Indemnified Parties from and against all losses, costs, claims, suits, actions, fines, penalties, expenses, liabilities and damages and related expenses relating to a breach by the Borrower of its obligations hereunder, including without limitation reasonable attorney’s fees and disbursements, arising under the Facility, the Loan Documents, any Loan or Project Loan, the use of the proceeds thereof, and the transactions contemplated hereunder or thereunder, except to the extent such loss, cost, claim, suit, action, fine, penalty, expense, liability or damage is determined by a court of competent jurisdiction in a final non-appealable judgment to have been caused by any of Indemnified Parties’ gross negligence or willful misconduct in such Person’s performance under this Agreement; provided, however, that no Indemnified Party shall be deemed responsible for, or not entitled to the foregoing indemnity by reason of another Person’s gross negligence or willful misconduct. Indemnified Parties, at their option, may undertake and conduct through counsel of their collective choice as designated by such Indemnified Parties, at the expense of the Borrower, the settlement or defense of any such action or proceeding. Notice of any claim and/or action or proceeding instituted against Borrower shall be promptly given to each Indemnified Party and each Indemnified Party shall have the right, at such Person’s own cost and expense, to join in the defense of any such action or proceeding.
Section 9.2 No Liability on Part of Any Indemnified Party. No Indemnified Party by its acceptance of this Agreement, the Facility Notes and any payments on account thereof, shall be deemed to have assumed or to have become liable for any obligations or liabilities of Borrower.
Section 9.3 No Joint Venture, Etc. Borrower hereby acknowledges and agrees that:
(a) No Indemnified Party has any fiduciary relationship with or duty to Borrower arising out of or in connection with this Agreement, and the relationship between Indemnified Party and Borrower in connection herewith is solely that of debtor and creditor; and
(b) No joint venture or partnership is created hereby or otherwise exists by virtue of the transactions contemplated hereby between any Indemnified Party and Borrower.
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ARTICLE X BORROWER ACCOUNTS; APPLICATION OF PROJECT LOAN PROCEEDS
Section 10.1 Borrower Accounts. On or before the Effective Date, Borrower shall establish (and at all times thereafter shall maintain) with Borrower Account Bank the Borrower Operating Account. The Borrower agrees that it will use its best efforts to deposit, all amounts received by it, to the Borrower Operating Account on the same Business Day that such amounts are received and no later than two (2) Business Days after receipt. The Borrower shall administer the Borrower Operating Account in accordance with this Article X.
(a) All interest earned on each Borrower Operating Account shall be deposited (or caused to be deposited) by the Borrower Account Bank into such Borrower Operating Account.
(b) Borrower Operating Account may be maintained as separate subaccounts on the books and records of the Borrower. The funds attributable to such subaccounts may be deposited in one or more general bank accounts and need not be physically segregated from any other funds in such general bank account so long as the requirements of this Section 10.1 are met.
(c) The Administrative Agent shall permit Borrower to withdraw amounts from the Borrower Operating Account sufficient to pay for costs, fees and expenses of the Borrower and to reimburse the Administrative Agent for any such amounts paid by the Administrative Agent; provided, that Borrower shall not be permitted to withdraw any amounts from the Borrower Operating Account consisting of proceeds of recoveries with respect to Underlying Project Loans pursuant to Section 10.3(b) held in such Borrower Operating Account, if applicable.
Section 10.2 Application of Project Loan Proceeds.
(a) On each Payment Date and to the extent Borrower has received principal payments, interest payments, or amortized principal and interest payments on an Underlying Project Loan, Project Loan Proceeds for each Underlying Project Loan shall be disbursed from the Borrower Operating Account and applied in the following order of priority (it being understood that Project Loan Proceeds relating to an Underlying Project Loan shall only be applied to the items in this Section 10.2 relating to such Underlying Project Loan or the out-of- pocket costs, fees and expenses in this Section 10.2):
(i) First, to pay the Administrative Agent any reasonable out-of-pocket costs then owed to the Administrative Agent hereunder;
(ii) Second, to the extent the Project Loan Proceeds with respect to such Underlying Project Loan remain after any prior payments on such Payment Date, to the Class A Lender in the following order: (a) first, all accrued interest due (calculated on the basis of the Class A Lender’s Spread and the outstanding principal balance of the Underlying Project Loan) and owing to the Class A Lender hereunder with respect to the Loan made by the Class A Lender in connection with Underlying Project Loan; and (b) second, to outstanding principal on the
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subject Loan made by the Class A Lender to Borrower under this Agreement with respect to the Underlying Project Loan, until the unpaid principal amounts thereof have been reduced to zero;
(iii) Third, to the extent the Project Loan Proceeds with respect to such Underlying Project Loan remain after any prior payments on such Payment Date, to the Class B Lender in the following order: (a) first, all accrued interest due (calculated on the basis of the Class B Lender’s Spread and the outstanding principal balance of the Underlying Project Loan) and owing to the Class B Lender hereunder with respect to the Loan made by the Class B Lender in connection with Underlying Project Loan; and (b) second, to outstanding principal on the subject Loan made by the Class B Lender to Borrower under this Agreement with respect to the Underlying Project Loan, until the unpaid principal amounts thereof have been reduced to zero;
(iv) Fourth, to the extent the Project Loan Proceeds with respect to such Project Loan remain after any prior payments on such Payment Date, all accrued interest due (calculated on the basis of the Administrative Agent’s Spread and outstanding principal balance of the Underlying Project Loan) and owing to Administrative Agent hereunder to pay the Administrative Agent;
(v) Fifth, to the extent the Project Loan Proceeds with respect to such Project Loan remain after any prior payments on such Payment Date, all accrued interest due (calculated on the basis of the Excess Spread and outstanding principal balance of the Underlying Project Loan) and owing to Administrative Agent hereunder to pay the Administrative Agent; provided, however, that if the 25% of the Class A Lender Commitment exceeds the Total Top Loss multiplied, the Excess Spread shall be contributed to the Class C Lender Top Loss until 25% of the Class A Lender Commitment is equal to or exceeds the Total Top Loss; and
(vi) Sixth, to the extent the Project Loan Proceeds with respect to such Project Loan remain after any prior payments on such Payment Date, the amount of any reasonable (to be determined by the Administrative Agent in its discretion) costs, fees and expenses then owed to or by (as the case may be) to the Borrower.
(b) Notwithstanding any language to the contrary contained in this Agreement, Borrower shall only be required to pay principal or interest payments under a Facility Note to the extent Borrower receives such principal payments or interest payments on the Underlying Project Loans, unless such principal payments or interest payments on underlying Project Loans are more than thirty (30) days late. In such a case, ZB, N.A., dba Zions First National Bank may debit an amount equal to such late payments from the Class B Lender Top Loss held in the Restricted Account to the extent such funds are available and apply such amount toward amounts owed under the subject Facility Note, provided ZB, N.A., dba Zions First National Bank notifies Borrower of such debit when it is made.
(c) For the avoidance of doubt it is agreed that all provisions in this Section 10.2 permitting proceeds to be applied to Loans made in connection with Underlying Project Loans shall refer strictly to those specific Loans which were used to originate the applicable Underlying Project Loan and not Loans used for the origination of any other Underlying Project Loan.
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Section 10.3 Sharing of Project Loan Losses.
(a) To the extent that any of the Class A Lender, the Class B Lenders or the Class C Lender incur any loss that is unable to be reimbursed with the proceeds received on account of any recovery with respect to an Underlying Project Loan under Section 10.2, the Facility Note with respect to such Lender shall be permanently reduced in an amount equal to such loss.
(b) Notwithstanding the foregoing or any other provision contained herein, to the extent there is a recovery with respect to an Underlying Project Loan for which a loss is incurred pursuant to Section 10.3(a) hereof, the proceeds of such recovery shall be distributed in the following order of priority:
(i) first, to Borrower in the amount of all reasonable out-of-pocket costs, fees and expenses incurred in connection with such recovery;
(ii) thereafter, in accordance with Section 1.3 of this Agreement.
Section 10.4 Intentionally Deleted.
Section 10.5 Full Release Upon Repayment. Upon the full payment, performance, satisfaction and discharge of all of the Obligations and the payments of all other amounts which may be due to the Administrative Agent and Lenders under the terms of this Agreement, the Administrative Agent and Lenders shall execute such instruments as Borrower may reasonably require in order to effect a release of the remaining Collateral held by the Administrative Agent and Lenders, to anyone entitled to receive the same, all of which instruments shall be executed by any Administrative Agent and such Lender, without representation or warranty by or recourse against the Administrative Agent and such Lender, whereupon this Agreement shall terminate and be of no further force or effect except for such terms that expressly survive termination of this Agreement.
ARTICLE XI REPORTING REQUIREMENTS
Within the below specified time frames, Borrower shall furnish to the Administrative Agent and each of the Lenders, and Administrative Agent shall furnish to each of the Lenders, the following:
Section 11.1 Financial Statements and Information; Annual Portfolio Management Reports.
(a) Within the earlier of (i) one hundred eighty (180) days after the end of each fiscal years of Borrower and of Administrative Agent, respectively, or (ii) thirty (30) days after delivered to Administrative Agent’s board of directors, each of Borrower and Administrative Agent shall deliver its audited financial statements, which financial statements shall be in accordance with GAAP and in all other respects in form and substance reasonably satisfactory to Administrative Agent and the Lenders and shall contain (except for standard qualifications) an unqualified (or otherwise reasonably satisfactory to the Lenders) opinion of the
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audited organization’s certified public accountant, which certified public accountant’s name shall have been provided in advance to Administrative Agent and the Lenders and shall be reasonably acceptable to Administrative Agent and the Lenders;
(b) Within forty-five (45) days after the end of each fiscal quarter, each of Borrower and Administrative Agent shall deliver its self-prepared unaudited quarterly financial statements, including a balance sheet (or statement of financial position) and statement of income or loss (or statement of activities), and statement of cash flows, each certified by an Authorized Officer of Borrower and Administrative Agent, each setting forth the financial condition of Borrower and of Administrative Agent, respectively, in accordance with GAAP;
(c) As soon as practicable and in any event within ten (10) days after delivery to Borrower or to Administrative Agent, respectively, a copy of any letter issued by Borrower’s independent public accountants or other management consultants with respect to its financial or accounting systems or controls, including all so-called “management letters.”
Section 11.2 Quarterly and Monthly Reports.
(a) Within forty (45) days after the end of each fiscal quarter of Borrower the Administrative Agent shall provide a written summary of the status of Borrower’s Project Loan portfolio, which such summary shall include, without limitation, the following information:
(i) a Portfolio Report in a form approved by Administrative Agent and Lenders holding a Majority-in Interest, which report shall (x) summarize all Project Loans then outstanding, setting forth for such Project Loans details regarding location, risk rating, maturity, amortization and interest rate and other relevant information set forth in Exhibit D, (y) provide a statement of all funds then on deposit in each Borrower Account and a calculation by Borrower of the then unfunded portion of the Class A Total Loan Amount, the Class B Total Loan Amount, and the Class C Lender Top Loss, and (z) report outstanding maturities for Project Loans and proposed renewal activities, as well as report all Project Loans repaid since the prior quarterly report;
(ii) a “Default Certificate” providing a delinquency report with respect to any Delinquent or Defaulted Loans;
(iii) a “Covenant Compliance Certificate” in the form attached as Exhibit E;
(iv) an account statement for each Borrower Account; and
(v) notices of any changes to the Credit Manual.
(b) Within ten (10) days after the end of calendar month, the Administrative Agent shall provide a written summary of the status of Borrower’s Project Loan portfolio, which such summary shall include, without limitation, the following information:
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(i) the unpaid principal balance and accrued but unpaid interest for each of the Project Loans;
(ii) the balance between long-term (five (5) years) and short term (one (1) to three (3) years) Project Loans held by the Borrower;
(iii) the loan-to-value ratio for each Project Loan as determined at the application Loan Settlement Date;
(iv) the mix of loan types as well as a listing of any and all Project Loans repaid during the preceding fiscal year;
(v) the mix of asset classes represented;
(vi) the diversification by location of the underlying Project;
(vii) the diversification of the Project Loan borrowing entities and ultimate Project Loan borrowers;
(viii) the reconciliation of the payments made by the Borrower on the Advances with the payments received by the Borrower on the underlying loans;
(ix) the gross annual revenue of each Project Borrower; and
(x) the address, for Community Reinvestment Act purposes, of each Project Borrower.
Section 11.3 Notices of Default; Material Adverse Change. As soon as practicable and in any event within two (2) Business Days after Borrower’s knowledge thereof, Borrower shall provide the Administrative Agent and the other Lenders notice of (a) the occurrence of any Event of Default or Unmatured Event of Default and/or, after receiving notice thereof, any default or event of default under any Underlying Project Loan, or (b) the occurrence of any Borrower Material Adverse Effect.
Section 11.4 Litigation. As soon as practicable and in any event within five (5) Business Days after Borrower’s knowledge thereof, notice of the institution of any litigation or proceedings against Borrower before any court, arbitrator or governmental department, commission, board, bureau, agency or instrumentality in an amount in excess of $100,000, in each case together with the amount of contingent liability, if any, if such amount is ascertained and such other supporting or evidencing documentation as shall be required by Administrative Agent or any Lender in order to evaluate the notice provided.
Section 11.5 Charge-Offs or Write-Downs. Notice in writing of any charge-off or write-down of a Project Loan in accordance with this Agreement and the Credit Manual as soon as possible after approval by the Administrative Agent and Lenders holding a Majority-in- Interest of the Loans to conduct such charge-off or write-down, but in any event within five (5) Business Days after recordation of same in Borrower’s financial record.
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Section 11.6 Other. Borrower shall promptly provide to each Lender such additional information with respect to each Project Loan financed under the Facility as such Lender may reasonably request. Such other information respecting the condition or operations, financial or otherwise, of Borrower as any Lender may from time to time specifically and reasonably request in writing to Borrower (including, without limitation more frequent reporting of the yearly and monthly reports described in this Article XI).
ARTICLE XII OBLIGATIONS OF JUNIOR LENDERS
Section 12.1 Bankruptcy.
(a) Each Junior Lender agrees that neither Administrative Agent nor the Senior Lender owes any fiduciary duty to such Junior Lender in connection with the administration of the Facility and the Loan Documents and such Junior Lender agrees not to assert any such claim.
(b) The provisions of this Article XII shall be applicable both before and after the commencement, whether voluntary or involuntary, of any Proceeding. For as long as the Facility shall remain outstanding, unless Junior Lenders shall have first obtained the consent of the Senior Lender, Junior Lenders, in their capacity as Junior Lenders, and shall not solicit any Person to, direct or cause Borrower to: (i) commence any Proceeding; (ii) institute proceedings to have Borrower adjudicated a bankrupt or insolvent; (iii) consent to, or acquiesce in, the institution of bankruptcy or insolvency proceedings against Borrower; (iv) file a petition or consent to the filing of a petition seeking reorganization, arrangement, adjustment, winding-up, dissolution, composition, liquidation or other relief by or on behalf of Borrower; (v) seek or consent to the appointment of a receiver, liquidator, assignee, trustee, sequestrator, custodian or any similar official for Borrower; (vi) make an assignment for the benefit of any creditor of Borrower; (vii) seek to consolidate any other assets of Borrower with any other Person in any proceeding relating to bankruptcy, insolvency, reorganization or relief of debtors; or (viii) take any action in furtherance of any of the foregoing.
(c) In any Proceeding the Administrative Agent, Borrower and each Lender hereby agrees that: (i) each Lender shall be permitted to file proofs of claim and/or where necessary to (x) file any necessary responsive or defensive pleadings in opposition to any motion, claim adversary proceedings or other pleadings made by a Person objecting to otherwise seeking disallowance of the claims of a Junior Lender or (y) prevent the running of any statute of limitations or similar restrictive claims of the Junior Lenders or to assert a compulsory cross- claim or counter claim against a Loan Party; (ii) each Junior Lender shall retain the right in its sole and absolute discretion to, among other things, vote on a plan of reorganization or arrangement with respect to Borrower; and (iii) each Junior Lender shall retain the right to otherwise participate in such Proceeding; provided that, in each case, such participation or plan or arrangement does not adversely impact or challenge the rights of the Senior Lender or priority of payments set forth in this Agreement as between the Senior Lender and the Junior Lenders, and, except as set forth in Section 7.6(b), the Junior Lenders shall not be entitled to receive any payments until the Senior Lender is fully paid.
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ARTICLE XIII COMMITTEES
Section 13.1 Credit Committee. The Administrative Agent shall establish a Credit Committee (the “Credit Committee”) including one representative for each Class A Lender, one (1) representative from each Class B Lender, and one (1) representative from the Administrative Agent. Notwithstanding anything to the contrary contained in this Agreement, only the Class B Lender representative from the Geographic Area where the Project Loan is proposed to be made will have the right to vote in connection with such proposed Project Loan. The Class A Lenders will have a minimum of three (3) votes on the Credit Committee. If there are less than three Class A Lenders, each Class A Lender will have at least one vote and the additional vote will belong to the Class A Lender with the largest Class A Lender Commitment. If there are three (3) or more Class A Lenders, each one will have one vote. For the avoidance of doubt, initially there will be one Class A Lender, ZB, N.A. dba Zions First National Bank, which will have three votes on the Credit Committee. Each member of the Credit Committee will have a term of three (3) years, which term may be renewed by the party which appointed such member. The Credit Committee shall meet monthly to make Determinations on proposed Project Loans as set forth in Section 1.3 herein. In addition, the Credit Committee shall have the authority to recommend and approve changes to the Credit Manual and Underwriting Guidelines which are not inconsistent with the terms of this Agreement.
Section 13.2 Advisory Committee. An advisory committee may be established at the discretion of the Administrative Agent.
Section 13.3 Pricing Committee. The Administrative Agent shall establish a pricing committee comprised of the Administrative Agent and one representative appointed by each Class A Lender, one representative appointed by the Class B Lenders, and one representative appointed by the Class C Lender. The pricing committee will meet quarterly (or as otherwise determined necessary) at the direction of the Administrative Agent and shall be responsible for setting rate and fee levels for its products based upon current cost of funds, market conditions and other factors that may vary over time and impact facility pricing. However, only the representative from the Class A Lender shall have the right to vote on and determine the Class A Lender’s Spread, subject to the terms of the Credit Manual.
ARTICLE XIV MISCELLANEOUS
Section 14.1 Further Assurances. Until all of the Facility Notes have been paid in full, Borrower shall, promptly upon the request of any Lender or Administrative Agent, execute and/or deliver to such Lender or Administrative Agent such other additional documents in Borrower’s possession as are reasonably necessary to carry out the purposes of this Agreement and the other Loan Documents, without cost or expense to such Lender or Administrative Agent; provided that such Lender hereby agrees not to disclose any confidential information or documents received pursuant hereto, unless such information is or becomes publicly available without fault on the part of Lender or is demanded by a valid court order or subpoena, or disclosure of which is required under applicable law or regulation.
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Section 14.2 Examination of Records. Upon five (5) days’ prior written notice, Borrower shall permit officers and employees of the Administrative Agent and the Lenders and representatives of the Administrative Agent and the Lenders to audit and examine and take extracts from the books and records of Borrower at any time and from time to time during normal business hours. The Borrower agrees to reimburse the Administrative Agent and the Lenders, promptly after the Administrative Agent’s or a Lender’s request therefor, for the expenses of the Administrative Agent or the Lender incurred in conducting such audit and examination in an amount equal to the Administrative Agent’s or the Lender’s then reasonable and customary charges for each person employed to perform such audit or analysis, plus all costs and expenses (including without limitation, travel expenses) incurred by the Administrative Agent or the Lender in the performance of such audit or examination; provided, however, that unless an Event of Default has occurred and is continuing, Borrower shall only be responsible for the cost and expense of the first such examination in any calendar year.
Section 14.3 Amendments and Waivers. Unless otherwise specified herein, none of the terms or provisions of this Agreement may be waived, altered, modified, amended or discharged, except by an instrument in writing signed a Super Majority-in-Interest; provided that no agreement, waiver, alteration, modification, amendment or consent may be made without the consent of all of the Lenders which would:
(a) increase the amount of the Commitment of any Lender without the consent of such Lender;
(b) whether or not any Loans are outstanding, change the Facility Maturity Date or the time for payment of principal or interest on any Loan or any other fee payable to any Lender, or change the principal amount of or the rate of interest borne by any Loan or reduce any fee payable to any Lender without the consent of each Lender directly affected thereby;
(c) modify, amend, or alter the priority payment provisions set forth in Article X of this Agreement or the provisions of Article XIII of this Agreement without the consent of the Lender directly affected thereby;
(d) amend the provisions of Section 1.11 of this Agreement or this Section 14.3;
(e) alter any provision regarding the pro rata treatment of the Lenders; or
(f) change the definition of “Majority-in-Interest” or “Super Majority-in- Interest” or “Disinterested Lenders” or change any requirement providing for the Lenders or “Majority-in-Interest” or “Super Majority-in-Interest” or other similar requirement set forth in this Agreement for purposes of taking any action hereunder without the consent of all the Lenders (or Disinterested Lenders where applicable).
No failure on the part of Administrative Agent or any Lender to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise by Administrative Agent or any Lender of any right hereunder preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedy available to Administrative Agent or any Lender at 40 4829-2834-4907
law or in equity. Administrative Agent shall not release any guaranty securing the Obligations without the prior written consent of each Lender that is a Beneficiary thereof.
Section 14.4 GOVERNING LAW. THIS AGREEMENT AND THE FACILITY NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF UTAH (WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES).
Section 14.5 CONSENT TO JURISDICTION AND VENUE; WAIVER OF JURY TRIAL.
(a) EXCLUSIVE JURISDICTION. EXCEPT AS PROVIDED IN SUBSECTION (b), EACH OF THE PARTIES HERETO AGREES THAT ALL DISPUTES AMONG THEM ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH, THIS AGREEMENT, OR ANY OF THE OTHER LOAN DOCUMENTS WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED EXCLUSIVELY BY STATE OR FEDERAL COURTS LOCATED IN SALT LAKE CITY, BUT THE PARTIES HERETO ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF SALT LAKE CITY. EACH OF THE PARTIES HERETO WAIVES IN ALL DISPUTES BROUGHT PURSUANT TO THIS SUBSECTION (a) ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT CONSIDERING THE DISPUTE.
(b) OTHER JURISDICTIONS. BORROWER AGREES THAT ANY LENDER OR ADMINISTRATIVE AGENT SHALL HAVE THE RIGHT TO PROCEED AGAINST BORROWER OR ITS PROPERTY IN A COURT IN ANY LOCATION TO ENABLE SUCH LENDER OR ADMINISTRATIVE AGENT TO (1) OBTAIN PERSONAL JURISDICTION OVER BORROWER OR (2) ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF SUCH LENDER OR ADMINISTRATIVE AGENT. BORROWER AGREES THAT IT WILL NOT ASSERT ANY PERMISSIVE COUNTERCLAIMS IN ANY PROCEEDING BROUGHT BY ANY LENDER TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF SUCH LENDER OR ADMINISTRATIVE AGENT. BORROWER WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN WHICH ANY LENDER OR ADMINISTRATIVE AGENT HAS COMMENCED A PROCEEDING DESCRIBED IN THIS SUBSECTION (b).
(c) VENUE. BORROWER IRREVOCABLY WAIVES ANY OBJECTION (INCLUDING, WITHOUT LIMITATION, ANY OBJECTION OF THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS) WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH IN ANY JURISDICTION SET FORTH ABOVE.
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(d) SERVICE OF PROCESS. BORROWER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY UNITED STATES REGISTERED MAIL, POSTAGE PREPAID, TO SUCH BORROWER IN ACCORDANCE WITH SECTION 14.8 HEREOF. THE FOREGOING, HOWEVER, SHALL NOT LIMIT THE RIGHT OF ANY LENDER OR ADMINISTRATIVE AGENT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE ANY LEGAL ACTION OR PROCEEDING OR TO OBTAIN EXECUTION OF JUDGMENT IN ANY APPROPRIATE JURISDICTION.
(e) WAIVER OF JURY TRIAL. TO THE MAXIMUM EXTENT PERMITTED BY LAW, EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, ARISING OUT OF, CONNECTED WITH, RELATED TO OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH. EACH OF THE PARTIES HERETO AGREES AND CONSENTS THAT, TO THE MAXIMUM EXTENT PERMITTED BY LAW, ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
(f) ADVICE OF COUNSEL. EACH OF THE PARTIES REPRESENTS TO EACH OTHER PARTIES HERETO THAT IT HAS DISCUSSED THIS AGREEMENT AND, SPECIFICALLY, THE PROVISIONS ON INDEMNIFICATION AND SECTION 15.4 AND THIS SECTION 14.5, WITH ITS COUNSEL.
Section 14.6 Headings. The titles of the articles and the paragraph headings of this Agreement are for convenience only and shall not affect the construction of this Agreement.
Section 14.7 Integration. This Agreement supersedes all other conversations and prior agreements with respect to the subject matter hereof.
Section 14.8 Notices. All notices, demands, requests, consents, approvals or other communications required, permitted, or desired to be given hereunder shall be in writing sent by facsimile (with receipt by the sender of a confirmation of successful transmission) or by registered or certified mail, postage prepaid, return receipt requested, or delivered by hand or reputable overnight courier addressed to the party to be so notified at its address hereinafter set forth, or to such other address as such party may hereafter specify in accordance with the provisions of this Section 15.8. Any such notice, demand, request, consent, approval or other communication shall be deemed to have been received (a) upon delivery on a Business Day if sent by mail, hand-delivery or courier or (b) on the date of sending with confirmed receipt if sent by facsimile, in each case addressed to the party for whom it is intended
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at that party’s address set forth below, or to such other address as that party may hereafter designate in writing to the other party hereto:
Borrower: Utah Small Business Growth Initiative, LLC 6880 South 700 West, 2nd Floor Midvale, Utah 84047 Attention: Michael Plaizier
Administrative Agent: Utah Small Business Growth Initiative, LLC 6880 South 700 West, 2nd Floor Midvale, Utah 84047 Attention: Michael Plaizier
With a copy to: Kirton McConkie 50 East South Temple, Suite 400 Salt Lake City, Utah 84111 Attn: John B. Lindsay
Class A Lender: Zions First National Bank Corporate Banking Division One South Main Street, Suite 300 Salt Lake City UT 84133 Attention Andrew M. Larsen
Class B Lender: Box Elder County 01 South Main, Suite 20 Brigham City, Utah 84302 Attention: Mitch Zundel
With a copy to: Box Elder County Attorney 81 North Main, Suite 102 Brigham City, Utah 84302 Attention: Stephen Hadfield
Class B Lender: City of Orem c/o City of Orem Economic Development 56 North State Street Orem, UT 84057 Attention: Ryan Clark
Class B Lender: Ogden City Corporation 2549 Washington Blvd., Suite 420 Ogden, UT 84401 Attention: Tom Christopulos
and
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Ogden City Corporation 2549 Washington Blvd., Suite 420 Ogden, UT 84401 Attention: Melven Smith
Class B Lender: Provo City c/o Provo City Economic Development 351 West Center Street Provo, UT 84601 Attention: Dixon Holmes
With a copy to: Provo City Legal Department 351 West Center Street Provo, UT 84601 Attention: Camille Williams
Class B Lender: Spanish Fork City c/o Spanish Fork City Attorney 789 W. Center Street Spanish Fork, UT 84660 Attention: Junior Baker
Class B Lender: Weber County c/o Weber Economic Development Partnership 2380 Washington Blvd., Suite 250 Ogden, Utah 84401 Attention: Douglas S. Larsen
With a copy to: Weber County Attorney 2380 Washington Blvd., Suite 230 Ogden, Utah 84401 Attention: Christopher Allred
Class C Lender: Utah Small Business Growth Initiative, LLC c/o Utah Center for Neighborhood Stabilization 6880 South 700 West, 2nd Floor Midvale, Utah 84047 Attention: Michael Plaizier
Section 14.9 Assignments.
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(a) This Agreement may not be assigned by Borrower. Subject to the foregoing, this Agreement shall be binding upon, and inure to the benefit of the parties hereto and their respective successors and assigns.
(b) With written notice to Borrower provided within 5 Business Days after such assignment, each of the Lenders may assign all, but not a portion, of its rights and obligations hereunder and under the other Loan Documents (including, without limitation, its Commitment, all Loans owing to it, and its interest in all rights of Borrower assigned, pledged or granted to such Lender pursuant to the Loan Documents).
(c) Notwithstanding any other provision of this Section 14.9, any Lender may at any time assign, as collateral or otherwise, all or any portion of its rights (including, without limitation, rights to payment of interest and repayment of Loans) under this Agreement to any Federal Reserve Bank or similar or successor federal agency, without notice to or consent of Borrower.
Section 14.10 Disgorgement. Should any Lender or the Administrative Agent be obligated by any bankruptcy or other law to repay to Borrower or to any trustee, receiver or other representative of Borrower, any amounts previously paid in respect of and/or pursuant to this Agreement, such Lender’s Facility Note and/or the other Loan Documents, then this Agreement and such Lender’s Facility Note shall be reinstated to include the amount of such repayment. None of the Lenders or Administrative Agent shall be required to litigate or otherwise dispute its obligation to make such repayments if it, in good faith and on the advice of counsel, believes that such obligation exists.
Section 14.11 Conclusiveness of Statements by Lenders. Any statement of account relating to Borrower signed as correct by any Authorized Officer of any Lender shall be conclusive evidence against Borrower of the indebtedness of Borrower to such Lender absent manifest error.
Section 14.12 Severability. If any term contained in this Agreement shall be invalid, illegal or unenforceable in any respect under any applicable law, the remaining terms hereof shall not in any way be affected or impaired. Anything in this Agreement to the contrary notwithstanding, the obligation of Borrower to pay interest on the principal amount of any Loan shall be subject to the limitation that no payment of such interest shall be required to the extent that receipt of such payment would be contrary to the applicable usury laws.
Section 14.13 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed originals.
Section 14.14 Survival. All representations, warranties, agreements and covenants made by Borrower in this Agreement shall survive the execution and delivery hereof and shall continue in full force and effect until all the Facility Notes are paid, satisfied and discharged in full.
Section 14.15 Consent. Unless otherwise expressly stated herein to the contrary, where the consent or approval of any Lender is required, such consent or approval may be given or withheld in such Person’s sole and absolute discretion. 45 4829-2834-4907
Section 14.16 No Strict Construction. The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first above written.
BORROWER:
UTAH SMALL BUSINESS GROWTH INITIATIVE, LLC, a Utah limited liability company dba BUSINESS LOANS OF UTAH
By: Utah Center for Neighborhood Stabilization, a Utah nonprofit corporation Its: Sole Member
By: ______Michael Plaizier Its: Executive Director
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CLASS A LENDER:
ZB, N.A. Commitment: [$______] dba Zions First National Bank
By: Name: Title:
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CLASS B LENDERS:
BOARD OF COUNTY COMMISSIONERS OF BOX ELDER COUNTY Commitment: [$______]
By: Name: Jeffrey Hadfield, Chair
Attest:
By: Name: Marly Young, Box Elder County Clerk
CITY OF OREM Commitment: [$______]
By: Name: James P. Davidson, City Manager
Attest:
By: Name: Donna Weaver, City Recorder
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OGDEN CITY, a municipality and political subdivision of the State of Utah Commitment: [$______]
By: Name: Michael P. Caldwell, Mayor
Attest:
By: Ogden City Recorder’s Office
CITY OF PROVO Commitment: [$______]
By: Name: Wayne Parker, City Administrator
Attest:
By: Name: Provo City Recorder
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SPANISH FORK CITY Commitment: [$______]
By: Name: Steve Leifson, Mayor
Attest:
By: Name: Kent R. Clark, City Recorder
BOARD OF COUNTY COMMISSIONERS OF WEBER COUNTY Commitment: [$______]
By: Name: Charles J. Ebert, Chair
Attest:
By: Name: Ricky Hatch, CPA, Weber County
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CLASS C LENDER:
Commitment: [$______] UTAH SMALL BUSINESS GROWTH INITIATIVE, LLC, a Utah limited liability company dba BUSINESS LOANS OF UTAH
By: Utah Center for Neighborhood Stabilization, a Utah nonprofit corporation Its: Sole Member
By: ______Michael Plaizier Its: Executive Director
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ADMINISTRATIVE AGENT:
UTAH SMALL BUSINESS GROWTH INITIATIVE, LLC, a Utah limited liability company dba BUSINESS LOANS OF UTAH
By: Utah Center for Neighborhood Stabilization, a Utah nonprofit corporation Its: Sole Member
By: ______Michael Plaizier Its: Executive Director
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SCHEDULE I
LOAN TYPES AND COMMITMENTS
Schedule 1 - 1 4829-2834-4907
EXHIBIT A
DEFINITIONS
For purposes of this Agreement, the following terms shall have the following meanings:
“Administrative Agent” is defined in the preamble to this Agreement.
“Administrative Agent’s Spread” means the portion of interest calculated on the outstanding principal balance of a Project Loan at the rate of one and five tenths percent (1.5%) per annum.
“Affected Party” means Administrative Agent, any Lender or any of their Affiliates.
“Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control with such Person. A Person shall be deemed to control another Person if the controlling Person is the “beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act of 1934) of greater than nine and nine-tenths percent (9.90%) or more of any class of voting securities (or other voting interests) of the controlled Person or possesses, directly or indirectly, the power to direct or cause the direction of the management or policies of the controlled Person, whether through ownership of capital stock, by contract or otherwise.
“Agreement” shall mean this Credit Agreement as dated on or about the Effective Date among the Borrower, the Administrative Agent, the Class A Lender, the Class B Lenders, and the Class C Lender, as amended, restated, supplemented or otherwise modified from time to time in accordance with the provisions of the Loan Documents, together with all exhibits and/or schedules.
“Approval Package” is defined in Section 1.3(f) of this Agreement.
“Authorized Officer” means, with respect to any Person, the President, Vice President or other officer duly authorized in accordance with the governing documents of such Person.
“Borrower” is defined in the preamble to this Agreement.
“Borrower Account Bank” means Zions Bank, and its successors.
“Borrower Material Adverse Effect” means a material adverse effect on or material adverse change to (i) the business, assets, financial condition or operations of Borrower, (ii) the ability of Borrower to duly and punctually to pay its debts as they come due and perform its obligations under any Loan Document, (iii) the legality, validity or enforceability of any Loan Document or (iv) the ability of the Administrative Agent and the Lenders to enforce their legal remedies pursuant to this Agreement or any other Loan Document.
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“Borrowing” means disbursements of one or more Loans hereunder to Borrower to fund the origination or purchase of a Project Loan.
“Borrowing Date” means, with respect to any Borrowing, the date on which such Borrowing is funded.
“Borrowing Request” means a request for borrowing substantially in the form of Exhibit C to the Agreement.
“Borrowing Termination Date” shall mean October __, 2019, which date may be extended on an annual basis in accordance with Section 1.1(e).
“Business Day” shall mean any day other than (i) a Saturday or Sunday or (ii) a day on which banking institutions in the State of New York or the State of Delaware are required or authorized by law or executive order to be closed.
“Change in Law” means, the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued.
“Change of Control” means, (i) with respect to the Borrower, USBGI ceases to own 100% of the membership interests or any other equity interests in the Borrower, and (ii) with respect to USBGI, that such entity ceases to be recognized by the Internal Revenue Service as tax-exempt under Section 501(c)(3) of the Code.
“Class A Lender” is defined in the preamble of the Agreement.
“Class A Lender Commitment” is defined in Section 1.2(a) of this Agreement.
“Class A Lender’s Spread” means the portion of interest calculated on the outstanding principal balance of a Project Loan at the rate LIBOR (or the FHLB Rate if applicable) plus 3.5% per annum, which amount is subject to change by the Pricing Committee.
“Class A Total Loan Amount” shall mean $______.
“Class B Lenders” is defined in the preamble of this Agreement.
“Class B Lender Commitment” is defined in Section 1.2(b) of this Agreement.
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“Class B Total Loan Amount” shall mean the amount provided to the Class B Lenders expected to be up to $1,000,000, as such number may be adjusted in accordance with the provisions of this Agreement.
“Class B Lender Top Loss” is defined in Section 1.3(b) of this Agreement.
“Class C Lender” is defined in the preamble of this Agreement.
“Class C Lender Top Loss” is defined in Section 1.3(c) of this Agreement and shall initially be $600,000, which amount may be adjusted in accordance with the provisions of this Agreement and be subject to increase in accordance with Section 1.3(e).
“Code” shall mean the Internal Revenue Code of 1986, as amended.
“Collateral” shall mean, as to each Project Loan, Project Loan Proceeds and the collateral for such Project Loan.
“Commitment” means the obligations of the Class A Lender and the Class B Lenders, individually, to make Loans this Agreement in an amount not to exceed, in aggregate, the Class A Lender Total Loan Amount and the Class B Total Loan Amount, respectively; provided, however, that the Commitment for any the Class A Lender and any Class B Lender shall not exceed the amount listed opposite its name on the signature pages hereto.
“Conforming Loan” shall mean a Project Loan that satisfies the requirements set forth in the Credit Manual.
“Covenant Compliance Certificate” has the meaning assigned to such term in Section 12.2.
“Credit Agreement Closing Date” shall mean October ___, 2017.
“Credit Committee” has the meaning set forth in section 13.1.
“Credit Committee Meeting” has the meaning set forth in section 1.3(f).
“Credit Manual” means guidelines for the originating, underwriting and servicing of Project Loans annually reviewed and approved by the Credit Committee substantially in the form contained of Exhibit F to this Agreement
“Current Assets” means cash and cash equivalents, accounts receivable, inventory and prepaid expenses, but excluding (a) deferred tax assets, and (b) receivables from any Affiliates, directors, employees, officers or stockholders and any of their respective Affiliates, determined in accordance with GAAP applied using the same accounting methods, practices, principles, policies and procedures, with consistent classifications, judgments and valuations and estimation methodologies that were used in the preparation of the audited financial statements for the most recent fiscal year end as if such accounts were being prepared and audited as of a fiscal year end.
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“Current Liabilities” means accounts payable, accrued taxes and accrued expenses, but excluding payables to any Affiliates, directors, employees, officers or stockholders and any of their respective Affiliates, deferred tax liabilities and the current portion of long term debt, determined in accordance with GAAP applied using the same accounting methods, practices, principles, policies and procedures, with consistent classifications, judgments and valuation and estimation methodologies that were used in the preparation of the audited financial statements for the most recent fiscal year end as if such accounts were being prepared and audited as of a fiscal year end.
“Debt” means (i) indebtedness for borrowed money, (ii) obligations evidenced by bonds, debentures, notes or other similar instruments, (iii) obligations to pay the deferred purchase price of property or services (other than customary billing arrangements whereby goods and services are paid for in arrears over the period of a service contract in the ordinary course of business), (iv) obligations as lessee under leases which shall have been or should be, in accordance with generally accepted accounting principles, recorded as capital leases, and (v) obligations under direct or indirect guaranties in respect of, and obligations (contingent or otherwise) to purchase or otherwise acquire, or otherwise to assure a creditor against loss in respect of, indebtedness or obligations of others of the kinds referred to in clause (i) through (iv) above.
“Default Certificate” has the meaning assigned to such term in Section 11.2.
“Default Interest Rate” means a rate per annum equal at all times to 5% above the Interest Rate.
“Defaulted Loan” shall mean a Delinquent Loan that is past due for more than ninety (90) days, unless a Work-Out Plan is being developed in accordance with Section 5.16, in which case a Delinquent Loan shall not be deemed a Defaulted Loan until it is one hundred fifty (150) days past due.
“Delinquent Loan” shall mean each Underlying Project Loan that (i) has become more than fifteen (15) days past due or (ii) is in any way in material default under any Project Loan Document after giving effect to any applicable cure periods.
“Determination” shall mean the written determination, provided by the Credit Committee to the Administrative Agent of whether to approve the origination of a particular Project Loan with such approval based on the approval of the Credit Committee to originate such Project Loan in accordance with Section 1.5.
“Disinterested Lenders” means all Lenders, other than USBGI with respect to decisions pertaining to the Administrative Agent and the Servicer.
“Draw” shall mean any funding of the Loan in accordance with Section 1.4.
“Effective Date” shall mean ______, 2017.
“Eligible Account” means an account which is either: (1) a segregated account maintained with a federal or state-chartered depository institution or trust company, whose deposits are insured by the Federal Deposit Insurance Corporation and which is an Eligible
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Institution or (2) a segregated trust account maintained with the corporate trust department of a federal depository institution or state-chartered depository institution subject to regulations regarding fiduciary funds on deposit similar to Title 12 of the Code of Federal Regulations Section 9.10(b) which is an Eligible Institution acting in its fiduciary capacity.
“Eligible Institution” means any financial institution: (1) with a capital and surplus of not less than $250,000,000, (2) whose commercial paper, short-term debt obligations or other short-term deposits are rated at least “A-1” (or the equivalent) by a nationally recognized statistical rating organization and (3) whose long-term unsecured debt obligations are rated at least “A” (or the equivalent) by a nationally recognized statistical rating organization.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
“ERISA Affiliate” means, with respect to any Person, (i) any corporation which is a member of the same controlled group of corporations (within the meaning of Section 414(b) of the Code) as such Person, (ii) any partnership or other trade or business (whether or not incorporated) under common control (within the meaning of Section 414(c) of the Code) with such Person, or (iii) any member of the same affiliated service group (within the meaning of Section 414(m) of the Code) as such Person, any corporation described in clause (i) above or any partnership or trade or business described in clause (ii) above.
“Escrow Instructions” means a closing instruction letter, escrow letter or other written closing instructions delivered in connection with the closing of a Project Loan.
“Event of Default” shall mean the occurrence of any event listed in Section 7.1 of the Agreement.
“Excess Spread” means any portion of interest calculated on the outstanding principal balance of a Project Loan that is in excess of the sum of the Class A Lender’s Spread and the Administrative Agent’s Spread.
“Facility” means the lending facility described in this Agreement consisting of the Lenders’ Commitment to make Loans under this Agreement up to the Class A Total Loan Amount, the Class B Total Loan Amount, and the Class C Lender Top Loss.
“Facility Collateral” is defined in Section 6.12(a) of this Agreement.
“Facility Maturity Date” means with respect to each Lender’s Facility Note, ______, which date shall be extended on an annual basis in accordance with Section 1.1(e).
“Facility Note” shall mean a promissory note of Borrower issued to each Lender evidencing the Loans made by such Lender to Borrower.
“FLHB Rate” means the Federal Home Loan Bank rate based upon the FHLB Des Moines rate for Fixed-Rate Advances for the (Term to be the same as LIBOR’s) term as quoted on the FHLB Des Moines internet web site at www.fhlbdm.com.
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“Fitch” means Fitch, Inc. (or its successors in interest).
“Funding Date” means the date requested for funding the Loan in accordance with Section 1.4.
“GAAP” means generally accepted accounting principles, consistently applied, that are in effect from time to time.
“Geographical Area” means geographic boundaries or corporate limits of the Class B Lenders.
“Government Lists” means (i) the Specially Designated Nationals and Blocked Persons Lists maintained by OFAC, (ii) any other list of terrorists, terrorist organizations or narcotics traffickers maintained pursuant to any of the Rules and Regulations of OFAC that Lender notified Borrowers in writing is now included in “Government Lists,” or (iii) any similar lists maintained by the United States Department of State, the United States Department of Commerce or any other Governmental Authority or pursuant to any Executive Order of the President of the United States of America that Administrative Agent notified Borrowers in writing is now included in “Government Lists.”
“Governmental Authority” means the United States of America, any state or other political subdivision thereof, any court and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.
“Indemnified Parties” means, collectively, each of the Lenders and the Administrative Agent and their shareholders, partners, directors, officers, managers, members, employees, agents, affiliates (except in the case of the USBGI, as Administrative Agent), representatives, counsel and advisors and any one of the foregoing may be referred to herein as an “Indemnified Party.”
“Interest Rate” means the rate determined by the Administrative Agent as the daily floating LIBOR rate (or the FHLB Rate if applicable), plus ______% or the fixed interest rate with respect to any Facility Note.
“Junior Lender” means any Lender that receives a lower priority in the distribution rights under Section 10.2 vis-à-vis another Lender. The Class B Lenders and the Class C Lender shall be a Junior Lender vis-à-vis the Class A Lender. The Class A Lender will not be a Junior Lender.
“Lenders” means the Class A Lender, the Class B Lenders, and the Class C Lender.
“LIBOR” means the London-Interbank Offered (Maturity) Rate. Notwithstanding any other provision in this Agreement, if the adoption of any applicable law, rule, or regulation, or any change therein, or any change in the interpretation or administration thereof by any governmental authority, central bank, or comparable agency charged with the interpretation or administration thereof, or compliance by Administrative Agent with any request or directive (whether or not having the force of law) of any such authority, central bank, or comparable agency shall make it unlawful or impossible for Administrative Agent to maintain or fund
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advances based on LIBOR, then upon notice to the Lenders, LIBOR shall be converted to the Federal Home Loan Bank rate (“FLHB Rate”). The FLHB Rate is to be strictly interpreted and is not intended to serve any purpose other than providing an index to determine the interest rate used in this Agreement. In addition, notwithstanding anything to the contrary herein, if Administrative Agent reasonably determines that quotations of interest rates referred to in the definition of LIBOR are not being provided in the relevant amounts or for the relevant maturities for purposes of Administrative Agent determining LIBOR, then Administrative Agent shall give notice thereof to Lenders, whereupon until Administrative Agent notifies Lenders that the circumstances giving rise to such suspension no longer exist, the Interest Rate hereunder shall be converted to the FHLB Rate.
“Loan” shall mean as to each Lender the disbursements under Facility Notes that the Class A Lender, the Class B Lenders, and the Class C Lender make to Borrower pursuant to the provisions of this Agreement to (i) fund the origination or purchase of an Underlying Project Loan or (ii) make Project Loan Protective Advances for such Underlying Project Loan.
“Loan Closing Date” shall mean, with respect to a Project Loan originated by the Borrower the date such Project Loan is funded.
“Loan Documents” shall mean this Agreement, the Facility Notes and all other documents delivered in connection with this Agreement.
“Loan Settlement Date” shall mean, with respect to a Project Loan, the date such Project Loan is originated or purchased under this Facility.
“Majority-in-Interest” means greater than fifty percent (50%) of each Class of Lenders (other than USBGI in the case where the Majority-in-Interest is to be calculated with respect to the Disinterested Lenders only). If there are two Class A Lenders, a Majority-in-Interest requires the approval, consent, or vote, as applicable, of both Class A Lenders.
“Managing Member” means USBGI and its successors and assigns.
“Maximum Rate” shall mean the maximum rate of non-usurious interest permitted by any applicable law, rule or regulation.
“Moody’s” means Moody’s Investors Service, Inc. (or its successors in interest).
“Mountain Time” shall mean the time in the Mountain time zone according to Mountain Standard Time.
“Non-Excluded Taxes” has the meaning assigned to such term in Section 1.9(a) hereof.
“Obligations” means, collectively, (i) all unpaid principal of and accrued and unpaid interest on (including, without limitation, any interest accruing subsequent to the commencement of a bankruptcy, insolvency or similar proceeding with respect to Borrower, whether or not such interest constitutes an allowed claim in such proceeding) the Loans and (ii) all other obligations of Borrower to Administrative Agent and Lenders under each Loan Document, in each case, whether now existing or hereafter arising, whether direct or indirect, matured or unmatured,
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contingent or otherwise, including without limitation, all debts, liabilities, indemnities, fees, costs, expenses and other obligations of the Borrower to the Administrative Agent, any Lender or any Indemnified Party hereunder or thereunder (whether or not such amounts are liquidated or determinable), and all covenants and duties regarding such amounts, of any kind or nature, present or future, whether or not evidenced by any note, agreement or other instrument.
“OFAC” means the U.S. Department of Treasury’s Office of Foreign Assets Control.
“Origination Fee” as the meaning assigned to such term in Section 1.3(g) hereof.
“Patriot Act” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act (USA PATRIOT Act) of 2001, as the same may be amended from time to time, and corresponding provisions of future laws.
“Patriot Act Offense” means (i) any violation of the criminal laws of the United States of America or of any of the several states, or that would be a criminal violation if committed within the jurisdiction of the United States of America or any of the several states, relating to terrorism or the laundering of monetary instruments, including any offense under (A) the criminal laws against terrorism, (B) the criminal laws against money laundering, (C) the Bank Secrecy Act, as amended, (D) the Money Laundering Control Act of 1986, as amended, or (E) the Patriot Act or (ii) any crimes of conspiracy to commit, or aiding and abetting another to commit, a Patriot Act Offense described in clause (i).
“Payment Date” means the eighth (8th) day of each calendar month, or if such day is not a Business Day, then the next succeeding Business Day. [TO CONFIRM]
“Percentage Interest” means, with respect to each Lender, the percentage of each Borrowing that is funded with proceeds from such Lender’s commitment as determined by the Administrative Agent and approved by the Credit Committee.
“Permitted Investments” means any investment, which is one or more of the following:
(i) direct obligations of, or obligations fully guaranteed as to principal and interest by, the United States or any agency or instrumentality thereof, provided such obligations are backed by the full faith and credit of the United States;
(ii) certificates of deposit, time deposits, demand deposits and bankers’ acceptances of any bank or trust company incorporated under the laws of the United States or any State thereof or the District of Columbia, provided that the short term commercial paper of such bank or trust company (or, in the case of the principal depository institution in a depository institution holding company, the long term unsecured debt obligations of the depository institution holding company) at the date of acquisition thereof has been rated by Moody’s and S&P in their highest short term rating category, and if rated by Fitch, in its highest short term rating category; and
(iii) money market accounts at an FDIC-insured financial institution.
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“Person” means any individual, corporation, firm, enterprise, partnership, trust, incorporated or unincorporated association, joint venture, joint stock company, limited liability company or other entity of any kind, or any government or political subdivision or any agency, department or instrumentality thereof.
“Portfolio Report” means a report with respect to the Project Loans financed by the Facility in substantially the form contained in Exhibit D.
“Prepayment Date” shall mean the date of prepayment, in whole or in part, of a Facility Note.
“Proceeding” shall mean any case, proceeding or other action against or by Borrower under any existing or future law of any jurisdiction relating to bankruptcy, insolvency, reorganization or relief of debtors, including without limitation any voluntary or involuntary petition filed pursuant to 11 U.S.C. 101 et seq.
“Project” shall mean the uses for which financing is provided through a Project Loan.
“Project Borrower” shall mean each borrower under a Project Loan, which shall be an individual, partnership, limited partnership, limited liability company, corporation, or other business entity acceptable to the Credit Committee.
“Project Collateral” shall mean the collateral, acceptable to the Loan Committee, to secure a Project Loan.
“Project Guaranty” shall mean a guaranty with respect to a Project Loan executed by the parties thereto.
“Project Loan” shall mean a business loan or other loan products as described in the Credit Manual made by the Borrower to a Project Borrower for the purpose of financing a small business in the Geographical Area of a Class B Lender.
“Project Loan Agreement” shall mean a loan agreement entered into in connection with a Project Loan.
“Project Loan Documentation” means the form of promissory note, loan agreement, guaranty, mortgage or deed of trust, loan commitment, assignment of rents, security agreement, guaranty, UCC financing statement and other documentation with respect to Project Loans consistent with the Credit Manual. Any one of the foregoing items may be referred to herein as a “Project Loan Document.”
“Project Loan Proceeds” shall mean any and all payments received by Borrower from Project Borrowers or otherwise (including, without limitation, any funds on deposit in the Borrower Operating Account pursuant to Section 5.10(b), all proceeds of the repurchase of any Project Loan received by the Borrower, collections as a result of insurance proceeds and collections as a result of liquidation of or foreclosure on Collateral), with respect to the Project Loans.
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“Project Loan Protective Advance” shall mean any additional Loan funded in order to pay encumbrances, taxes, liens, insurance premiums or other charges necessary to protect any Collateral securing a Project Loan.
“Project Note” shall mean a promissory note evidencing a Project Loan.
“Required Loan Documentation” means, with respect to any Project Loan, a loan commitment, if needed, the loan agreement, promissory note payable (or endorsed) to Borrower, mortgage or deed of trust (to the extent applicable), title insurance policy (to the extent applicable), assignment of rents (to the extent applicable), security agreement (to the extent applicable), financing statements (to the extent applicable), guaranties (to the extent applicable), UCC financing statements (to the extent applicable), and other documents, instruments or agreements executed and delivered to evidence, secure and or support a Project Loan. Any one of the foregoing items may be referred to herein as a “Required Loan Document.”
“Restricted Account” means the restricted deposit account established at Z.A. dba Zions First National Bank at the closing of this Agreement, into which the Class C Lender Top Loss shall be deposited. [ZIONS TO PROVIDE ADDITIONAL LANGUAGE]
“S&P” means Standard & Poor’s Ratings Group, a division of The McGraw-Hill Companies, Inc. (or its successors in interest).
“Scheduled Monthly Payment” shall have the meaning give to it in Section 10.2(v).
“Senior Lender” means the Class A Lender that is entitled to a higher priority in the distribution rights under Section 10.2 vis-à-vis than the Junior Lender.
“Servicer” means USBGI.
“Servicing Agreement” means that certain Agreement between the Borrower and Servicer dated of even date herewith.
“State” means one of the fifty states of the United States or the District of Columbia.
“Sub-Servicer” means the sub-servicer as allowed under the Credit Manual.
“Sub-Servicing Agreement” means that certain Agreement between the Borrower and Sub-Servicer dated of even date herewith.
“Super Majority-in-Interest” means, with respect to the period from the date of this Agreement through the Borrowing Termination Date, at least two thirds (2/3) of each Class of Lenders.
“Total Loan Amount” means the Class A Total Loan Amount.
“Total Top Loss” is defined in Section 1.3(e) of this Agreement.
“UCC” shall mean the applicable Uniform Commercial Code.
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“USBGI” means the Utah Small Business Growth Initiative, LLC, a Utah limited liability company, dba Business Loans of Utah.
“Underlying Project Loan” shall mean, for each Loan, the Project Loan originated with the proceeds of such Loan.
“Underwriting Guidelines” shall mean the guidelines for making Project Loans, attached hereto as Exhibit H, which set forth the Project Loan types and terms necessary to draw upon the Class A Lender’s Commitment.
“United States” means the United States of America.
“Unmatured Event of Default” means the occurrence of any event or condition that with the passage of time or the giving of notice or both will constitute an Event of Default.
“Work-Out Plan” has the meaning assigned to such term in Section 5.16.
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EXHIBIT B
FORM OF FACILITY NOTE
$[______] Dated: October __, 2017
FOR VALUE RECEIVED, the undersigned, UTAH SMALL BUSINESS GROWTH INITIATIVE, LLC, a Utah limited liability company, dba BUSINESS LOANS OF UTAH (the “Borrower”), HEREBY PROMISES TO PAY to the order of ______, as a [Class A Lender][Class B Lender][Class C Lender] (the “Lender”) the principal amount of ______($______) or, if less, the aggregate principal amount of all Loans made by or on behalf of the Lender to the Borrower pursuant to the “Credit Agreement” (as hereinafter defined) outstanding on the Facility Maturity Date (as defined in the Credit Agreement), or earlier to the extent required by and in accordance with the terms of the Credit Agreement. Unless defined elsewhere herein, capitalized terms used in this Facility Note shall have the meanings assigned to such terms in the Credit Agreement referred to below.
The Borrower promises to pay interest on the principal amount of each Loan from the date of such Loan until such principal amount is paid in full, at the applicable interest rate and payable at such times, as are specified in the Credit Agreement referred to below.
Both principal and interest are payable in lawful money of the United States of America to the Lender as described in the Credit Agreement in same day funds. Each Loan made by the Lender to the Borrower and the maturity thereof, and all payments made on account of the principal amount thereof, shall be recorded by the Lender on the grid attached hereto which is a part of this Promissory Note, or, at its option, on its books and records.
This Facility Note is one of the Facility Notes referred to in, and is entitled to the benefits of, the Credit Agreement dated as of ____, 2017 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), among the Borrower, Utah Small Business Growth Initiative, LLC, a Utah limited liability company, dba Business Loans of Utah, as Administrative Agent and the Class A Lender, Class B Lenders, and Class C Lender as parties thereto, and the other Loan Documents referred to therein and entered into pursuant thereto. The Credit Agreement, among other things, (i) provides for the making of Loans by or on behalf of the [Class A Lender][Class B Lenders][Class C Lender] to the Borrower from time to time, in an aggregate principal amount not to exceed the [Class A Total Loan Amount][Class B Total Loan Amount][ Class C Lender Top Loss]and the indebtedness of the Borrower resulting from each such Loan being evidenced by a Facility Note, (ii) contains provisions for payments of principal hereof prior to the maturity hereof and for re-drawing funds previously prepaid upon the terms and conditions therein specified, (iii) contains provisions for acceleration of the maturity hereof upon the happening of certain stated events therein specified and (iv) contains provisions regarding the relative priority of payments by the Borrower to the Lenders.
The Loans made by the Lender to the Borrower pursuant to the Credit Agreement and this Facility Note shall be treated as debt. There are no participations (other than as permitted by
B - 1 4829-2834-4907
Section 14.9 of the Credit Agreement) created in the Loans or any other debt under the Credit Agreement.
TO THE FULLEST EXTENT PERMITTED BY LAW, BORROWER HEREBY WAIVES ITS RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING AND/OR HEARING ON ANY MATTER WHATSOEVER ARISING OUT OF, OR IN ANY WAY CONNECTED WITH, THIS FACILITY NOTE, THE CREDIT AGREEMENT, OR THE ENFORCEMENT OF ANY REMEDY UNDER ANY LAW, STATUTE, OR REGULATION. NEITHER PARTY WILL SEEK TO CONSOLIDATE ANY SUCH ACTION IN WHICH A JURY HAS BEEN WAIVED, WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT OR HAS NOT BEEN WAIVED. EACH PARTY HAS RECEIVED THE ADVICE OF COUNSEL WITH RESPECT TO THIS WAIVER.
All parties hereto, whether as makers, endorsers or otherwise, severally waive presentment for payment, demand, protest and notice of dishonor.
This Facility Note shall be governed by, and construed in accordance with, the laws of the State of Utah (without regard to conflict of laws principles).
UTAH SMALL BUSINESS GROWTH INITIATIVE, LLC, a Utah limited liability company dba BUSINESS LOANS OF UTAH
By: Utah Center for Neighborhood Stabilization, a Utah nonprofit corporation Its: Sole Member
By: ______Michael Plaizier Its: Executive Director
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LOANS
Date Amount of Amount of Unpaid Notation Maturity Date Loan Principal Principal Made By Loan Balance
B - 3 4829-2834-4907
EXHIBIT C
FORM OF BORROWING REQUEST
[Date]
To: [CLASS ___ LENDER]
Utah Small Business Growth Initiative, LLC, dba Business Loans of Utah, as Administrative Agent ______Attn:
Ladies and Gentlemen:
The undersigned, Utah Small Business Growth Initiative, LLC, a Utah limited liability company, dba Business Loans of Utah (the “Borrower”), refers to that certain Credit Agreement dated on or about August ____ 2017 (as the same may be amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”) among the Borrower, the Class A Lender, Class B Lenders, and Class C Lender, (the “Lenders”) and Utah Small Business Growth Initiative, LLC, a Utah limited liability company, dba Business Loans of Utah, as Administrative Agent for the Lenders (the “Agent”) and certain other parties, and hereby gives you notice, irrevocably, pursuant to Section 1.3 of the Credit Agreement that the undersigned hereby requests a Borrowing under the Credit Agreement, and in that connection, sets forth below the information related to such Borrowing Request as required by Section 1.3 of the Credit Agreement. Capitalized terms used herein but not defined shall have the meanings given such terms in the Credit Agreement.
A. Summary Borrowing Request: Borrowing Request Number: Total Amount of the proposed Borrowing: $
Interest Calculation on Borrowing:
B. Representations and Warranties
The undersigned hereby represents and warrants that each of the following statements are true on the date hereof and will be true on the proposed Loan Settlement Date:
(i) Each of the representations and warranties listed in Section 1.3 of the Credit Agreement are true as of the date of this Borrowing Request;
C - 1 4829-2834-4907
(ii) Each applicable condition precedent listed in Article I, II, and Section 3.3 of the Credit Agreement will be met on the proposed Loan Settlement Date; and
(iii) No Event of Default or Unmatured Event of Default has occurred and is continuing, or would result after giving effect to the Borrowing contemplated hereby or the application of the proceeds of the Borrowing as contemplated by the Credit Agreement.
UTAH SMALL BUSINESS GROWTH INITIATIVE, LLC, a Utah limited liability company dba BUSINESS LOANS OF UTAH
By: Utah Center for Neighborhood Stabilization, a Utah nonprofit corporation Its: Sole Member
By: ______Michael Plaizier Its: Executive Director
C - 2 4829-2834-4907
EXHIBIT D
FORM OF PORTFOLIO REPORT
(attached)
D - 1 4829-2834-4907 Loan #: Entity-Loan Type- Sequential #
Entity # Box Elder County 001 Davis County 002 Ogden City 003 Orem City 004 Provo City 005 Spanish Fork City 006 Weber County 007 Loan Type Working Capital - Term 010 Working Capital - Revolving 011 Equipment 012 FF&E 013 Accts Receivables 014 Real Estate 015 Other 016 EXHIBIT E
FORM OF COVENANT COMPLIANCE CERTIFICATE
Utah Small Business Growth Initiative, LLC d/b/a Business Loans of Utah (“BLU”) is in compliance with all covenants stated in Article V of the Credit Agreement relating to the Fund, and with respect to the financial covenants listed in Article V of the Credit Agreement, attached hereto as Schedule 1 are detailed calculations of such financial covenants. As of the date hereof, no Event of Default or Unmatured Event of Default exists.
In Witness, Whereof, the undersigned officer has executed this Certificate on behalf of BLU this ____ day of ______, 2017.
UTAH SMALL BUSINESS GROWTH INIATIVE, LLC, a Utah limited liability company d/b/a BUSINESS LOANS OF UTAH
By: Name: Title:
Exhibit F
Credit Manual
Business Loans of Utah Loan Originating and Servicing Manual
Revised: November 7, 2017
1
Loan Originating and Servicing Manual
I. Introduction ...... 4 II. Project Loan Origination ...... 5 A. Project Loan Underwriting ...... 5 1. Fund Underwriting Guidance ...... 5 2. Underwriting Package ...... 5 3. Project Loan Terms and Fees ...... 5 4. Project Loan Interest Rate ...... 6 5. Payment of Project Loan Interest ...... 6 6. Appraisals ...... 6 7. Environmental Requirements ...... 6 8. Insurance Requirements ...... 7 B. Project Loan Approval Process ...... 7 C. Commitment Letter ...... 9 D. Changes in Loan Structure ...... 9 III. Project Loan Closing ...... 10 A. Responsibility for Closings ...... 10 B. Closing Documents ...... 10 C. Closing Attorney ...... 11 D. Closing Costs ...... 11 IV. Project Loan Disbursements ...... 12 A. Funding Requests ...... 12 B. Borrowing Funding ...... 12 C. Notes; Principal and Interest ...... 13 D. Increased Costs; Increased Capital; Taxes ...... 14 E. Payments in Full; Taxes ...... 16 F. Sharing of Payments ...... 16 G. CRA Sub-Allocation ...... 17 H. Draw Policy ...... Error! Bookmark not defined. V. Project Loan Servicing ...... 17 A. Project Loan Administration ...... 17 1. Project Loan Servicing ...... 17 B. Collateral Administration...... 27 1. Monitoring property insurance ...... 27 2. Monitoring property tax payments ...... 28 3. Monitoring flood insurance classification ...... 28 4. UCC renewals/releases and changes in title ...... 28 5. Collection and Monitoring of Delinquent Project Borrower Payments for Taxes, Insurance and Reserves ...... 28 6. Release of collateral ...... 29 VI. Project Loan Monitoring and Reporting ...... 29
2 A. Asset Management ...... 29 1. Project Loan Monitoring ...... 29 2. Site Inspections ...... 32 B. Risk Rating Requirements ...... 33 EXHIBIT A ...... 34 EXHIBIT B ...... 37 EXHIBIT C ...... 39
3 I. Introduction
The Business Loans of Utah (BLU or the “Fund”) is a unique financial resource which supports economic development and job creation in the State of Utah by funding companies which it deems creditworthy, but do not qualify for traditional financing.
BLU plays a valuable role in economic development as it is the only financial resource which takes a risk-managed approach to support companies and entrepreneurs poised at crucial stages of commercial development.
BLU leverages Utah Small Business Growth Initiative (USBGI) and public funds to attract private investment and diversify risk among public and private entities. BLU reduces risk by evaluating credit and equity risks posed by applicants to assess their likelihood of success. BLU simultaneously evaluates applicant debt and equity to provide: a sophisticated analysis of business model sustainability, a high level of risk management, and a method for furthering the interests of debt and equity investors.
The Fund utilizes public resources as a loan loss reserve for privately funded community development loans. BLU’s community development guidelines are similar to those of the Community Reinvestment Act (CRA). For example, such guidelines include:
Activities which revitalize or stabilize low-moderate income areas; Activities which promote economic development by financing small businesses; and Permanent job creation, retention, and/or improvement for low- moderate income persons
The Fund allows private industry to support economic growth with managed risk.
The Fund will be structured as a program within USBGI. Private lenders and a consortium of Utah cities and counties will participate in the Fund. USBGI is the lender (Lender) for the Fund and will serve as the Administrative Agent and Servicer. The Servicer may enter an agreement with a “Sub servicer” detailing responsibilities for the Fund. The Loan Originating and Servicing Manual is designed to complement the Credit Agreement by and among the various lenders, and other Fund legal documents, but does not in any way replace or override them. The Manual simply provides guidance to the Fund for loan underwriting and servicing. The Manual describes the types of loans the Fund will finance, the originating and underwriting standards for those loans, and the policies and procedures the Fund must follow in underwriting and processing those loans.
All references with initial capital letters not defined herein will have the meanings set forth in the Credit Agreement.
4 II. Project Loan Origination
The Fund will prioritize the making of small business loans that promote economic development, revitalization or stabilization of low and moderate income areas and creates or retains permanent jobs for low and moderate income persons.
The Fund’s targeted loan size is from $50,000 to $350,000 subject to the terms of the Credit Agreement.
The following procedures describe the way to underwrite and present a loan for approval by the Credit Committee:
A. Project Loan Underwriting
1. Fund Underwriting Guidance.
USBGI has developed underwriting guidelines set forth in Exhibit H and Exhibit J Project Underwriting Compliance Checklist (“PUC”) to the Credit Agreement to provide guidance on the underwriting requirements for the loan products. Those loan products can include, equipment loans, account receivable loans, working capital loans, tenant improvement loans. The fund may propose a Project Loan that does not meet the requirements listed in Exhibit J Underwriting checklist. However, those Project Loans must include clear mitigants to the extra risks posed by those project loans.
2. Underwriting Package.
The Administrative Agent will complete its underwriting package which will contain all the information and documents in Exhibit G-1 Borrower Underwriting Checklist in the Credit Agreement. The Lender will disclose in the Underwriting Package characteristics, if any, prohibiting the Project Loan from being a Conforming Loan. Following submission of any Underwriting Package to the Credit Committee, the Administrative Agent will promptly provide additional information reasonably requested by the Credit Committee.
3. Project Loan Terms and Fees.
Project Loans can have terms of up to five (5) years, subject to the following constraints: 1) The Project Loan maturity date must be before the Fund’s 7-year maturity. For example, if a Project Loan is originated in Year 2 of the Fund, the maximum Project Loan Term is five years; and 2) the requirements set forth in the applicable PUC.
All uses of Project Loan proceeds should comply with the limitations set forth in the Credit Agreement. Project Borrower fees payable at closing may be capitalized and paid to the Fund from Project Loan proceeds. These fees include a loan origination fee of 2.0% payable to the Fund..
5
Project Loan proceeds included in the Project Loan commitment amount but not disbursed at closing will be added to the Project Loan’s outstanding principal balance when disbursed or advanced to the Project Borrower.
4. Project Loan Interest Rate.
The minimum interest rate will be based on the maximum interest rate quoted by the Small Business Administration and the maximum rate will not be greater than 18%. The interest rate will be based on perceived risk and approved by the Credit Committee. The rate for amortizing terms loans will be a fixed rate. Revolving loans will have a variable rate.
5. Payment of Project Loan Principal and Interest.
Payment will be monthly due on the first of the month. Amortizing loans will generally have a fixed monthly principal and interest payment, but may include an interest only period.
Revolving lines of credit may be interest only but will generally require a rest period and/or periodic principal reductions. Interest on revolving lines of credit will be calculated on the average daily outstanding.
Credit Committee may approve additional repayment structures.
6. Appraisals.
Each Loan that is secured by real estate must have an appraisal that complies with the requirements set forth in Exhibit K to the Credit Agreement.
Appraisers are to be engaged directly by the Servicer or Sub-Servicer. The Servicer must ensure that the appraiser selected is either on the Fund’s List of Approved Appraisers or meets/exceeds the Fund’s minimum qualifications for appraisers and could be added to the list. To be considered qualified, the appraiser must have at least four years of relevant appraisal experience and currently be active in appraisal work, and be experienced in the geographic area where the property is located. The appraiser must be certified and licensed in the State of Utah.
The Project Borrower must pay the cost of appraisal before the appraisal is ordered.
7. Environmental Requirements.
The Fund requires an environmental assessment on all properties that serve as collateral for loans. The level of assessment will vary depending on the size of the loan, the age and condition of the property, and the existing and prior uses
6 of the property. See Exhibit L to the Credit Agreement for a full description of the Fund’s Environmental Requirements.
8. Insurance Requirements.
The Project Borrower must comply with the insurance requirements set forth in Exhibit N to the Credit Agreement. A copy of the complete insurance policy must be provided to the Fund (provided, however, that a certificate with all applicable endorsements will be acceptable for Project Loan closing), and the Fund must obtain a complete copy of the insurance policy, no more than 30 days following closing.
B. Project Loan Approval Process
The Fund will originate loans. Loans will either be Conforming or Non- Conforming Loans. Conforming Loans must meet all the terms and conditions set forth in the Fund Underwriting Criteria (Exhibit H to the Credit Agreement) and applicable Product Underwriting Checklist (See Exhibit J to the Credit Agreement). These Loan requests will be evaluated by the Credit Committee Fund as set forth by Section 1.3 of the Credit Agreement. Loans that do not conform to the Fund Underwriting Criteria or applicable PUC located in Exhibit J of the Credit Agreement will be determined to be Non-Conforming and may be approved by the Credit Committee pursuant to the such section, but through the Non-Conforming Loan approval process described in Section 1.3(d) of the Credit Agreement. For summary purposes only, the Credit Committee approval process for Conforming and Non-Conforming Loans is as follows:
Conforming Non-Conforming Administrative Agent prepares the Administrative Agent prepares Underwriting Package for the Project Underwriting Package for the Project Loan. Underwriting package includes Loan with a cover memo describing the all applicable items set forth in Exhibit ways in which the Project Loan is Non- G of the Credit Agreement. Conforming. Administrative Agent determines Administrative Agent determines whether Underwriting Package is whether Underwriting Package is complete and whether the Project Loan complete and whether the Project Loan is Conforming or Non-Conforming is Conforming or Non-Conforming based on the Underwriting Criteria in based on the Underwriting Criteria in Exhibit H. The Administrative Agent Exhibit H. The Administrative Agent will prepare an Approval Package for will prepare an Approval Package proposed loans and will deliver it to each (including an analysis of the risks member of the Credit Committee no associated with the Non-Conforming later than 5 Business Days prior to the aspects of the Project Loan) for Credit Committee meeting. The proposed loans and will deliver them to Approval Package includes the credit each member of the Credit Committee
7 memo and associated attachments but no later than 5 Business Days prior to not the appraisal and other reports. the Credit Committee meeting. The Approval Package includes the credit memo and associated attachments but not the appraisal and other reports. After receipt of the Approval Package, After receipt of the Approval Package, Credit Committee members may Credit Committee members may correspond with the Administrative correspond with the Administrative Agent to request more information Agent to request more information and/or ask clarifying questions about and/or ask clarifying questions about the proposed Project Loans. the proposed Project Loans.
At the Credit Committee meeting each At the Credit Committee meeting each member will vote to approve or decline member will vote to approve or decline the proposed Project Loan. Any member the proposed Project Loan. Any of the Credit Committee unable to attend member of the Credit Committee unable the meeting may approve or decline the to attend the meeting may approve or proposed Project Loan by email to the decline the proposed Project Loan by Administrative Agent prior to the Credit email to the Administrative Agent prior Committee Meeting. to the Credit Committee Meeting. A Credit Committee meeting will A Credit Committee meeting will require a quorum of three committee require a quorum of three committee members. A proposed Conforming Loan members. A proposed Non-Conforming will be approved for funding if a Loan will be approved for funding if majority of the Credit Committee 66% or more of the Credit Committee members vote in favor of funding the members, including a majority of the Project Loan. Class A Lenders, vote in favor of funding the Project Loan.
8 C. Commitment Letter
If a Project Loan is approved as set forth above, a Project Loan commitment letter (a “Commitment Letter”) will be issued. The Commitment Letter must conform to the form of the commitment letter provided by the Fund, and attached as Exhibit M to the Credit Agreement. Commitment Letters will be signed by the Fund and addressed to the Project Borrower. Commitment Letters will clearly set forth the terms and conditions of the Project Loan, which will include the Project Loan commitment amount, the interest rate, fees required by the Fund, the maturity date, and repayment terms. In addition, Commitment Letters will set forth equity requirements, the interest reserve amount, and the budget and uses for Loan proceeds. The Commitment Letters will also lay out the conditions precedent to closing and the expected closing costs to be paid by the Project Borrower.
Once the Fund has issued a Commitment Letter, such commitment may remain open for a period not exceeding 30 days, during which time the Project Borrower must either accept or reject the offer. Closing must occur no later than 120 days from the date of issuance of the Commitment Letter.
Provided that the value or condition of the business and/or it’s collateral related to the Project Loan has not materially deteriorated, and the financial condition of the Sponsor, Project Borrower or the guarantor(s) has not materially deteriorated, Commitment Letters may be extended at the discretion of the Administrative Agent, for up to six months, so long as the extended maturity date does not result in a Project Loan maturity that falls after the then Facility Maturity Date of the Credit Agreement. Requests for commitment extensions shall require an additional explanation as to why the extension is needed.
If there has been a material change to a commitment already issued, and the Fund nonetheless deems the extension to be warranted, such request for extension of commitment shall be re-submitted to the Administrative Agent and Credit Committee for approval.
D. Changes in Loan Structure
Non-material changes to the terms and conditions of a Project Loan after commitment and prior to closing may be approved in writing by the Administrative Agent on behalf of the Fund. Material changes in the terms and conditions of an approved Project Loan between commitment and closing require review and approval by the Credit Committee. The following are examples of material changes to the terms and conditions of a Project Loan:
The loan amount is increased by more than 5%, decreased by more than 15%, or exceeds the maximum loan-to-value ratio set forth by the Commitment Letter;
9 The collateral/property valuation originally reported to the Credit Committee has been materially adversely affected, and not, in the opinion of the Lender and Administrative Agent, sufficiently offset by the offer of additional collateral or a lowering of the requested loan amount; There is any substitution of property or changes in the proposed disposition of the property; The Fund’s lien priority in respect to the Collateral changes from a senior to a junior position; The final maturity of the Project Loan is extended from the original maturity approved by the Credit Committee, or beyond the maximum total term listed under the applicable Product Underwriting Checklist (PUC), but never to be later than the then Facility Maturity Date of the Credit Agreement; The interest rates applicable to a Project Loan or the method of calculating the same will be changed; Any obligor under any Project Loan document (including guaranties and indemnities), or any Collateral for a Project Loan, will be released, unless such release is otherwise permitted under the terms of the Fund Documents or the applicable Project Loan documentation; There is material adverse change in the Project Sponsors, Project Borrowers or Project Loan Guarantors financial position or other material changes which may negatively affect the Project Borrowers ability to implement the Project as planned; There is a material change in the planned take-out financing for the Project Loan; or For Conforming Loans approved as such, there is any change to the Project or the Project Loan terms which would render the Project Loan a Non- Conforming Loan.
III. Project Loan Closing
A. Responsibility for Closings
The Servicer is responsible for all Project Loan closings but may delegate some or all of the following responsibilities to the Sub-Servicer. For each Project Loan closing, the servicer may elect to use either (i) a lawyer or law firm retained by USBGI by contract, or (ii) USBGI’s in-house counsel (“Closing Attorney”). The Servicer will review all closing documentation and ensure that the documented terms and conditions are consistent with the terms of the transaction as approved by the Fund.
B. Closing Documents
Project Loans will be documented at closing by the Project Loan Documentation in the form set forth by the Project Loan Documents. The following Project Loan
10 Documents will be sent by the Servicer to the Administrative Agent in substantially final form prior to the Project Loan closing for the Administrative Agent’s review:
Deed of Trust; Promissory Note; Loan Agreement; General Assignments of Contracts; Personal Guarantee(s); Borrower Repayment Guarantee; Security Agreement; Environmental Indemnification Agreement; and Any other documents setting forth terms and conditions of the Project Loan and evidencing and securing the security interest of the Fund in the Project Loan collateral.
The Project Loan Borrower will be exclusively responsible for all fees, costs and expenses charged by its Closing Attorney. If because of exceptional and substantial deviation from the Model Project Loan Documents, the Administrative Agent deems it necessary for the Credit Committee to review the proposed changes, the Project Loan Documents will be submitted for Credit Committee approval prior to the Project Loan Closing and signing of the documents by the fund.
C. Closing Attorney
The Project Loan Documentation may be forwarded by the Fund to the appropriate Closing Attorney. If so, the Closing Attorney will coordinate with the escrow agent to ensure the Deed of Trust and all recordable agreements executed by and among the Project Borrower and the Fund are properly recorded in the public records. The fully executed original Project Loan Documentation must be submitted by the Closing Attorney and the Fund to the Servicer for safekeeping with copies for the Fund’s counsel. The Servicer must ensure the title company delivers the recorded documents to the Administrative Agent.
D. Closing Costs
The Fund will pay the Project Loan closing costs that the Fund Documents specifically provide are the responsibility of the Fund. All other Project Loan closing costs will be payable by the Project Borrowers.
11 IV. Project Loan Disbursements
A. Funding Requests
1. Each Draw (other than a Project Loan Protective Advance) will be requested by a Borrowing Request, substantially in the form of Exhibit C in the Credit Agreement given by the Borrower to the Lenders not later than 12:00 noon (Mountain Time) five (5) Business Days prior to the proposed Funding Date. Not later than 12:00 noon (Mountain Time) on the proposed Funding Date and no earlier than the Business Day before the proposed Funding Date, the Class A Lenders, and Class B Lenders, as applicable, will transfer to the Borrower Operating Account, by wire transfer in same-day funds, the amount of their respective shares of such Borrowing. Notwithstanding the foregoing, a Lender may elect to fund its portion of a Loan earlier than the Business Day before the Funding Date provided that no interest will accrue on such portion of the Loan until the Business Day before the Borrowing Date. Upon receipt of all such funds, the Administrative Agent, the Class A Lender, and the Class B Lender, as applicable, are deemed to have authorized the release of such funds from the Borrower Operating Account to originate the Project Loans.
2. Funding requests may be made to the Lenders not more often than twice monthly and will be in a principal amount of not less than $5,000 in the aggregate based on projected lending activity during the period prior to the Borrowing Termination Date.
B. Borrowing Funding
1. Each Loan (other than a Loan for a Project Protective Advance) will be used by the Borrower to fund Project Loan(s) or Loan Loss Reserves for a Project Loan.
2. Except as otherwise provided below, each Borrowing will be funded by (a) each Class A Lender in a principal amount not to exceed each Class A Lender’s Percentage Interest multiplied by the principal amount of the Borrowing, provided, that after giving effect to such Borrowing, the aggregate principal amount of all Loans made by such Class A Lender (including Loans for a Project Protective Advance) will not exceed the Class A Lender’s Commitment, and (b) Class B Lender in a principal amount not to exceed Class B Lender’s Percentage Interest multiplied by the principal amount of such Borrowing, provided, that after giving effect to such Borrowing, the aggregate principal amount of all Loans made by Class B Lender (including Loans for a Project Protective Advance) will not exceed Class B Lender’s Commitment.
12 C. Notes; Principal and Interest
1. The Loans will be evidenced by the Facility Note received by each Lender. Each Facility Note will be substantially in the form of Exhibit B in the Credit Agreement annexed hereto.
2. Borrower will pay interest on the unpaid principal amount advanced from the date of the Borrowing under the Facility Note until payment in full at an interest rate equal to (i) for each Class A Lender, the Class A Interest Rate, (ii) for the Class B Lender, the Class B Interest Rate, and (iii) for the Class C Lender, the Class C Interest Rate.
3. All interest and principal due under each Facility Note will be calculated and payable monthly in arrears on the applicable Payment Date, and will be computed on a 360-day year and the actual number of days elapsed in such month; provided that payment of interest relating to any Project Loan will not be due unless and until payment is received on the underlying Project Loan. Each principal and interest payment will be remitted to the Lenders on the Payment Date in accordance with Article X in the Credit Agreement.
4. Each Facility Note is prepayable in whole or in part without penalty. In the event of any prepayment of a Facility Note, whether voluntary or involuntary and whether or not due to acceleration of the maturity of such Facility Note or any other reason whatsoever, such prepayment will be accompanied by all interest accrued on the amount prepaid through such Prepayment Date. Until the expiration of the Borrowing Termination Date, Borrower will have the right to reborrow funds that have been previously prepaid in accordance with Section 1.7(b)(iv) in the Credit Agreement.
5. If Borrower fails to make any payment due under the terms of a Facility Note after the expiration of any applicable grace periods or upon the occurrence of any other Event of Default under this Agreement, the outstanding principal amount of such Facility Note, will bear interest at the Default Interest Rate. This remedy is available in addition to all other rights and remedies of any Lender under this Agreement or any other Loan Document.
6. Notwithstanding anything to the contrary contained in this Agreement or any other Loan Document, the interest paid or agreed to be paid to any Lender under the Loan Documents will not exceed the Maximum Rate. If any Lender receives interest in an amount exceeding the Maximum Rate, the excess interest will be applied to the principal amount of such Lender’s Facility Note, or, if it exceeds such unpaid principal, refunded to the Borrower. In determining whether the interest contracted for, charged, or received by any Lender exceeds the Maximum Rate, the Lenders may, to the extent permitted by any applicable law, rule or regulation (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate and
13 spread in equal or unequal parts the total amount of interest throughout the contemplated term of the obligations hereunder.
D. Increased Costs; Increased Capital; Taxes.
1. Increased Costs.
If (a) there will be any increase in the cost to any Affected Party of agreeing to make or making, funding or maintaining the Lenders’ Commitment, including, without limitation, due to a Change in Law, or (b) any reduction in any amount receivable in respect thereof or otherwise under this Agreement, and such increased cost or reduced amount receivable is due to either:
a) the introduction of or any change (including, without limitation, any change by way of imposition or increase of reserve requirements) in the interpretation of any law or regulation after the date hereof; or
b) the compliance with any guideline or request from any central bank or other Governmental Authority (whether or not having the force of law);
then from time to time, such Affected Party may request Borrower pay such Affected Party additional amounts sufficient to compensate such Affected Party for such increased cost or reduced amount receivable, including, without limitation, all interest and penalties thereon or with respect thereto, and all out of pocket expenses (including the reasonable fees and expenses of counsel in defending against the same), as reasonably determined by such Affected Party. Promptly, but in any event, within five (5) Business Days after receiving such request, Borrower will pay such additional amounts to such Affected Party.
2. Increased Capital.
If after the date hereof any Lender determines that:
a) the adoption or implementation of or any change in or in the interpretation or administration of any law or regulation or any guideline or request from any central bank or other Governmental Authority or quasi-governmental authority exercising jurisdiction, power or control over such Lender or banks or financial institutions generally (whether or not having the force of law), compliance with which affects or would affect the amount of capital required or expected to be maintained by such Lender or any entity controlling such Lender, and
b) the amount of such capital is increased by or based upon the making or maintenance by such Lender of its Loans or the existence of such Lender’s obligation to make Loans,
then, in any such case, upon written demand by such Lender, Borrower agrees immediately to pay to such Lender, from time to time as specified by such
14 Lender, additional amounts sufficient to compensate such Lender or such entity therefor. Such demand will be accompanied by a statement as to the amount of such compensation and include a summary of the basis for such demand with detailed calculations. Such statement will be conclusive and bind for all purposes, in the absence of manifest error.
3. Taxes.
a) Any and all payments made by Borrower to any Lender under this Agreement or under such Lender’s Facility Note or any other Loan Document will be made free and clear of, and without reduction for or on account of, any and all present or future income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority, excluding net income taxes and franchise taxes or any other tax based upon net income, profits and/or gain imposed on an Affected Party as a result of a present or former connection between such Affected Party and the jurisdiction of the Governmental Authority imposing such tax or any political subdivision or taxing authority thereof or therein (other than any such connection arising solely from such Affected Party having executed, delivered, registered or performed its obligations or received a payment under, or enforced, this Agreement). If any such non-excluded taxes, levies, imposts, duties, charges, fees, deductions or withholdings (“Non- Excluded Taxes”) are required to be withheld from any amounts payable to such Affected Party hereunder, the amounts so payable to such Affected Party will be increased to the extent necessary to yield to such Affected Party (after payment of all Non-Excluded Taxes) a payment equal to the amount that would have been paid but for the Non- Excluded Tax; provided, however, that Borrower will not be required to increase any such amounts payable to any Affected Party not organized under the laws of the United States of America or a state thereof if such Affected Party fails to comply with the requirements of Section 1.9(c) in the Credit Agreement. Whenever any Non-Excluded Taxes are payable by Borrower, as promptly as possible thereafter, Borrower will send to the affected Lender for its own account or for the account of such Affected Party a certified copy of an original official receipt received by Borrower showing payment thereof. If Borrower fails to pay any Non-Excluded Taxes when due to the appropriate taxing authority or fails to remit to such affected Lender the required receipts or other required documentary evidence, Borrower will indemnify the applicable Affected Party for any incremental taxes, interest or penalties that may become payable by such Affected Party because of any such failure.
b) Each Affected Party will deliver to Borrower (i) if such Affected Party is not a “United States person” within the meaning of Section 7701(a)(30) of the Code, or is a “disregarded entity” within the meaning
15 of Treasury Regulation 301.7701 2 owned by an Affected Party which is not a “United States person” within the meaning of Section 7701(a)(30) of the Code, two (2) duly completed copies of Internal Revenue Service Form W 8BEN indicating that no United States withholding tax is due on any payment to such Affected Party pursuant to this Agreement or W 8ECI, as applicable, or the applicable successor form, or (ii) otherwise, two (2) duly completed copies of Internal Revenue Service Form W 9, or the applicable successor form, as the case may be.
4. Notification.
If any Affected Party becomes aware that any amounts are or will be owed to it pursuant to Section 1.9 in the Credit Agreement, then it will promptly notify Borrower as soon as possible thereafter. The Affected Party will submit to Borrower a certificate indicating the amount owing to it and the calculation thereof in reasonable detail. The amounts set forth in such certificate will, in the absence of demonstrable error, be conclusive and binding. Subject to Article X in the Credit Agreement hereof, Borrower will pay such amounts to the Affected Party within ten (10) Business Days after receiving the request.
5. Survival.
Without prejudice to the survival of any other agreement of Borrower hereunder, the agreements and obligations of Borrower contained in Section 1.9 in the Credit Agreement will survive the termination of this Agreement.
E. Payments in Full; Taxes
All sums payable by Borrower hereunder will be paid in full, free of any deductions or withholdings. Borrower will pay directly to the appropriate taxing authority or reimburse the Lenders for all present and future taxes and charges relating to this transaction, except for taxes which are imposed on or measured by any Lender’s net income, profits and/or gain, or the execution, delivery, performance and enforcement of the Loan Documents and all taxes on such payments and reimbursements.
F. Sharing of Payments
If any Lender receives any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) on account of principal or interest on any of its Loans to Borrower or other Obligations of Borrower hereunder (other than pursuant to Section 1.7 in the Credit Agreement) in excess of its ratable share of such payments (as determined pursuant to Article X or Article VII in the Credit Agreement, in the case following an Event of Default and the exercise of remedies as contemplated thereby), such Lender will forthwith purchase from the other Lenders such participations in the Loans made by them or such other Obligations as will be necessary to cause such purchasing Lender to share the excess payment
16 ratably with each of such other Lenders, provided, however, that if all or any portion of such excess payment is thereafter recovered from such purchasing Lender, such purchase from each Lender will be rescinded and each other Lender will repay to the purchasing Lender the purchase price paid for such participation to the extent of such recovery together with an amount equal to such Lender’s ratable share (according to the proportion of (a) the amount of such Lender’s required repayment to (b) the total amount so recovered from the purchasing Lender) of any principal, interest or other Obligations paid or payable by the purchasing Lender in respect of the total amount so recovered. The Borrower agrees that any Lender so purchasing a participation from another Lender pursuant to Section 1.11 in the Credit Agreement may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off) with respect to such participation as fully as if such Lender were the direct creditor of the Borrower in the amount of such participation.
G. CRA Sub-Allocation
Each Class A Lender may receive credit for Community Reinvestment Act purposes in accordance with the amount respective to the Percentage Interest of such Lenders in each of the Project Loans.
V. Project Loan Servicing
A. Project Loan Administration
1. Project Loan Servicing.
Project Loan servicing is a key component in the risk management process. Project Loan servicing ensures the timely repayment of interest and principal, and the correct reporting of Project Loan information to protect the quality of the Fund’s portfolio. Pursuant to the Servicing Agreement by and between USBGI as Servicer (together with any Successor) and the Fund, the Servicer is responsible for all aspects of Project Loan document management, reporting and servicing. The Servicer may enter into a Subservicing Agreement with any individual, company or organization (the “Subservicer”) to delegate certain of its servicing responsibilities to the Subservicer. a) Project Borrower Information Administration
(1) The Servicer will monitor and follow up with the Project Borrowers and collect all required Project Borrower information submissions when due including all financial statements, tax returns and other documents as specified in the Project Loan Documentation.
(2) The Servicer will keep track of property insurance expirations, collect new certificates and insurance policies, and confirm that
17 new certificates and policies conform to the insurance requirements contained in the Project Loan Documentation.
(3) The Servicer will provide the Fund a monthly report of all items collected on the Project Loan(s) with an aging of past due items.
(4) The Servicer will maintain a tickler of required Project Borrower and project reporting information and will contact the Project Borrowers as necessary to collect information when due.
(5) The Fund will maintain complete Project Loan files for the life of the Project Loan and for 7 years after repayment of the Project Loan. b) Project Loan File
The Servicer will maintain a Project Loan File for each Project Loan. At a minimum, the Project Loan File will include:
All documents used in the Fund loan approval process, including the documented approval by the Credit Committee; Executed Commitment Letter; Executed Original Project Loan Documents; and Project Loan security documentation, title report, title insurance, and other applicable documents;
The Servicer will create and maintain a Credit File for each Project Loan. The Credit File will contain all pertinent information regarding the status of the Project Loan, Project Borrower and the Project. Monitoring information provided by the Project Borrower is reviewed periodically and placed in the appropriate places in the Credit File. At a minimum, the Credit File will include:
Original Approval Package; Project Loan Borrower credit reports (as applicable), organizational documents, and other supporting documentation; Project Loan Borrower interim and audited financial statements and all financial analysis completed on the Borrower, Sponsor and Guarantor(s). Appraisal and all applicable Environmental reports; and Copy of the Fund Project Loan File as described herein.
18 c) Payments
The Servicer is responsible for monitoring the receipt of Project Loan payments, preparing monthly delinquency reports, and enforcing late payment provisions of notes.
i. Continuously from the date hereof and at all times during the Servicing Period or until the principal and interest on all Project Loans is paid in full, the Servicer will proceed diligently to cause all payments due under each Project Loan to be collected when the same becomes due and payable.
ii. With respect to any Project Loans that provide for the deposit of Escrow Payments in Escrow Accounts, the Servicer will take the necessary steps on its part to ascertain and estimate annual ground rents, taxes, assessments, water rates, fire and hazard insurance premiums, mortgage insurance premiums, and all other similar charges that, as provided in the Loan Documentation, are required to be escrowed to the end that the Escrow Payments payable by the Borrower will be sufficient to pay such charges from the corresponding Escrow Account as and when they become due and payable.
iii. Consistent with the foregoing, in the event that a Project Loan becomes a Delinquent Loan, provided that a Special Servicer has not been appointed pursuant to section A.1.i.(j) of this Manual, Servicer may in its discretion implement the applicable procedures of this Manual, and the Servicer may after consulting with and receiving a determination for the Administrative Agent on whether such actions will materially change the risk profile of a Project Loan: (a) waive any late payment charge or, if applicable, any penalty interest, or (b) extend the due dates for the periodic payments due on a Delinquent Loan for a period of not greater than thirty (30) days.
iv. Servicer will not: waive, modify or vary any term of any Project Loan (including modifications changing the applicable interest rate, forgive the payment of principal or interest, or extend the final maturity date of such Project Loan); accept payment from the related Project Borrower of any amount less than the stated principal balance in final satisfaction of any such Project Loan; or consent to the postponement of strict compliance with any such term or otherwise grant indulgence to any Project Borrower (other than as provided in this Manual).
v. Servicer will deposit any funds it receives with respect to any Project Loan into the Borrower Collection Account within two
19 (2) Business Days after receipt thereof and will hold such funds in trust for the benefit of the Fund and the Administrative Agent pending such deposit thereof. d) Fund Accounts
i. Monitoring of Deposits in the Fund Accounts.
Servicer will direct all Project Borrowers to remit payments on Project Loans only to the Borrower Collection Account and not to any other account. The Administrative Agent may require that Project Borrowers be directed to remit payments to an account other than the Borrower Collection Account; if so, the Servicer will cooperate with the Fund and the Administrative Agent to affect such transfer.
ii. Establishment of Escrow Accounts; Deposits in Escrow Accounts.
Servicer will perform the following management services when the collateral securing the Project Loan is real estate:
a. The Servicer will manage any Servicer-held escrow and reserve accounts for insurance, real estate taxes, and interest reserves in accordance with the Project Loan Documentation and any applicable laws and regulations. For interest reserve accounts this includes making any required journal transfers to apply the reserve to interest payments due per the note. For property tax impound accounts this includes calculating the periodic impounds required to total to the property tax payment next due and to make the payment prior to the imposition of any penalties or late fees. The Servicer is also responsible for investing impound or reserve accounts as directed by the Project Loan Documentation and for collecting any delinquent impound or reserve account payments.
b. The Servicer will segregate and hold all funds collected and received pursuant to each Project Loan constituting Escrow Payments separate and apart from any of its own funds and general assets and will establish and maintain one or more Escrow Accounts, in the form of time deposit, demand accounts or the Eligible Accounts.
c. The Servicer will deposit in the applicable Escrow Account or Accounts no later than the end of the two Business Days following the Servicer’s receipt thereof,
20 and retain therein, (i) all Escrow Payments collected on Project Loans, to effecting timely payment of any such items as required under the terms of this Agreement, and (ii) all insurance proceeds which are to be applied to the restoration or repair of any Collateral relating to a Project Loan. Any interest paid on funds deposited in the Escrow Account, other than interest on escrowed funds required by law to be paid to the applicable Project Borrower, will be deposited in the Borrower Collection Account. iii. Permitted Withdrawals from Escrow Accounts.
Withdrawals from an Escrow Account may be made by the Servicer (a) to effect timely payments of ground rents, taxes, assessments, water rates, hazard insurance premiums and comparable items, (b) to refund to a Project Borrower any funds as may be determined to be overages, (c) for transfer to the Borrower Collection Account in accordance with the terms of this Agreement and the Project Loan Documentation, (d) for application to restoration or repair of the applicable Mortgaged Property, (e) to pay to a Project Borrower, to the extent required by law, any interest paid on the funds deposited in such Escrow Account, or (f) to clear and terminate such Escrow Account on the termination of this Agreement or, with respect to amounts associated with a given Project Loan, at the end of the Servicing Period with respect thereto. iv. Payments of Taxes, Insurance and Other Charges; Collections Thereunder.
With respect to each Project Loan providing for Escrow Payments, Servicer will maintain accurate records reflecting the status of ground rents, taxes, assessments, water rates and other charges that are or may become a lien upon the collateral relating to a Project Loan and fire and hazard insurance coverage and will obtain, from time to time, all bills for the payment of such charges, including insurance renewal premiums and will effect payment thereof prior to the applicable penalty or termination date, employing for such purpose deposits of the Project Borrower in the Escrow Account amounts estimated and accumulated by the Servicer and sufficient for such purposes, as allowed under the terms of the Project Loan Documentation and applicable law. To the extent that the Project Loan Documentation does not provide for Escrow Payments, Servicer will determine whether any such payments are made by a Project Borrower. Servicer will use reasonable commercial efforts to effect payments of all such bills in a manner and at a time that
21 assures that the lien priority of the Loan Documentation is not jeopardized (and, with respect to the payment of taxes, in a manner and at a time that avoids the loss of the collateral relating to such Project Loan due to a tax sale or the foreclosure of a tax lien), subject to the Project Borrower’s faithful performance in the payment of same or the making of the Escrow Payments, but Servicer is not required to make advances from its own funds to effect such payments.
v. Transfer of Accounts.
The Servicer may transfer an Escrow Account to a different depository only with the prior written consent of the Administrative Agent (at the direction of the Lenders), and will affect such transfers upon and in accordance with the written instructions of the Administrative Agent (at the direction of the Lenders). The Servicer will provide written notice to the Fund and Administrative Agent prior to the transfer of any Escrow Account to a different depository institution.
vi. Reports.
Monthly reports showing any amounts due to the Servicer-held escrow accounts but uncollected are distributed to the Administrative Agent.
vii. Insurance Proceeds.
Upon the occurrence of any insured loss that, under the terms of the applicable Required Project Loan Documentation, gives rise to an obligation on the part of the applicable Project Borrower to place insurance proceeds in escrow for the purpose of rebuilding or repairing the collateral for such Project Loan, the Servicer will take reasonable steps to implement, or to cause the applicable Project Borrower to implement, the provisions of the Required Project Loan Documentation governing the deposit of insurance proceeds in and the disbursement of insurance proceeds from an Escrow Account for the purpose of effecting such rebuilding or repair. viii. Reserves.
The Servicer will also process draw requests from Servicer-held replacement reserve and operating reserve accounts in accordance with the Required Project Loan Documentation.
22 This may include ordering any follow up reports such as construction inspection reports and title date down or title continuation endorsements.
e) Quarterly Monitoring
The Servicer will send a written notice of pending Project Loan maturity to Project Borrower at 120 days from maturity. At 90 days prior to Project Loan maturity, the Servicer will contact the Project Borrower via telephone or e-mail regarding the status of the payoff or conversion. f) Amendments of Non-Delinquent Loans
The Servicer will work with the Administrative Agent on all proposed modifications to any Project Loan Document (a “Requested Change”) associated with non-delinquent loans. Each Requested Change will include a brief assessment by the Servicer on whether such Requested Change will be a Material Change. The Servicer will provide the request to and consult with the Administrative Agent, who will make the final determination as to whether the Requested Change is a Material Change. If the Administrative Agent determines the Requested Change will not be a Material Change, the Servicer will only be required to provide the Credit Committee with notice of the Requested Change. If the Administrative Agent determines a Requested Change is a Material Change, the Servicer must receive consent by a Supermajority of the Credit Committee to approve such Requested Change. If Requested Change is approved pursuant to this section, the Administrative Agent will request the Servicer make such a Requested Change in the name of the Project Borrower. All Requested Changes must be formally documented and reported to the Credit Committee whether or not Credit Committee approval is required.
g) Notification of Adjustments
The Servicer will execute and deliver the notices required by the applicable Required Loan Documentation regarding interest rate adjustments. The Servicer also will provide timely notification to the Fund of all applicable data and information regarding such interest rate adjustments and the Servicer’s methods of implementing such interest rate adjustments.
h) Notification of Events of Default
Servicer will promptly notify the Fund and the Administrative Agent, upon obtaining actual knowledge of an existing “Event of Default”.
23 i. Within fifteen (15) days from the date on which any Project Loan becomes a Delinquent Loan, the Administrative Agent will provide notice to the Lenders. Within thirty (30) days from the date on which any Project Loan becomes a Delinquent Loan, the Borrower, the Administrative Agent and the Servicer will work with the Project Borrower to expeditiously develop a work-out plan (“Work-Out Plan”) in accordance with the Credit Manual. If there is no Work-Out-Plan in effect within 150 days after a Project Loan becomes a Delinquent Loan, the Borrower will pursue its legal remedies to collect payment under the Project Loan documents.
ii. On the Facility Maturity Date, Project Borrower will assign all Delinquent Loans and/or Defaulted Loans funded with Loan proceeds hereunder and remaining outstanding on such date to Administrative Agent and the Administrative Agent will thereafter manage such Delinquent Loans (including the liquidation thereof) for the benefit of the Lenders in accordance with the provisions of this Agreement. i) Delinquent Loans
i. In the case of a Delinquent Loan, the Servicer will work in conjunction with the Administrative Agent to propose its recommended plan of action regarding such Delinquent Loan, which may include, but is not limited to, the full restructuring of a Project Loan, or foreclosure, in each case, requiring the written approval of a Supermajority of the Credit Committee members. If a Supermajority of Credit Committee members do not approve the plan, the Class A Lenders on the Credit Committee must agree upon and approve the plan of action. In connection with such approval, the Class A Lenders may, without limitation, require the Administrative Agent to enforce all of the Borrower’s rights and remedies with respect to such Delinquent Loan and take all commercially reasonable steps to collect on the loan.
ii. The parties hereto agree that the Servicer will at the direction (or may, with the written consent) of the Administrative Agent (as directed by a Majority of the Class A Lenders, the Class B Lender and the Class C Lender), retain a special servicer (a “Special Servicer”) to perform any services typically performed by a “special servicer” with respect to Delinquent Loans, or for a “real estate owned” or “REO” property, including, but not limited to, negotiating amendments, assumptions or modifications of any Project Loan, commencing any litigation, foreclosure or other realization action with respect to the
24 collateral on behalf of the Borrower, selling any Project Loan or foreclosed Mortgaged Property or managing or operating any foreclosed Mortgaged Property (collectively, the “Extraordinary Services”) in accordance with Section 5.16 of the Credit Agreement; provided that the Servicer, upon presentation of an acceptable written analysis and plan to the Administrative Agent for servicing such Delinquent Loans and with the consent of Administrative Agent (after receiving Supermajority approval from the Credit Committee), may perform such Extraordinary Services itself. iii. If the Servicer performs Extraordinary Services, it will receive additional compensation, to the extent not already provided in this Manual, for Extraordinary Services in accordance with a budget approved by the Credit Committee in accordance with Section 5.17 of the Credit Agreement. iv. Upon a Project Loan becoming a Delinquent Loan, the Servicer will promptly notify the Fund and the Administrative Agent in writing and request direction by the Administrative Agent in writing as to what action to take with respect to the Delinquent Loan consistent with the Manual. The following decisions on Delinquent Loans require Credit Committee approval by a Supermajority vote: a. Waivers of (material) Events of Default under the Project Loan Documents;
b. Release of any collateral securing a Project Loan, except in the case of loan repayment; and
c. Any Material Modifications of the Project Loan terms, including without limitation, the extension of the Project Loan maturity date. Material Modifications include any amendments or modifications to the Project Loan that:
Increase outstanding principal amount; Modify payment terms, including a loan’s interest rate, fees, or an increase in the amortization period of a loan; Modify Collateral in any material way, including the parameters of LTV requirements specified in the original loan approval; Cause a Project Loan to become Non- Conforming; Change the proposed primary source of repayment, collateral, budget, scope of the
25 Project, amount or timing of equity, other debt or subsidies; Extend the Project Loan term without a designated source of take-out financing; Waive any material covenant or revise a covenant (including financial) in such a manner to make such covenant less stringent; Provide an exception to Fund policies on environmental risk, entitlements, or insurance; and Other amendments or modifications having a material impact on the structure of the Project Loan and/or the potential to increase the risk of losses to the Fund.
v. Servicer will execute written agreements for such Extraordinary Services, which agreement will include a schedule of special servicing, liquidation and workout fees. The Servicer further agrees to negotiate in good faith to determine the precise amount of such additional compensation for Extraordinary Services. Such compensation will be in the amounts as set forth in the Work-Out Budget approved in accordance with Section 5.17 of the Credit Agreement. If a Special Servicer other than the Servicer has been appointed, the Servicer will not receive a Servicing Fee with respect to the Project Loans transferred to such Special Servicer, provided, that, Servicer may receive reasonable compensation for any ongoing services provided by it in accordance with the Work-Out Plan and associated budgets. vi. The parties agree that if a Delinquent Loan is transferred to a Special Servicer (other than the Servicer), they will cooperate with the Fund and the Administrative Agent in the transfer of the Project Loan servicing files and any Escrow Accounts with respect to such Delinquent Loan to the Special Servicer as contemplated by section V.A.1.i.(ii) of this Manual. Unless otherwise agreed to in writing by the parties, in the event a Delinquent Loan is no longer a Delinquent Loan, such Delinquent Loan shall be transferred back to the Servicer for servicing under this Agreement. Without prejudice to the terms of any separate agreement executed by Servicer as Special Servicer, the Servicer will not be entitled to be paid the Servicing Fee hereunder with respect to such specific services transferred
26 to a Special Servicer during the period the Delinquent Loan is being serviced by a Special Servicer.
j) Charge-Offs or Write Downs.
Servicer will provide written notice of any charge-off or write-down of a Project Loan in accordance with the Credit Agreement and this Credit Manual as soon as possible after approval by the Administrative Agent and Lenders holding a Majority-in-Interest of the Loans to conduct such charge-off or write-down, but in any event within five (5) Business Days after recordation of same in Borrower’s financial record.
k) Satisfaction of Project Loan Documentation and Release of Project Loan Documentation Files.
i. Upon the payment in full of any Project Loan, or the Servicer’s receipt of notice that payment in full will be escrowed in a manner customary for such purposes, the Servicer will: (a) notify the Administrative Agent that all amounts received or to be received in connection with such payment, and required to be deposited in the Borrower Collection Account, have been or will be so deposited, and (b) request execution of any document necessary to satisfy the Project Loan and delivery of any related mortgage or collateral held by the Fund or the Fund’s designee. Upon receipt of such certification and request, the Servicer will prepare and process any satisfaction or release and provide the related mortgage documentation to the Fund for delivery to the applicable Project Borrower.
ii. At any time when any Project Loan ceases to be a Project Loan other than as a result of the payment in full thereof, the Servicer will release the Required Loan Documentation to the Special Servicer or other Person designated by the instruction of the Administrative Agent, and will transfer any funds in any Escrow Account related to the Project Loan as directed in the instruction. Effective upon such transfer, Servicer will have no liability whatsoever with respect to the Project Loan arising from acts or omissions with respect to the Project Loan on or after the date on which such Project Loan ceased to be a Project Loan.
B. Collateral Administration
1. Monitoring Property Insurance.
The Servicer will maintain the property insurance files and a tickler file of property insurance expiration dates. It will contact Project Borrowers for renewal insurance certificates and policies 30 days prior to insurance expirations and follow up continuously until the documents are received. It will
27 confirm that replacement certificates and policies are in conformance with Project Loan document requirements.
2. Monitoring Property Tax Payments.
The Servicer will review all tax service reports to confirm property taxes are paid current, and will research as needed the property tax status for any collateral with known delinquent property taxes. The Servicer will pay the property tax bills from impound accounts for any applicable collateral, (b) calculate impound amounts, and (c) ensure Project Borrowers’ payment billings reflect the proper amounts. The Servicer will attempt to resolve Project Loans with delinquent property taxes and/or impound accounts but if the Project Loans cannot be resolved within 90 days they will notify the Administrative Agent.
3. Monitoring Flood Insurance Classification.
The Servicer will review all flood certifications and confirm that documentation of any required flood insurance is in the insurance file. When it is notified of any changes in a property’s flood status, it will follow up with Project Borrowers to obtain the correct insurance or to notify them that flood insurance is no longer required, as applicable.
4. UCC Renewals/Releases and Changes in Title.
The Servicer will keep track of UCC expirations, file continuation statements as needed, and file releases on Project Loans paid off or where collateral is released pursuant to the Project Loan Documentation.
5. Collection and Monitoring of Delinquent Project Borrower Payments for Taxes, Insurance and Reserves.
The Servicer is responsible for collecting delinquent impound amounts and causing Project Borrowers to pay current any delinquent property taxes on Project Loans. The Servicer will decide when to cease working with the Project Borrower and recommend that the Fund advance the property tax payments itself to protect its collateral. Advancing delinquent property tax payments should be done in conformance with the Project Loan Documentation and in consultation with counsel. The Servicer will promptly force-place an insurance policy (with the approval of the Administrative Agent, at the direction of the Lenders) on property secured by a Project Loan upon actual knowledge that the property will be uncovered. As part of the Loan Monitoring process, Servicer will analyze compliance with and adequacy of payments by Project Borrowers to the required operating and replacement reserve accounts. Servicer is responsible for ensuring Project Borrowers meet all requirements governing reserve amounts and uses.
28 6. Release of Collateral.
The Servicer will prepare and record reconveyances, satisfaction and release of mortgages and UCC releases upon receipt of payment in full of a Fund loan. It will also process other releases of collateral in accordance with Project Loan Documentation. Releases of collateral not in connection with a paid off Project Loan will require the approval of the Committee.
VI. Project Loan Monitoring and Reporting
A. Asset Management
Asset management functions include the Servicer preparing Loan Monitoring Reports (LMRs) and conducting site visits, monitoring development progress against benchmarks established at underwriting, reviewing financial covenant compliance, and evaluating and recommending Project Loan extensions and modifications.
1. Project Loan Monitoring.
Project Loans are formally reviewed through the preparation of a LMR, which is attached as Exhibit D to the Credit Agreement, by the Servicer and reviewed by the Administrative Agent and by the Credit Committee. Project Loans are reviewed quarterly, semi-annually, or annually, depending on the risk factors of the Project Loan. Generally, performing Project Loans will be reviewed annually. A Project Loan is defined as “performing” if it has been paying as agreed, in compliance with all covenants and other Project Loan terms, and repayment of interest and principal is expected in full. Once a Project Loan has been downgraded or has other performance issues, the review frequency and level of review should be determined by the Administrative Agent in consultation with the Credit Committee.
(a) Review of Project Borrower Information
The Servicer will coordinate directly with the Administrative Agent to share information on the status of Project Borrower/Sponsor relationship and to designate the appropriate person for making requests to Project Borrowers to collect information past due over thirty (30) days. The Servicer will review the information collected for any material adverse changes to Project Borrower or project financial condition. When there has been deterioration in the Project Borrower’s and/or Sponsor’s and/or guarantor’s financial condition, Project Borrower’s operations, or the primary source of the repayment of the Project Loan, the Servicer will do additional research as needed
29 to understand the issues in depth, to be able to recommend an appropriate risk rating and accrual status and to prepare resolution strategies for the Project Loans. Serious unexpected deterioration in a Project Loan will be reported to the Administrative Agent promptly, and to the Committee monthly, or more frequently if warranted.
(b) Covenant compliance including project milestones and reserve account funding.
The Servicer will review the Project Borrower information for the Project Borrower’s compliance with any Project Loan covenants required by the Project Loan approval. The covenants may include Project Borrower and/or sponsor and/or guarantor financial ratios, occupancy percentages, debt service coverage ratios, completion of project milestones within certain time frames, etc. Any out of compliance covenants will be reported in the LMRs (see below) and communicated in writing to the Project Borrower with a request for a plan to get back into compliance. Project Loan reviews should also address the Project Borrower’s performance under any required ongoing environmental contractual requirements.
(c) Preparing LMRs
The LMR (See Exhibit A) will be the primary means of reviewing information about the Project Loan and its performance on a periodic basis. This form provides summary information on the performance of the Project Borrower, Sponsor, Guarantor (as applicable), project and Project Loan. The key issues affecting the Project Loan’s risk and its repayment must be presented on this form. Relevant attachments will be attached to the LMR such as: spreads of the Project Borrower’s or Guarantor’s financial statements, reviews of project operations history, collateral evaluations, site visit memos, memos to the credit file, and any other relevant information. Servicer will prepare LMRs quarterly, semi-annually or annually as applicable and present them to the next available Committee meeting.
(d) Project Loan Risk
Project Loan Risk rating review including non-accrual status Servicer will recommend an appropriate risk rating in each LMR based on the most recent available information in file plus information obtained by contacting the applicable Project Borrower
30 directly. Justifications for any downgrades or upgrades should be thoroughly explained in the LMR. As appropriate, the Servicer may also make recommendations for changes in accrual status and for write-offs.
(e) Quarterly Credit Review Meetings
Each quarter, the Servicer will review the list of Project Loans to be reviewed that quarter and make necessary adjustments to the list. Quarterly, the Servicer will present a review of each Project Loan to the Credit Committee and recommend any necessary changes in risk rating classifications. The Administrative Agent will approve the recommended risk rating classifications for the reviewed Project Loans. The Administrative Agent will prepare a written report summarizing any risk rating modifications made during the quarterly review of all Project Loans’ risk rating classifications and the Project Loans formally reviewed at the Credit Committee Meeting. The report is transmitted to the Credit Committee. The Administrative Agent may revise risk rating classifications between quarterly meetings. Interim changes to risk rating classifications will be communicated in writing to the Credit Committee.
(f) Quarterly Reports
Within forty-five (45) days after the end of each fiscal quarter, the Administrative Agent will provide a written summary of the status of Borrower’s Project Loan portfolio. The summary will include, without limitation, the following information:
i. a Portfolio Report in a form approved by Administrative Agent and Lenders holding a Majority-in Interest, which report shall (a) summarize all Project Loans then outstanding, setting forth for such Project Loans details regarding location, risk rating, maturity, amortization and interest rate and other relevant information set forth in Exhibit D, (b) provide a statement of all funds then on deposit in each Borrower Account and a calculation by Borrower of the then unfunded portion of the Class A Total Loan Amount, the Class B Total Loan Amount, and the Class C Total Loan Amount (c) report outstanding maturities for Project Loans and proposed renewal activities, as well as report all Project Loans repaid since the prior quarterly report;
31 ii. a “Default Certificate” providing a delinquency report with respect to any Delinquent or Defaulted Loans;
iii. a “Covenant Compliance Certificate” in the form of Exhibit E to the Credit Agreement;
iv. an account statement for each Borrower Account and the Interest Reserve, if applicable; and
v. notices of any changes to the Credit Manual.
2. Site Inspections.
The Servicer will maintain a schedule of site inspections following the guidelines below:
(a) Project Loans secured by real estate or an assignment of lease, require a site inspection of the property every two years.
(b) Operating properties securing Project Loans with outstanding principal of $200,000 or more require a site inspection annually.
(c) In the event that the Servicer has information pertaining to a Project Loan that warrants concern, site visits should be scheduled more frequently.
(d) In the event that a Project Loan is downgraded from a “pass” rating, the property should be considered for an annual visit.
(e) Project Loans with an outstanding principal balance of less than $50,000 do not require a site visit unless the situation warrants (i.e., the Project Loan has been downgraded, or the condition of the property or its operation is in question).
Site visits will be performed by the Servicer, and may be contracted, as needed, to third party professional property inspectors. Site inspections should report on any indications of contamination or environmentally hazardous practices. If circumstances warrant (e.g. notification of contamination or an environmental enforcement action), environmental due diligence reports may be updated and a new Phase I Environmental Site Assessment report may be ordered. Site visits must be documented with a site inspection report, preferably accompanied by photos (see Exhibit B).
32 B. Risk Rating Requirements
The Fund (through its Administrative Agent) assigns risk ratings to Project Loans when they are approved and reviews them throughout the life of the Project Loans so the Fund may evaluate the portfolio according to the various performance characteristics of the Project Loans. Loans are expected to be rated Pass at the time of underwriting.
a. Risk Rating Classifications - the risk ratings for the Fund’s Project Loans are as set forth in the Risk Rating Chart attached as Exhibit C.
b. Changes to Risk Ratings - the Administrative Agent (at the direction of the Credit Committee) can make revisions and changes to risk ratings. Such changes are to be communicated in writing to the Committee and the Servicer on a periodic basis.
33 EXHIBIT A FORM OF LOAN MONITORING REPORT
Loan Monitoring Report Loan #: Credit Associate: Loan Officer: Month Ending: Revision Date:
Borrower: Name: Address: Sponsor: Guarantor:
Loan Information
Loan Ownership % Owned Loan Type: Utah Small Business Growth Initiative, LLC, d/b/a Business Loans of Utah Security: Lien Others (please list below) Position: LTV: DSCR: Lead Lender:
Loan Approval Date: Borrower Total
Loan Closing Date: Original Loan Amount:
Conversion Date: Loan Amount:
Original Maturity Date: Current Principal Balance:
Current Maturity Date: Total Fund Exposure (current commitment amount):
Original Term: Subject
Extended Term:
Amortization:
Interest Original: Total Exposure: Rate Current:
Extensions Last Quarter End LMR:
Number: Last Site Visit:
Total Months: Next Site Visit:
Credit Review
34 Current Recommended Assigned
Risk Rating Review Frequency
Purpose(s): Secured
List all appropriate purposes
Brief Description of Loan Purpose
Collateral Property Value LTV Ratio Valuation Date: 1st Lien: 2nd Lien: 3rd Lien: Covenants and Date / Borrower Met Conditions: What Frequency Condition at Monitoring Last Check Requirements Financial benchmarks: FYE 12/31 borrower Financial benchmarks / FYE 6/30 covenants: guarantor 1. Current Ratio 1. XXX 2. Acid Test 2. XXX 3. Cash flow positive 3. XXX 4. Net Worth maintained 4. XXX 5. Met DSC ratio 5. XXX benchmarks Construction Commitment at Due at Close closing Re-zoning Date Tax credit investor identified Date Performance benchmarks (i.e. lease-up; enrollment; sales N/A N/A absorption) Other Other Special Example: State Agency has 100% payment guarantee in place for Circumstances full term of the financing. While there is an appropriations risk, there are no other unmet performance hurdles and the borrower is complying with the regulatory agreement. The State Agency remains committed to providing supportive housing through our borrowing entity which is the strongest in the state.
35 A. Status Report
What (what has happened since last report; what is noteworthy to the reader):
Why:
Concerns:
Pending Action(s) with credit / borrowing entity/affiliates:
B. Financial Evaluation of Primary and/or Secondary Repayment Source (notes as to audited or internally prepared; changes since last period; trends; areas of concern or where more research is warranted): Financials How does it compare with underwriting pro forma? Borrowing Entity Financial Spreads Guarantor, if any
C. Recommendations (including any New Conditions):
D. Next Steps / Who is Accountable?
What Who is Accountable Due Date [e.g.] Set Ticklers: Financial Statement Collection
- Borrower & Sponsor Audited (DATE) fiscal Servicer year end statements - Quarterly Operating Statements Servicer - Reserve Account Statement Servicer
Attachments: Financial spreads for borrower, sponsor, guarantor, operator, etc.
36 EXHIBIT B FORM OF SITE INSPECTION REPORT
Business Loans of Utah Site Inspection Form
Loan Number(s): ______Date of Last Inspection: Date of Inspection: ______Servicer or Sub-Servicer: ______
Site Visit Conducted by: ______Loan Officer: ______
Borrower:
Client Contact:
Phone number:
Address:
Name:
Year Built or Rehabbed:
Brief Description of Property:
37 Physical Condition of Property S = Satisfactory NI = Needs Improvement
Property Areas S NI Comments and Notes Grounds
Parking Lot
Building Exteriors
Public Areas
Office
Laundry
Hallways and Elevators
Work/Storage Areas
Other
Have any improvements relating to appearance been completed in the last year?
Have any conditions been cited by regulatory inspection (include date of referenced inspection)?
Are there any capital replacement/improvements that need to be addressed in the upcoming 12 months?
Are there any replacement reserve requirements contained in the Loan Agreement? Partnership Agreement? Are the reserves at the proper level?
Meeting with on-site management?
Other issues/concerns?
Schedule Next Site Visit: ______
38 EXHIBIT C FORM OF RISK RATING CHART RISK RATING SYSTEM Risk Rating Review Description Classification Frequency 1 – Pass/Strong Upon Initial Approval: The loan adheres to all key Annual underwriting standards without exception, and the loan and/or borrower demonstrate strength in one or more area (e.g., low LTV, high debt service coverage ratio, notable borrower or guarantor financial strength, etc.)
Following Initial Approval: Borrower and loan are both performing fully to projections, or better, with no sign of deterioration in any of the major performance criteria (borrower financial condition, project financial condition, collateral, organization, development timeline). The borrower complies with all loan requirements, including payments, financial or other covenants, and reporting requirements. Actual LTV is within underwriting standards. 2 - Pass/Acceptable Upon Initial Approval: The loan requires an Annual exception to one or more key underwriting parameters, or the borrower has moderate or lesser financial or organizational capacity; alternatively, the loan adheres to all key underwriting standards but at the limit of each measure.
Following Initial Approval: Borrower and loan are both performing to projections, with no sign of deterioration in any of the major performance criteria (borrower financial condition, project financial condition, collateral, organization, development timeline). Alternatively, there may be some modest decline in the performance criteria of a previously rated Pass-1 loan. The borrower is current on all loan payments and in compliance with all loan covenants. Minor reporting infractions may exist; however, continued infractions indicative of underlying financial and/or management weakness would warrant a downgrade.
A loan experiencing a short-term delay (i.e., less than three months) of the take-out event, with no
39 decrease in the likelihood of the take-out, may still be considered Pass/Acceptable. Multiple or longer term extensions, and/or extensions or modifications requiring a full re-underwriting of the loan, would generally require a downgrade to Below Expectation absent mitigating factors. An acceptable mitigating factor for a loan to return to Pass/Acceptable following a downgrade would be the borrower’s demonstrated ability to perform to the re- underwritten timeline and/or other performance criteria. Risk Rating Review Description Classification Frequency 3 – Below There may be some sign of deterioration in one or Semi- Expectation more major performance criteria, but the overall Annual; or quality of the loan is still acceptable because there is more strong expectation of full repayment. The timing of frequently repayment may be delayed requiring extension of the as loan beyond several months. Any deterioration is determined still within acceptable norms of performance. For by the example, borrower net operating income or project Credit performance may be lower or slower than expected Committee. at underwriting, but values are still considered sufficient to service and repay the debt. A Below Expectation loan has potential weaknesses meriting management’s close attention. The loan is currently protected but is exhibiting deteriorating trends which, if not corrected, could jeopardize repayment of the loan and result in a Substandard rating. Alternatively, the loan may have an intractable weakness, such as chronic operating shortfalls, but is backed by a strong guarantor or strong real estate collateral so full repayment of the loan is not threatened. 4 – Substandard Borrower and/or loan performance are substantially Monthly or below expectations, and merit remedial actions. Quarterly Deterioration in one or more major performance progress criteria requires more intense scrutiny and tracking, as intervention with borrower. Deterioration may determined include one or more of: overall borrower financial by the condition; project-related performance factors; Credit covenant breach; collateral value or marketability; Committee. concerns about borrower management or development team; negative change in external factors such as public agency support, takeout, or
40 market; and/or loan performance or availability of financial data. Loan may require restructure to return to acceptable risk status. The loan is inadequately protected given deterioration in collateral value and/or financial condition of borrower. There are well-defined weaknesses that could jeopardize repayment of the debt if not mitigated, but no loss is currently anticipated.
Risk Rating Review Description Classification Frequency 5 – Doubtful Borrower/loan shows significant deterioration, Monthly or requiring restructure, and concerted intervention. Quarterly Negative trends cannot be easily reversed, and progress repayment on the original terms is extremely tracking, as doubtful. Any combination of borrower financial determined condition, project financial condition, collateral by the value, borrower management team, or loan history Credit indicates that principal and/or interest repayment is Committee. at risk. Weaknesses can be well defined, but losses are difficult to precisely quantify. Foreclosure proceedings against real property security may become advisable. Restructure may provide borrower an opportunity to return to improved trends. Loans in this category are at risk of principal loss without material improvement in the performance of the borrower and/or the loan. 6 – Loss The Fund expects to write off some amount of loan Monthly or principal. Amount written off may be less than the Quarterly outstanding principal, in which case the loan may be progress restructured to isolate repayable principal in one tracking, as note; the amount the Fund expects to write off is determined classified 6. The Administrative Agent notifies all by the Fund participants of potential write off amount as it Credit is identified. Loans classified 6 should be written off, Committee. regardless of potential for recovery, within a short timeframe.
41 EXHIBIT G
FORM OF APPROVAL PACKAGE
G-1 Borrower Loan Application G-2 Underwriting Package Documents G-3 Approval Package Contents
(attached)
Business Loans of Utah - Exhibit G 1 Revised 8/2017
EXHIBIT G-1
BORROWER LOAN APPLICATION
Date: / /
I. Business Information
Business Name:
Business Address:
City: County: Zip:
Business Phone #: Business Fax #:
Email: ______
Website:
Origination date of business _____/______(month/year)
Name of bank______Branch ______
Legal Structure (check one): Sole Proprietorship LLC Corporation Partnership Other
Federal Tax ID# (EIN): _____
Business owner is: Woman Disabled Disabled Veteran Minority None of these
Industry (Include NAICS Code if known): _____
Current employees (excluding owners) Employees to be hired in the next 12 months _
Investment in business to date: $
Business Loans of Utah - Exhibit G 2 Revised 8/2017
II. Ownership Information
Complete this section for each person with any ownership in the business (even 1% or less). Use additional sheets as necessary. Any owner of 20% or more is required to sign a personal guarantee.
Owner Name: Social Security #: ___/_ ____/______Home Street Address: City: ______County: Zip: Own: Rent: Home Phone #: Work Phone #: Mobile Phone #: E-Mail Address: Number of people in household: Total gross annual household Income: $ Position: Percentage of ownership:
Owner Name: Social Security #: ___/_ ____/______Home Street Address: City: ______County: Zip: Own: Rent: Home Phone #: Work Phone #: Mobile Phone #: E-Mail Address: Number of people in household: Total gross annual household Income: $ Position: Percentage of ownership:
Owner Name: Social Security #: ___/_ ____/______Home Street Address: City: ______County: Zip: Own: Rent: Home Phone #: Work Phone #: Mobile Phone #: E-Mail Address: Number of people in household: Total gross annual household Income: $ Position: Percentage of ownership:
Owner Name: Social Security #: ___/_ ____/______Home Street Address: City: ______County: Zip: Own: Rent: Home Phone #: Work Phone #: Mobile Phone #: E-Mail Address: Number of people in household: Total gross annual household Income: $ Position: Percentage of ownership:
Business Loans of Utah - Exhibit G 3 Revised 8/2017
III. Loan Request
Amount Requested: $ (min. $50,000, max. $200,000)
Use of Loan Funds
Use Amount Description
Real estate purchase
Building rent/renovation
Equipment purchase, repair or update
Inventory
Supplies
Marketing/Advertising
Debt payoff or consolidation
Working Capital
Miscellaneous
Other
Total
Collateral
Please list assets owned by the business. Include inventory, equipment, furniture/fixtures, accounts receivable, and all other assets. Include personal and business real estate.
Vin # or Property Item Description Cost/Value Amount Owed Address (if applicable)
Business Loans of Utah - Exhibit G 4 Revised 8/2017
IV. Applicant Questionnaire – (To be filled out separately by each owner of 20% or more)
Applicant Name: Yes No N/A
1. Are you active in the day-to-day operation of the business? 2. Do you have outside or other employment? Name of employer. 3. If yes, will you remain employed outside your business? 4. Have you or do you own any other business? 5. Do you have formal training or direct experience in this industry? 6. Are you current on all personal taxes? 7. Have you ever filed bankruptcy? If yes in what year? ______If yes, has the bankruptcy been discharged? Discharge Date: 8. Have your bank accounts had checks returned NSF in the last 3 months? 9. Do you owe any outstanding child support? 10. Do you own real estate (excluding personal residence)? If yes, please provide the address:
11. Are you a veteran of the United States military? Please state which branch. 12. Will your credit report show that you have been current with creditors for the past 2 years? Please explain any credit issues below or on a separate sheet:
13. Are you a U.S. citizen or otherwise authorized to work in the U.S. (e.g., visa or “green card” holder)? Include proof of citizenship (See Checklist for approved proof of citizenship) or a copy of green card or visa with this application. 14. Are you or a principal of the business incarcerated, on parole or probation, or a defendant in a criminal proceeding? If yes please explain on the lines below. 15. Are you involved in any pending civil lawsuits? If yes, explain your involvement and the status of the lawsuit on the lines below.
Additional Information: ______
Business Loans of Utah - Exhibit G 5 Revised 8/2017
V. Work Experience - (To be filled out separately by each owner of 20% or more)
List chronologically beginning with the most current employment to the last 5 years or substitute a recent resume if prepared.
Company Name______City/State ______
From______to ______Title ______
Job Duties______
Reason for Leaving ______
Company Name______City/State ______
From______to ______Title ______
Job Duties______
Reason for Leaving ______
Company Name______City/State ______
From______to ______Title ______
Job Duties______
Reason for Leaving ______
Company Name______City/State ______
From______to ______Title ______
Job Duties______
Reason for Leaving ______
Education – College or Technical Training
Institution Name and Location Dates Attended From/To Degree/Certification Obtained
1)______
2)______
3)______
Business Loans of Utah - Exhibit G 6 Revised 8/2017
VI. Personal Financial Statement - (To be filled out separately by each owner of 20% or more)
Information Current as of: / /
Name: Social Security #: / /
Spouse (if an owner) Social Security #: / /
Personal Cash Flow Monthly Household Income (after-taxes from all sources) Only list income that will remain in place going forward. Source (employer name or other source): Source (employer name or other source): Total Monthly Household Income
Monthly Household Expenses Rent/Mortgage: Utilities: Insurance (home and auto): Auto Loan Payments: Credit Card Payments: Student Loan Payments: Other Bank Loan Payments: Food/Groceries: Other (please specify): Total Monthly Household Expenses Net Monthly Personal Cash Flow (Income minus Expenses)
Personal Balance Sheet Assets Please estimate the value of what you own. Cash in Banks (please provide bank name(s)):
Real Estate (primary residence): Automobiles (Year Make & Model): Retirement Accounts: Other Assets (please specify): Total Assets Liabilities Please estimate your total debt. Total Mortgage Balance: Total Auto Loan Balance: Total Credit Card Balance: Total Student Loan Balance: Other Liabilities (please specify): Other Liabilities (please specify): Total Liabilities Net Worth (Assets minus Liabilities)
Business Loans of Utah - Exhibit G 7 Revised 8/2017
Each owner of 20% or more must read and initial the following statements:
The undersigned authorize(s) Business Loans of Utah (“BLU”), to gather, obtain and review all consumer and business information (including, but not limited to, regular and investigative reports, credit reports, financial statements, and other documents submitted by Applicant(s) in connection with this application). The undersigned further request(s) and authorize(s) all creditors and all consumer and business reporting agencies to furnish such information to BLU.
The undersigned acknowledge(s) that this completed and signed application is only an application for credit. This application, even if favorably received, does not constitute a commitment on the part of BLU ______to extend credit.
The undersigned represent(s) and warrant(s) that the undersigned has (have) no knowledge of any fact that does, or with the passage of time could, materially adversely affect the credit worthiness of the undersigned for purposes of either obtaining or repaying this loan.
The undersigned agree(s) to notify BLU immediately in writing if any of the information contained in this application becomes inaccurate or misleading in any respect.
The undersigned agrees to hold harmless BLU and its associated parties (including, but not limited to, the loan committee and business advisors) against claims, and waive any claims now existing or arising in the future, for rights, damages, losses, liability, costs or expenses against BLU or such other associated parties.
The undersigned understands that the application fee paid by Applicant(s) to BLU is nonrefundable.
The undersigned understands that if a loan is received from BLU as a result of this application, the undersigned will be required to cooperate in good faith with BLU staff and business advisors including but not limited to providing updated financial reports and other information relative to the business operation.
The undersigned represent(s) and warrant(s) that the information submitted all-inclusive in this application is true, correct and complete to the best of your (their) knowledge.
Applicant(s): Co-maker/Guarantor:
Signature Date Signature Date
Signature Date Signature Date
______Signature Date Signature Date
Business Loans of Utah - Exhibit G 8 Revised 8/2017
EXHIBIT G-2
UNDERWRITING PACKAGE DOCUMENTS
Lender Utah Small Business Growth Initiative, LLC d/b/a Contact Name: Mike Plaizier Business Loans of Utah 6880 South 700 West, 2nd floor Contact Phone Number: (801) 316-9112
Midvale, UT 84047 Contact Email Address: [email protected] Borrower Contact Name:
Contact Phone Number:
Contact Email Address: Project Requested Loan Amount: $ Requested Loan Type:
Requested Loan Purpose: A. General Information
1. Application Fee received.
2. Class B Lender consent to process Application.
3. Mission; history; program; and portfolio of properties, units, and clients served / completed. 4. Business or Strategic plan. 5. Key Personnel and Board bios. 6. Year-to-date Financial Statements (i.e., Profit & Loss, Cash Flow, Balance Sheet). 7. 3 years of Financial Statements. 8. 3 years of Business and Personal Tax Returns. 9. Articles of Incorporation or equivalent formation documents. 10. By-laws or equivalent (e.g., LLC Operating Agreement, Partnership Agreement). 11. Certificate of Good Standing (no more than 30 days old). 12. Schedule of Real Estate Owned. 13. Schedule of Contingent Liabilities. 14. Proof of Liability Insurance. 15. State and Federal Tax-Exempt Determination, if applicable. 16. 2-year Cash Flow Projection. 17. Last 3 months of business checking statements. 18. Operating Budget or Operating Projections, if applicable. 19. Pro Forma Revenue Projections. 20. Appraisal and written review of the Appraisal. 21. Copies of any leases regarding real estate, equipment, vehicles, etc. 22. Titles/deeds (or other proof of ownership) for any equipment, real estate, inventory, receivables, commercial instruments, and other property pledged as collateral.
Business Loans of Utah - Exhibit G 9 Revised 8/2017 23. All other Third-Party Reports and written review of the reports, if applicable. 24. Preliminary Title Report. 25. Evidence of Site Control and/or Purchase and Sale Agreement, as applicable. 26. Proof of Zoning/Entitlement status. 27. Substantiation for any purchase over $5000.00 using loan funds. 28. Proof of U.S. Citizenship or Permanent Resident ID Card. 29. Any additional documentation reasonably required by the Administrative Agent.
Business Loans of Utah - Exhibit G 10 Revised 8/2017 EXHIBIT G-3
APPROVAL PACKAGE CONTENTS
1) Credit Memorandum prepared by Lender
2) Product Underwriting Checklist (PUC)
3) Loan Purpose
4) Collateral Description
5) Financial Spreads
6) Pro Forma Projections
7) Guarantors Financial Spread and/or Analysis
8) Tracked Covenants
9) Other Items
Business Loans of Utah - Exhibit G 11 Revised 8/2017 EXHIBIT H-1
UNDERWRITING GUIDELINES
Loan Types: Term loans, accounts receivable loans, draw down lines of credit and revolving lines of credit. Loan Amortization: Loan amortization may be adjusted to meet the cash flow projection with a balloon at year 5. Loan Amount: Up to 25% of the community allocated amount not to exceed 10%. Minimum Loan amount $50,000.00. Location: Business must be located within the legal boundaries of the designated community. Eligible Borrowers: For profit and non-profit entities. Actively engaged in business and producing revenue for at least 2 years. Ability to demonstrate growth to date though not necessarily profitable. Eligible Use of Funds Equipment and/or inventory purchase, business asset purchase, working capital, accounts receivable loans, real estate purchase, marketing/advertising, leasehold improvements and debt consolidation. Restricted Industries See attachment A-1 for specific restrictions. Recourse: Full recourse on all pledged assets and enforcement of guarantees. Interest Rate: Rate will be a minimum of the maximum SBA rate up to a maximum of 18% and generally fixed for the life of the loan. Repayments: Monthly payments due the 1st of the month 30 days after closing. Payments will be interest only or principal and interest according to the terms of the loan. Pre-payment There are no prepayment penalties. Fees: The borrower will pay a non-refundable application fee of $100 to be submitted with application package. The loan origination fee will be 2% of the loan amount. Covenants: Standard Commercial Loan Covenants e.g. maintaining required level of hazard and/or key man insurance; schedule for providing financial statements and tax returns; keep federal, state and local taxes current; shareholder loans must be subordinated to lender; maintain liquidity or performance ratios. Collateral: UCC Filing on all business assets, lien position on personal and business real estate, titled vehicles, publicly traded stocks and bonds. Security: Personal guarantee of any owner of 20% or more and/or a qualified co -signer. Guarantee of parent or subsidiary companies if applicable. Term: Maximum 5-year term.
Business Loans of Utah - Exhibit H 2 Revised 8/2017
Third Party Reports: Credit report on all owners of 20% or more; business credit report if registered with Dunn & Bradstreet and/or Expedia; online search for example, Google, Facebook and Twitter. Business Feasibility Demonstrated growth and ability to increase revenue. Market Analysis Able to clearly define the target market and able to define a market strategy that is aggressive, financially reasonable. Competitive Analysis Analysis by the loan officer will include an analysis of direct and indirect competitors, their location relative to the applicant business, their estimated market share and their strengths and weaknesses. Management Strength Analysis by the loan officer of the strengths and weaknesses of the management team including owners, managers, employees, contract employees, Board of Directors and Advisory Board. The business demonstrates experience in sales, operations and finance. Reporting Borrower agrees to provide annual business tax returns; Requirements quarterly and annual financial statements if requested, notice of any change in ownership, change in legal entity, change of address or any other change that affects the material operation of the business. Annual reporting of jobs created and jobs retained. Documentation See Exhibit G-1. Ratio Analysis Calculations using the most common ratios to evaluate the financial stability of the business including: sufficiency of projected income to service the debt; the estimated value of the collateral under fair market value or forced liquidation value; and the value of the personal guarantees.
Business Debt Service Coverage (DSCR) = Net Operating income / Total Debt Service. This measures the ability of the company to meet its monthly loan payments. Minimum ratio is 1:1.
Global DSCR = Net Operating Income + Owners Income/ Total Debt service + Owners Debt Service. This considers owner’s personal debt and ability if any to contribute cash to the business. Minimum ration is 1:1.
Loan to Value = Loan amount / Value of all assets being pledged as collateral. This ratio indicates whether collateral is worth materially more or less than the amount of the loan. Typically, the higher the LTV the higher the risk. Minimum will be established based on the industry as reported by RMA Associates.
Business Loans of Utah - Exhibit H 3 Revised 8/2017
Debt to Worth = Total Debt/Net Worth. This is the percent of debt as compared to the net worth of the company. Minimum ratio is 4:1.
EXHIBIT H-2
INELIGIBLE BUSINESSES
A business must be engaged in an activity the Fund determines as acceptable for financial assistance. The following businesses types are not eligible for assistance:
Financial businesses primarily engaged in the business of lending, such as banks, finance companies, payday lenders, check cashing, some leasing companies and factors (pawn shops, although engaged in lending, may qualify in some circumstances). Businesses owned by developers and landlords that do not actively use or occupy the assets acquired or improved with the loan proceeds. Life insurance companies. Businesses located in a foreign country (businesses in the U.S. owned by aliens may qualify). Businesses engaged in pyramid sale distribution plans (e.g., multi-level marketing), where a participant's primary incentive is based on the sales made by an ever- increasing number of participants. Businesses engaged in gambling activities. Businesses engaged in any illegal activity. Private clubs and businesses that limit the number of memberships for reasons other than capacity. Government-owned entities. Business Loans of Utah - Exhibit H 4 Revised 8/2017
Businesses principally engaged in teaching, instructing, counseling or indoctrinating religion or religious beliefs, whether in a religious or secular setting. Businesses that present live performances of a sexual nature, or directly or indirectly derive revenue through the sale of products or services, or the presentation of any depictions or displays, of a sexual nature. Businesses primarily engaged in political or lobbying activities. Speculative businesses (e.g., oil exploration, real estate flipping). New restaurants unless the loan is for a new location for an existing and successful restaurant (requires pre-underwriting approval from the community).
Note:
Legal aliens are eligible; however, consideration is given to status (e.g., resident, lawful temporary resident) in determining the business’ degree of risk. Applications will not be accepted from firms in which a principal is currently incarcerated, on parole, on probation or is a defendant in a criminal proceeding.
Business Loans of Utah - Exhibit H 5 Revised 8/2017
EXHIBIT I
CONFLICT OF INTEREST POLICY
TO BE ADOPTED BY MEMBERS AND CREDIT COMMITTEE
PURPOSE
Pursuant to its general obligation to act with integrity and fairness, the Utah Small Business Growth Initiative, LLC d/b/a Business Loans of Utah (“BLU”) implemented policies to identify and deal with conflicts that may arise from time to time as a result of corporate relationships between Credit Committee1 members and Lenders.
ADMINISTRATION AND MONITORING
This Policy will be adopted by the Member (defined below) and the Credit Committee. It will be periodically reviewed and updated by the Member and Credit Committee. Interpretation and administration of this Policy is the responsibility of the Member.
DEFINITIONS
The following definitions will be used to interpret and apply this Policy:
1. A “Conflict of Interest” exists when a Lender has a Financial Interest (as defined herein) related to an outcome of a determination to be made by the Credit Committee.
2. The “Member” of the Fund is Utah Small Business Growth Initiative, LLC, a Utah limited liability company d/b/a Business Loans of Utah.
3. The Fund will have a “Credit Committee” including three (3) representatives appointed by the Class A Lender, one (1) representative from the Class B Lender for whose geographic location the Project Loan is disbursed, and one (1) representative from the Administrative Agent (“BLU”).
4. “Lenders” include: Class A Lenders, Class B Lenders, and the Class C Lender as defined in the Credit Agreement.
5. "Financial Interest" means a direct or indirect financial interest in any activity, transaction, property, or relationship that involves receiving or providing something of monetary value, and includes, but is not limited to, any right, contractual or otherwise, to the payment of money, whether contingent or fixed.
1 Terms with initial capital letters not otherwise defined herein shall have the meanings set forth in the Credit Agreement among the Fund and various lenders dated September __, 2017 (the “Credit Agreement”).
FAIR ADMINISTRATION
The Member and members of the Credit Committee have the responsibilities in connection with the mission and activities of the Fund, as set forth in the Transaction Documents, to act fairly, impartially and without discrimination in favor of, or against, any Lender.
CONFIDENTIAL INFORMATION
Credit Committee members will not disclose or use confidential information received by reason of their position with the Fund to obtain a Financial Interest or business advantage for himself or herself, for any other person or entity or for any corporate interest in which he or she is affiliated.
PROHIBITED ACTIVITIES
No Credit Committee member involved with the underwriting or review of Project Loans on behalf of a Lender, will participate in or attempt to influence decisions by the Fund regarding the evaluation, approval, funding or monitoring of any Project Loan when the Lender is evaluating, contemplating or underwriting a separate loan to the Project Borrower.
PROCEDURE FOR DISCLOSURE AND RESOLVING CONFLICTS
Lenders will fully disclose to the Member each instance of actual or potential Conflict of Interest with the Fund. Where a Lender has disclosed an actual or potential Conflict of Interest or a Prohibited Activity, information related thereto will be disclosed in a written report submitted in a timely manner to the Member. The report will fully disclose the Lender’s interest in the matter and any additional information that the Member reasonably requests.
The Member will determine if the Conflict of Interest or Prohibited Activity can be resolved. The Member may consult with Fund Counsel to assist in making such determination. The Member will take such steps as it deems appropriate under the circumstances. The Member will disclose to the Credit Committee any actual or possible Conflict of Interest on the part of any Lender which has been disclosed to the Member before the Credit Committee votes on the matter related thereto. The Credit Committee will, by a majority vote of the disinterested Credit Committee members, determine whether the Lender will be required to abstain from voting on any such matter for which a Conflict of Interest exists.
EXHIBIT J
PROJECT UNDERWRITING CHECKLISTS
J - 1 4829-2834-4907 Project Loan Underwriting Compliance Checklist
Applicant Name: Loan #:
Loan Type: Loan Amount: $
CONFORMANCE WITH UNDERWRITING REQUIREMENTS YES NO
Policies 1) Loan commitment amount is no more than 25% of the community allocated amount and will be no greater than 10% of total Fund capital. 2) Borrower is not eligible for traditional financing (i.e., not “bankable”). 3) Loan funds are disbursed for an eligible use (See Exhibit H). 4) Business is located within legal boundaries of the designated community. Financial Product Requirements 5) Loan amount is no less than $50,000.00. 6) Interest Rate is a minimum of the maximum SBA rate up to a maximum of 18% and fixed for the life of the loan. 7) Loan term is 5 years or less. 8) There are no prepayment penalties. Borrower General Information 9) Business or Strategic Plan. 10) Key Personnel Bios/Resumes. 11) Organizing Documents (e.g., Articles of Incorporation). 12) By-laws or equivalent (e.g., LLC Operating Agreement). 13) Certificate of Good Standing (no more than 30 days old). 14) Proof of Business Liability Insurance. Borrower/Guarantor Financials 15) Year-to-date Financials (i.e., Profit & Loss, Cash Flow, Balance Sheet) 16) Business Financials for last 3 years. 17) Business Tax Returns for last 3 years. 18) Personal Tax Returns for last 3 years from all owners of 20% or more. 19) Credit Report(s) on all owners of 20% or more. 20) Business Credit Report(s) if registered with Dunn & Bradstreet and/or Expedia. 21) Explanation of any credit issues. 22) 2-year Cash Flow Projection. 23) Debt Service Coverage Ratio (DSCR) is at a minimum ratio of 1:1. 24) Loan to Value (LTV) is at a minimum based on the industry as reported by RMA Associates. 25) Debt to Worth (DTW) is at a minimum ratio of 4:1. 26) Schedule of Real Estate Owned. 27) Schedule of Contingent Liabilities. 28) Statements for last 3 months for accounts (e.g., checking, money market, savings) of Business.
Business Loans of Utah - Exhibit J 2 Revised 8/2017 29) Statements for last 3 months for accounts (e.g., checking, money market, savings) of owners of 20% or more. Borrower Standards 30) Actively engaged in business and producing revenue for at least 2 years. 31) Demonstrable growth to date though not necessarily profitable. 32) Proof of US Citizenship or Permanent Resident ID Card. 33) No Principal in the Business is currently incarcerated, on parole, on probation, or a defendant in a criminal proceeding. Security & Collateral 34) Personal Guarantee of any owner of 20% or more and/or of a qualified co- signer. 35) Guarantee of parent or subsidiary companies (if applicable). 36) Titles/deeds on any equipment, machinery, vehicles or real estate pledged as collateral. 37) Inventory Schedule if pledged as collateral. 38) Statements for any accounts receivable pledged as collateral. 39) Other documentation substantiating the existence, location, value, and ownership of collateral (including any other necessary information). 40) Copies of all lease and agreements pertaining to building, equipment, etc. 41) Proof of UCC Filing on all business assets and lien position on personal and business real estate, vehicles, publicly traded stocks and bonds, etc. Documentation 42) Loan Application Complete and Signed. 43) Application Fee. 44) Bids, brochures, invoices or internet printouts for uses of loans over $5,000 45) Asset Purchase Agreement 46) Real Estate Purchase Agreement 47) Other
Business Loans of Utah - Exhibit J 3 Revised 8/2017
2. Acquisition
Loan Name: Loan #:
J - 2 4829-2834-4907
3. Construction
Loan Name: Loan #:
J - 3 4829-2834-4907 EXHIBIT K
APPRAISAL REQUIREMENTS
Appraisals determine the value of collateral for Utah Small Business Growth Initiative, LLC d/b/a Business Loans of Utah’s (“BLU”) underwriting purposes. Lenders are to critically review appraisals and may express their opinion of value, but the value reported to approval authorities is always the value shown in the reviewed and accepted appraisal. If a Lender concludes in an appraisal review that the appraisal is so flawed as to provide an unreliable indication of value, the Administrative Agent should review the appraisal and determine whether to accept it.
a. Appraisal Requirements
i. Appraisals are required to support all loans secured by real estate.
ii. New appraisals are required for extensions and modifications of existing credit facilities unless:
There has been no obvious and material change in market conditions or physical aspects of the property that threatens the adequacy of the institution’s real estate collateral protection after the transaction even if additional funds are advanced, or
There is no advancement of additional funds other than funds necessary to cover reasonable closing costs.
b. Appraiser Qualifications
i. The Lender must ensure that the appraiser selected is qualified to appraise the project being valued.
ii. To be considered qualified, the appraiser must have at least four years of relevant appraisal experience and currently be active in appraisal work, and be experienced in the geographic area where the property is located. The appraiser must be certified and licensed in the state where the property is located. If the appraiser is not known to the Administrative Agent, the Lender must seek references from lenders that have commissioned comparable appraisals.
iii. The appraiser must not be affiliated with the borrower, or a buyer or seller of the property, and the appraiser must have no direct or indirect interest, financial or otherwise, in the property or transaction. c. Ordering an Appraisal:
i. Appraisals are to be engaged directly by the Administrative Agent. The Administrative Agent may accept an appraisal prepared by an appraiser engaged by another financial services organization if the Administrative Agent determines that the appraisal conforms to its requirements. If the loan is for $500,000 or more, and the appraisal has been ordered by or addressed to another party, the Lender must request that the appraisal be addressed to the Lender.
ii. The Lender must receive a reliance letter from the appraiser for BLU’s use of the appraisal.
iii. The Lender must give the appraiser written instructions when ordering the appraisal that include specific issues to consider regarding the nature of the property being appraised and the appraisal assignment. d. Appraisal Standards:
i. All appraisals must adhere to the current Uniform Standards of Professional Appraisal Practice of the Appraisal Foundation (USPAP).
ii. The appraisal must have the stated purpose of estimating the value of the unencumbered, fee simple interest in the security offered for the proposed loan. The appraisal must clearly identify the “highest and best” of the property. The impact of the borrower’s use of the property for anything other than its “highest and best” use must be evaluated. Any special conditions, covenants or deed restrictions that affect the value and would remain after a foreclosure must be clearly identified and assessed.
iii. The appraisal must contain an “as is” valuation of the property.
iv. Appraisals of properties securing loans in excess of $250,000 must be either a Self-Contained Appraisal Report or a Summary Appraisal Report (as defined by USPAP Standard 2.2).
v. Property values must be evaluated based on the cost, sales comparison and income approaches to value, or the appraisal must provide an adequate explanation for not using one of the approaches. The appraisal must indicate which value approach was given the most weight (and why), and the reconciled value must be clearly justified.
vi. In the income approach to valuation, the appraiser must use a market capitalization rate that does not incorporate adjustments for special financing, subsidies, tax credit benefits, or tax exempt financing.
vii. For the renovation or new construction of a property, the appraisal must contain both as “as is” and an “as completed” valuation. When determining the “as completed” valuation, the appraiser will consider the scope of the renovation or new construction; the schedule for completing the scope of work; the historic, current and forecasted absorption and turnover rates for the property and the property’s market area; and any other pertinent factors affecting the property’s ability to attain the “as completed” rents or sales prices and final value. The appraisal will analyze and report appropriate deductions and discounts for proposed construction, renovation, or partially leased buildings. e. Appraisal Review
i. Appraisal reviews for loans will be reviewed by Lenders using the Appraisal Review Form attached hereto. These reviews will be reviewed and approved by the Administrative Agent prior to loan closing.
ii. USBGI strongly prefers reviewing appraisals during the loan approval process. If the appraisal is unavailable at the time of the loan approval, the appraisal must be reviewed and accepted by the Administrative Agent before closing the loan.
iii. A review of an appraisal must include a review of the methodology and assumptions used by the appraiser in reviewing various income streams, comparable properties, and value conclusions. The appraisal review must be documented using the Appraisal Review form included as an Attachment.
iv. Lenders must review the comparable properties used for the income and market approaches to ensure that they are consistent with the property type, restricted uses and market condition. f. Date of Valuation
i. The date of the original valuation will be no more than 6 months prior to the date of the loan closing. An update is required for an appraisal dated more than 6 months prior to the loan closing; if there have been changes in market conditions.
ii. Lenders will use their judgment as to whether market conditions warrant an update. If an update is warranted, it must be issued by the original appraiser and include an updated value and valuation date. The update must state that the appraiser has re-inspected the property, comparable properties and the market area. If the property value has changed since the original valuation, the appraiser must adequately describe and document the revised value.
iii. A new Self-Contained or Summary Report appraisal of the property may be required (rather than an update) for appraisals dated more than 12 months prior to the loan closing. Lenders must determine whether market conditions warrant a new appraisal. iv. The Lender or Administrative Agent may require an updated or new appraisal when there is reason to believe the property’s value has declined since the date of the last appraisal or update.
LOAN NO. (list all) DATE: APPRAISAL REVIEW FORM
LENDER:
UNDERWRITER:
BORROWER:
PROJECT:
PROPERTY ADDRESS:
APPRAISER:
Comment here on whether the appraiser meets BLU’s appraiser requirements, and if not, why Lender is comfortable with this exception.
Appraisal Report Date Valuation Date Type of Valuation Appraised Value: Cost Approach Sales Comparison Approach Income Approach Reconciliation
General Comments: Cost and sales comp methods were used income method not used since the property will be owner occupied.
COST APPROACH:
Land: ______Building: ______Total: ______
Comments: SALES COMPARISON APPROACH:
COMPARABLE PROPERTIES
Gross Indicated Distance Date of Value Adjusted Value Address: from Subject Sale per S.F. Value/S.F. of Comp.
Subject Property N/A
Comments:
INCOME APPROACH:
Appraiser Loan Officer Scheduled Gross Income Vacancy % Effective Gross Income Operating Expenses w/o RE Taxes Real Estate Taxes Replacement Reserves Net Operating Income Capitalization Rate Indicated Value
Comments: (Include explanation of how the cap rate was derived.)
Lender’s Conclusion of Value: $
Comments: (Include explanation of how the cap rate was derived.)
Lender’s Conclusion of Value: $
K - 2 4829-2834-4907 EXHIBIT L
ENVIRONMENTAL REQUIREMENTS
A. Environmental Assessment Reports
The Fund may require an environmental assessment of properties that serve as collateral for loans. The assessment must be performed by, or supervised by, a qualified “environmental professional” as defined by 40 CFR 312.10(b). The level of assessment varies depending on the size of the loan, the age and condition of the property, and the existing and prior uses of the property.
(i) An Environmental Transaction Screen prepared in accordance with industry standards using the most recent ASTM Standard Practice E1528, Standard Practice for Environmental Site Assessments: Transaction Screen Process (currently E1528-06) may be used in situations where all of the following conditions are met:
The loan amount is less than $500,000; The Administrative Agent’s physical inspection of the site and review of any other due diligence documents (inspection report, title report identifying past owners of the site, appraisal, etc.) does not reveal or indicate the presence of any environmental hazards; and The property securing the loan is not currently being used for, nor has it ever been used for or located adjacent to a property that has been used for, any industrial use or commercial use that may have been affected by or generated recognized environmental conditions, historical REC, or other environmental conditions. The Fund’s interest in the property is only that of a secured lender, i.e. the proposed transaction is not a foreclosure or other acquisition of real estate (this level of environmental due diligence does not qualify for the landowners’ liability protections from CERCLA liability). (ii) When the conditions for a Transaction Screen are not met, the Fund requires a Phase I Environmental Site Assessment prepared in accordance within industry standards using the most recent ASTM Standard Practice E1527, Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process, (currently E1527-05). A Phase I is also performed when The Fund is planning to foreclose on a property, regardless of the size of the loan.
(iii) In addition to meeting the ASTM standards for transaction screens or environmental site assessments, report contractors should disclose if any of the following potential hazards were observed or otherwise determined to be present on the property:
ACMs including whether they are friable or damaged with the potential for presenting a health risk;
Lead Based Paint including the condition of surfaces so painted and whether children are present on site;
Mold and mildew, as observed or as reported by persons familiar with the property Other required additions to the ASTM standards scope of work include: Residential properties built prior to 1981 must be screened for the potential of ACM, including the identification of all suspect materials in accessible areas (interior and exterior) and the collection and analysis of three bulk samples from each homogeneous area of friable and damaged non-friable suspect ACM. The remaining materials are considered suspect until tested and proven otherwise. This screening approach is not a comprehensive asbestos survey, but is intended to identify the potential for an asbestos hazard in accessible areas. All residential properties in areas of high radon propensity based on a review of the U.S. Environmental Protection Agency’s (USEPA) Map of Radon Zones must be examined through the exposure and analysis of canisters using the charcoal liquid scintillation method. All residential properties constructed prior to 1978 must be examined for the presence of lead paint. A minimum of 30 Lead Check Swab colorimetric on-site tests must be collected: 10 inside apartment units, 10 outside and 10 in common areas. Analysis should be focused on chewable surfaces (5 feet and below) and on protruding surfaces. If the project consists of more than 100 units, the number of inside apartment samples should be increased to correspond to a 10 sample-per 100-unit ratio. Paint chip samples should be collected and analyzed from any paint that tested positive using the swabs. Analysis of confirmatory paint chip samples should be conducted using the Flame Atomic Absorption Spectrophotometry method. All property types must be examined for lead in drinking water, if information obtained from a municipal water provider indicates the potential for a problem. (iv) If the Phase I Assessment recommends obtaining a Phase II Environmental Site Assessment, it must be obtained and prepared in accordance with industry standards using the most recent ASTM Standard Practice E1903, Standard Guide for Environmental Site Assessments: Phase II Environmental Site Assessment Process, (currently E1903-97).
(v) If the environmental assessments provided to or on behalf of the Fund are complicated or the findings and conclusions are unclear, Lenders are encouraged to obtain reviews of the assessments, known as “desk reviews” by a qualified environmental assessment professional. In some cases, legal counsel who specialize in environmental law should be employed in order to assess the environmental risk.
(vi) Environmental assessments should meet the standards contained in 40 CFR Part 312 and ASTM E1527-05. In general, reports over one year old must be updated in their entirety and those between 180 days and one year old must be partially updated. The Lender may order the environmental assessment on behalf of the Project Borrower. If the Lender orders or causes the Phase I to be ordered, the Lender must provide to the environmental professional its knowledge of any environmental cleanup liens recorded against the property, any specialized knowledge the Lender has of environmental conditions on the property, any knowledge it has of the relationship of the property’s purchase price to the fair market value of the property were it not contaminated, and any commonly known information it has relevant to the report. The Project Borrower must provide the Lender with the funds for the assessment before it is ordered.
(vii) The Fund may accept an environmental assessment ordered and obtained by the Project Borrower or other lender, if the firm is acceptable to the Fund and if the assessment has been performed in accordance with the Fund’s standards for environmental assessments. All assessments not prepared by firms approved by the Fund will be reviewed by a qualified environmental professional engaged by the Fund.
B. Standards for Environmental Assessment Firms
(i) Environmental assessments must be performed or supervised by an Environmental Professional (EP) as defined by 40 CFR 312.10 (b). These include the requirements that the EP hold a current state Professional Engineer’s or Professional Geologist’s license or registration or be licensed by the state to perform environmental inquiries (see 40 CFR 312.21) and have the equivalent of 3 years of full-time relevant experience; or have a Bachelor’s degree or higher from an accredited college or university in an engineering or science discipline and 5 years of full time relevant experience; or have 10 years of full time relevant experience. Environmental Professionals must also meet the licensing requirements of the state in which the property is located. If the firm preparing the assessment is not known to the Fund, the Lender must obtain resumes of key principals and letters of reference attesting to the assessor’s prior work. At least one of the references must be from an institutional lender.
(ii) The assessor must not be affiliated with the Project Borrower, or a buyer or seller of the property, or have any other conflict of interest.
EXHIBIT M
LOAN COMMITMENT LETTER
DATE
BORROWER TITLE ADDRESS CSZ
Subject: Commitment Letter for a Loan
Regarding: Proposed ______Loan for ______, Borrower
Dear______:
Utah Small Business Growth Initiative, LLC, a Utah limited liability company d/b/a Business Loans of Utah (“BLU”), is pleased to inform you that based upon your representations, application and information provided to us, BLU has approved a ______loan (hereafter Loan) made by BLU (hereafter Lender) to ______, a Utah ______(the Borrower). This letter does not set forth all the terms and conditions of the Loan. Rather, it is only an outline, in summary format, of the major points of understanding which will be the basis of the final Loan. This commitment to fund will expire if not accepted by the Borrower within thirty (30) days from the date of this letter, unless a written extension is granted by BLU. Furthermore, this Commitment Letter will expire within one hundred twenty (120) days of the date of this letter if the Loan Documents are not fully executed and the Loan is not closed, unless a written extension of time is granted by BLU.
The basic terms and conditions of the proposed Participation include:
Loan Terms. The following general Loan Terms will be included in the Loan Documents:
The Loan is for a principal amount of up to ______Dollars ($______) a for a term of ___ months.
Business Loans of Utah - Exhibit M 2 Revised 8/2017
The interest rate is a [ ] fixed [ ] variable rate calculated and adjusted as set forth in the Loan Documents.
The Loan proceeds are to be used by the Borrower only for the following purposes: ______.
All disbursements of the Loan proceeds are to be calculated based on the conditions set forth in the Loan Documents:
Borrower shall pay BLU loan fees of $______(______Dollars) as an origination fee approving the Loan. The loan fees are payable to BLU at the time the Loan Documents are signed.
The Collateral and security for the loan are listed below.
Personal Guarantees from ______executed by each in his and her individual capacities (hereafter Guarantors).
The following insurance policies, which must be kept in effect:
Evidence and certificate of comprehensive casualty and general liability coverage insurance coverage in full force and effect for all of the Collateral with loss payable endorsements to the Lender.
UCC Financing Statement filed with the Utah Department of Commerce and each other filing required by law to perfect and evidence the required priority security interest in all Collateral. BLU shall have the right to rely on Lender's perfection of the security interests required herein.
A ______priority Deed of Trust (herein Deed of Trust) on real property at: ______(herein Property), properly executed and recorded on the Property.
Assignment of rents and lease.
Assignment of all contracts.
First security interest in all FF&E acquired with the loan proceeds and project intangibles (rents, insurance proceeds, eminent domain).
Business Loans of Utah - Exhibit M 3 Revised 8/2017
Financial Reporting of Borrower. The Loan Documents shall require Borrower to submit the following:
On an annual basis, a copy of Borrower's federal income tax return within 30 days of the filing due date.
On an annual basis, a copy of the Guarantors’ federal income tax return within 30 days of the filing due date and a current financial statement.
Within ____ days of the Borrower's fiscal year end, internally prepared financial statements of the Borrower.
Within ____ days of the end of each ______, internally prepared financial statements of the Borrower.
Within ____ days of the end of each ______, internally prepared report as may be requested by Lenders.
Conditions Precedent. The proposed loan will be subject to fulfillment of BLU terms and conditions including, but not limited to the following:
3.1 ______
3.2 ______
3.3 ______
3.4 ______
Additional Loan Covenants. Additional Loan Covenants to include the following:
______
______
Miscellaneous.
This Commitment Letter does not obligate BLU or the Fund to fund a loan beyond the terms as described herein. It is mutually understood and agreed that this Commitment Letter represents the entire understanding between the Borrower and BLU regarding the terms applicable to the Loan and that no oral representations or inducements regarding the terms applicable to the Loan that are not included or embodied in this Commitment Letter shall be of any force and effect.
The Loan shall be fundable only upon satisfaction of each term and condition of this Commitment Letter and the Loan Documents, provided, however, that BLU shall not be required to fund the Loan pursuant to this Commitment Letter if the Loan would be contrary to applicable state and/or federal law or in the event of a material adverse change in the condition of Borrower or any guarantor. This Commitment Letter is further
Business Loans of Utah - Exhibit M 4 Revised 8/2017
conditioned upon there being no (i) material adverse change in the Borrower’s financial condition between the date hereof and the date on which the Loan Documents have been signed by all parties, and (ii) no material misstatement in any information provided to us in connection with the Loan.
This Commitment Letter expresses, embodies, and supersedes any previous understandings, agreements, or promises (whether oral or written) with respect to the Loan and the Participation. This Commitment Letter represents the final expression of the agreement between the parties. The terms of this Commitment Letter may not be contradicted by any understanding not included in this Commitment Letter. An amendment of this Commitment Letter may occur only in writing, signed by the party to be charged. The terms and conditions of this Commitment Letter imposing obligations upon the Lender shall survive the expiration of same and shall continue until the Loan is paid in full.
If the foregoing terms and conditions are acceptable to you, please accept by dating and signing the enclosed copy of this Commitment Letter in the place provided below and returning it to BLU.
Lender’s execution of this Commitment Letter will confirm Lender’s acceptance of the terms and conditions of this Commitment Letter. Please sign and date and return this original Commitment Letter to:
______(Loan Officer) Utah Small Business Growth Initiative, LLC d/b/a Business Loans of Utah 6880 South 700 West, 2nd Floor Midvale, Utah 84047
Each person signing on behalf of Borrower and BLU warrant that they are authorized to sign on behalf of the organization they represent and bind that organization to the specific performance of the above terms and conditions.
Signed this ____ day of ______, 2017. Signed this ____ day of ______, 2017.
UTAH SMALL BUSINESS GROWTH INITIATIVE, LLC, a Utah limited liability Company d/b/a BUSINESS LOANS OF UTAH
By: By: Name: Name: Title: Title: Address: Address:
Business Loans of Utah - Exhibit M 5 Revised 8/2017 EXHIBIT N
INSURANCE REQUIREMENTS
1. General Requirements
a. An Insurance Binder must be provided at loan closing.
b. At loan closing, or no more than thirty (30) days following closing, a copy of the complete insurance policy must be provided.
c. Borrower’s insurance carrier must be acceptable to Utah Small Business Growth Initiative, LLC d/b/a Business Loans of Utah (BLU) and its A.M. Best Rating must be rated A- or better.
2. Certificate of Liability Insurance
a. In the amounts of $1,000,000 per occurrence and $2,000,000 aggregate.
b. $3,000,000 per occurrence and $5,000,000 general aggregate for elevator buildings.
c. Provided on an Acord 25 Certificate of Insurance.
d. USBGI, and its successors and/or assigns, must be named as Additional Insured.
e. Certificate must be accompanied by Endorsement CG 20 26 naming BLU as Additional Insured.
f. The certificate must provide for thirty (30) days prior written notice to BLU of cancellation or expiration of the policy.
g. If a property is self-managed by the Borrower, Fidelity Bond/Employee Dishonesty Coverage is required in an amount equal to 2 months projected gross revenue.
NOTE: Loans for child care or charter school facilities, abuse and molestation insurance is also required.
3. Evidence of Directors and Officers Coverage
In an amount of no less than $1,000,000.
4. Evidence of Property Insurance – Property Description or Address
a. Insured amount - full replacement value. b. Provided on Acord 27 Evidence of Property Insurance form.
c. Name BLU, and its successors and/or assigns, as both mortgagee and loss payee.
d. Must be accompanied by a CP12 18 Loss Payable endorsement.
e. Cancellation clause should read "The policy is subject to the premiums, forms, and rules in effect for each policy period. Should the policy be terminated, the Company will give the additional interest identified below thirty (30) days written notice, and will send notification of any changes to the policy that would affect that interest, in accordance with the policy provisions or as required by law."
f. When specifically requested, insurance must also include endorsements for loss of rental income or business interruption of one year's scheduled gross income or loss of use of the facility for a minimum of one year.
g. If the property contains a boiler or steam vessel, Boiler and Machinery Coverage is required for 100% replacement value.
h. Deductible must be $10,000 or less.
i. Flood Certificate is required for all loans. Flood insurance is required if structure falls in a Flood Zone beginning with “A” or “V”.
5. Construction Loans
a. Builder’s Risk
i. Builder’s Risk coverage is required for all loans where construction/rehab exceeds $100,000.
ii. Builder’s Risk is provided on an Acord 27 Evidence of Property Insurance.
iii. All other property insurance requirements are required.
b. General Contractor
i. General Contractors must have comprehensive general liability (including automobile liability) of no less than $5,000,000 ($10,000,000 minimum for loans of $10 million or higher).
ii. Borrower and BLU must be named as additional insured.
iii. Workers’ compensation insurance must meet statutory benefits based on state law. EXHIBIT O
CREDIT MEMORANDUM
(attached)
Business Loans of Utah – Exhibit O Revised 8/2017
Loan Summary Date: Loan Officer: Conforming Loan: [ ] Yes [ ] No Risk Rating: Borrowing Entity: Tax ID: Principals: Guarantors:
Project Location: Project Description:
Loan Purpose: BLU Loan Terms: Amount DSCR Terms LTC LTV Total Loan Amount: Total Equity Total Costs: Rate: Term: Fee: Subordinate Debt: Primary Repayment Source: Secondary: Collateral: Appraisal: Appraiser: Date of Report: Unrestricted Value: Restricted Value: Conditions Precedent:
Exceptions:
Business Loans of Utah – Exhibit O Revised 8/2017 CREDIT PRESENTATION Synopsis:
Borrower Strengths
Borrower Weaknesses
Recommendation I recommend approval of the loan as presented.
Purpose:
Loan Terms:
Loan Amount: $
Interest Rate:
Term:
Extension Option:
Loan Fees:
Payments:
Penalty Clause:
Repayment:
Primary Source of Repayment:
Secondary Source of Repayment:
Tertiary Source of Repayment:
Business Loans of Utah – Exhibit O Revised 8/2017 Collateral Analysis – Real Estate
Address:
Frontage:
Accessibility:
Zoning:
Easements:
Improvements:
Surrounding:
Other:
Collateral Analysis – Other (e.g., Equipment, Vehicles, Inventory, etc.)
Environmental:
Cost Analysis/Sources & Uses:
Uses: Loan Equity Total
Total Uses
Sources: LTC LTV % % % % Total Sources %
Appraised Value: LTV: %
Business Loans of Utah – Exhibit O Revised 8/2017 Project Economics:
Appraisal Analysis:
Feasibility:
Market Conditions:
Supply:
Demand:
Borrower:
Financial Analysis:
Guarantors:
Guarantor Analysis:
Business Loans of Utah – Exhibit O Revised 8/2017
EXHIBIT P
FORM OF CLASS A LENDER JOINDER AGREEMENT
(attached)
P - 1 4829-2834-4907
EXHIBIT Q
FORM OF CLASS B LENDER JOINDER AGREEMENT
(attached)
Q - 1 4829-2834-4907
COLLATERAL DESCRIPTION FOR UCC-1 FINANCING STATEMENT
DEBTOR: /______
The following is the description of the Collateral for the loan to the above debtor from Utah Small Business Growth Initiative, LLC, a Utah limited liability company, dba Business Loans of Utah, to be used in filing the UCC-1 Financing Statement electronically with the /Utah Department of Commerce for the State of Utah:
ALL OF DEBTOR’S RIGHTS, TITLES AND INTERESTS WHETHER NOW OWNED OR HEREAFTER ACQUIRED IN: ACCESSIONS; DEPOSIT ACCOUNTS; ACCOUNTS; AS-EXTRACTED COLLATERAL; CHATTEL PAPER; DOCUMENTS; EQUIPMENT; FIXTURES; FURNITURE; GENERAL INTANGIBLES; GOODS; INSTRUMENTS; INVENTORY; LEASES; RENTS; SUBLEASES; LETTER-OF-CREDIT RIGHTS; MINERALS; REPORTS; RECORDS; SOFTWARE; WATER RIGHTS; WATER SHARES; PLUS ALL PROCEEDS AND PRODUCTS OF THE FOREGOING.
[DETERMINE IF THERE IS ANY ADDITIONAL COLLATERAL TO BE IDENTIFIED]
4836-4465-5439 SECURITY AGREEMENT
This Security Agreement (the “Security Agreement”) is made between /, a / (“Borrower”), and Utah Small Business Growth Initiative, LLC, a Utah limited liability company, dba Business Loans of Utah (“Lender”), pursuant to a Loan Agreement, dated /, between Borrower, Lender and /, as Guarantors (the “Loan Agreement”).
For good and valuable consideration, receipt of which is hereby acknowledged, Borrower and Lender hereby agree as follows:
1. Definitions. Except as otherwise provided herein, terms defined in the Loan Agreement shall have the same meanings when used herein. Terms defined in the singular shall have the same meaning when used in the plural and vice versa. Terms defined in the Uniform Commercial Code as adopted now or in the future in the State of Utah which are used herein shall have the meanings set forth in the Utah Uniform Commercial Code, except as expressly defined otherwise. However, if a term is defined in Article 9 of the Uniform Commercial Code of the State of Utah differently than in another Article of the Uniform Commercial Code of the State of Utah, the term has the meaning specified in Article 9. As used herein, the term:
“Collateral” means the collateral described in Section 2, Grant of Security Interest, below.
“Default Rate” means the default interest rate provided in the Note or the Loan Agreement.
“Liquidation Costs” means the reasonable costs and out of pocket expenses incurred by Lender in obtaining possession of any Collateral, in storage and preparation for sale, lease or other disposition of any Collateral, in the sale, lease, or other disposition of any or all of the Collateral, and/or otherwise incurred in foreclosing on any of the Collateral, including, without limitation, (a) reasonable attorneys fees and legal expenses, (b) transportation and storage costs, (c) advertising costs, (d) sale commissions, (e) sales tax and license fees, (f) costs for improving or repairing any of the Collateral, and (g) costs for preservation and protection of any of the Collateral.
“Note” means the / Note of Borrower in favor of Lender dated / (the “Note”), in the original principal amount of /______Dollars (/$______).
“Permitted Encumbrances” means Liens permitted under the Loan Agreement and security interests and liens authorized in writing by Lender.
“Security Agreement Default” has the meaning given it in Section 9 hereof.
2. Grant of Security Interest. Borrower hereby grants to Lender a security interest in all personal property of Borrower, wherever located, now owned or hereafter acquired or created, including, without limitation, the following (the “Collateral”): 4833-2562-0815
a. All inventory as defined in the Uniform Commercial Code, wherever located, all goods, merchandise or other personal property held for sale or lease, names or marks affixed thereto for purposes of selling or identifying the same or the seller or manufacturer thereof and all related rights, title and interest, all raw materials, work or goods in process or materials or supplies of every nature used, consumed or to be used in Borrower’s business, all packaging and shipping materials, and all other goods customarily or for accounting purposes classified as inventory, of Borrower, now owned or hereafter acquired or created, all proceeds and products of the foregoing and all additions and accessions to, replacements of, insurance or condemnation proceeds of, and documents covering any of the foregoing, all leases of any of the foregoing, and all rents, revenues, issues, profits and proceeds arising from the sale, lease, license, encumbrance, collection, or any other temporary or permanent disposition of any of the foregoing or any interest therein (collectively, the “Inventory”).
b. All accounts as defined in the Uniform Commercial Code (including health-care-insurance receivables), accounts receivable, amounts owing to Borrower under any rental agreement or lease, payments on construction contracts, promissory notes or on any other indebtedness, any rights to payment customarily or for accounting purposes classified as accounts receivable, and all rights to payment, proceeds or distributions under any contract, of Borrower, presently existing or hereafter created, and all proceeds thereof (collectively, the “Accounts”).
c. All equipment and goods as defined in the Uniform Commercial Code, all motor vehicles, including all tires, accessories, spare and repair parts, and tools, wherever located, and all related right, title and interest, of Borrower, now owned or hereafter acquired or created, all proceeds and products of the foregoing and all additions and accessions to, replacements of, insurance or condemnation proceeds of, and documents covering any of the foregoing, all leases of any of the foregoing, and all rents, revenues, issues, profits and proceeds arising from the sale, lease, license, encumbrance, collection, or any other temporary or permanent disposition of any of the foregoing or any interest therein (collectively, the “Equipment”).
d. All general intangibles as defined in the Uniform Commercial Code, choses in action, proceeds, contracts, distributions, dividends, refunds, security deposits, judgments, insurance claims, any right to payment of any nature, intellectual property rights or licenses, payment intangibles, licenses, tax refunds, any other rights or assets of Borrower customarily or for accounting purposes classified as general intangibles, and all documentation and supporting information related to any of the foregoing, all rents, profits and issues thereof, and all proceeds thereof.
e. All of the following (collectively, “Financial Obligations Collateral”):
i. Any and all promissory notes and instruments payable to or owing to Borrower or held by Borrower, whether now existing or hereafter created (collectively, the “Promissory Notes”);
4833-2562-0815 ii. Any and all leases under which Borrower is the lessor, whether now existing or hereafter created (collectively, the “Leases”);
iii. Any and all chattel paper (as defined in the Uniform Commercial Code) (whether tangible or electronic) in favor of, owing to, or held by Borrower, including, without limitation, any and all conditional sale contracts or other sales agreements, whether Borrower is the original party or the assignee, whether now existing or hereafter created (collectively, the “Chattel Paper”);
iv. Any and all security agreements, collateral and titles to motor vehicles which secure any of the foregoing obligations, whether now existing or hereafter created (collectively, the “Security Agreements Collateral”); and
v. All amendments, modifications, renewals, extensions, replacements, additions, and accessions to the foregoing and all proceeds thereof.
f. All deposit accounts (as defined in the Uniform Commercial Code), including without limitation, all deposit accounts, checking accounts, savings accounts, money market accounts, certificates of deposit, depositary accounts, balances, reserves, deposits, debts or any other amounts or obligations of Lender owing to Borrower, including, without limitation, all interest, dividends or distributions accrued or to accrue thereon, whether or not due, now existing or hereafter arising or created, and all proceeds thereof.
g. All investment property (as defined in the Uniform Commercial Code), all interest, dividends or distributions accrued or to accrue thereon, whether or not due, now existing or hereafter arising or created, and all proceeds thereof.
h. All documents (as defined in the Uniform Commercial Code), all amendments, modifications, renewals, extensions, replacements, additions, and accessions thereto, and all proceeds thereof.
i. All letter of credit rights (as defined in the Uniform Commercial Code) (whether or not the letter of credit is evidenced by a writing), all amendments, modifications, renewals, extensions, replacements, additions, and accessions thereto, and all proceeds thereof.
j. All supporting obligations (as defined in the Uniform Commercial Code), all amendments, modifications, renewals, extensions, replacements, additions, and accessions thereto, and all proceeds thereof.
k. All of the following (collectively, “Intellectual Property”):
i. All right, title and interest of Borrower in and to patent applications and patents, including, without limitation, all proceeds thereof (such as, by way of example, license royalties and proceeds of infringement suits), the right to sue for past, present and future infringements, all rights corresponding thereto throughout the world, and all reissues,
4833-2562-0815 divisions, continuations, renewals, extensions, and continuations-in-part thereof (collectively, the “Patents”);
ii. All right, title and interest of Borrower in and to trademark applications and trademarks, including, without limitation, all renewals thereof, all proceeds thereof (such as, by way of example, license royalties and proceeds of infringement suits), the right to sue for past, present and future infringements, and all rights corresponding thereto throughout the world (collectively, the “Trademarks”), and the good will of the business to which each of the Trademarks relates, but excluding any application for registration of any trademark or service mark that would be invalidated, canceled, voided or abandoned due to the grant and/or enforcement of an assignment or security interest (including intent-to-use applications filed with the United States Patent & Trademark Office pursuant to 15 U.S.C. Section 1051 prior to the filing of a statement of use or amendment to allege use under 15 U.S.C. 1051 (c) or (d)), provided that at such time as the grant and/or enforcement of the assignment or security interest would not cause such application to be invalidated, canceled, voided or abandoned, then the same shall automatically be included as part of the collateral;
iii. All copyrights of Borrower and all rights and interests of every kind of Borrower in copyrights and works protectible by copyright, whether now owned or hereafter acquired or created, and all renewals and extensions thereof, and in and to the copyrights and rights and interests of every kind or nature in and to all works based upon, incorporated in, derived from, incorporating or relating to any of the foregoing or from which any of the foregoing is derived, and all proceeds thereof (such as, by way of example, license royalties and proceeds of infringement suits), the right to sue for past, present and future infringements, and all rights corresponding thereto throughout the world (collectively, the “Copyrights”);
iv. All of Borrower’s trade secrets and other proprietary information, now existing or created in the future, and all proceeds thereof (collectively, the “Trade Secrets”);
v. All right, title, and interest of Borrower in, to and under license agreements and contracts concerning Patents, Trademarks, Copyrights, and Trade Secrets now existing or created in the future, all amendments, modifications, and replacements thereof, all royalties and other amounts owing thereunder, and all proceeds thereof (collectively, the “Licenses”); and
vi. All internet domain names and addresses of Borrower now existing or created in the future, and all proceeds thereof.
l. /[DESCRIBE ANY COMMERCIAL TORT CLAIM WHICH IS COLLATERAL.]
Borrower and Lender acknowledge their mutual intent that all security interests contemplated herein are given as a contemporaneous exchange for new value to Borrower, regardless of when advances to Borrower are actually made or when the Collateral is acquired.
4833-2562-0815 (a) Debts Secured. The security interest granted by this Security Agreement shall secure all of Borrower’s present and future debts, obligations, and liabilities of whatever nature to Lender, including, without limitation the Note, and all renewals, extensions, modifications and replacements thereof (including any which increase the original principal amount), /[if additional promissory notes], all obligations of Borrower arising from or relating to the Loan Documents, including, without limitation, this Security Agreement, advances of the same kind and quality or relating to this transaction, transactions in which the documents evidencing the indebtedness refer to this grant of security interest as providing security therefor, and all overdrafts on any account of Borrower maintained with Lender, now existing or hereafter arising.
Borrower and Lender expressly acknowledge their mutual intent that the security interest created by this Security Agreement secure any and all present and future debts, obligations, and liabilities of Borrower to Lender without any limitation whatsoever.
3. Authorization to File Financing Statements. Borrower hereby irrevocably authorizes Lender at any time and from time to time to file in any filing office in any Uniform Commercial Code jurisdiction any initial financing statements and amendments thereto that (a) indicate the Collateral (i) as all assets of Borrower or words of similar effect, regardless of whether any particular asset comprised in the Collateral falls within the scope of Article 9 of the Uniform Commercial Code of such jurisdiction, or (ii) as being of an equal or lesser scope or with greater detail, and (b) provide any other information required by part 5 of Article 9 of the Uniform Commercial Code of the State of Utah, or such other jurisdiction, for the sufficiency or filing office acceptance of any financing statement or amendment, including (i) whether Borrower is an organization, the type of organization and any organizational identification number issued to Borrower and, (ii) in the case of a financing statement filed as a fixture filing or indicating Collateral as as-extracted collateral or timber to be cut, a sufficient description of real property to which the Collateral relates. Borrower agrees to furnish any such information to Lender promptly upon Lender’s request. /[Borrower also ratifies its authorization for Lender to have filed in any Uniform Commercial Code jurisdiction any like initial financing statements or amendments thereto if filed prior to the date hereof.]
4. Borrower’s State of Organization. Borrower represents and warrants that Borrower is a /______organized and existing under the laws of the State of /______, and that Borrower has not at any time within the last five (5) years changed its state of organization. Borrower shall not change its state of organization without giving Lender at least thirty (30) days prior written notice thereof.
5. Representations and Warranties Concerning Collateral. Borrower represents and warrants that:
a. Borrower is the sole owner of the Collateral.
b. The Collateral is not subject to any security interest, lien, prior assignment, or other encumbrance of any nature whatsoever except Permitted Encumbrances.
4833-2562-0815 c. The Accounts are each a bona fide obligation of the obligor identified therein for the amount identified in the records of Borrower, except for normal and customary disputes which arise in the ordinary course of business and which do not affect a material portion of the Accounts.
d. To the best knowledge of Borrower, there are no defenses or setoffs to payment of the Accounts which can be asserted by way of defense or counterclaim against Borrower or Lender, except for normal and customary disputes which arise in the ordinary course of business and which do not affect a material portion of the Accounts.
e. There is presently no default or delinquency in any payment of the Accounts except for any default or delinquency which has been reserved against by Borrower in accordance with generally accepted accounting principles and, except for normal and customary disputes which arise in the ordinary course of business and which do not affect a material portion of the Accounts.
f. Borrower has no knowledge of any fact or circumstance which would materially impair the ability of any obligor on the Accounts to timely perform its obligations thereunder, except those which arise in the ordinary course of business and which do not affect a material portion of the Accounts.
g. Any services performed or goods sold giving rise to the Accounts have been rendered or sold in compliance with applicable laws, ordinances, rules, and regulations and in the ordinary course of Borrower’s business.
h. There have been no extensions, modifications, or other agreements relating to payment of the Accounts, except those granted in the ordinary course of business and which do not affect a material portion of the Accounts.
i. The Promissory Notes, Leases, Chattel Paper, and Security Agreements Collateral are bona fide obligations of the obligors identified therein for the amount identified therein or as otherwise disclosed in writing to Lender by Borrower, except for normal and customary disputes which arise in the ordinary course of business and which do not affect a material portion of such obligations.
j. To the best knowledge of Borrower, there are no defenses or setoffs to payment of the Promissory Notes, Leases, Chattel Paper, and Security Agreements Collateral which can be asserted by way of defense or counterclaim against Borrower or Lender, except for normal and customary disputes which arise in the ordinary course of business and which do not affect a material portion of such obligations.
k. There is presently no default or delinquency in any payment of the Promissory Notes, Leases, Chattel Paper, and Security Agreements Collateral, except for normal and customary disputes which arise in the ordinary course of business and which do not affect a material portion of such obligations.
4833-2562-0815 l. Borrower has no knowledge of any fact or circumstance which would materially impair the ability of any obligor on the Promissory Notes, Leases, Chattel Paper, and Security Agreements Collateral to timely perform its obligations thereunder, except those which arise in the ordinary course of business and which do not affect a material portion of such obligations.
m. Any services performed or goods sold giving rise to the Promissory Notes, Leases, Chattel Paper, and Security Agreements Collateral have been rendered or sold in compliance with applicable laws, ordinances, rules, and regulations.
n. There have been no extensions, modifications, or other agreements relating to payment of the Promissory Notes, Leases, Chattel Paper, and Security Agreements Collateral except as shown upon the face thereof or as otherwise disclosed in writing to Lender by Borrower, except those granted in the ordinary course of business and which do not affect a material portion of such obligations.
6. Covenants Concerning Collateral. Borrower covenants that:
a. Borrower will keep the Collateral free and clear of any and all security interests, liens, assignments or other encumbrances, except Permitted Encumbrances.
b. Borrower will execute and deliver any applications for certificates of title, certificates of title, and other documents (properly endorsed, if necessary) reasonably requested by Lender for perfection or enforcement of any security interest or lien, and to give good faith, diligent cooperation to Lender, and to perform such other acts reasonably requested by Lender for perfection and enforcement of any security interest or lien created hereunder, including, without limitation, obtaining control for purposes of perfection with respect to Collateral consisting of deposit accounts, investment property, letter-of-credit rights, and electronic chattel paper. Lender is authorized to file, record, or otherwise utilize such documents as it deems necessary to perfect and/or enforce any security interest or lien granted hereunder.
c. Borrower will keep the Equipment in good repair, ordinary wear and tear and obsolescence excepted. Borrower will pay when due all taxes, license fees and other charges on the Equipment. Borrower will not sell, misuse, conceal, or in any way dispose of the Equipment or permit it to be used unlawfully or for hire or contrary to the provisions of any insurance coverage. Risk of loss of the Equipment shall be on Borrower at all times unless Lender takes possession of the Equipment. Loss of or damage to the Equipment or any part thereof will not release Borrower from any of the obligations secured by the Equipment. Lender or its representatives may, at any time and from time to time upon reasonable notice to Borrower, enter any premises owned or leased by Borrower where the Equipment is located and inspect, audit and check the Equipment.
d. Borrower shall insure the Equipment, at Borrower’s expense, against loss, damage, theft, and such other risks as Lender may reasonably request to the full insurable value thereof with insurance companies and policies reasonably satisfactory to Lender. Proceeds from such insurance shall be payable to Lender as its interest may appear and such policies shall
4833-2562-0815 provide for a minimum ten days written cancellation notice to Lender. Upon request, policies or certificates attesting to such coverage shall be delivered to Lender. Insurance proceeds may be applied by Lender toward payment of any obligation secured by this Security Agreement, whether or not due, in such order of application as Lender may elect.
e. Borrower will insure the Inventory, at Borrower’s expense, against loss, damage, theft, and such other risks as Lender may request to the full insurable value thereof with insurance companies and policies reasonably satisfactory to Lender. Proceeds from such insurance shall be payable to Lender as its interest may appear and such policies shall provide for a minimum ten days written cancellation notice to Lender. Upon request, policies or certificates attesting to such coverage shall be delivered to Lender. Insurance proceeds may be applied by Lender toward payment of any obligation secured by this Security Agreement, whether or not due, in such order of application as Lender may elect.
f. Borrower will submit to Lender reports as to the Inventory and the Accounts at such times and in such form as Lender may reasonably request. Borrower will at all times keep accurate and complete records of the Inventory and the Accounts. Lender or its representatives may, at any time and from time to time, enter any premises where the Inventory and the records pertaining to the Accounts are located and inspect, audit, check, copy, and otherwise review the Inventory and the Accounts.
g. So long as no Security Agreement Default has occurred and is continuing, Borrower will have the right to sell or otherwise dispose of the Inventory in the ordinary course of business. No other disposition of the Inventory may be made without the prior written consent of Lender.
h. All proceeds from the sale or other disposition of the Inventory and Accounts and all collections and other proceeds therefrom shall, at Lender’s request, be deposited into an account designated by Lender (the “Cash Collateral Account”), which account shall be under the sole and exclusive control of Lender. Such proceeds and collections shall not be commingled with any other funds and shall be promptly and directly deposited into such account in the form in which received by Borrower. Such proceeds and collections shall not be deposited in any other account and such Cash Collateral Account shall contain no funds other than such proceeds and collections. All or any portion of the funds on deposit in such Cash Collateral Account may, in the sole discretion of Lender, be applied from time to time as Lender elects to payment of obligations secured by this Security Agreement or Lender may elect to turn over to Borrower, from time to time, all or any portion of said funds.
i. Borrower will use diligent and good faith efforts to collect the Accounts. Borrower is authorized to collect the Accounts in a commercially reasonable manner. Lender, in its sole discretion, may terminate such authority whereupon Lender is authorized by Borrower, without further act, to notify any and all account debtors to make payment thereon directly to Lender, and to take possession of all proceeds from the Accounts, and to take any action which Borrower might or could take to collect the Accounts, including the right to make any compromise, discharge, or extension of the Accounts. Upon request of Lender, Borrower will execute and deliver notices to Borrower’s account debtors instructing such account debtors to
4833-2562-0815 pay Lender and to execute and deliver to Borrower’s account debtors similar documents reasonably requested by Lender to facilitate collection of the Accounts. Borrower authorizes Lender to deliver copies of such notices and similar documents to such account debtors.
j. All costs of collection of the Accounts, including attorneys fees and legal expenses, shall be borne solely by Borrower, whether such costs are incurred by or for Borrower or Lender. In the event Lender elects to undertake direct collection of the Accounts, Borrower will deliver to Lender, if so requested, all books, records, and documents in Borrower’s possession or under its control as may relate to the Accounts or as may be helpful to facilitate such collection. Lender will have no obligation to cause an attorneys demand letter to be sent, to file any lawsuit, or to take any other legal action in collection of the Accounts. It is agreed that collection of the Accounts in a commercially reasonable manner does not require that any such legal action be taken.
k. Borrower does hereby make, constitute, and appoint Lender and its designees as Borrower’s true and lawful attorney in fact, with full power of substitution, such power to be exercised in the following manner: (1) Lender may receive and open all mail addressed to Borrower and remove therefrom any cash, notes, checks, acceptances, drafts, money orders or other instruments in payment of the Accounts; (2) Lender may cause mail relating to the Inventory and Accounts to be delivered to a designated address of Lender where Lender may open all such mail and remove therefrom any cash, notes, checks, acceptances, drafts, money orders, or other instruments in payment of the Accounts; (3) Lender may endorse Borrower’s name upon such notes, checks, acceptances, drafts, money orders, or other forms of payment; (4) Lender may settle or adjust disputes or claims in respect to the Accounts for amounts and upon such terms as Lender, in its sole discretion and in good faith, deems to be advisable, in such case crediting Borrower with only the proceeds received and collected by Lender after deduction of Lender’s costs, including reasonable attorneys fees and legal expenses; and (5) Lender may do any and all other things necessary or proper to carry out the intent of this Security Agreement and to perfect and protect the liens and rights of Lender created under this Security Agreement.
l. Borrower will use diligent and good faith efforts to collect the Promissory Notes, Leases, Chattel Paper, and Security Agreements Collateral. Borrower is authorized to collect that Collateral in a commercially reasonable manner. Upon written notice by Lender to Borrower, Lender may at any time terminate such authority. Upon such termination, Lender is authorized by Borrower, without further act, to notify any and all obligors on that Collateral to make payment thereon directly to Lender, to take possession of all proceeds from any such payments, and to take any action which Borrower might or could take to collect that Collateral, including the right to make any compromise, discharge or extension of that Collateral. Lender may exercise such collection rights at any time, whether or not a Security Agreement Default has occurred or is continuing. Upon request of Lender, Borrower will execute and deliver notices to the obligors on such Collateral instructing such obligors to pay Lender and to execute and deliver to Borrower’s account debtors similar documents reasonably requested by Lender to facilitate collection of the Accounts. Borrower authorizes Lender to deliver copies of such notices and similar documents to such obligors.
4833-2562-0815 Borrower hereby irrevocably makes, constitutes, and appoints Lender and its designees as Borrower’s true and lawful attorney in fact, with full power of substitution, to endorse Borrower’s name upon checks, drafts, money orders, or other forms of payment of the Promissory Notes, Leases, Chattel Paper, and Security Agreements Collateral or on any other documents relating to collection of that Collateral.
All costs of collection of the Promissory Notes, Leases, Chattel Paper, and Security Agreements Collateral, including attorneys fees and legal expenses, will be borne solely by Borrower, whether such costs are incurred by or for Borrower or Lender. In the event Lender elects to undertake direct collection of that Collateral pursuant to the terms of this Security Agreement, Borrower agrees to deliver to Lender, upon request, all books, records, and documents in Borrower’s possession or under its control as may relate to that Collateral or as may be helpful to facilitate such collection.
m. Immediately upon execution of this Security Agreement, Borrower will deliver to Lender all Promissory Notes and Chattel Paper. Upon creation of any Promissory Notes or Chattel Paper in the future, immediately upon creation Borrower will deliver the Promissory Notes and Chattel Paper to Lender.
n. Borrower will, immediately upon obtaining knowledge thereof, report to Lender in writing any default on any item of Promissory Notes, Leases, Chattel Paper, and Security Agreements Collateral, any material claim or dispute asserted by any obligor on any item of that Collateral, and any other material matters that may affect the value, enforceability or collectability of any of that Collateral.
o. Borrower will not, without Lender’s written consent, make any material settlement, compromise or adjustment of any item of Promissory Notes, Leases, Chattel Paper, and Security Agreements Collateral or grant any material discounts, extensions, allowances or credits thereon.
p. Borrower will at all times keep accurate and complete records as to the Promissory Notes, Leases, Chattel Paper, and Security Agreements Collateral and payments thereon and will allow Lender or its representatives, at any time and from time to time upon reasonable notice to Borrower, to inspect, audit, check, copy and otherwise review those records.
7. Right to Perform for Borrower. Lender may, in its sole discretion and without any duty to do so, elect to discharge taxes, tax liens, security interests, or any other encumbrance upon the Collateral, perform any duty or obligation of Borrower, pay filing, recording, insurance and other charges payable by Borrower, or provide insurance as provided herein if Borrower fails to do so. Any such payments advanced by Lender shall be repaid by Borrower upon demand, together with interest thereon from the date of the advance until repaid, both before and after judgment, at the Default Rate.
8. Default. Time is of the essence of this Security Agreement. The occurrence of any of the following events shall constitute a “Security Agreement Default” under this Security Agreement:
4833-2562-0815
a. Any representation or warranty made by Borrower in this Security Agreement is materially false or materially misleading when made;
b. Borrower fails in the payment or performance of any obligation, covenant, agreement or liability created by or arising from or related to this Security Agreement and the same is not cured within the cure periods set forth in the Loan Documents;
c. A significant number of the Accounts or a significant amount owing on the Accounts becomes delinquent or uncollectible; or
d. An Event of Default occurs.
No course of dealing or any delay or failure to assert any Security Agreement Default shall constitute a waiver of that Security Agreement Default or of any prior or subsequent Security Agreement Default.
9. Remedies. Upon the occurrence of any Security Agreement Default, Lender shall have the following rights and remedies, in addition to all other rights and remedies existing at law, in equity, or by statute or provided in the Loan Documents:
a. Lender shall have all the rights and remedies available under the Uniform Commercial Code;
b. Lender shall have the right to enter upon any premises leased or owned by Borrower where the Collateral or records relating thereto may be and take possession of the Collateral and such records;
c. Upon request of Lender, Borrower shall, at the expense of Borrower, assemble the Collateral and records relating thereto at a place designated by Lender and tender the Collateral and such records to Lender;
d. Without notice to Borrower, Lender may obtain the appointment of a receiver of the business, property and assets of Borrower and Borrower hereby consents to the appointment of Lender or such person as Lender may designate as such receiver; and
e. Lender may sell, lease or otherwise dispose of any or all of the Collateral and, after deducting the Liquidation Costs, apply the remainder to pay, or to hold as a reserve against, the obligations secured by this Security Agreement.
Borrower shall be liable for all deficiencies owing on any obligations secured by this Security Agreement after liquidation of the Collateral. Lender shall not have any obligation to clean-up or otherwise prepare any Collateral for sale, lease, or other disposition.
The rights and remedies herein conferred are cumulative and not exclusive of any other rights and remedies and shall be in addition to every other right, power and remedy herein
4833-2562-0815 specifically granted or hereafter existing at law, in equity, or by statute which Lender might otherwise have, and any and all such rights and remedies may be exercised from time to time and as often and in such order as Lender may deem expedient. No delay or omission in the exercise of any such right, power or remedy or in the pursuance of any remedy shall impair any such right, power or remedy or be construed to be a waiver thereof or of any default or to be an acquiescence therein.
In the event of breach or Security Agreement Default, Borrower agrees to pay all costs and expenses, including reasonable attorneys fees and legal expenses, incurred by or on behalf of Lender in enforcing, or exercising any remedies under, this Security Agreement, and any other rights and remedies. Additionally, Borrower agrees to pay all Liquidation Costs. Any and all such costs, expenses, and Liquidation Costs shall be payable by Borrower upon demand, together with interest thereon from the date of the advance until repaid, both before and after judgment, at the Default Rate.
Regardless of any Security Agreement Default, Borrower agrees to pay all expenses, including reasonable attorneys fees and legal expenses, incurred by Lender in any bankruptcy proceedings of any type involving Borrower, the Collateral, or this Security Agreement, including, without limitation, expenses incurred in modifying or lifting the automatic stay, determining adequate protection, use of cash collateral, or relating to any plan of reorganization.
10. Notices. All notices or demands by any party hereto shall be in writing and shall be sent as provided in the Loan Agreement.
11. Indemnification. Borrower shall indemnify Lender for any and all claims and liabilities, and for damages which may be awarded or incurred by Lender, and for all reasonable attorney fees, legal expenses, and other out-of-pocket expenses incurred in defending such claims, arising from or related in any manner to the negotiation, execution, or performance by Lender of this Security Agreement, but excluding any such claims based upon breach or default by Lender or gross negligence or willful misconduct of Lender.
Lender shall have the sole and complete control of the defense of any such claims. Lender is hereby authorized to settle or otherwise compromise any such claims as Lender in good faith determines shall be in its best interests.
12. General. This Security Agreement is made for the sole and exclusive benefit of Borrower and Lender and is not intended to benefit any third party. No such third party may claim any right or benefit or seek to enforce any term or provision of this Security Agreement.
In recognition of Lender’s right to have all its attorneys fees and expenses incurred in connection with this Security Agreement secured by the Collateral, notwithstanding payment in full of the obligations secured by the Collateral, Lender shall not be required to release, reconvey, or terminate any security interest in the Collateral unless and until Borrower and all Guarantors have executed and delivered to Lender general releases in form and substance satisfactory to Lender.
4833-2562-0815
Lender and its officers, directors, employees, representatives, agents, and attorneys, shall not be liable to Borrower or any Guarantor for consequential damages arising from or relating to any breach of contract, tort, or other wrong in connection with or relating to this Security Agreement or the Collateral.
If the incurring of any debt by Borrower or the payment of any money or transfer of property to Lender by or on behalf of Borrower or any Guarantor should for any reason subsequently be determined to be “voidable” or “avoidable” in whole or in part within the meaning of any state or federal law (collectively “voidable transfers”), including, without limitation, fraudulent conveyances or preferential transfers under the United States Bankruptcy Code or any other federal or state law, and Lender is required to repay or restore any voidable transfers or the amount or any portion thereof, or upon the advice of Lender’s counsel is advised to do so, then, as to any such amount or property repaid or restored, including all reasonable costs, expenses, and attorneys fees of Lender related thereto, the liability of Borrower and Guarantors, and each of them, and this Security Agreement, shall automatically be revived, reinstated and restored and shall exist as though the voidable transfers had never been made.
This Security Agreement shall be governed by and construed in accordance with the laws of the State of Utah.
Any provision of this Security Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction only, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
Borrower may not assign or transfer any of the Loan Documents (as defined in the Loan Agreement) and any such purported assignment or transfer is void.
Lender may assign or transfer Lender’s interest in this Security Agreement and any of the Loan Documents. Borrower acknowledges that Lender has granted Zions Bank, (Municipality), and the Utah Center for Neighborhood Stabilization, a Utah nonprofit corporation, dba USBGI, a security interest in this Security Agreement and the Loan Documents under that certain Credit Agreement dated October ___, 2017, which agreement pertains to the source of funds for the Loan.
All references in this Security Agreement to the singular shall be deemed to include the plural if the context so requires and vice versa. References in the collective or conjunctive shall also include the disjunctive unless the context otherwise clearly requires a different interpretation.
All agreements, representations, warranties and covenants made by Borrower shall survive the execution and delivery of this Security Agreement, the filing and consummation of any bankruptcy proceedings, and shall continue in effect so long as any obligation to Lender contemplated by this Security Agreement is outstanding and unpaid, notwithstanding any
4833-2562-0815 termination of this Security Agreement. All agreements, representations, warranties and covenants in this Security Agreement shall bind the party making the same and its heirs and successors, and shall be to the benefit of and be enforceable by each party for whom made and their respective heirs, successors and assigns.
/[IF MORE THAN ONE BORROWER] All obligations of Borrower under this Security Agreement shall be joint and several.
This Security Agreement, together with the Loan Documents, constitute the entire agreement between Borrower and Lender as to the subject matter hereof and may not be altered or amended except by written agreement signed by Borrower and Lender. All other prior and contemporaneous agreements, arrangements, and understandings between the parties hereto as to the subject matter hereof are, except as otherwise expressly provided herein, rescinded.
Signature Page(s) Follow
4833-2562-0815
Dated: /.
LENDER
UTAH SMALL BUSINESS GROWTH INITIATIVE, LLC, a Utah limited liability company dba BUSINESS LOANS OF UTAH
By: Utah Center for Neighborhood Stabilization, a Utah nonprofit corporation Its: Sole Member
By: ______Michael Plaizier Its: Executive Director
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BORROWER
/______, a /______
By: ______Name: ______Title: ______
16 4833-2562-0815 LOAN AGREEMENT
between
UTAH SMALL BUSINESS GROWTH INITIATIVE, LLC, a Utah limited liability company, dba BUSINESS LOANS OF UTAH Lender
and
/ ______Borrower
Effective Date: /______
4824-5287-7903 TABLE OF CONTENTS
Page
1. Definitions...... 1 2. Loan Description ...... 7 2.1 Commitment ...... 7 2.2 Borrowing Procedures ...... 7 2.3 Loan Payments ...... 7 2.4 Interest...... 8 2.5 Capital Adequacy ...... 8 2.6 Note ...... 8 2.7 Due Date Extension ...... 9 2.8 Prepayment ...... 9 2.9 Automatic Debit of Borrower’s Account ...... 9 3. Security for Obligations ...... 9 4. Effectiveness; Conditions to Loan Disbursement ...... 9 5. Representations and Warranties ...... 11 5.1 Organization and Qualification ...... 11 5.2 Authorization ...... 11 5.3 No Governmental Approval Necessary ...... 12 5.4 Accuracy of Financial Statements ...... 12 5.5 No Pending or Threatened Litigation ...... 13 5.6 Full and Accurate Disclosure ...... 13 5.7 Compliance with ERISA ...... 13 5.8 Compliance with All Other Applicable Law ...... 14 5.9 Environmental Representations and Warranties ...... 14 5.10 Operation of Business ...... 14 5.11 Payment of Taxes ...... 15 5.12 No Material Adverse Change...... 15 5.13 Subsidiaries ...... 15 5.14 Investment Company Act ...... 15 5.15 Regulation U ...... 15 5.16 No Immunity ...... 15 5.17 Intellectual Property ...... 16 6. Borrower’s Covenants ...... 16 6.1 Use of Proceeds ...... 16 6.2 Financial Statements and Reports ...... 16 6.3 Financial Covenants ...... 17 6.4 Limitations on Debt ...... 17 6.5 Limitations on Loans ...... 18 6.6 Limitations on Operating Leases ...... 18 6.7 Liens ...... 18 6.8 Exclusive Negative Pledge ...... 18 6.9 Investments ...... 18
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6.10 Capital Expenditures ...... 18 6.11 Restricted Payments ...... 19 6.12 Purchase of Assets ...... 19 6.13 Management Fees ...... 19 6.14 Mergers, Consolidations, Sales ...... 19 6.15 Subsidiaries ...... 19 6.16 Insurance ...... 19 6.17 Inspection ...... 20 6.18 Collateral Examination ...... 20 6.19 Landlord Waivers and Consents ...... 20 6.20 Operation of Business ...... 20 6.21 Maintenance of Records and Properties ...... 20 6.22 Notice of Default, Litigation ...... 21 6.23 Payment of Taxes and Obligations ...... 21 6.24 Deposit Account Requirement ...... 21 6.25 Minimum Balance Requirement ...... 21 6.26 Environmental Covenants ...... 22 6.27 Continued Compliance with ERISA ...... 23 6.28 Continued Compliance with Applicable Law ...... 23 6.29 Prior Consent for Amendment or Change ...... 24 6.30 Maintenance of Existence, etc ...... 24 6.31 Patriot Act ...... 24 6.32 Further Assurances...... 24 7. Default...... 24 7.1 Events of Default ...... 24 7.2 No Waiver of Event of Default ...... 26 8. Remedies ...... 26 8.1 Remedies upon Event of Default ...... 26 8.2 Rights and Remedies Cumulative ...... 27 8.3 No Waiver of Rights ...... 27 8.4 Offset...... 27 9. General Provisions ...... 27 9.1 Governing Agreement ...... 27 9.2 Borrower’s Obligations Cumulative ...... 27 9.3 Payment of Expenses and Attorney’s Fees ...... 28 9.4 Right to Perform for Borrower ...... 28 9.5 Assignability ...... 28 9.6 Third Party Beneficiaries ...... 28 9.7 Governing Law ...... 28 9.8 Severability ...... 28 576575-1
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9.9 Interpretation of Loan Agreement ...... 29 9.10 Survival and Binding Effect of Representations, Warranties, and Covenants ...... 29 9.11 Indemnification ...... 29 9.12 Environmental Indemnification ...... 29 9.13 Interest on Expenses and Indemnification, Collateral, Order of Application ...... 30 9.14 Limitation of Consequential Damages ...... 30 9.15 Waiver and Release of Claims ...... 30 9.16 Revival Clause ...... 31 9.17 Arbitration ...... 31 9.18 Consent to Utah Jurisdiction and Exclusive Jurisdiction of Utah Courts ...... 33 9.19 Joint and Several Liability ...... 34 9.20 Notices ...... 34 9.21 Counterparts ...... 35 9.22 Disclosure of Financial and Other Information ...... 35 9.23 USA Patriot Act Notification ...... 35 9.24 Integrated Agreement and Subsequent Amendment...... 35
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EXHIBITS
Exhibit A – Promissory Note Exhibit B – Form of Compliance Certificate
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LOAN AGREEMENT
This Loan Agreement is made and entered into by and between Utah Small Business Growth Initiative, LLC, a Utah limited liability company, dba Business Loans of Utah, as Lender, and /, a /, as Borrower.
For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Definitions
Terms defined in the singular shall have the same meaning when used in the plural and vice versa. As used herein, the term:
“Affiliate” means a subsidiary, parent or sister entity, or other entity effectively controlling or being controlled by another entity, or associated with other entities under common ownership or control.
“Banking Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks in the State of Utah are authorized or required to close and, when used in reference to an Interest Period, a day on which dealings in dollar deposits are also carried on in the London Interbank market and banks are open for business in London.
“Borrower” means /, a / organized and existing under the laws of the State of /, its successors, and, if permitted, assigns.
“Capital Expenditure” means all amounts paid by Borrower in connection with the purchase of plant, machinery or equipment (including vehicles) or other similar expenditures (including leases of any of the foregoing) which, in accordance with generally accepted accounting principles, would be required to be capitalized and shown on the balance sheet of Borrower, but excluding expenditures made in connection with the replacement, substitution or restoration of assets to the extent financed (i) from insurance proceeds (or other similar recoveries) paid on account of the loss of or damage to the assets being replaced or restored or (ii) with awards of compensation arising from the taking by eminent domain or condemnation of the assets being replaced.
“Change of Control” means [SELECT ONE OR MORE OF THE FOLLOWING] [(a) the acquisition by any Person or group of Persons (within the meaning of Section 13 or 14 of the Securities Exchange Act of 1934, as amended) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under such Act) of [20]% or more of the outstanding shares of common stock of Borrower]; [(b) during any 24-month period, individuals who at the beginning of such period constituted Borrower’s Board of Directors (together with any new directors whose election by Borrower’s Board of Directors or whose nomination for election by Borrower’s shareholders was approved by a vote of a majority of the directors who either were directors at beginning of such period or whose election or nomination was previously so approved) ceasing
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for any reason to constitute a majority of the Board of Directors of Borrower]; [or / ceasing to own at least / percent (/%) of the voting interest in Borrower either directly or indirectly].
[IF APPLICABLE]“COF Rate” means the interest rate determined by Lender, in its sole discretion, from time to time, as to be the cost of funds of Zions Bank, as such rate may change from time to time.
“Collateral” shall have the meaning set forth in Section 3, Security for Obligations, of this Loan Agreement.
“Compliance Certificate” means a compliance certificate, signed by Borrower’s chief financial officer or chief executive officer, in the form of Exhibit B hereto or any other form acceptable to Lender certifying Borrower’s status regarding Borrower’s compliance with all terms and conditions of this Loan Agreement.
Debt” of any Person means, without duplication, (a) all indebtedness of such Person for borrowed money; (b) all obligations issued, undertaken or assumed by such Person as the deferred purchase price of property or services (other than trade payables and current operating liabilities not for borrowed money, entered into in the ordinary course of business on ordinary terms that are not more than ninety (90) days past due, unless contested in good faith and by appropriate proceedings); (c) all obligations of such Person evidenced by notes, bonds, debentures or similar instruments; (d) all indebtedness created or arising under any conditional sale or other title retention agreement, or incurred as financing, in either case with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property); (e) all obligations of such Person with respect to capital leases; (f) all guaranties of such Person of any indebtedness of another Person, and (g) the sale, with recourse, of any of such Person’s accounts.
“Dollars” and the sign “$” mean lawful money of the United States.
“Effective Date” means /.
“Environmental Condition” means any condition involving or relating to Hazardous Materials and/or the environment affecting the Real Property, whether or not yet discovered, which could or does result in any damage, loss, cost, expense, claim, demand, order, or liability to or against Borrower or Lender by any third party (including, without limitation, any government entity), including, without limitation, any condition resulting from the operation of Borrower’s business and/or operations in the vicinity of the Real Property and/or any activity or operation formerly conducted by any person or entity on or off the Real Property.
“Environmental Health and Safety Law” means any legal requirement that requires or relates to:
a. advising appropriate authorities, employees, or the public of intended or actual releases of Hazardous Materials, violations of discharge limits or other prohibitions, and of the commencement of activities, such as resource extraction or construction, that do or could have significant impact on the environment;
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b. preventing or reducing to acceptable levels the release of Hazardous Materials;
c. reducing the quantities, preventing the release, or minimizing the hazardous characteristics of wastes that are generated;
d. assuring that products are designed, formulated, packaged, and used so that they do not present unreasonable risks to human health or the environment when used or disposed of;
e. protecting resources, species, or ecological amenities;
f. use, generation, storage, transportation, treatment, sale, or transfer of Hazardous Materials or other potentially harmful substances;
g. cleaning up Hazardous Materials that have been released, preventing the threat of release, and/or paying the costs of such clean up or prevention; or
h. making responsible parties pay for damages done to the health of others or the environment or permitting self-appointed representatives of the public interest to recover for injuries done to public assets.
“Equity Interest” means (a) in the case of a corporation, capital stock, (b) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of capital stock, (c) in the case of a partnership, partnership interests (whether general or limited), (d) in the case of a limited liability company, membership interests and (e) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person.
“Event of Default” is defined in Section 7.1, Events of Default, of this Loan Agreement.
“Fiscal Year” means the fiscal year of Borrower which period shall be the 12-month period ending on / of each year. References to a Fiscal Year with a number corresponding to any calendar year (e.g., “Fiscal Year 2017”) refer to the Fiscal Year ending on / of such calendar year.
“Fiscal Quarter” means a fiscal quarter of a Fiscal Year.
“Hazardous Materials” means (i) “hazardous waste” as defined by the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976 (42 U.S.C. Section 6901 et seq.), including any future amendments thereto, and regulations promulgated thereunder, and as the term may be defined by any contemporary state counterpart to such act; (ii) “hazardous substance” as defined by the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. Section 9601 et seq.), including any future amendments thereto, and regulations promulgated thereunder, and as the term may be defined by any contemporary state counterpart of such act; (iii) asbestos; (iv) polychlorinated biphenyls; (v) underground or above ground storage tanks, whether empty or filled or partially filled with any substance; (vi) any substance the presence of which is or becomes listed, regulated or prohibited
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by any federal, state, or local law, ordinance, rule, or regulation; and (vii) any substance which under any federal, state, or local law, ordinance, rule or regulation requires special handling or notification in its collection, storage, treatment, transportation, use or disposal.
“Insolvency Proceeding” means, without respect to any Person, (a) any case, action or proceeding with respect to such Person before any court or other governmental authority relating to bankruptcy, reorganization, insolvency, liquidation, receivership, dissolution, winding-up or relief of debtors (including any proceeding under the United States Bankruptcy Code) or (b) any general assignment for the benefit of creditors, composition, marshalling of assets for creditors, or other, similar arrangement in respect of such Person’s creditors generally or any substantial portion of such creditors.
“Lender” means Utah Small Business Growth Initiative, LLC, a Utah limited liability company, dba Business Loans of Utah.
[IF APPLICABLE] “LIBOR Rate” means the rate per annum quoted by Lender as Lender’s LIBOR rate based upon quotes for the London Interbank Offered Rate from the ICE Benchmark Administration Interest Settlement Rates, as quoted for U.S. Dollars by Bloomberg or other comparable pricing services selected by Lender. This definition of LIBOR Rate is to be strictly interpreted and is not intended to serve any purpose other than providing an index to determine the interest rates used hereunder and in the Note. LIBOR Rate may not necessarily be the same as the quoted offer side in the Eurodollar time deposit market by any particular institution or service applicable to any interest period. It is not the lowest rate at which Lender may make loans to any of its customers, either now or in the future.
“Lien” means any security interest, mortgage, deed of trust, pledge, hypothecation, assignment, charge or deposit arrangement, encumbrance, lien (statutory or other) or preferential arrangement of any kind or nature whatsoever in respect of any property (including those created by, arising under or evidenced by any conditional sale or other title retention agreement, the interest of a lessor under a capital lease, or any financing lease having substantially the same economic effect as any of the foregoing, but not including the interest of a lessor under an operating lease).
“Loan” means the Term Loan.
“Loan Agreement” means this agreement, together with any exhibits, amendments, addendums, and modifications.
“Loan Documents” means the Loan Agreement, Note, Security Documents, all other agreements and documents contemplated by any of the aforesaid documents, and all amendments, modifications, addendums, and replacements, whether presently existing or created in the future.
“Margin Stock” means “margin stock” as such term is defined in Regulation T, U and X of the Board of Governors of the Federal Reserve Board.
“Material Adverse Effect” means (a) a material adverse change in, or a material adverse effect upon, the operations, business, properties, condition (financial or otherwise), profits or
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prospects of Borrower; or (b) a material adverse effect upon the legality, validity, binding effect or enforceability against Borrower or Guarantor of any Loan Document.
“Maturity Date” means /.
“Note” means the Promissory Note to be executed by Borrower pursuant to Section ____ of this Loan Agreement, in the form of Exhibit A attached hereto and which is incorporated into this Loan Agreement by this reference, and any and all renewals, extensions, modifications, and replacements thereof.
“Obligations” means the Loan, the Note, and all obligations of Borrower under the Loan Documents.
“Organizational Documents” means, in the case of a corporation, its Articles of Incorporation and By-Laws; in the case of a general partnership, its Articles of Partnership; in the case of a limited partnership, its Articles of Limited Partnership; in the case of a limited liability company, its Articles of Organization and Operating Agreement or Regulations, if any; in the case of a limited liability partnership, its Articles of Limited Liability Partnership; and all amendments, modifications, and changes to any of the foregoing which are currently in effect.
“Patriot Act” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Title III of Pub. L. 107-56 (signed into law on October 26, 2001).
“Person” means any natural person, corporation, partnership, limited liability company, trust, association, governmental authority or unit, or any other entity, whether acting in an individual, fiduciary or other capacity.
“Perfection Certificate” means a certificate in a form provided by Lender containing information necessary to identify locations for UCC filing searches.
“Real Property” means any and all real property or improvements thereon owned or leased by Borrower or in which Borrower has any other interest of any nature whatsoever.
“Release” means any presence, emission, spill, seepage, leak, escape, leaching, discharge, injection, pumping, pouring, emptying, dumping, disposal, migration, or release of Hazardous Materials from any source into or upon the environment, including the air, soil, improvements, surface water, groundwater, the sewer, septic system, storm drain, publicly owned treatment works, or waste treatment, storage, or disposal systems.
“Security Documents” means all security agreements, assignments, pledges, financing statements, deeds of trust, mortgages, and other documents which create or evidence any security interest, assignment, lien or other encumbrance in favor of Lender to secure any or all of the Obligations, and all amendments, modifications, addendums, and replacements, whether presently existing or created in the future.
“Subsidiary” of a Person means any corporation, association, partnership, limited liability company, joint venture or other business entity of which more than 50% of the voting stock,
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membership interests or other equity interests is owned or controlled directly or indirectly by such Person, or by one or more of the Subsidiaries of such Person, or by a combination thereof. Unless the context otherwise clearly requires, references herein to a “Subsidiary” refer to a Subsidiary of Borrower.
“Term Loan” is defined in Section 2.1 of this Loan Agreement.
“Term Loan Commitment” means the obligation of Lender to make the Term Loan hereunder in the amount of $/.
“Note” is defined in Section 2.6 of this Loan Agreement.
“Unmatured Event of Default” means any event which, with the giving of notice, the lapse of time, or both, would (if not cured or otherwise remedied during such time) constitute an Event of Default.
“Zions Bank” means ZB, N.A., dba Zions First National Bank.
2. Loan Description
2.1 Commitment
Lender agrees to make a term loan to Borrower (the “Term Loan”) on the Effective Date in an amount of the Term Loan Commitment. Amounts borrowed as the Term Loan which are repaid or prepaid by Borrower may not be reborrowed.
2.2 Borrowing Procedures
Borrower shall have access to the proceeds of the Term Loan pursuant to such procedures as shall be agreed upon by Borrower and Lender from time to time.
2.3 Loan Payments
Payments of principal and accrued interest in amounts such that the principal amount of the Note will be fully amortized on the Maturity Date shall be due on the fifth (5th) day of each month.
All remaining principal and unpaid interest shall be paid in full on the Maturity Date.
2.4 Interest
a. Interest Generally. Interest on the Term Loan shall accrue from the date of disbursement of the principal amount or portion thereof until paid, both before and after judgment, in accordance with the terms set forth herein, and shall be computed on the basis of a three hundred sixty (360) day year.
b. Interest Rate. Interest on the principal balance of the Term Loan shall accrue at [INSERT LANGUAGE FOR TYPE OF RATE, FREQUENCY OF
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ADJUSTMENT IF FLOATING RATE, AND MARGIN OVER APPLICABLE INDEX.
c. [IF A LIBOR-BASED RATE IS USED] Suspension or Termination of LIBOR Pricing. Notwithstanding anything to the contrary herein, if Lender determines (which determination shall be conclusive) that (a) quotations of interest rates are not being provided for purposes of determining the LIBOR Rate, or (b) the LIBOR Rate does not accurately cover the cost to Lender of making or maintaining advances based on the LIBOR Rate, then Lender may give notice thereof to Borrower, whereupon until Lender notifies Borrower that the circumstances giving rise to such suspension no longer exist, then (1) interest pricing based on the LIBOR Rate shall be suspended, and (2) the COF Rate shall replace the LIBOR Rate.
Notwithstanding anything to the contrary herein, if the adoption of any applicable law, rule, or regulation, or any change therein, or any change in the interpretation or administration thereof by any governmental authority, central bank, or comparable agency charged with the interpretation or administration thereof, or compliance by any Lender with any request or directive (whether or not having the force of law) of any such authority, central bank, or comparable agency, shall make it unlawful or impossible for such Lender to maintain balances based on the LIBOR Rate, then upon notice to Borrower by such Lender, the outstanding principal amount of the applicable balances based on the LIBOR Rate, together with interest accrued thereon, (a) shall be repaid immediately upon demand of such Lender if such change or compliance with such request, in the judgment of such Lender, requires immediate repayment or, (b) if such repayment is not required in the judgment of the such Lender, at the election of Borrower shall be converted to a balances based on the COF Rate. [END LIBOR-BASED RATE LANGUAGE]
2.5 Capital Adequacy
If any Lender shall reasonably determine that the application or adoption of any law, rule, regulation, directive, interpretation, treaty or guideline regarding capital adequacy, or any change therein or in the interpretation or administration thereof, whether or not having the force of law, increases the amount of capital required or expected to be maintained by such Lender or any Person controlling such Lender, and such increase is based upon the existence of such Lender’s obligations hereunder and other commitments of this type, then from time to time, within ten days after demand from such Lender, Borrower shall pay to such Lender such amount or amounts as will compensate such Lender or such controlling Person, as the case may be, for such increased capital requirement. The determination of any amount to be paid by Borrower under this Section 2.5 shall take into consideration the policies of such Lender or any Person controlling such Lender with respect to capital adequacy and shall be based upon any reasonable averaging, attribution and allocation methods. A certificate of such Lender setting forth the amount or amounts as shall be necessary to compensate such Lender as specified in this Section 2.5 shall be delivered to Borrower and shall be conclusive in the absence of manifest error.
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2.6 Note
The Term Loan shall be evidenced by a promissory note (as amended or otherwise modified from time to time, and together with any substitutions therefor or renewals thereof, the “Note”) substantially in the form of Exhibit A, with appropriate insertions, dated the Effective Date, payable to the order of the Lender as provided herein.
The date and amount of the Term Loan made by Lender and of each repayment of principal thereon received by Lender shall be recorded by Lender in its records. The aggregate unpaid principal amount so recorded shall be rebuttable presumptive evidence of the principal amount owing and unpaid. The failure so to record any such amount or any error in so recording any such amount shall not, however, limit or otherwise affect the obligations of Borrower to repay the actual outstanding principal amount of the Term Loan together with all interest accruing thereon.
2.7 Due Date Extension
The Note shall provide for the payment of interest. If any payment of principal or interest under the Note (or of any other amount payable hereunder) falls de on a day which is not a Banking Business Day, then such due date shall be extended to the next following Banking Business Day and additional interest shall accrue and be payable for the period of such extension.
2.8 Prepayment
a. Optional Prepayments. Borrower may from time to time, on at least one Banking Business Day’s prior written or telephonic notice received by Lender, prepay all or any portion of Term Loan at any time [SELECT ONE OF THE FOLLOWING] [without premium or penalty] [upon payment of /].
b. Prepayment Procedures Any prepayment received by Lender after 2:00 p.m. mountain standard or daylight time (whichever is in effect on the date the prepayment is received) shall be deemed received on the following Banking Business Day.
3. Security for Obligations
The Obligations shall be secured by such collateral as is provided in the Security Documents (the “Collateral”), which shall include, without limitation, the following: a security interest in all personal property of Borrower and a security interest in all of the Equity Interests in Borrower.
4. Effectiveness; Conditions to Loan Disbursement
The obligation of Lender to make the Term Loan is subject to the following conditions precedent:
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The obligation of Lender to make the Term Loan is subject to (i) the conditions specified in this Section 4, Effectiveness; Conditions to Loan Disbursements, of this Loan Agreement having been satisfied; and (ii) Lender having received all of the following, each duly executed and dated the Effective Date (or such earlier date shall be satisfactory to Lender), in form and substance satisfactory to Lender.
a. The Note.
b. Certified copies of resolutions of the [board of directors] [members] of Borrower.
c. Certified copies of the Organizational Documents of Borrower.
d. The executed Security Documents.
e. Perfection Certificate(s).
f. Terminations of all security interests covering the Collateral, including without limitation, such UCC-3 termination statements as Lender may request.
g. Such UCC-1 financing statements covering the Collateral as Lender may request.
h. Any other information required by Section 326 of the Patriot Act or necessary for the Lender to verify the identity of the Borrower, as required by Section 326 of the Patriot Act.
i. Such other information and documents as Lender may reasonably request.
All conditions precedent set forth in this Loan Agreement and any of the Loan Documents are for the sole benefit of Lender and may only be waived by Lender.
5. Representations and Warranties
5.1 Organization and Qualification
[IF CORPORATION]
Borrower represents and warrants that it is a corporation duly organized and existing in good standing under the laws of the State of /, [and that Borrower is qualified and in good standing as a foreign corporation in the State of /].
Borrower represents and warrants that it is duly qualified to do business in each jurisdiction where the conduct of its business requires qualification.
Borrower represents and warrants that it has the full power and authority to own its property and to conduct the business in which it engages and to enter into and perform its obligations under the Loan Documents.
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Borrower represents and warrants that it has delivered to Lender or it’s counsel accurate and complete copies of Borrower's Organizational Documents which are operative and in effect as of the Effective Date.
[END OF CORPORATION ALTERNATIVE]
[IF LIMITED LIABILITY COMPANY]
Borrower represents and warrants that it is a limited liability company duly organized and existing in good standing under the laws of the State of /, and that Borrower is qualified and in good standing to do business in the State of /.
Borrower represents and warrants that it is duly qualified to do business in each jurisdiction where the conduct of its business requires qualification.
Borrower represents and warrants that it has the full power and authority to own its properties and to conduct the business in which it engages and to enter into and perform its obligations under the Loan Documents.
Borrower represents and warrants that it has delivered to Lender or it’s counsel accurate and complete copies of Borrower's Organizational Documents which are operative and in effect as of the Effective Date.
Borrower represents and warrants that the members of Borrower are: /
Borrower represents and warrants that the [managing members] of Borrower are: /.
[END OF LIMITED LIABILITY COMPANY ALTERNATIVE]
5.2 Authorization
[IF CORPORATION]
Borrower represents and warrants that the execution, delivery, and performance by Borrower of the Loan Documents has been duly authorized by all necessary action on the part of Borrower and are not inconsistent with Borrower's Organizational Documents or any resolution of the Board of Directors of Borrower, do not and will not contravene any provision of, or constitute a default under, any indenture, mortgage, contract, or other instrument to which Borrower is a party or by which it is bound, and that upon execution and delivery thereof, the Loan Documents will constitute legal, valid, and binding agreements and obligations of Borrower, enforceable in accordance with their respective terms.
[END OF CORPORATION ALERNATIVE]
[IF LIMITED LIABILITY COMPANY]
Borrower represents and warrants that the execution, delivery, and performance by Borrower of the Loan Documents has been duly authorized by all necessary action on the part of
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Borrower and are not inconsistent with Borrower's Organizational Documents or resolution of the limited liability company, do not and will not contravene any provision of, or constitute a default under, any indenture, mortgage, contract, or other instrument to which Borrower is a party or by which it is bound, and that upon execution and delivery thereof, the Loan Documents will constitute legal, valid, and binding agreements and obligations of Borrower, enforceable in accordance with their respective terms.
[IF ANY OF THE MEMBERS ARE CORPORATIONS, ADD THIS PROVISION FOR EACH CORPORATION]
Borrower represents that / (herein “Member”) is a corporation duly organized and in good standing under the laws of the State of /, and that the execution, delivery, and performance by Member of the Loan Documents has been duly authorized by all necessary action on the part of Member and are not inconsistent with Member's Organizational Documents or any resolution of the Board of Directors of Member, do not and will not contravene any provision of, or constitute a default under, any indenture, mortgage, contract, or other instrument to which Member is a party or by which it is bound, and that upon execution and delivery thereof, the Loan Documents will constitute legal, valid, and binding agreements and obligations of Member, in its capacity as general partner of Borrower, enforceable in accordance with their respective terms.
[END OF MEMBER CORPORATIONS ALTERNATIVE]
[END OF LIMITED LIABILITY ALTERNATIVE]
5.3 No Governmental Approval Necessary
Borrower represents and warrants that no consent by, approval of, giving of notice to, registration with, or taking of any other action with respect to or by any federal, state, or local governmental authority or organization is required for Borrower’s execution, delivery, or performance of the Loan Documents.
5.4 Accuracy of Financial Statements
Borrower represents and warrants that all of its audited financial statements heretofore delivered to Lender have been prepared in accordance with generally accepted accounting principles consistently applied and fully and fairly represent Borrower’s financial condition as of the date thereof and the results of Borrower’s operations for the period or periods covered thereby.
Borrower represents and warrants that all of its unaudited financial statements heretofore delivered to Lender fully and fairly represent Borrower’s financial condition as of the date thereof and the results of Borrower’s operations for the period or periods covered thereby and are consistent with other financial statements previously delivered to Lender.
Borrower represents and warrants that since the dates of the most recent audited and unaudited financial statements delivered to Lender, there has been no material adverse change in its financial condition.
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5.5 No Pending or Threatened Litigation
Borrower represents and warrants that there are no actions, suits, or proceedings pending or, to Borrower’s knowledge, threatened against or affecting Borrower in any court or before any governmental commission, board, or authority which, if adversely determined, would have a Material Adverse Effect.
5.6 Full and Accurate Disclosure
Borrower represents and warrants that this Loan Agreement, the financial statements referred to herein, any loan application submitted to Lender , and all other statements furnished by Borrower to Lender in connection herewith contain no untrue statement of a material fact and omit no material fact necessary to make the statements contained therein or herein not misleading. Borrower represents and warrants that it has not failed to disclose in writing to Lender any fact that would, or could reasonably have, a Material Adverse Effect.
5.7 Compliance with ERISA
Borrower represents and warrants that Borrower and each ERISA Affiliate, as defined below, is in compliance in all material respects with all applicable provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”), as amended, and the regulations and published interpretations thereunder, and that they have performed all of their obligations under each Plan. Each Plan that is intended to qualify under Section 401(a) of the Internal Revenue Code is so qualified. Neither a Reportable Event as set forth in Section 4043 of ERISA or the regulations thereunder (“Reportable Event”) nor a prohibited transaction as set forth in Section 406 of ERISA or Section 4975 of the Internal Revenue Code of 1986, as amended, has occurred and is continuing with respect to any employee benefit plan established, maintained, or to which contributions have been made by Borrower or any trade or business (whether or not incorporated) which together with Borrower would be treated as a single employer under Section 4001 of ERISA (“ERISA Affiliate”) for its employees which is covered by Title I or Title IV of ERISA (“Plan”); no notice of intent to terminate a Plan has been filed nor has any Plan been terminated which is subject to Title IV of ERISA; no circumstances exist that constitute grounds under Section 4042 of ERISA entitling the Pension Benefit Guaranty Corporation (“PBGC”) to institute proceedings to terminate, or appoint a trustee to administer a Plan, nor has the PBGC instituted any such proceedings; neither Borrower nor any ERISA Affiliate has completely or partially withdrawn under Section 4201 or 4204 of ERISA from any Plan described in Section 4001(a)(3) of ERISA which covers employees of Borrower or any ERISA Affiliate (“Multi- employer Plan”); Borrower and each ERISA Affiliate has met its minimum funding requirements under ERISA with respect to all of its Plans and the present fair market value of all Plan assets equals or exceeds the present value of all vested benefits under or all claims reasonably anticipated against each Plan, as determined on the most recent valuation date of the Plan and in accordance with the provisions of ERISA and the regulations thereunder and the applicable statements of the Financial Accounting Standards Board (“FASB”) for calculating the potential liability of Borrower or any ERISA Affiliate under any Plan; neither Borrower nor any ERISA Affiliate has incurred any liability to the PBGC (except payment of premiums, which is current) under ERISA; and no material claim (other than routine claims for benefits) has been asserted against the Plan or against the Borrower or its ERISA Affiliates in connection with the Plan; no
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lien pursuant to Section 401(a)(29) or 412(n) of the Internal Revenue Code or pursuant to ERISA has been imposed with respect to any Plan.
Borrower, each ERISA Affiliate and each group health plan (as defined in ERISA Section 733) sponsored by Borrower and each ERISA Affiliate, or in which Borrower or any ERISA Affiliate is a participating employer, are in compliance with, have satisfied and continue to satisfy (to the extent applicable) all requirements for continuation of group health coverage under Section 4980B of the Internal Revenue Code and Sections 601 et seq. of ERISA, and are in compliance with, have satisfied and continue to satisfy Part 7 (Sections 701 et seq., Sections 711, 712 and 731 et seq.) of ERISA and all corresponding and similar state laws relating to portability, access and renewability of group health benefits and other requirements included in Part 7.
5.8 Compliance with All Other Applicable Law
Borrower represents and warrants that it has complied with all applicable statutes, rules, regulations, orders, and restrictions of any domestic or foreign government, or any instrumentality or agency thereof having jurisdiction over the conduct of Borrower’s business or the ownership of its properties, the failure to comply with which would reasonably be expected to have a Material Adverse Effect.
5.9 Environmental Representations and Warranties
Borrower further represents and warrants that (i) Borrower is in material compliance with all Environmental Health and Safety Laws, (ii) Borrower maintains and has materially complied with all governmental permits, licenses, variances, clearances and all other necessary approvals required under the Environmental Health and safety Laws for the operation and conduct of its business, and (iii) each such permit is in full force and effect has not expired or been suspended, denied or revoked, and is not under challenge by any person, and Borrower has received no notice that any such permit will be suspended, denied or revoked
5.10 Operation of Business
Borrower represents and warrants that Borrower possesses all licenses, permits, franchises, patents, copyrights, trademarks, and trade names, or rights thereto, to conduct its business substantially as now conducted and as presently proposed to be conducted, and Borrower is not in violation of any valid rights of others with respect to any of the foregoing.
Borrower represents and warrants that neither Borrower nor any Subsidiary is in default in the performance, observation or fulfillment of any of the obligations, covenants, or conditions contained in any agreement to which it is a party, which default, individually or in the aggregate, could have a Material Adverse Effect.
Borrower represents and warrants that immediately after the consummation of the transaction contemplated herein, as well as following the making of the Loan or extension of credit hereunder, Borrower will be able to pay its debts and satisfy its liabilities as they mature, in accordance with their terms. Borrower will not allow any of its Subsidiaries to incur debts beyond the ability of that Subsidiary to pay such debts as they mature.
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5.11 Payment of Taxes
Borrower represents and warrants that Borrower has filed all tax returns (federal, state, and local) required to be filed and has paid all taxes, assessments, and governmental charges and levies, including interest and penalties, on Borrower’s assets, business and income, except such as are being contested in good faith by proper proceedings and as to which adequate reserves are maintained.
5.12 No Material Adverse Change
Since the date of the most current audited financial statements of Borrower, which were delivered to Lender, no event or events have occurred which, individually or in the aggregate, has had or is reasonably likely to have a Material Adverse Effect.
5.13 Subsidiaries
Borrower has no Subsidiaries.
5.14 Investment Company Act
Neither Borrower nor any Subsidiary is an “investment company” or a company “controlled” by an “investment company”, within the meaning of the Investment Company Act of 1940, as amended.
5.15 Regulation U
Borrower is not engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying Margin Stock.
5.16 No Immunity
In any proceedings in connection with any of the Loan Documents to which the Borrower or any Subsidiary is a party, neither the Borrower nor any such Subsidiary will be entitled for itself or any of its assets immunity from suit, execution, attachment or other legal process.
5.17 Intellectual Property
Borrower hereby represents that (1) Borrower owns or holds valid license rights to use all patents, trademarks, service marks, copyrights and other intellectual property (“Intellectual Property Rights”) necessary for Borrower to conduct its business as now conducted and presently proposed to be conducted; and (2) Borrower has no knowledge of (i) any infringement or any claim or notice alleging any infringement by Borrower of another Persons’ Intellectual Property Rights, nor of any basis for any such claim; or (ii) any infringement or any claim or notice alleging any infringement by third parties of Borrower’s Intellectual Property Rights, nor of any basis for any such claim.
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6. Borrower’s Covenants
Borrower makes the following agreements and covenants, which shall continue so long as this Loan Agreement is in effect and so long as Borrower is indebted to Lender for the Obligations, unless otherwise agreed in writing by Lender and Borrower.
6.1 Use of Proceeds
Borrower shall use the proceeds of the Loan solely for [OPTION] [/ and] for general business purposes.
Borrower shall not, directly or indirectly, use any of the proceeds of the Loan for the purpose of purchasing or carrying any Margin Stock, or to extend credit to any person or entity for the purpose of purchasing or carrying any such margin stock or for any purpose which violates, or is inconsistent with, Regulation X of said Board of Governors, or for any other purpose not permitted by Section 7 of the Securities Exchange Act of 1934, as amended, or by any of the rules and regulations respecting the extension of credit promulgated thereunder.
6.2 Financial Statements and Reports
Borrower shall provide Lender with such financial statements and reports as Lender may reasonably request. Audited financial statements and reports shall be prepared in accordance with generally accepted accounting principles and shall fully and fairly represent Borrower’s financial condition as of the date thereof and the results of Borrower’s operations for the period or periods covered thereby. Unaudited financial statements and reports shall fully and fairly represent Borrower’s financial condition as of the date thereof and the results of Borrower’s operations for the period or periods covered thereby and shall be consistent with other financial statements previously delivered to Lender.
Until requested otherwise by Lender, Borrower shall provide the following financial statements and reports to Lender:
a. Annual audited financial statements with an unqualified opinion for each fiscal year of Borrower from an independent accounting firm and in a form acceptable to Lender, to be delivered within one hundred twenty (120) days of the end of the fiscal year. Borrower shall also deliver copies of any management letters or other reports submitted to Borrower by independent certified public accountants in connection with examination of the financial statements of Borrower made by such accountants.
b. / financial statements for each calendar month in a form acceptable to Lender, to be delivered within / (/) days of the end of the /. The /ly financial statements shall include a certification by the chief financial officer or chief executive officer of Borrower that the monthly financial statements fully and fairly represent Borrower’s financial condition as of the date thereof and the results of operations for the period covered thereby and are consistent with other financial statements previously delivered to Lender.
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c. Within thirty (30) days of the end of each /, Borrower shall deliver to Lender a Compliance Certificate.
6.3 Limitations on Debt
Borrower shall not create, incur, assume or allow to exist any Debt, except (i) Debt incurred pursuant to this Loan Agreement; or (ii) Debt that is subordinated to the rights and interests of Lender under the Loan Documents, which subordination shall be in form and substance satisfactory to Lender, in an amount not to exceed $/ and (v) other Debt in an amount not to exceed /$ at any time outstanding.
6.4 Limitations on Loans
Borrower shall not make or allow to exist any loans or advances, of any nature whatsoever, to any Person, or guaranty or allow to exist any guaranty of the indebtedness of any Person, except (i) advances in the ordinary course of business to vendors, suppliers, and contractors and (ii) loans and guaranties with outstanding balances and obligations in amounts totaling no more than $/ in the aggregate at any time.
6.5 Limitations on Operating Leases
Borrower shall not create, incur, assume or allow to exist any operating lease obligations if, after giving effect thereto, the aggregate of all annual operating lease obligations of Borrower would exceed $/.
6.6 Liens
Borrower shall not create or permit to exist any Lien on any of its real or personal properties, assets or rights of whatsoever nature (whether now owned or hereafter acquired), except (a) Liens created pursuant to this Loan Agreement); (b) Liens for taxes or other governmental charges not at the time delinquent or thereafter payable without penalty or being contested in good faith by appropriate proceedings and, in each case, for which it maintains adequate reserves; (c) Liens arising in the ordinary course of business (such as Liens of carriers, warehousemen, mechanics and materialmen and other similar Liens imposed by law for sums not overdue or being contested in good faith by appropriate proceedings and not involving any deposits or advances for borrowed money or the deferred purchase price of property or services, and, in each case, for which it maintains adequate reserves; (d) easements, rights of way, restrictions, minor defects or irregularities in title and other similar Liens not interfering in any material respect with the ordinary conduct of the business of Borrower; (f) other Liens, in addition to Liens permitted by clauses (a) through (f), securing aggregate Debt not exceeding $/.
6.7 Exclusive Negative Pledge
Borrower shall not enter into or allow to exist any agreement with any other party that in any way limits Borrower’s ability to grant or allow to exist security interests or liens in or on any of Borrower’s assets.
6.8 Investments
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Borrower shall not make or suffer to exist any investments or commitments therefor, without Lender’s prior written consent, except (i) short term obligations of, or fully guaranteed by, the United States of America, commercial paper rated A-1 or better by Standard Poor’s Rating Services or P-1 or better by Moody’s Investor Services, demand deposit accounts maintained in the ordinary course of business, and certificates of deposit issued by and time deposits with domestic commercial banks having capital and surplus in excess of $100,000,000.00.
6.9 Capital Expenditures
Borrower shall not make or commit to make any Capital Expenditure in any Fiscal Year unless, after giving effect to such Capital Expenditure, the aggregate amount of all Capital Expenditures made by Borrower and its subsidiaries during such Fiscal Year shall not exceed $/.
6.10 [OPTION] Restricted Payments
Borrower shall not (a) declare or pay any dividends or distributions on any Equity Interests in Borrower, (b) purchase or redeem any such Equity Interests or any warrants, options or other rights in respect of such Equity Interests, (c) make any other distribution to holders of such Equity Interests (other than the issuance of such Equity Interests, or options in respect thereof, as reasonable compensation to directors, officers, managers or employees), (d) prepay, purchase or redeem any subordinated Debt, except if permitted under the terms of an agreement executed by Lender, or (e) set aside funds for any of the foregoing.
Notwithstanding the forgoing, to the extent Borrower is not directly subject to federal, state or local income taxes, Borrower shall be allowed to distribute to holders of such Equity Interests the amounts necessary for such holders to pay income taxes attributable to the income of Borrower; provided that such distributions shall be allowed only if no Event of Default or Unmatured Event of Default has occurred and is continuing, and if such distributions will not create an Event of Default.
6.11 Management Fees
Borrower shall not pay any management fees without the prior written approval of Lender.
6.12 Mergers, Consolidations, Sales
Borrower shall not wind up, liquidate, or dissolve itself, be a party to any merger or consolidation, or purchase or otherwise acquire all or substantially all of the assets or any stock of any class of, or any partnership or joint venture interest in, any other Person, or, except in the ordinary course of its business, sell, transfer, convey or lease all or any substantial part of its assets, or sell or assign with or without recourse any receivables.
6.13 Subsidiaries
Borrower shall not create any Subsidiary without the prior written consent of Lender.
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6.14 Insurance
Borrower shall maintain insurance with financially sound and reputable insurance companies or associations in such amounts and covering such risks as are usually carried by companies engaged in the same or a similar business and similarly situated, which insurance may provide for reasonable deductibility from coverage thereof and which shall name Lender as a loss payee. Borrower shall provide Lender, annually with a certificate executed by an authorized officer of Borrower, certifying the existence and adequacy of the property and casualty insurance program carried by Borrower with respect to itself and its Subsidiaries, and that a written summary of said program has been delivered to the Lender identifying the name of each insurer, the number of each policy and expiration date of each policy, the amounts and types of each coverage, and a list of exclusions and deductibles for each policy.
6.15 Inspection
Borrower shall at any reasonable time and from time to time permit Lender or any representative of Lender to examine and make copies of and abstracts from the records and books of account of, and visit and inspect the properties and assets of, Borrower, and to discuss the affairs, finances, and accounts of Borrower with any of Borrower’s officers and directors and with Borrower’s independent accountants.
6.16 Collateral Examination
Borrower shall permit Lender and their agents or designees at any reasonable time during Borrower’s regular business hours to examine and evaluate the Collateral, to audit the Collateral perfection procedures, and to conduct an appraisal of such Collateral, which appraisal shall be conducted by an appraiser acceptable to Lender, and to inspect, audit and make copies of and extracts from all records and all other papers related to the Collateral in the possession of Borrower. So as no Unmatured Event of Default or Event of Default has occurred and is continuing, up to / such examinations or appraisals per annum may be made and shall be at Borrower’s expense. In if an Unmatured Event of Default or Event of Default has occurred as is continuing, Lender may conduct as many examinations or appraisals as they reasonably deem necessary, and Borrower shall be responsible to pay for all such examinations or appraisals.
6.17 Landlord Waivers and Consents
No later than / (/) days after the Effective Date, Borrower shall provide Lender, a landlord waiver and consent with respect to all Real Property leased by Borrower, in a form satisfactory to Lender, in order to preserve and effectuate the Lender’s security interests in the Collateral. Borrower shall likewise provide Lender with such landlord waivers and consents with respect to any Real Property leased by Borrower hereafter.
6.18 Operation of Business
Borrower shall maintain all licenses, permits, franchises, patents, copyrights, trademarks, and trade names, or rights thereto, necessary or advisable to conduct its business and Borrower shall not violate any valid rights of others with respect to any of the foregoing. Borrower shall continue to engage in a business of the same general type as now conducted.
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6.19 Maintenance of Records and Properties
Borrower shall keep adequate records and books of account in which complete entries will be made in accordance with generally accepted accounting principles consistently applied, reflecting all financial transactions of Borrower. Borrower shall maintain, keep and preserve all of its properties (tangible and intangible) necessary or useful in the proper conduct of its business in good working order and condition, ordinary wear and tear excepted.
6.20 Notice of Default, Litigation
Borrower shall promptly notify Lender in writing of all actions, suits or proceedings filed or threatened against or affecting Borrower in any court or before any governmental commission, board, or authority (or any material adverse development which occurs in any such action, suit or proceeding) which, if adversely determined, would have a Material Adverse Effect. Borrower shall promptly notify Lender in writing of the occurrence of an Event of Default or an Unmatured Event of Default.
6.21 Payment of Taxes and Obligations
Borrower shall pay when due all taxes, assessments, and governmental charges and levies on Borrower’s assets, business, and income, and all material obligations of Borrower of whatever nature, except such as are being contested in good faith by proper proceedings and as to which adequate reserves are maintained.
6.22 Deposit Account Requirement
As a factor in determining the interest rate charged by Lender on the Loan and to provide additional security for Lender, Borrower shall maintain all of its deposit accounts with Lender commencing within thirty (30) days of the Effective Date. Borrower shall not invest any excess cash with any institution other than Lender or in any other investment without prior written approval of Lender. [Lender shall grant such approval upon execution and delivery of documentation in a form acceptable to Lender granting Lender a perfected security interest therein.
6.23 Environmental Covenants
Borrower covenants that it will:
a. Not permit the presence, use, disposal, storage or Release of any Hazardous Materials on, in, or under the Real Property, except in the ordinary course of Borrower’s business under conditions that are generally recognized to be appropriate and safe and that are in strict compliance with all applicable Environmental Health and Safety Laws.
b. Comply with the provisions of all Environmental Health and Safety Laws.
c. Notify Lender promptly of any (i) Release which is in violation of applicable Environmental Health and Safety Laws, or requiring reporting to any
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governmental agency under Environmental Health and Safety Laws, (ii) any Environmental Condition, (iii) any complaint or notice received from any governmental agency or any other party alleging any liability of Borrower or with respect to the Real Property under any Environmental Health and Safety Laws.
d. Upon any Release in violation of applicable Environmental Health and Safety Laws or upon the occurrence of any Environmental Condition, immediately contain and remediate the same to the extent required in strict compliance with all Environmental Health and Safety Laws, and as necessary to promptly pay any fine or penalty assessed in connection therewith (subject to any defenses thereto), and promptly notify Lender of such events.
e. Permit Lender to inspect the Real Property for Hazardous Materials and Environmental Conditions, to conduct tests thereon, and to inspect all books, correspondence, and records pertaining thereto.
f. From time to time upon Lender’s request, and at Borrower’s expense, provide a report (including all validated and unvalidated data generated for such reports) of a qualified independent environmental engineer acceptable to Lender, satisfactory to Lender in scope, form, and content, and provide to Lender such other and further assurances reasonably satisfactory to Lender, that Borrower is in compliance with these covenants concerning Hazardous Materials and Environmental Conditions, and that any past violation thereof has been corrected in compliance with all applicable Environmental Health and Safety Laws.
g. Defend, indemnify and hold harmless Lender and Lender’s Affiliates, from and against any claims, demands, penalties, fines, liabilities, settlements, damages, costs and expenses of whatever kind or nature known or unknown, contingent or otherwise, arising out of, or in any way relating to the violation of, noncompliance with or liability under any Environmental Health and safety Laws or any lawful orders, requirements or demands of governmental authorities related thereto, including, without limitation, reasonable attorney’s and consultant’s fees, investigations and laboratory fees, response costs, court costs and litigation expenses, except to the extent that any of the foregoing directly result from the gross negligence or willful misconduct of any Lender, any Affiliate of a Lender, or any of their respective employees, agents, officers and directors.
6.24 Continued Compliance with ERISA
With respect to all Plans (as defined in Section 5.7, Compliance With ERISA, of this Loan Agreement) which Borrower or any ERISA Affiliate currently maintains, participates in, or contributes to, or to which Borrower or any ERISA Affiliate is a sponsoring or participating employer, fiduciary, party in interest or disqualified person or which Borrower or any ERISA Affiliate may hereafter adopt, participate in, or contribute to, Borrower shall continue to comply and shall require each ERISA Affiliate to continue to comply with all applicable provisions of the Internal Revenue Code and ERISA and all regulations and official interpretations of such provisions, and with all representations made in Section 5.7, Compliance With ERISA, of this
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Loan Agreement, including, without limitation, conformance, in all material respects with all notice and reporting requirements, funding standards, prohibited transaction rules, multi- employer plan rules, necessary reserve requirements, and health care continuation, coverage and portability requirements.
6.25 Continued Compliance with Applicable Law
Borrower shall conduct its business in a lawful manner and in material compliance with all applicable federal, state, and local laws, ordinances, rules, regulations, and orders; shall maintain in good standing all licenses and organizational or other qualifications reasonably necessary to its business and existence; and shall not engage in any business not authorized by and not in accordance with its Organizational Documents and other governing documents.
6.26 Prior Consent for Amendment or Change
Borrower shall not materially modify, amend, or otherwise alter its Organizational Documents or other governing documents without Lender’s prior written consent. Borrower shall not, without Lender’s prior written consent, waive or fail to enforce its Organizational Documents or other governing documents if doing so would cause a Material Adverse Effect. Borrower shall not change its name or convert to a different form of legal entity without Lender’s prior written consent.
6.27 Maintenance of Existence, etc.
Borrower shall maintain and preserve (a) its existence and good standing in the jurisdiction of its organization, and (b) its qualification and good standing in each jurisdiction where the nature of its business makes such qualification necessary.
6.28 Patriot Act
Borrower shall not, and shall not permit any Subsidiary to, (a) be or become subject at any time to any law, rule, regulation or list of any governmental agency (including, without limitation, the U.S. Office of Foreign Asset Control list) that prohibits or limits any Lender from making any advance or extension of credit to the Borrower or from otherwise conducting business with the Borrower, or (b) fail to provide documentary and other evidence of the Borrower’s identity as may be requested by any Lender at any time to enable such Lender to verify the Borrower’s identity or to comply with any applicable law, rule or regulation, including, without limitation, Section 326 of the Patriot Act.
6.29 Further Assurances
Borrower shall take such actions as Lender may reasonably request from time to time (including, without limitation, the execution and delivery of guaranties, security agreements, pledge agreements, mortgages, financing statements and other documents, the filing or recording of any of the foregoing, and the delivery of stock certificates and other collateral with respect to which perfection is obtained by possession) to ensure that the obligations of Borrower hereunder and under the other Loan Documents are secured by the Collateral.
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7. Default
7.1 Events of Default
Time is of the essence of this Loan Agreement. The occurrence of any of the following events shall constitute a default under this Loan Agreement and under the Loan Documents and shall be termed an “Event of Default”:
a. Default in the payment when due of the principal of or interest on any Loan, or any other amount payable by Borrower hereunder or under the Loan Documents [IF GRACE PERIOD FOR PAYMENT DEFAULTS] if such default remains unremedied for more than / (/) Business Banking Days after the due date thereof, or if there is no express due date, then (/) Business Banking Days after demand [END OF GRACE PERIOD FOR PAYMENT DEFAULTS OPTION].
b. Any representation, warranty, certificate, or other information or statement (financial or otherwise) made by or on behalf of Borrower in any of the Loan Documents, or any document contemplated by the Loan Documents, is materially false, incomplete or materially misleading in any material respect when made or furnished.
c. Any default shall occur under the terms applicable to any Debt of Borrower in an aggregate amount (for all Debt so affected) exceeding $/ and such default shall (a) consist of the failure to pay such Debt when due (subject to any applicable grace period), whether by acceleration or otherwise, or (b) accelerate the maturity of such Debt or permit the holder or holders thereof, or any trustee or agent for such holder or holders, to cause such Debt to become due and payable prior to its expressed maturity.
d. Default in the payment when due, or in the performance or observance of, any material obligation of, or condition agreed to by, Borrower with respect to any material contract of Borrower.
e. Borrower (i) ceases or fails to be solvent, or generally fails to pay, or admits in writing its inability to pay, its debts as they become due; (ii) voluntarily ceases to conduct its business in the ordinary course; (iii) commences any Insolvency Proceeding with respect to itself; or (iv) takes any action to effectuate or authorize any of the foregoing.
f. (i) Any involuntary Insolvency Proceeding is commenced or filed against Borrower, or any writ, judgment, warrant of attachment, warrant of execution or similar process is issued or levied against a substantial part of Borrower’s properties, and such proceeding or petition shall not be dismissed, or such writ, judgment, warrant of attachment, warrant of execution or similar process shall not be released, vacated or fully bonded within thirty (30) days after commencement, filing or levy; (ii) Borrower admits the material allegations of a petition against it in any Insolvency Proceeding, or an order for relief (or similar order under non-U.S. law) is ordered in any Insolvency Proceeding; or (iii) Borrower acquiesces in the appointment of a receiver, trustee, custodian, conservator, liquidator, mortgagee in possession (or agent therefor) or other similar Person for itself or a substantial portion of its property or business.
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g. One or more non-interlocutory judgments, non-interlocutory orders, decrees or arbitration awards is entered against Borrower involving in the aggregate a liability (to the extent not covered by independent third-party insurance as to which the insurer does not dispute coverage), as to any single or related series of transactions, incidents or conditions, of $/ or more, and the same shall remain unvacated and unstayed pending appeal for a period of thirty (30) days after the entry thereof.
h. Any non-monetary judgment, order or decree is entered against Borrower or Guarantor which has or would reasonably be expected to have a Material Adverse Effect, and there shall be any period of thirty (30) consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect.
i. The Security Documents shall cease to be in full force and effect; or Borrower or any Person by, through or on behalf of Borrower, shall contest the validity or enforceability of any Security Document.
j. A Change of Control occurs.
k. Any Material Adverse Effect occurs.
l. Failure by Borrower to comply with or to perform any provision of this Loan Agreement or any of the Loan Documents that is not specifically listed above as an Event of Default, with such failure continuing unremedied for a period of fifteen (15) days after notice of such failure is given to Borrower by Lender.
7.2 No Waiver of Event of Default
No course of dealing or delay or failure to assert any Event of Default or Unmatured Event of Default shall constitute a waiver of that Event of Default or Unmatured Event of Default or of any prior or subsequent Event of Default or Unmatured Event of Default.
8. Remedies
8.1 Remedies upon Event of Default
If any Event of Default occurs, Lender may do any or all of the following:
a. declare the commitment of Lender to make the Loan to be terminated, whereupon such commitment shall be terminated;
b. declare the unpaid principal amount of the Loan, all interest accrued and unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan Document to be immediately due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by Borrower; and
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c. exercise all rights and remedies available to Lender under the Loan Documents or applicable law; provided, however, that upon the occurrence of any Event of Default specified in subsection 7.1 (e) or (f) of this Loan Agreement, the obligation of Lender to make the Loan shall automatically terminate and the unpaid principal amount of the Loan and all interest and other amounts as aforesaid shall automatically become due and payable without further act of Lender.
8.2 Rights and Remedies Cumulative
The rights and remedies herein conferred are cumulative and not exclusive of any other rights or remedies and shall be in addition to every other right, power, and remedy that Lender may have, whether specifically granted herein or hereafter existing at law, in equity, or by statute. Any and all such rights and remedies may be exercised from time to time and as often and in such order as Lender may deem expedient.
8.3 No Waiver of Rights
No delay or omission in the exercise or pursuance by Lender of any right, power, or remedy shall impair any such right, power, or remedy or shall be construed to be a waiver thereof.
8.4 Offset
In addition to, and without limitation of, any rights of Lender under any Loan Document or applicable law, if Borrower becomes insolvent, however evidenced, or if any Event of Default occurs and during the continuance thereof, all deposits (including all account balances, whether provisional or final and whether or not collected or available) and all other Debt at any time held or owing by any Lender or any Affiliate of any Lender to or for the credit or account of the Borrower may, without prior notice to the Borrower, be offset and applied toward the payment of the Obligations owing to such Lender, whether or not the Obligations, or any part thereof, shall then be due. This right of setoff may be enforced or exercised by any Lender regardless of whether any Lender has made any demand on Borrower. Any delay, neglect or conduct by any Lender in exercising its rights under this subsection shall not be deemed to a waiver of the right to exercise this right of setoff. To secure the payment of the Obligations, Borrower hereby grants to Lender a continuing lien on and security interest in any balances, credits, deposits, accounts and monies of Borrower with any Lender. Any offsetting Lender shall give Borrower prompt written notice of the exercise of its offset rights upon said exercise.
9. General Provisions
9.1 Governing Agreement
In the event of conflict or inconsistency between this Loan Agreement and the other Loan Documents, excluding the Note, the terms, provisions and intent of this Loan Agreement shall govern.
9.2 Borrower’s Obligations Cumulative
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Every obligation, covenant, condition, provision, warranty, agreement, liability, and undertaking of Borrower contained in the Loan Documents shall be deemed cumulative and not in derogation or substitution of any of the other obligations, covenants, conditions, provisions, warranties, agreements, liabilities, or undertakings of Borrower contained herein or therein.
9.3 Payment of Expenses and Attorney’s Fees
Borrower shall pay all reasonable expenses of Lender relating to the negotiation, drafting of documents, documentation of the Loan, and administration and supervision of the Loan, including, without limitation, title insurance, recording fees, filing fees, and reasonable attorneys fees and legal expenses, whether incurred in making the Loan, in future amendments or modifications to the Loan Documents, or in ongoing administration and supervision of the Loan.
Upon occurrence of an Event of Default, Borrower agrees to pay all costs and expenses, including reasonable attorney fees and legal expenses, incurred by Lender in enforcing, or exercising any remedies under, the Loan Documents, and any other rights and remedies.
Borrower agrees to pay all expenses, including reasonable attorney fees and legal expenses, incurred by Lender in any Insolvency Proceeding of any type involving Borrower, the Loan Documents, or the Collateral, including, without limitation, expenses incurred in modifying or lifting the automatic stay, determining adequate protection, use of cash collateral or relating to any plan of reorganization.
9.4 Right to Perform for Borrower
Lender may, in its sole discretion and without any duty to do so, discharge taxes, tax liens, security interests, or any other encumbrance upon the Collateral or any other property of Borrower, pay any filing, recording, or other charges payable by Borrower, and perform any other obligation of Borrower under the Loan Documents.
9.5 Assignability
Borrower may not assign or transfer any of the Loan Documents and any such purported assignment or transfer is void.
Lender may assign or transfer Lender’s interest in this Agreement and any of the Loan Documents. Borrower acknowledges that Lender has granted Zions Bank, (Municipality), and the Utah Center for Neighborhood Stabilization, a Utah nonprofit corporation, dba USBGI, a security interest in this Agreement and the Loan Documents under that certain Credit Agreement dated October ___, 2017, which agreement pertains to the source of funds for the Loan.
9.6 Third Party Beneficiaries
The Loan Documents are made for the sole and exclusive benefit of Borrower, Lender and are not intended to benefit any other third party. No third party may claim any right or benefit or seek to enforce any term or provision of the Loan Documents.
9.7 Governing Law
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The Loan Documents shall be governed by and construed in accordance with the internal laws of the State of Utah, except to the extent that any such document expressly provides otherwise.
9.8 Severability
The illegality or unenforceability of any provision of this Loan Agreement or any instrument or agreement required hereunder shall not in any way affect or impair the legality or enforceability of the remaining provisions of this Loan Agreement or such instrument or agreement.
9.9 Interpretation of Loan Agreement
The article and section headings in this Loan Agreement are inserted for convenience only and shall not be considered part of the Loan Agreement nor be used in its interpretation.
All references in this Loan Agreement to the singular shall be deemed to include the plural when the context so requires, and vice versa. References in the collective or conjunctive shall also include the disjunctive unless the context otherwise clearly requires a different interpretation.
9.10 Survival and Binding Effect of Representations, Warranties, and Covenants
All agreements, representations, warranties, and covenants made herein by Borrower shall survive the execution and delivery of this Loan Agreement and shall continue in effect so long as any obligation to Lender contemplated by this Loan Agreement is outstanding and unpaid, notwithstanding any termination of this Loan Agreement. All agreements, representations, warranties, and covenants made herein by Borrower shall survive any Insolvency Proceeding involving Borrower. All agreements, representations, warranties, and covenants in this Loan Agreement shall bind the party making the same, its successors and, in Lender’s case, assigns, and all rights and remedies in this Loan Agreement shall inure to the benefit of and be enforceable by each party for whom made, their respective successors and, in Lender’s case, assigns.
9.11 Indemnification
Borrower shall indemnify Lender for any and all claims and liabilities, and for damages which may be awarded or incurred by Lender, and for all reasonable attorney fees, legal expenses, and other out-of-pocket expenses incurred in defending such claims, arising from or related in any manner to the negotiation, execution, or performance by Lender of any of the Loan Documents, but excluding any such claims based upon breach or default by Lender or gross negligence or willful misconduct of Lender.
Lender shall have the sole and complete control of the defense of any such claims. Lender is hereby authorized to settle or otherwise compromise any such claims as Lender in good faith determines shall be in Lender’s best interests.
9.12 Environmental Indemnification
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Borrower shall indemnify Lender for any and all claims and liabilities, and for damages which may be awarded or incurred by Lender, and for all reasonable attorney fees, legal expenses, and other out-of-pocket expenses arising from or related in any manner, directly or indirectly, to (i) Hazardous Materials located on, in, or under the Real Property; (ii) any Environmental Condition on, in, or under the Real Property; (iii) violation of or non-compliance with any Environmental Health and Safety Law; (iv) any breach or violation of Section 5.9, Environmental Representations and Warranties, and/or Section 6.23, Environmental Covenants, of this Loan Agreement; and/or (v) any activity or omission, whether occurring on or off the Real Property, whether prior to or during the term of the loan secured hereby, and whether by Borrower or any other person or entity, relating to Hazardous Materials or an Environmental Condition. The indemnification obligations of Borrower under this Section shall survive any reconveyance, release, or foreclosure of the Real Property, any transfer in lieu of foreclosure, and satisfaction of the obligations secured hereby.
Lender shall have the sole and complete control of the defense of any such claims. Lender is hereby authorized to settle or otherwise compromise any such claims as Lender in good faith determines shall be in Lender’s best interests.
9.13 Interest on Expenses and Indemnification, Collateral, Order of Application
All expenses, out-of-pocket costs, attorneys’ fees and legal expenses, amounts advanced in performance of obligations of Borrower, and indemnification amounts owing by Borrower to Lender under or pursuant to this Loan Agreement, the Note, and/or any Security Documents shall be due and payable upon demand. If not paid upon demand, all such obligations shall bear interest at the default rate provided in the Loan Documents from the date of disbursement until paid to Lender, both before and after judgment. Lender is authorized to disburse funds under the Note for payment of all such obligations.
Payment of all such obligations shall be secured by the Collateral and by the Security Documents.
All payments and recoveries shall be applied to payment of the foregoing obligations, the Note, and all other amounts owing to Lender by Borrower in such order and priority as determined by Lender. Unless provided otherwise in the Note, payments on the Note shall be applied first to accrued interest and the remainder, if any, to principal.
9.14 Limitation of Consequential Damages
Lender and Lender’s officers, directors, employees, representatives, agents, and attorneys, shall not be liable to Borrower or any Guarantor for consequential damages arising from or relating to any breach of contract, tort, or other wrong in connection with the negotiation, documentation, administration or collection of the Loan.
9.15 Waiver and Release of Claims
Borrower (i) represents that it has no defenses to or setoffs against any indebtedness or other obligations owing to Lender or Lender’s Affiliates (the “Liabilities”), nor claims against Lender or Lender’s Affiliates for any matter whatsoever, related or unrelated to the Liabilities,
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and (ii) releases Lender and Lender’s Affiliates from all claims, causes of action, and costs, in law or equity, existing as of the date of this Loan Agreement, which Borrower has or may have by reason of any matter of any conceivable kind or character whatsoever, related or unrelated to the Liabilities, including the subject matter of this Loan Agreement. This provision shall not apply to claims for performance of express contractual obligations owing to Borrower by Lender or its Affiliates.
9.16 Revival Clause
If the incurring of any debt by Borrower or the payment of any money or transfer of property to Lender by or on behalf of Borrower should for any reason subsequently be determined to be “voidable” or “avoidable” in whole or in part within the meaning of any state or federal law (collectively “voidable transfers”), including, without limitation, fraudulent conveyances or preferential transfers under the United States Bankruptcy Code or any other federal or state law, and Lender is required to repay or restore any voidable transfers or the amount or any portion thereof, or upon the advice of Lender’s counsel is advised to do so, then, as to any such amount or property repaid or restored, including all reasonable costs, expenses, and attorneys fees of Lender related thereto, the liability of Borrower shall automatically be revived, reinstated and restored and shall exist as though the voidable transfers had never been made.
9.17 Arbitration
a. Jury Trial and Class Action Waivers. As permitted by applicable law, Borrower and Lender each waive their respective rights to a trial before a jury in connection with any Dispute (as “Dispute” is hereinafter defined), and Disputes shall be resolved by a judge sitting without a jury. If a court determines that this provision is not enforceable for any reason and at any time prior to trial of the Dispute, but not later than 30 days after entry of the order determining this provision is unenforceable, any party shall be entitled to move the court for an order compelling arbitration and staying or dismissing such litigation pending arbitration (“Arbitration Order”). If permitted by applicable law, Borrower and Lender also waive the right to litigate in court or an arbitration proceeding any Dispute as a class action, either as a member of a class or as a representative, or to act as a private attorney general.
b. Arbitration. If a claim, dispute, or controversy arises between any of the parties with respect to this Agreement, related agreements, or any other agreement or business relationship between any of the parties whether or not related to the subject matter of this Agreement (all of the foregoing, a “Dispute”), and only if a jury trial waiver is not permitted by applicable law or ruling by a court, any party may require that the Dispute be resolved by binding arbitration before a single arbitrator at the request of any party. By agreeing to arbitrate a Dispute, each party is giving up any right it may have to a jury trial, as well as other rights it would have in court that are not available or are more limited in arbitration, such as the rights to discovery and to appeal.
Arbitration shall be commenced by filing a petition with, and in accordance with the applicable arbitration rules of, JAMS or National Arbitration Forum (“Administrator”) as selected by the initiating party. If the parties agree, arbitration may be commenced by
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appointment of a licensed attorney who is selected by the parties and who agrees to conduct the arbitration without an Administrator. Disputes include matters (i) relating to a deposit account, application for or denial of credit, enforcement of any of the obligations the parties have to each other, compliance with applicable laws and/or regulations, performance or services provided under any agreement by any party, (ii) based on or arising from an alleged tort or (iii) involving either parties’ employees, agents, affiliates, or assigns of a party. However, Disputes do not include the validity, enforceability, meaning, or scope of this arbitration provision, and such matters may be determined only by a court. If a third party is a party to a Dispute, the parties each will consent to including the third party in the arbitration proceeding for resolving the Dispute with the third party. Venue for the arbitration proceeding shall be at a location determined by mutual agreement of the parties or, if no agreement, in the city and state where Lender is headquartered.
After entry of an Arbitration Order, the non-moving party shall commence arbitration. The moving party shall, at its discretion, also be entitled to commence arbitration but is under no obligation to do so, and the moving party shall not in any way be adversely prejudiced by electing not to commence arbitration. The arbitrator (i) will hear and rule on appropriate dispositive motions for judgment on the pleadings, for failure to state a claim, or for full or partial summary judgment, (ii) will render a decision and any award applying applicable law, (iii) will give effect to any limitations period in determining any Dispute or defense, (iv) shall enforce the doctrines of compulsory counterclaim, res judicata, and collateral estoppel, if applicable, (v) with regard to motions and the arbitration hearing, shall apply rules of evidence governing civil cases, and (vi) will apply the law of the state specified in the agreement giving rise to the Dispute. Filing of a petition for arbitration shall not prevent any party from (i) seeking and obtaining from a court of competent jurisdiction (notwithstanding ongoing arbitration) provisional or ancillary remedies including but not limited to injunctive relief, property preservation orders, foreclosure, eviction, attachment, replevin, garnishment, and/or the appointment of a receiver, (ii) pursuing non-judicial foreclosure, or (iii) availing itself of any self-help remedies such as setoff and repossession. The exercise of such rights shall not constitute a waiver of the right to submit any Dispute to arbitration.
Judgment upon an arbitration award may be entered in any court having jurisdiction except that, if the arbitration award exceeds $4,000,000, any party shall be entitled to a de novo appeal of the award before a panel of three arbitrators. To allow for such appeal, if the award (including Administrator, arbitrator, and attorney’s fees and costs) exceeds $4,000,000, the arbitrator will issue a written, reasoned decision supporting the award, including a statement of authority and its application to the Dispute. A request for de novo appeal must be filed with the arbitrator within 30 days following the date of the arbitration award; if such a request is not made within that time period, the arbitration decision shall become final and binding. On appeal, the arbitrators shall review the award de novo, meaning that they shall reach their own findings of fact and conclusions of law rather than deferring in any manner to the original arbitrator. Appeal of an arbitration award shall be pursuant to the rules of the Administrator or, if the 88Administrator has no such rules, then the JAMS arbitration appellate rules shall apply.
Arbitration under this provision concerns a transaction involving interstate commerce and shall be governed by the Federal Arbitration Act, 9 U.S.C. § 1 et seq. This arbitration provision
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shall survive any termination, amendment, or expiration of this Agreement. If the terms of this provision vary from the Administrator’s rules, this arbitration provision shall control.
c. Reliance. Each party (i) certifies that no one has represented to such party that the other party would not seek to enforce jury and class action waivers in the event of suit, and (ii) acknowledges that it and the other party have been induced to enter into this Agreement by, among other things, the mutual waivers, agreements, and certifications in this section.
9.18 Consent to Utah Jurisdiction and Exclusive Jurisdiction of Utah Courts
Borrower acknowledges that by execution and delivery of the Loan Documents Borrower has transacted business in the State of Utah and Borrower voluntarily submits to, consent to, and waive any defense to the jurisdiction of courts located in the State of Utah as to all matters relating to or arising from the Loan Documents and/or the transactions contemplated thereby. EXCEPT AS EXPRESSLY AGREED IN WRITING BY LENDER AND EXCEPT AS PROVIDED IN THE ARBITRATION PROVISIONS ABOVE, THE STATE AND FEDERAL COURTS LOCATED IN THE STATE OF UTAH SHALL HAVE SOLE AND EXCLUSIVE JURISDICTION OF ANY AND ALL CLAIMS, DISPUTES, AND CONTROVERSIES, ARISING UNDER OR RELATING TO THE LOAN DOCUMENTS AND/OR THE TRANSACTIONS CONTEMPLATED THEREBY. NO LAWSUIT, PROCEEDING, OR ANY OTHER ACTION RELATING TO OR ARISING UNDER THE LOAN DOCUMENTS AND/OR THE TRANSACTIONS CONTEMPLATED THEREBY MAY BE COMMENCED OR PROSECUTED IN ANY OTHER FORUM EXCEPT AS EXPRESSLY AGREED IN WRITING BY LENDER.
9.19 Joint and Several Liability
If there is more than one Borrower, each shall be jointly and severally liable for all obligations and liabilities arising under the Loan Documents.
9.20 Notices
All notices or demands by any party to this Loan Agreement shall, except as otherwise provided herein, be in writing and shall be deemed to have been sufficiently given when personally delivered, deposited in the United States mail, by registered or certified mail, or deposited with a reputable overnight mail carrier which provides delivery of such mail to be traced, addressed as follows:
Mailing addresses:
Lender:
Utah Small Business Growth Initiative, LLC 6880 South 700 West, 2nd Floor Midvale, Utah 84047 Attention: Michael Plaizier
With a copy to:
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Kirton McConkie 50 East South Temple, Suite 400 Salt Lake City, Utah 841 Attention: John B. Lindsay
Borrower:
/ / / Attention: /
With a copy to:
/ / / Attention: /
9.21 Counterparts
This Loan Agreement may be executed in any number of separate counterparts, each of which, when so executed, shall be deemed an original, and all of which taken together shall constitute but one and the same instrument.
9.22 Disclosure of Financial and Other Information
Borrower hereby consents to Lender disclosing to any other lender who may participate in the Loan any and all information, knowledge, reports, and records, including, without limitation, financial statements, relating in any manner whatsoever to the Loan, Borrower.
9.23 USA Patriot Act Notification
Lender hereby notifies Borrower that, pursuant to the requirements of the Patriot Act, it is required to obtain, verify and record information that identifies Borrower, which information includes the name and address of Borrower and other information that will allow such Lender to identify Borrower in accordance with the Patriot Act.
9.24 Integrated Agreement and Subsequent Amendment
The Loan Documents constitute the entire agreement between Lender, Borrower, and may not be altered or amended except by written agreement signed by Lender, Borrower. PURSUANT TO UTAH CODE SECTION 25-5-4, BORROWER IS NOTIFIED THAT THESE AGREEMENTS ARE A FINAL EXPRESSION OF THE AGREEMENT BETWEEN LENDER AND BORROWER AND THESE AGREEMENTS MAY NOT BE CONTRADICTED BY EVIDENCE OF ANY ALLEGED ORAL AGREEMENT.
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All prior and contemporaneous agreements, arrangements and understandings between the parties hereto as to the subject matter hereof are, except as otherwise expressly provided herein, rescinded.
Signature Page(s) Follow
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IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement to be duly executed and delivered by their proper and duly authorized officers as of /.
LENDER
UTAH SMALL BUSINESS GROWTH INITIATIVE, LLC, a Utah limited liability company dba BUSINESS LOANS OF UTAH
By: Utah Center for Neighborhood Stabilization, a Utah nonprofit corporation Its: Sole Member
By: ______Michael Plaizier Its: Executive Director
Signature Page /___ to Loan Agreement
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BORROWER
/______, a /______
By: ______Name: ______Title: ______
Signature Page /___ to Loan Agreement
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EXHIBIT A
Secured Promissory Note
$/______/______, 20___
FOR VALUE RECEIVED, the undersigned, /, a / (“Borrower”), promises to pay to the order of Utah Small Business Growth Initiative, LLC, a Utah limited liability company, dba Business Loans of Utah (“Lender”), in lawful money of the United States of America, the principal sum of /______($/______) (the “Loan”) or such lesser amount as may be advanced herein (this “Note”).
1. Definitions; Loan Agreement
(a) For the purposes of this Note, unless otherwise defined herein, capitalized terms used herein shall have the meaning ascribed to such terms in the Loan Agreement. The following definitions (some of which are restated from those definitions contained in the Loan Agreement) shall apply to the words and phrases used herein:
“Business Day” shall mean any day other than a Saturday, Sunday or a legal holiday on which banks are authorized or required to be closed for the conduct of commercial banking business in Salt Lake City, Utah.
“Deed of Trust” shall mean that certain Deed of Trust with Assignment of Rents dated as of the date hereof executed by Borrower in favor of Lender.
“Event of Default” shall mean any of those events set forth in Section 7.1 of the Loan Agreement.
“Interest Rate” shall mean /____% per annum.
“Loan Agreement” shall mean that certain Loan Agreement, dated as of the date hereof, by and between the Lender and Borrower.
“Loan Amount” shall mean $/______.
“Loan Documents” shall mean the Loan Agreement, this Note, the Deed of Trust, financing statements, and all other documents, instruments and agreements which evidence, secure or are otherwise executed in connection with the Loan, including all amendments, modifications, renewals, extensions, restatements and replacements thereof.
“Maturity Date” shall mean the earlier of (i) /______, and (ii) the date on which the unpaid principal balance of this Note becomes due and payable by acceleration or otherwise pursuant to the Loan Documents or the exercise by Lender of any right or remedy under any Loan Document.
(b) All of the terms, covenants and agreements of the Loan Agreement and the other Loan Documents are incorporated herein by reference.
2. Advances
The proceeds of the Loan shall be disbursed to Borrower or as instructed by the Borrower in one disbursement on the Closing Date.
3. Interest, Payments and Maturity of Loan
(a) Subject to the terms and conditions of this Note, interest will accrue on the outstanding principal amount of this Note at the Interest Rate. Interest shall accrue interest on the basis of a 360-day year consisting of twelve 30-day months, compounded monthly, and shall be payable for the actual number of days elapsed in any period. [OPEN ISSUE UNDER THIS PARAGRAPH CONCERNING COMPOUNDING, PARAGRAPH SUBJECT TO REVISION]
(b) On /______, Borrower shall make a payment of interest only for the period commencing on the date of this Note and ending on /______. Borrower shall continue to make payments of accrued and unpaid interest only at the Interest Rate, each payment payable in arrears in successive monthly installments on the fifth (5th) day of each calendar month, through and including the payment due on /______.
(c) Beginning with the payment due on /______, and ending with the payment due on the Maturity Date, Borrower shall make monthly payments of principal plus accrued and unpaid interest, each payment payable in arrears in successive monthly installments on the fifth (5th) day of each calendar month, calculated on a /______(/____) month amortization schedule. For purposes of determining the interest accrual in this Section 3(c), the amount of interest accrued shall be calculated (notwithstanding the payment date) from the fifth (5th) day of the applicable calendar month through the last day of the applicable calendar month) computed with respect to the then outstanding principal balance (including any compounded interest), which payments shall be due and payable on the fifth (5th) day of each consecutive month. On /______, Borrower shall make a payment in the amount of $/______to Lender.
(d) The entire outstanding principal balance under this Note plus all accrued and unpaid interest thereon and any other amount due hereunder shall become due and payable on the Maturity Date.
(e) Payments of principal and interest shall be made to Lender by crediting before 12:00 noon, Pacific Standard Time, on the appropriate due date, to Utah Small Business Growth Initiative, LLC, a Utah limited liability company, dba Business Loans of Utah, 6880 South 700 West, 2nd Floor, Midvale, Utah 84047, or its assignee; or in such other manner as Lender may elect from time to time. If any payment is due on a calendar day other than a Business Day, such payment shall be due on the next succeeding Business Day. Failure to
make payments on this Note within three (3) Business Days of the date such amount becomes due and payable shall constitute an Event of Default hereunder.
(f) Amounts repaid hereunder shall be applied first to reduce the accrued unpaid interest on the aggregate unpaid principal amount of this Note and second to reduce the aggregate unpaid principal amount of this Note. In addition, any amounts repaid may not be reborrowed.
(g) In no contingency or event whatsoever, whether by reason of advancement of the proceeds hereof or otherwise, shall the amount paid or agreed to be paid to Lender for the use, forbearance or detention of money advanced hereunder exceed the highest lawful rate permissible under any law which a court of competent jurisdiction may deem applicable hereto.
4. Prepayment
Borrower may prepay all or any part of the Loan at any time without permission or penalty, but with written notice provided to Lender not less than five (5) days before the date of such prepayment.
5. Security
This Note is secured, inter alia, by the Deed of Trust to which reference is hereby made for a description of the nature and extent of the security provided thereby and the rights and limitations of rights of the Lender and of the Borrower (or other debtor or pledgor under a pledge or security agreement) in respect of such security.
6. Default; Default Rate
If the Borrower shall fail to pay any amount herein provided within three (3) Business Days of the date each such amount becomes due and payable, or in case an event of default (as defined in the any of the Loan Documents, or any pledge and/or security agreement or any other document executed by Borrower in connection with or to secure this Note) shall occur, the principal of this Note and any accrued interest and all other indebtedness secured or to be secured by the Loan Documents may be declared due and payable in the manner and with the effect provided in the Loan Documents, and the same shall thereafter bear interest at the rate contained in this Note plus five percent (5%) per annum, initially determined on the date incurred and changing thereafter, if and when the rate changes. Failure to exercise this option shall not constitute a waiver of the right to exercise the same at any other time. Notwithstanding the foregoing, the Lender shall not be obligated to provide notice of default for failure to make any payment if it has delivered notice of default for failure to make payment on at least three previous occasions.
7. Late Charge
The Borrower recognizes that default by the Borrower in making the payments under this Note and/or in any of the other Loan Documents when due will result in the Lender
incurring additional expense servicing the loan, loss to the Lender of the use of the money due, and frustration to the Lender in meeting its other loan commitments. In the event that any payment or portion thereof is not paid within fifteen (15) days after the date it is due, the Lender hereof may collect, and Borrower agrees to pay with such payment a “late charge” of five percent (5%) of any overdue amount or $5.00, whichever is greater, as liquidated damages for the additional expense of handling such delinquent payments. Such late charge represents the reasonable estimate by the parties of a fair average compensation due to the failure of the undersigned to make timely payments. Such late charge shall be paid without prejudice to the rights of Lender hereof to collect any other amounts provided to be paid or to declare a default hereunder or under the Loan Documents.
8. Costs and Expenses
(a) In the event that the Borrower defaults with respect to any payment herein provided for or in case of an Event of Default under the Loan Documents, the Lender shall have the right, at the Borrower’s expense, to consult an attorney or collection agency to make any demand, enforce any remedy, or otherwise protect its rights under this Note and the Loan Documents. The Borrower hereby promises to pay (or cause to be paid) all costs, fees, and expenses so incurred by the Lender, including without limitation reasonable attorney fees (with or without litigation), court costs, collection agency charges, notice expenses, and title search expenses, and the failure of the defaulting Borrower to pay (or cause to be paid) the same shall, in itself, constitute a further and additional default. In the event that suit or action is instituted by the Lender to enforce this Note or rights under the Loan Documents, the Borrower hereby promises to pay (or cause to be paid), in addition to costs and expenses provided by statute or otherwise, such sums as the court may adjudge reasonable as attorney fees in such proceeding and on any appeals from any judgment or decree entered therein and the costs and attorney fees for collection of the amount due therein.
(b) The Borrower further agrees to pay (or cause to be paid) immediately upon demand all costs and expenses of the Lender including reasonable attorney fees (i) if the Lender seeks to have property securing the Loan abandoned by any estate in Bankruptcy; (ii) if the Lender attempts to have any stay or injunction prohibiting the enforcement or collection of this Note, prohibiting the foreclosure of any pledge and/or security agreement, or prohibiting the enforcement of any pledge and/or security agreement or any other Loan Document lifted by any Bankruptcy or other court; (iii) if the Lender participates in any subsequent proceedings or appeals from any order or judgment entered in any such proceeding; (iv) if the Lender deems it appropriate to file a proof of claim or in any other manner participate in any Bankruptcy or similar proceedings; (v) if the Lender retains legal counsel in connection with amendments or modifications to this Note or any other Loan Document; or (vi) if the Lender participates in any mediation or arbitration proceeding to enforce its rights under any of the Loan Documents.
9. Non-Waiver; Miscellaneous
(a) Wherever possible each provision of this Note shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Note
shall be prohibited or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity without invalidating the remainder of such provision or remaining provisions of this Note. No delay or failure on the part of Lender in the exercise of any right or remedy hereunder shall operate as a waiver thereof, nor as acquiescence in any default, nor shall any single or partial exercise by Lender of any right or remedy preclude any other right or remedy. Lender, at its option, may enforce its rights against any collateral securing this Note without enforcing its rights against Borrower or any other property or indebtedness due or to become due to Borrower. Borrower agrees that, without releasing or impairing Borrower’s liability hereunder, Lender may at any time release, surrender, substitute or exchange any collateral securing this Note and may at any time release any party primarily or secondarily liable for the indebtedness evidenced by this Note.
(b) Any notice to be given pursuant to this Note shall be given as provided in the Loan Agreement. Time is of the essence. All reimbursements and payments required by this Note (other than the scheduled payments of principal or interest) shall be immediately due and payable on demand. Borrower agrees that it has received valuable consideration hereunder, that it signs this Note as maker and not as surety, and that any and all suretyship defenses are hereby waived. The Borrower for itself and all drawers and endorsers severally waives presentment for payment, protest, notice of protest, and notice of nonpayment of this Note. This Note is governed by the laws of the state of Idaho without regard for conflict of laws principles; provided, however, that to the extent the Lender of this Note has greater rights or remedies under federal law, this provision shall not be deemed to deprive the Lender of such rights and remedies as may be available under federal law.
10. Jury Waiver BORROWER AGREES THAT, AT THE SOLE OPTION OF PAYEE, ALL LITIGATION ARISING OUT OF THIS NOTE AND THE LOAN AGREEMENT SHALL BE IN THE LOCAL OR FEDERAL COURTS LOCATED IN THE STATE OF MONTANA OR IN ANY OTHER COURT IN WHICH PAYEE SHALL INITIATE LEGAL OR EQUITABLE PROCEEDINGS AND WHICH HAS SUBJECT MATTER JURISDICTION OVER THE MATTER IN CONTROVERSY, AND BORROWER HEREBY WAIVES ANY DEFENSE OF INCONVENIENT FORUM. BORROWER FURTHER AGREES THAT PROCESS MAY BE SERVED UPON IT BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO BORROWER AT ITS ADDRESS STATED HEREIN, AND BORROWER WAIVES ANY DEFENSE OF INSUFFICIENCY OF SERVICE WITH RESPECT TO PROCESS SO SERVED. BORROWER FURTHER AGREES THAT, BECAUSE OF THE COMPLEXITIES OF COMMERCIAL TRANSACTIONS AND THE NEED FOR EXPEDITIOUS RESOLUTION OF DISPUTES, ALL LITIGATION ARISING OUT OF THIS NOTE OR ANY OF THE OTHER LOAN DOCUMENTS SHALL BE BEFORE A COURT SITTING WITHOUT A JURY, AND BORROWER HEREBY, TO THE EXTENT PERMITTED BY LAW, WAIVES TRIAL BY JURY IN ALL SUCH LITIGATION.
11. Setoff
As additional security for the payment of the obligations described in the Loan Documents and any other obligations of the Borrower to the Lender of any nature whatsoever (collectively the “Obligations”), the Borrower hereby grants to the Lender a security interest in, a lien on and an express contractual right to set off against all depository account balances, cash and any other property of the Borrower now or hereafter in the possession of the Lender and the right to refuse to allow withdrawals from any account (collectively, “Setoff”). At Lender’s option, the Lender may, at any time upon the occurrence of a default hereunder (notwithstanding any notice requirements or grace/cure periods under this or other agreements between the Borrower and the Lender) Setoff against the Obligations whether or not the Obligations (including future installments) are then due or have been accelerated, all without any advance or contemporaneous notice or demand of any kind to the Borrower, such notice and demand being expressly waived.
12. Purpose
Borrower acknowledges that this Loan is primarily for investment, business or commercial purposes and not primarily for personal, family, household or agricultural purposes.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, Borrower has caused this Secured Promissory Note to be duly executed as of the day and year first above written.
BORROWER
/______, a /______
By: ______Name: ______Title: ______
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EXHIBIT B
COMPLIANCE CERTIFICATE
As submitted with financial statements for the period ended ______
To: Lender pursuant to the Loan Agreement described below.
This Compliance Certificate is furnished pursuant to the Loan Agreement, dated as of /, as it may be amended, modified or supplemented from time to time (the “Loan Agreement”) by and among the undersigned as Borrower the Lender that is party thereto. Unless otherwise defined herein, capitalized terms used in this Compliance Certificate have the meanings ascribed to them in the Loan Agreement. In the event of any conflict between the calculations set forth in this Compliance Certificate and the manner of calculation required by the Loan Agreement, the terms of the Loan Agreement shall govern and control.
1. The person signing this instrument is the duly elected, qualified and acting officer or representative of the Borrower as indicated below, having all necessary authority to act for the Borrower in making the certifications herein.
2. The person signing this instrument has reviewed the terms of the Loan Agreement and has made, or has caused to be made under his/her supervision, a detailed review of the transactions and conditions of the Borrower and any of its subsidiaries during the accounting period(s) covered by the attached financial statements.
3. The examinations described in paragraph 2 above did not disclose, and the undersigned has no knowledge of, the existence of any condition or event that constitutes a Default or an Event of Default during or at the end of the accounting period(s) covered by the attached financial statements or as of the date of this Compliance Certificate, except as set forth below in response to which Borrower proposes to take or has taken the following actions (if none, so state): ______
4. The Borrower is in full compliance with all covenants contained in the Loan Agreement, except as provided for below in response to which Borrower proposes to take or has taken the following actions (if none, so state): ______
5. The representations and warranties made by Borrower in the Loan Agreement are true and correct in all material respects as of the date hereof, except to the extent any such representation or warranty is stated to relate solely to an earlier date, in which case such
4824-5287-7903
representation or warranty shall have been true and correct in all material respects on and as of such earlier date.
6. The financial statements attached hereto (balance sheet, income statement and statement of cash flows) for the period ended (i) are prepared in accordance with GAAP, applied on a consistent basis (subject to the absence of footnotes and to normal year-end adjustments), and (ii) fairly present in all material respects the financial condition and results of operations of the Borrower.
BORROWER:
/, /
By: EXHIBIT ONLY. NOT SIGN Name: ______Title: ______Date: ______
4824-5287-7903 GUARANTOR CERTIFICATE
This certification is made on /______in connection with the execution and delivery by /, a / (“Guarantor”), of a Guarantee (the “Guarantee”) which guarantees the full performance of /, a / (“Borrower”) under a Loan Agreement dated as of /______(the “Loan Agreement”), between Borrower and Utah Small Business Growth Initiative, LLC, a Utah limited liability company, dba Business Loans of Utah (“Lender”). Capitalized terms used herein and not otherwise defined shall have the meaning assigned to such terms in the Guarantee.
WE, THE UNDERSIGNED, DO HEREBY CERTIFY THAT:
1. Guarantor is duly organized and validly existing under the laws of the State of /Utah and duly qualified to do business in the State of Utah, with full power and authority to execute and deliver the Guarantee and to undertake and perform its obligations thereunder.
2. Guarantor’s execution and delivery of the Guarantee, and its guarantee of Borrower’s performance of its obligations under the Loan Agreement, do not conflict with, violate or constitute a default under Guarantor’s organizational documents, as amended from time, or the terms or provisions of any indenture, mortgage, deed of trust, agreement or other instrument by which Guarantor is bound.
3. Guarantor has duly authorized the execution and delivery of the Guarantee and the guarantee of Borrower’s obligations thereunder, and Guarantor has obtained all necessary consents and approvals to carry out the same, and the Guarantee has been duly executed and delivered by Guarantor.
4. On the date hereof each of the persons listed in Exhibit A attached hereto is a duly appointed, qualified and acting officer of Guarantor holding the respective office set forth opposite his or her name, and the signature of each officer set forth in Exhibit A who executed the Guarantee is his or her genuine signature. Each officer of Guarantor who executed the Guarantee has full power and authority to execute such Guarantee.
5. The representations and warranties of Guarantor contained in the Guarantee are true and correct in all material respects as of the date hereof as though such representations and warranties had been made on and as of the date hereof; Guarantor has complied with all the terms of the Guarantee to be complied with by it prior to or on the date hereof.
6. Attached hereto as Exhibits B, C, and D respectively, are true, correct and complete copies of (1) Guarantor’s organizational documents, including /Articles of Incorporation and /Bylaws, each of which were duly adopted by the /directors and/or shareholders of Guarantor, and are in full force and effect on the date hereof, (2) the resolution of Guarantor authorizing the execution and delivery of the Guarantee and all related documents, which resolution was duly adopted in accordance with all requirements of law and the organizational documents of Guarantor and remains in full force and effect on the date hereof, and (3) a Certificate of Existence issued by the /Utah Department of Commerce, Division of Corporations and Commercial Code with respect to Guarantor.
4817-8107-0671 7. All of the conditions and agreements required in the Guarantee to be satisfied or performed by Guarantor at or prior to the date hereof have been satisfied or performed by Guarantor in the manner and with the effect contemplated in the Guarantee.
Dated: /______.
GUARANTOR
/, a /
By: ______Name: ______Title: ______
2 4817-8107-0671 EXHIBITS
A. SPECIMEN SIGNATURES B. ORGANIZATION DOCUMENTS C. UNANIMOUS WRITTEN CONSENT D. CERTIFICATES OF EXISTENCE (DELAWARE)
3 4817-8107-0671 EXHIBIT A SPECIMEN SIGNATURES
______Officer [INSERT NAME OF OFFICER]
______Officer [INSERT NAME OF OFFICER]
4 4817-8107-0671 EXHIBIT B ORGANIZATIONAL DOCUMENTS
5 4817-8107-0671 EXHIBIT C
UNANIMOUS WRITTEN CONSENT OF THE /BOARD OF DIRECTORS OF /______
The undersigned, constituting the /board of directors of (the “/Board”) of /, a / (the “Company”), on behalf of the Company, hereby adopt, ratify, approve and consent to all of the following statements and resolutions by written consent without a meeting in the manner authorized by Company’s /Bylaws, effective as of /______. Capitalized terms not otherwise defined herein shall have the meaning ascribed to such terms in the Loan Agreement among Utah Small Business Growth Initiative, LLC, a Utah limited liability company, dba Business Loans of Utah (“Lender”), and /, a / (“Borrower”) (the “Loan Agreement”).
WHEREAS, the /Board has determined it to be in the best interest of the Company to guarantee Borrower’s performance under a term loan in the amount of /______Dollars (/$______), by means of the transactions described in the Loan Agreement (the “Transactions”).
NOW, THEREFORE, IT IS RESOLVED, that the authority granted herein is deemed retroactive. All acts authorized by this consent resolution, but performed prior to its adoption, are hereby ratified and approved; and be it
FURTHER RESOLVED, that the Guarantee of the Company to Lender and any and all transactions contemplated thereby be and hereby are approved and authorized substantially in the form presented to the Board, with such changes, additions, deletions, supplements and amendments thereto as the Board or any officer of the Company, acting in the best interest of the Company, may deem necessary or advisable, in consultation with legal counsel, each such determination to be conclusively evidenced by such person’s execution and delivery thereof; and be it
FURTHER RESOLVED, that the /Board or any officer of the Company (collectively an “Authorized Person”), acting in the best interest of the Company, be, and hereby is, in the name of the Company, authorized, directed and empowered to make any and all reasonably necessary filings, to take all such actions and to execute and deliver, or cause to be executed and delivered, all such agreements, amendments, certificates, instruments and documents as any Authorized Person, acting in the best interest of the Company, may deem, in his or her sole and absolute discretion, necessary or advisable to carry out the purposes and intent of the foregoing consent resolutions, with the making of any filings, the taking of any such actions or the execution and/or delivery of any such agreement, amendment, certificate, instrument, or document constituting conclusive evidence of the Authorized Person’s authority therefor and of the approval of the Board thereof, and to take such other actions as any Authorized Person, acting in the best interest of the Company may deem necessary, desirable, advisable or appropriate to consummate, effectuate, carry out or further the agreements and transactions contemplated by, and the intent and purpose of, and of the foregoing consent resolutions; and be it
FURTHER RESOLVED, that the omission from these consent resolutions of any agreement, document or other arrangement contemplated by any of the agreements, documents
6 4817-8107-0671 or instruments described in the foregoing consent resolutions or whereas clauses or any action to be taken in accordance with any requirement of any of the agreements, documents, or instruments described in the foregoing consent resolutions, shall in no manner derogate from the authority of any Authorized Person, acting in the best interest of the Company, to take all actions necessary, desirable, advisable or appropriate to consummate, effectuate, carry out or further the transactions contemplated by, including, without limitation, the intent and purposes of, the foregoing consent resolutions; and be it
FURTHER RESOLVED: that any Authorized Person, acting in the best interest of the Company, be, and hereby is, authorized on behalf of the Company: (i) to prepare, execute, deliver and perform, as the case may be, such agreements, amendments, applications, approvals, certificates, communications, consents, demands, directions, documents, further assurances, instruments, notices, orders, requests, resolutions, supplements or undertakings, (ii) to pay or cause to be paid on behalf of the Company any related costs and expenses and (iii) to take such other actions, in the name and on behalf of the Company, as each such Authorized Person, in his or her discretion, shall deem necessary or advisable to complete and effect the foregoing transactions or to carry out the intent and purposes of the foregoing consent resolutions and the transactions contemplated thereby, the preparation, execution, and delivery of any such agreements, amendments, applications, approvals, certificates, communications, consents, demands, directions, documents, further assurances, instruments, notices, orders, requests, resolutions, supplements or undertakings, the payment of any such costs or expenses and the performance of any such other acts shall be conclusive evidence of the approval of the Board thereof and all matters relating thereto.
[Signature Page Follows]
7 4817-8107-0671 IN WITNESS WHEREOF, the undersigned Board has executed this Written Consent as of the date first above written.
______, Director
______, Director
8 4817-8107-0671 EXHIBIT D
CERTIFICATE OF STATUS
9 4817-8107-0671 GUARANTEE
This Guarantee is made by the undersigned, /, a /, and /, a / (individually and collectively herein, “Guarantor”), to Utah Small Business Growth Initiative, LLC, a Utah limited liability company, dba Business Loans of Utah (“Lender”), as an inducement to Lender to enter into a Loan Agreement with and to loan monies to /, a / (“Borrower”).
Lender, Borrower, and Guarantor are entering into a Loan Agreement dated /______(the “Effective Date”), as amended, supplemented, restated or otherwise modified from time to time (the “Loan Agreement”), pursuant to which Lender has agreed to a term loan in the amount of /______Dollars (/$______) evidenced by a Promissory Note dated the Effective Date in the aggregate original principal amount of /______Dollars (/$______).
For good and valuable consideration, receipt of which is hereby acknowledged, Guarantor agrees as follows:
1. Definitions. Except as otherwise provided herein, terms defined in the Loan Agreement shall have the same meanings when used herein. Terms defined in the singular shall have the same meaning when used in the plural and vice versa. As used herein, the term:
“Collateral” includes, in addition to the meaning set forth in the Loan Agreement, any other collateral for the Obligations which may be taken in the future.
“Guarantor” includes, in addition to the meaning set forth in the Loan Agreement, any other person or entity who guarantees the Obligations, now or in the future by becoming a party to this Guarantee via execution of a joinder agreement or otherwise.
2. Guarantee. Guarantor absolutely and unconditionally guarantees to Lender that Borrower shall promptly and fully perform, pay and discharge the Obligations. If Borrower fails to pay any of the Obligations promptly as the same becomes due, Guarantor agrees to pay the Obligations on demand.
3. Guarantee Unconditional. This Guarantee is an absolute and unconditional guarantee of payment and not of collectability. The liability of Guarantor hereunder is not conditional or contingent upon the genuineness, validity, or enforceability of the Obligations or any of the Loan Documents or the value or sufficiency of any Collateral.
4. Agreement to Pay Attorneys Fees. Guarantor agrees to pay all collection costs, including reasonable attorneys’ fees and legal expenses, incurred by Lender in enforcing this Guarantee.
Guarantor agrees to pay all expenses, including attorneys’ fees and legal expenses, incurred by Lender in any bankruptcy proceedings of any type involving Guarantor, including, without limitation, expenses incurred in modifying or lifting the automatic stay, determining adequate protection, use of cash collateral, or relating to any plan of reorganization.
4844-9629-2943 5. Waiver by Guarantor. Guarantor expressly and absolutely, without affecting the liability of Guarantor hereunder:
a. Waives notice of acceptance of this Guarantee, the offer of guarantee contemplated by this Guarantee, or any other notice which may be required relative to the acceptance of this Guarantee;
b. Waives demand, protest, notice of dishonor or nonpayment or presentment for payment of the Notes or any other evidence of the Obligations;
c. Waives notice of transactions which have occurred under or relating to or affecting this Guarantee;
d. Waives notice of any adverse change in the condition, financial or otherwise, of Borrower or any Guarantor, any change concerning any Collateral, or of any other fact which might materially increase Guarantor’s risk, whether or not Lender has knowledge of the same;
e. Waives any right to require Lender to (i) proceed against Borrower by suit or otherwise, (ii) foreclose, proceed against, liquidate or exhaust any Collateral, or (iii) exercise, pursue or enforce any right or remedy Lender may have against Borrower, any Collateral, any Guarantor, any other person or entity, or otherwise, prior to proceeding against Guarantor; and
f. Waives any and all rights of subrogation, contribution or indemnification against Borrower or any Guarantor of any nature whatsoever, now existing or hereafter arising or created until ninety (90) days after the repayment of all Obligations.
6. Consent to Lender’s Acts. Guarantor hereby authorizes and consents to Lender at any time and from time to time, without notice or further consent of Guarantor, doing the following and Guarantor agrees that the liability of Guarantor shall not be released or affected by:
a. The taking or accepting, or the failure by Lender to take or accept, any other Collateral or Guarantee for the Obligations;
b. The modification, amendment, extension, renewal, replacement, or termination of any of the Loan Documents, to the granting of any other credit, and to the acceleration of maturity of the Obligations;
c. Any complete or partial release, substitution, subordination, impairment, loss, compromise, or other modification of any Collateral or any Guarantee;
d. The complete or partial release or substitution of Borrower or any Guarantor;
e. Any renewal, extension, modification, replacement, acceleration, consolidation, adjustment, indulgence, forbearance, waiver or compromise of the payment of any
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4844-9629-2943 part or all of the Obligations, or any liability of any Guarantor, or the performance of any covenant contained in the Loan Documents;
f. Any neglect, delay, omission, failure, or refusal of Lender to take or prosecute any action for the collection of the Obligations or any part thereof, or for the enforcement of any provision of any of the Loan Documents, or any action in connection with any Collateral or any Guarantee, including, without limitation, the failure of Lender to perfect any security interest in any Collateral;
g. Any increase or decrease in the rate of interest on the Obligations;
h. Acceptance of any partial and/or late payments on the Obligations;
i. Application of payments by, or recoveries from, Borrower or any Guarantor, or any sums realized from any Collateral, in such manner and in such order of priority as Lender deems proper, whether or not the obligation to which the payment or recovery is applied is due at the time of such application; and
j. Lender exercising any and all rights and remedies available to Lender by law, at equity or by agreement, even if the exercise thereof may affect, modify, or eliminate any Guarantor’s right of subrogation against Borrower or any other party.
7. Term of Guarantee. This Guarantee shall remain in full force and effect until all Obligations have been fully paid. No termination of this Guarantee by Guarantor shall be effective unless consented to in writing by Lender.
8. Cumulative Rights. The rights and remedies herein conferred are cumulative and not exclusive of any other rights or remedies, and shall be in addition to every other right, power, and remedy that Lender may have, whether specifically granted herein, or hereafter existing at law, in equity, or by statute; and any and all such rights and remedies may be exercised from time to time and as often and in such order as Lender may deem expedient.
No delay or omission in the exercise or pursuance by Lender of any right, power, or remedy shall impair any such right, power, or remedy or shall be construed to be a waiver thereof.
9. Governing Law. This Guarantee shall be governed by and construed in accordance with the laws of the State of Utah.
10. Binding Effect. This Guarantee may be executed and delivered to Lender prior to the execution and delivery of the Loan Documents. This Guarantee shall nonetheless be binding and enforceable upon its execution and delivery to Lender.
11. Revival Clause. If the incurring of any debt by Borrower or the payment of any money or transfer of property to Lender by or on behalf of Borrower, Guarantor, or any other party should for any reason subsequently be determined to be “voidable” or “avoidable” in whole or in part within the meaning of any state or federal law (collectively “voidable transfers”), including, without limitation, fraudulent conveyances or preferential transfers under the United 3
4844-9629-2943 States Bankruptcy Code or any other federal or state law, and Lender is required to repay or restore any voidable transfers or the amount or any portion thereof, or upon the advice of Lender’s counsel is advised to do so, then, as to any such amount or property repaid or restored, including all reasonable costs, expenses, and attorneys’ fees of Lender related thereto, the liability of Guarantor shall automatically be revived, reinstated and restored and shall exist as though the voidable transfers had never been made.
12. Severability and Interpretation. Any provision of this Guarantee which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction only, be ineffective only to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. The headings in this Guarantee are inserted for convenience only and shall not be considered part of the Guarantee nor be used in its interpretation. References in the collective or conjunctive shall also include the disjunctive unless the context otherwise clearly requires a different interpretation.
13. Continuing Agreement. All agreements, representations, warranties, and covenants made herein by Guarantor shall survive the execution and delivery of this Guarantee and shall continue in effect so long as the Obligations or any portion thereof are outstanding and unpaid. All agreements, representations, warranties, and covenants made herein by Guarantor shall survive any bankruptcy proceedings. This Guarantee shall bind the party making the same, and /its successors, assigns, heirs, executors, and personal representatives. The death, insolvency, bankruptcy, disability, or lack of corporate power of Borrower, Guarantor, or any other person or entity at any time will not affect this Guarantee.
14. Waiver of Defenses and Release of Claims. Guarantor hereby (i) represents that as of the Effective Date neither Guarantor nor any affiliate or principal of Guarantor has any defenses to or setoffs against any indebtedness or other obligations owing by Borrower and Guarantor, or by Borrower’s or Guarantor’s affiliates or principals, to Lender or Lender’s affiliates (the “Obligations”), nor any claims against Lender or Lender’s affiliates for any matter whatsoever, related or unrelated to the Obligations, and (ii) releases Lender and Lender’s affiliates, officers, directors, employees and agents from all claims, causes of action, and costs, in law or equity, known or unknown, whether or not matured or contingent, existing as of the date hereof that Borrower and Guarantor has or may have by reason of any matter of any conceivable kind or character whatsoever, related or unrelated to the Obligations, including the subject matter of this Loan Agreement. The foregoing release does not apply, however, to claims for future performance of express contractual obligations that accrue or mature after the date hereof that are owing to Borrower and Guarantor by Lender or Lender’s affiliates. Borrower and Guarantor each acknowledge that Lender has been induced to enter into or continue the Obligations by, among other things, the waivers and releases in this Section 14.
15. Consent to Utah Jurisdiction and Exclusive Jurisdiction of Utah Courts. Guarantor acknowledges that by execution and delivery of this Guarantee, Guarantor has transacted business in the State of Utah and Guarantor voluntarily submits to, consents to, and waives any defense to the jurisdiction of courts located in the State of Utah as to all matters relating to or arising from this Guarantee. EXCEPT AS EXPRESSLY AGREED IN WRITING BY LENDER AND EXCEPT AS PROVIDED IN THE ARBITRATION PROVISIONS IN 4
4844-9629-2943 THE LOAN AGREEMENT, THE STATE AND FEDERAL COURTS LOCATED IN THE STATE OF UTAH SHALL HAVE SOLE AND EXCLUSIVE JURISDICTION OF ANY AND ALL CLAIMS, DISPUTES, AND CONTROVERSIES, ARISING UNDER OR RELATING TO THIS GUARANTEE. NO LAWSUIT, PROCEEDING, OR ANY OTHER ACTION RELATING TO OR ARISING UNDER THIS GUARANTEE MAY BE COMMENCED OR PROSECUTED IN ANY OTHER FORUM EXCEPT AS EXPRESSLY AGREED IN WRITING BY LENDER.
16. Assignability. Guarantor may not assign or transfer any of the Loan Documents (as defined in the Loan Agreement) and any such purported assignment or transfer is void.
Lender may assign or transfer Lender’s interest in this Guarantee and any of the Loan Documents. Guarantor acknowledges that Lender has granted Zions Bank, (Municipality), and the Utah Center for Neighborhood Stabilization, a Utah nonprofit corporation, dba USBGI, a security interest in this Guarantee and the Loan Documents under that certain Credit Agreement dated October ___, 2017, which agreement pertains to the source of funds for the Loan.
17. Entire Agreement. This Guarantee, together with the Loan Agreement, constitutes the entire agreement between Lender and Guarantor concerning the subject matter hereof, and may not be altered or amended except by written agreement signed by Lender and Guarantor. All other prior and contemporaneous agreements, arrangements, and understandings between the parties hereto as to the subject matter hereof are rescinded.
[Signature Page Follows]
5
4844-9629-2943 Dated: /______.
GUARANTOR
/, a /
By: ______Name: ______Title: ______
/, a /
By: ______Name: ______Title: ______
Signature Page to Guarantee 4844-9629-2943
WHEN RECORDED, RETURN TO:
Kirton McConkie 50 East South Temple, Suite 400 Salt Lake City, Utah 84111 Attn: John B. Lindsay
DEED OF TRUST WITH ASSIGNMENT OF RENTS
This Deed of Trust with Assignment of Rents (“Deed of Trust”) is made and entered into this / day of /, /, by, between, and among /, a / (“Trustor”), whose address is /, to / (“Trustee”) whose address is /, and in favor of Utah Small Business Growth Initiative, LLC, a Utah limited liability company, dba Business Loans of Utah (“Beneficiary”), whose address is 6880 South 700 West, 2nd Floor, Midvale, Utah 84047.
This Deed of Trust is made pursuant to a Loan Agreement dated /, between Trustor, Beneficiary, and guarantors / (the “Loan Agreement”).
Trustor hereby conveys and warrants to Trustee, in trust for the benefit of Beneficiary, with power of sale, the following described property situated in / County, State of /: ______
Together with all buildings, fixtures, and improvements thereon; all waters and water rights on, relating, or appertaining thereto; all easements, licenses and rights of way relating or appertaining thereto; all rents, issues, royalties, income and profits; all awards made for taking by eminent domain or any proceeding or purchase in lieu thereof, the proceeds of any insurance; all tenements, hereditaments, rights, privileges, and appurtenances belonging or relating thereto or any improvements thereon; and including any of the foregoing now existing or created or arising in the future (collectively, the “Property”).
Trustor further agrees, represents, and covenants as follows:
1. Obligations Secured. This Deed of Trust secures all of Trustor’s present and future debts, obligations, and liabilities of whatever nature to Beneficiary, including, without limitation, the Note (as defined in the Loan Agreement) of Trustor in favor of Beneficiary dated /, in the original principal amount of / Dollars (/$______), and all renewals, extensions, modifications, and replacements thereof (including any which increase the original principal amount), all obligations of Trustor under the Loan Agreement or any of the Security Documents (as defined in the Loan Agreement), including, without limitation, this Deed of Trust (but excluding those obligations expressly excluded pursuant to Section 7, Hazardous Materials,
4839-5673-3007 below), advances of the same kind and quality or relating to this transaction, transactions in which the documents evidencing the indebtedness refer to this grant of security interest as providing security therefor, and all overdrafts on any account of Trustor maintained with Beneficiary, now existing or hereafter arising.
Trustor and Beneficiary expressly acknowledge their mutual intent that the lien created by this Deed of Trust secure any and all present and future debts, obligations, and liabilities of Trustor to Beneficiary without any limitation whatsoever.
2. Representations and Warranties. Trustor represents and warrants to Trustee and Beneficiary that:
a. Trustor is the owner of fee simple marketable title to the Property; and
b. The Property is free and clear of any liens, claims, encumbrances, restrictions, encroachments and interests whatsoever in favor of any third party, except current taxes and assessments which are not yet due and payable, and rights of way, easements, and licenses which are recorded and of public record.
3. Maintenance and Preservation of Property. Trustor shall (a) maintain the Property in good condition and repair; (b) not commit or allow any waste of the Property; (c) complete promptly and in good and workmanlike manner any building, fixture, or improvement which may be constructed on the Property; (d) except to the extent that insurance proceeds are applied by Beneficiary to the satisfaction of the obligations secured by this Deed of Trust, restore promptly and in good and workmanlike manner any of the Property which may be damaged or destroyed; (e) comply at all times with all laws, ordinances, regulations, covenants, and restrictions in any manner affecting the Property; (f) not commit or allow any act upon the Property in violation of law; and (g) do all acts which by reason of the character or use of the Property may be reasonably necessary to maintain and care for the Property.
Trustor shall not remodel, remove or modify any buildings, fixtures, or improvements upon the Property except (a) in the ordinary course of Trustor's business and on the condition that such action will not reduce or impair the fair market value or utility of the Property or (b) with the prior written consent of Beneficiary.
4. Insurance. Trustor shall secure and at all times maintain, at Trustor’s expense, the following types of insurance for the Property: (a) “All risk” casualty insurance for the full replacement value of all fixtures and improvements; (b) If the buildings and other improvements contain equipment of such nature, boiler and machinery insurance covering pressure vessels, air tanks, boilers, machinery, pressure piping, heating, air conditioning, elevator equipment and escalator equipment; (c) Insurance against loss of occupancy or use; (d) If the Property or any portion thereof is located in a special flood hazard area as designated by the Federal Insurance Administration, Department of Housing and Urban Development, flood insurance as required by the Flood Disaster Protection Act of 1973; and (e) Liability insurance with limits acceptable to Beneficiary.
4839-5673-3007 All such insurance shall be with insurance companies, and the form of all such policies shall be, acceptable to Beneficiary. All such policies shall name Beneficiary as loss payee as it interests may appear. Such policies shall provide for a minimum ten days written cancellation notice to Beneficiary. Upon request, policies or certificates attesting to such coverage shall be delivered to Beneficiary.
Insurance proceeds may, at the election of Beneficiary, be applied toward payment of any obligation secured by this Deed of Trust, whether or not due, in such order of application as Beneficiary may elect or be applied to repair and restore the Property. Such application or release of insurance proceeds by Beneficiary shall not cure or waive any default under this Deed of Trust.
In the event of any loss or damage to the Property, Trustor shall immediately give Beneficiary written notice thereof.
5. Taxes and Assessments. Trustor shall pay when due all taxes, assessments, and governmental charges and levies on the Property, except such as are being contested in good faith by proper proceedings and as to which adequate reserves are maintained.
6. Utilities. Trustor shall pay when due all utility charges for gas, electricity, water, sewer, garbage collection, or other services provided to the Property.
7. Hazardous Materials. “Hazardous Materials” shall mean (a) “hazardous waste” as defined by the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976 (42 U.S.C. Section 6901 et seq.), including any future amendments thereto, and regulations promulgated thereunder, and as the term may be defined by any contemporary state counterpart of such act; (b) "hazardous substance" as defined by the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. Section 9601 et seq.), including any future amendments thereto, and regulations promulgated thereunder; (c) asbestos; (d) polychlorinated biphenyls; (e) underground or above ground storage tanks, whether empty or filled or partially filled with any substance; (f) any substance the presence of which is or becomes prohibited by any federal, state, or local law, ordinance, rule, or regulation; and (g) any substance which under any federal, state, or local law, ordinance, rule, or regulation requires special handling or notification in its collection, storage, treatment, transportation, use or disposal.
“Environmental Condition” shall mean any condition involving or relating to Hazardous Materials and/or the environment affecting the Property, whether or not yet discovered, which could or does result in any damage, loss, cost, expense, claim, demand, order, or liability to or against Trustor or Beneficiary by any third party (including, without limitation, any government entity), including, without limitation, any condition resulting from the operation of Trustor’s business and/or operations in the vicinity of the Property and/or any activity or operation formerly conducted by any person or entity on or off the Property.
“Environmental Health and Safety Law” shall mean any legal requirement that requires or relates to:
4839-5673-3007
a. advising appropriate authorities, employees, and the public of intended or actual releases of Hazardous Materials, violations of discharge limits or other prohibitions, and of the commencement of activities, such as resource extraction or construction, that do or could have significant impact on the environment;
b. preventing or reducing to acceptable levels the release of Hazardous Materials into the environment;
c. reducing the quantities, preventing the release, or minimizing the hazardous characteristics of wastes that are generated;
d. assuring that products are designed, formulated, packaged, and used so that they do not present unreasonable risks to human health or the environment when used or disposed of;
e. protecting resources, species, or ecological amenities;
f. use, storage, transportation, sale, or transfer of Hazardous Materials or other potentially harmful substances;
g. cleaning up Hazardous Materials that have been released, preventing the threat of release, and/or paying the costs of such clean up or prevention; or
h. making responsible parties pay for damages done to the health of others or the environment or permitting self-appointed representatives of the public interest to recover for injuries done to public assets.
Trustor represents and warrants that, except as Beneficiary has been otherwise previously advised by Trustor in writing, no Hazardous Materials are now located on, in, or under the Property, and neither Trustor nor, to Trustor's knowledge, after due inquiry and investigation, any other person has ever caused or permitted any Hazardous Materials to be placed, held, used, stored, released, generated, located or disposed of on, in or under the Property, or any part thereof, nor caused or allowed an Environmental Condition to exist on, in or under the Property.
Trustor further represents and warrants that no investigation, administrative order, consent order and agreement, litigation or settlement with respect to Hazardous Materials and/or an Environmental Condition is proposed, threatened, anticipated or in existence with respect to the Property.
Trustor will:
a. Not permit the presence, use, disposal, storage or release of any Hazardous Materials on, in, or under the Property, except in the ordinary course of Trustor's business under conditions that are generally recognized to be appropriate and safe
4839-5673-3007 and that are in strict compliance with all applicable Environmental Health and Safety Laws.
b. Not permit any substance, activity or Environmental Condition on, in, under or affecting the Property which is in violation of any Environmental Health and Safety Laws.
c. Comply with the provisions of all Environmental Health and Safety Laws affecting the Property.
d. Notify Beneficiary immediately of any discharge of Hazardous Materials, Environmental Condition, or environmental complaint or notice received from any governmental agency or any other party affecting the Property.
e. Upon any discharge of Hazardous Materials or upon the occurrence of any Environmental Condition on, in, under or affecting the Property, immediately contain and remove the same in compliance with all Environmental Health and Safety Laws, promptly pay any fine or penalty assessed in connection therewith, and immediately notify Beneficiary of such events.
f. Permit Beneficiary to inspect the Property for Hazardous Materials and Environmental Conditions, to conduct tests thereon, and to inspect all books, correspondence, and records pertaining thereto.
g. From time to time upon Beneficiary’s request, and at Trustor’s expense, provide a report (including all validated and unvalidated data generated for such reports) of a qualified independent environmental engineer acceptable to Beneficiary, satisfactory to Beneficiary in scope, form, and content, and provide to Beneficiary such other and further assurances reasonably satisfactory to Beneficiary, that Trustor is in compliance with these covenants concerning Hazardous Materials and Environmental Conditions, and that any past violation thereof has been corrected in compliance with all Environmental Health and Safety Laws.
h. Immediately advise Beneficiary of any additional, supplemental, new, or other information concerning any Hazardous Materials or Environmental Conditions relating to the Property.
Trustor shall indemnify Beneficiary for any and all claims and liabilities, and for damages which may be awarded or incurred by Beneficiary, and for all reasonable attorney fees, legal expenses, and other out-of-pocket expenses, arising from or related in any manner, directly or indirectly, to (1) Hazardous Materials located on, in, or under the Property; (2) any Environmental Condition on, in, or under the Property; (3) violation of or non-compliance with any Environmental Health and Safety Law; (4) any breach or violation of the representations, warranties, and covenants contained in this Section 7, Hazardous Materials; and/or (5) any activity or omission, whether occurring on or off the Property, whether prior to or during the term of the obligations secured hereby, and whether by Trustor or any other person or entity,
4839-5673-3007 relating to Hazardous Materials or an Environmental Condition affecting the Property. The indemnification obligations of Trustor under this Section shall survive any reconveyance, release, or foreclosure of this Deed of Trust, any transfer in lieu of foreclosure, and satisfaction of the obligations secured hereby.
Beneficiary shall have the sole and complete control of the defense of any such claims. Beneficiary is hereby authorized to settle or otherwise compromise any such claims as Beneficiary in good faith determines shall be in its best interests.
Notwithstanding anything to the contrary in this Deed of Trust, any indemnification amount owing to Beneficiary pursuant to this Section 7, Hazardous Materials, shall not be secured by the Property.
8. Defense of Title. Trustor shall keep the Property free and clear of any liens for the supplying of services, labor or materials, unless Trustor is diligently contesting the validity of such lien by timely and appropriate procedures and adequate cash reserves for such lien have been set aside. Trustor shall promptly discharge any lien, deed of trust, mortgage, or other encumbrance upon the Property which has or may have priority over or equality with this Deed of Trust. Upon request of Beneficiary, Trustor shall appear in and defend any action or proceeding purporting to affect the security hereof, the Property, or the rights or powers of Beneficiary or Trustee. Should Trustee or Beneficiary elect to appear in or defend any such action or proceeding, Trustor shall pay all costs and expenses, including costs of evidence of title and reasonable attorneys fees and legal expenses, incurred by Trustee and/or Beneficiary.
9. Right to Perform for Trustor. Beneficiary may, in its sole discretion and without any duty to do so, elect to discharge taxes, assessments, liens, deeds of trust, mortgages, or other encumbrances upon the Property which have or may have priority over or equality with this Deed of Trust, perform any duty or obligation of Trustor, or pay recording, insurance or other charges payable by Trustor or provide insurance if Trustor fails to do so. Any such payments advanced by Beneficiary shall be reimbursed by Trustor upon demand, together with interest thereon from the date of the advance until repaid, both before and after judgment, at the default rate provided in the Promissory Note described in Section 1, above.
10. Further Assurance. Trustor shall execute and deliver such further instruments and documents and do such further acts as may be necessary or as may be reasonably requested by Beneficiary to carry out the purposes of this Deed of Trust and to subject to the lien and mortgage created or intended to be created hereby any property, rights, or interests covered or intended to be covered by this Deed of Trust.
11. Attornment. All future lease agreements entered into by Trustor, as landlord, which pertain to the Property shall contain a covenant on the part of the tenant, enforceable by Beneficiary, obligating such tenant, upon request of Beneficiary, to attorn to and become a tenant of Beneficiary or any purchaser from Trustee or through foreclosure of this Deed of Trust, for the unexpired term of, and subject to the terms and conditions of, such future lease agreements.
12. Condemnation Awards. If the Property, the improvements thereon, or any portion thereof should be taken or damaged by reason of any public improvement or condemnation
4839-5673-3007 proceeding, Beneficiary shall be entitled to all compensation, awards, and other payments and relief therefor, and shall be entitled, at Beneficiary's option, to commence, appear in, and prosecute in Beneficiary's own name any action or proceeding, and to make any compromise or settlement, in connection with such taking. Trustor shall promptly give notice to Beneficiary of any condemnation proceeding or any taking for public improvement. All such compensation, awards, and other payments and relief are hereby assigned to Beneficiary.
After deducting all costs and expenses, including reasonable attorneys’ fees and legal expenses, incurred by Beneficiary in connection with such compensation, awards, and other payments and relief, Beneficiary may, in its sole discretion and without any duty to do so, release such compensation or apply such compensation, or any portion thereof, on any of the obligations secured by this Deed of Trust, whether or not then due. Beneficiary shall have no obligation to apply such compensation to restore or repair damage to the Property, regardless of whether such taking has a significant adverse impact on the operation of the remaining portion of the Property.
13. No Further Encumbrances. Trustor shall not further encumber, mortgage or place any lien upon the Property, nor cause or allow by operation of law the encumbrance of the Property without the written consent of Beneficiary, even though such encumbrance may be junior to this Deed of Trust.
14. Evidence of Title. Until the indebtedness secured hereby is paid in full, Trustor shall deliver to, pay for and maintain with Beneficiary such evidence of title as Beneficiary may require, including abstracts of title or policies of title insurance and any extensions, renewals, or supplements thereof.
15. Access. Beneficiary and Beneficiary’s representatives are hereby authorized and shall have the right, at all reasonable times during the existence of this Deed of Trust, to enter upon the Property to inspect the Property and to perform any of the acts authorized under this Deed of Trust.
16. Assignment of Rents. As additional security for the obligations secured by this Deed of Trust, Trustor hereby assigns to Beneficiary, during the time until this Deed of Trust is reconveyed to Trustor, all rents, issues, royalties, income and profits of the Property. Until the occurrence of any default under this Deed of Trust or on any obligation secured hereby, Trustor shall have the right to collect and retain all rents, issues, royalties, income and profits of the Property. Upon the occurrence of any default under this Deed of Trust or on any obligation secured hereby, at the election of Beneficiary, the right of Trustor to collect and retain such rents, issues, royalties, income and profits shall cease and Beneficiary shall have the right, with or without taking possession of the Property, to collect and retain all such rents, issues, royalties, income and profits. Any sums so collected, after the deduction of all costs and expenses of operation and collection, including reasonable attorneys’ fees and legal expenses, shall be applied toward the payment of the obligations secured by this Deed of Trust. Such right of collection shall obtain both before and after the exercise of the power of sale provisions of this Deed of Trust, the foreclosure of this Deed of Trust and throughout any period of redemption.
The rights granted under this Section shall in no way be dependent upon and shall apply without regard to whether all or a portion of the Property is in danger of being lost, removed, or
4839-5673-3007 materially injured, or whether the Property or any other security is adequate to discharge the obligations secured by this Deed of Trust. Beneficiary's failure or discontinuance at any time to collect any of such rents, issues, royalties, income and profits shall not in any manner affect the right, power, and authority of Beneficiary thereafter to collect the same.
Neither any provision contained herein, nor the Beneficiary's exercise of its right to collect such rents, issues, royalties, income and profits, shall be, or be construed to be, an affirmation by Beneficiary of any tenancy, lease, sublease, option, or other interest in the Property, or an assumption of liability under, or a subordination of this Deed of Trust to, any tenancy, lease, sublease, option, or other interest in the Property. All tenants, lessees, sublessees and other persons who have any obligation to make any payment to Trustor in connection with the Property are hereby authorized and directed to make such payments directly to Beneficiary upon the demand of Beneficiary. Beneficiary's receipt of such rents, issues, royalties, income, and profits shall be a discharge of the obligation of the tenant or other person obligated to make the payment.
Collection by Beneficiary of such rents, issues, royalties, income, and profits shall not cure or waive any default under this Deed of Trust.
17. Assignment of Leases. Trustor hereby assigns to Beneficiary all right, title and interest of Trustor in and to any lease agreements entered into by Trustor as lessee for the acquisition of furnishings, goods or equipment for use on or in connection with the Property. This assignment shall be effective upon the occurrence of any default under this Deed of Trust or the obligations secured hereby and written acceptance of this assignment by Beneficiary.
18. Default. Time is of the essence of this Deed of Trust. The occurrence of any one of the following shall constitute an event of default:
a. Any representation or warranty made by or on behalf of Trustor in this Deed of Trust is materially false or materially misleading when made;
b. Trustor fails in the payment or performance of any obligation, covenant, agreement or liability created by or contemplated by this Deed of Trust or secured by this Deed of Trust; or
c. An Event of Default (as defined in the Loan Agreement) occurs.
No course of dealing or any delay or failure to assert any default shall constitute a waiver of that default or of any prior or subsequent default.
19. Notice of Default. Upon the occurrence of an event of default under this Deed of Trust, Beneficiary may elect to have the Property sold in the manner provided herein. Beneficiary may execute or cause Trustee to execute a written notice of default and of election to cause the Property to be sold to satisfy the obligations secured hereby. Trustee shall file such notice for record in the office of the county recorder of the county where the Property is located. Upon request of Trustee, Beneficiary shall also deposit with Trustee all promissory notes and all documents evidencing expenditures secured by this Deed of Trust. Notwithstanding anything to
4839-5673-3007 the contrary in the foregoing, all procedures shall be conducted in compliance with applicable law.
20. Exercise of Power of Sale. After the lapse of such time as may then be required by law following the recordation of the notice of default, and notice of default and notice of sale having been given as then required by law, Trustee, without demand on Trustor, shall sell the Property on the date and at the time and place designated in the notice of sale, either as a whole or in separate parcels, and in such order as Beneficiary may determine (but subject to any statutory right of Trustor to direct the order in which such property, if consisting of several known lots or parcels, shall be sold), at public auction to the highest bidder, the purchase price payable in lawful money of the United States at the time of sale. The person conducting the sale may, for any cause deemed expedient, postpone the sale from time to time until it shall be completed and, in every such case, notice of postponement shall be given by public declaration thereof by such person at the time and place last appointed for the sale; provided, if the sale is postponed for longer than one day beyond the day designated in the notice of sale, notice of the time, date and place of sale shall be given in the same manner as the original notice of sale or as otherwise required by law. Any person, including Beneficiary, may bid at the sale.
Trustee shall execute and deliver to the purchaser a Trustee’s Deed conveying the Property so sold, but without any covenant or warranty, express or implied. The recitals in the Trustee’s Deed of any matters or facts shall be conclusive proof of the truthfulness thereof. Trustee shall apply the proceeds of the sale to payment of (a) the costs and expenses of exercising the power of sale and of the sale, including the payment of the Trustee’s fees and costs and reasonable attorneys’ fees and legal expenses; (b) cost of any evidence of title procured in connection with such sale; (c) all sums expended under the terms hereof in conjunction with any default provision hereunder, not then repaid, with accrued interest at the default rate provided in the Promissory Note identified in Section 1, above; (d) all obligations secured by this Deed of Trust; and (e) the remainder, if any, to the person or persons legally entitled thereto, or Trustee, in Trustee's discretion, may deposit the balance of such proceeds with the County Clerk of the county where the Property is located. Notwithstanding anything to the contrary in the foregoing, all procedures shall be conducted in compliance with applicable law.
21. Surrender of Possession. If possession has not previously been surrendered by Trustor, Trustor shall surrender possession of the Property to the purchaser immediately after the Trustee’s sale.
22. UCC Remedies. Notwithstanding anything to the contrary herein, with regard to all fixtures and personal property conveyed to Trustee by this Deed of Trust, Beneficiary shall have the right, at the option of Beneficiary, to exercise any and all rights and remedies available to Beneficiary as a secured party under the Uniform Commercial Code of Utah, and any and all rights and remedies available to Beneficiary at law, in equity, or by statute. Upon written demand from Beneficiary, Trustor shall, at Trustor's expense, assemble such fixtures and personal property and make them available to Beneficiary at a reasonably convenient place designated by Beneficiary.
23. Foreclosure as a Mortgage. Beneficiary shall have the option to foreclose this Deed of Trust in the manner provided by law for the foreclosure of mortgages on real property
4839-5673-3007 and Beneficiary shall be entitled to recover in such proceedings all costs and expenses incidental thereto, including reasonable attorneys’ fees and legal expenses, in such amounts as shall be fixed by the court.
24. Receiver. If an event of default occurs under this Deed of Trust, Beneficiary shall have the right, without regard to the then value of the Property or the interest of Trustor therein, upon notice to Trustor, to apply to any court having jurisdiction to appoint a receiver of the Property. Trustor hereby irrevocably consents to such appointment and further consents to and approves Beneficiary as such receiver. Any such receiver shall have all the usual powers and duties of a receiver and shall continue as such and exercise all such powers until completion of the sale of the Property or the foreclosure proceeding, unless the receivership is sooner terminated.
25. No Remedy Exclusive. The rights and remedies herein conferred are cumulative and not exclusive of any other rights and remedies and shall be in addition to every other right, power and remedy herein specifically granted or hereafter existing at law, in equity, or by statute which Trustee or Beneficiary might otherwise have, and any and all such rights and remedies may be exercised from time to time and as often and in such order as Trustee or Beneficiary may deem expedient. No delay or omission in the exercise of any such right, power or remedy or in the pursuance of any remedy shall impair any such right, power or remedy or be construed to be a waiver thereof or of any default or to be an acquiescence therein.
26. Due on Sale. If Trustor shall either sell, convey or transfer the Property, or any part thereof, without the prior written consent of Beneficiary, or be divested of title in any manner except by proceedings in eminent domain, whether voluntarily or involuntarily, the obligations secured by this Deed of Trust shall, at the option of Beneficiary and without demand or notice, immediately accelerate and become due and payable in full. If Beneficiary exercises this option to accelerate, Beneficiary shall give Trustor written notice of such acceleration. Such notice shall provide a period of not less than thirty (30) days from the date the notice is given within which Trustor may pay the sums declared due. If Trustor fails to pay such sums within such period, Trustor shall be in default and Beneficiary may exercise its remedies hereunder.
27. Other Collateral. The obligations secured by this Deed of Trust may also be secured by other collateral not identified in this Deed of Trust.
28. Attorneys’ Fees and Legal Expenses. In the event of default under this Deed of Trust, Trustor agrees to pay all reasonable attorneys’ fees and legal expenses incurred by or on behalf of Trustee and/or Beneficiary in enforcement of this Deed of Trust, in exercising any rights and remedies arising from such default, or otherwise related to such default.
Regardless of default, Trustor agrees to pay all expenses, including reasonable attorneys’ fees and legal expenses, incurred by Trustee and/or Beneficiary in any bankruptcy proceedings of any type involving Trustor, the Property, or this Deed of Trust, including, without limitation, expenses incurred in modifying or lifting the automatic stay, assuming or rejecting leases, determining adequate protection, use of cash collateral, or relating to any plan of reorganization.
4839-5673-3007 29. Indemnification. Trustor shall indemnify Trustee and Beneficiary for any and all claims and liabilities, and for damages which may be awarded or incurred by Trustee and/or Beneficiary, and for all reasonable attorneys’ fees, legal expenses, and other out-of-pocket expenses incurred in defending such claims, arising from or related in any manner to the negotiation, execution, or performance of this Deed of Trust, but excluding any claims and liabilities based upon breach or default by Trustee or Beneficiary under this Deed of Trust or gross negligence or misconduct of Trustee or Beneficiary. Trustee and Beneficiary shall have sole and complete control of the defense of any such claims and are hereby authorized to settle or otherwise compromise any such claims as Trustee and Beneficiary in good faith determine shall be in their respective best interests.
30. Notices. Except as otherwise required by law, all notices or demands by any party hereto shall be in writing and may be sent by regular mail. Notices shall be deemed received when deposited in a United States post office box, postage prepaid, properly addressed to the mailing addresses set forth below or to such other addresses as Trustor, Trustee or Beneficiary may from time to time specify in writing. Any notice otherwise delivered shall be deemed to be given when actually received by the addressee.
Trustor:
/ / / Attention: /
With a copy to:
/ / / Attention: /
Trustee:
/ / / Attention: /
Beneficiary:
Utah Small Business Growth Initiative, LLC 6880 South 700 West, 2nd Floor Midvale, Utah 84047 Attention: Michael Plaizier
With a copy to:
4839-5673-3007 Kirton McConkie 50 East South Temple, Suite 400 Salt Lake City, Utah 841 Attention: John B. Lindsay
31. Actions by Trustee. At any time and from time to time upon written request of Beneficiary, payment of its fees and, in the case of full reconveyance, presentation of this Deed of Trust and the Note secured hereby identified in Section 1, above, without affecting the liability of any person for the payment of the indebtedness secured hereby, Trustee may (a) make a survey, map or plat of the Property; (b) join in granting any easement or creating any restriction on or relating to the Property; (c) join in any subordination or other agreement affecting this Deed of Trust which is authorized in writing by Beneficiary; and (d) reconvey, without warranty, all or any part of the Property upon written request of Beneficiary or as provided by law. The grantee in any reconveyance may be described as “the person or persons entitled thereto”, and the recitals therein of any matters or facts shall be conclusive proof of truthfulness thereof. Trustor agrees to pay reasonable Trustee’s fees, including reasonable attorneys’ fees and legal expenses, for any of such services.
32. Successor Trustee. Beneficiary may appoint a successor trustee at any time by filing a substitution of trustee for record in the office of the county recorder of the county where the Property is located. From the time the substitution is filed for record, the new Trustee shall succeed to all the powers, duties, authority and title of Trustee. Each such substitution shall be executed and acknowledged, and notice thereof shall be given and proof thereof made in the manner provided by law.
33. Acceptance of Trust. Trustee accepts this Trust when this Deed of Trust, duly executed and acknowledged, is made a public record as provided by law. Trustee is not obligated to notify any party hereto of pending sale under any other deed of trust or any action or proceeding in which Trustor, Beneficiary, or Trustee shall be a party, unless brought by Trustee.
34. Request for Notice. Trustor requests that a copy of any notice of default and of any notice of sale hereunder be mailed to Trustor at the address for Trustor provided in Section 30, Notices.
35. Assignability. Trustor may not assign or transfer any of the Loan Documents (as defined in the Loan Agreement) and any such purported assignment or transfer is void.
Beneficiary may assign or transfer Beneficiary’s interest in this Deed of Trust and any of the Loan Documents. Trustor acknowledges that Beneficiary has granted Zions Bank, (Municipality), and the Utah Center for Neighborhood Stabilization, a Utah nonprofit corporation, dba USBGI, a security interest in this Deed of Trust and the Loan Documents under that certain Credit Agreement dated October ___, 2017, which agreement pertains to the source of funds for the Loan.
36. Revival Clause. If the incurring of any debt by Trustor or the payment of any money or transfer of property to Beneficiary by or on behalf of Trustor or any guarantor should for any reason subsequently be determined to be “voidable” or “avoidable” in whole or in part
4839-5673-3007 within the meaning of any state or federal law (collectively “voidable transfers”), including, without limitation, fraudulent conveyances or preferential transfers under the United States Bankruptcy Code or any other federal or state law, and Beneficiary is required to repay or restore any voidable transfers or the amount or any portion thereof, or upon the advice of Beneficiary’s counsel is advised to do so, then, as to any such amount or property repaid or restored, including all reasonable costs, expenses, and attorneys’ fees of Beneficiary related thereto, the liability of Trustor and any guarantor, and each of them, and this Deed of Trust, shall automatically be revived, reinstated and restored and shall exist as though the voidable transfers had never been made.
37. General. This Deed of Trust shall be governed by and construed in accordance with the laws of the State of Utah.
All references in this Agreement to the singular shall be deemed to include the plural if the context so requires and vice versa. References in the collective or conjunctive shall also include the disjunctive unless the context otherwise clearly requires a different interpretation.
All agreements, representations, warranties and covenants made by Trustor shall survive the execution and delivery of this Deed of Trust, the filing and consummation of any bankruptcy proceedings, and shall continue in effect so long as any obligation to Beneficiary secured by this Deed of Trust is outstanding and unpaid. All agreements, representations, warranties and covenants in this Deed of Trust shall bind the party making the same and its heirs and successors, and shall be to the benefit of and be enforceable by each party for whom made and their respective heirs, successors and assigns.
Signature Page(s) Follow
4839-5673-3007
IN WITNESS WHEREOF, this Deed of Trust has been executed the date and year first above written.
TRUSTOR
/______, a /______
By: ______Name: ______Title: ______
STATE OF UTAH ) : ss. COUNTY OF SALT LAKE )
The foregoing instrument was acknowledged before me this _____ day ______, ______, by / of /, a /.
NOTARY PUBLIC Residing at:
14 4839-5673-3007 TRUSTEE
/______, a /______
By: ______Name: ______Title: ______
STATE OF UTAH ) : ss. COUNTY OF SALT LAKE )
The foregoing instrument was acknowledged before me this _____ day ______, ______, by / of /, a /.
NOTARY PUBLIC Residing at:
15 4839-5673-3007
BENEFICIARY
UTAH SMALL BUSINESS GROWTH INITIATIVE, LLC, a Utah limited liability company dba BUSINESS LOANS OF UTAH
By: Utah Center for Neighborhood Stabilization, a Utah nonprofit corporation Its: Sole Member
By: ______Michael Plaizier Its: Executive Director
STATE OF UTAH ) : ss. COUNTY OF SALT LAKE )
The foregoing instrument was acknowledged before me this _____ day ______, ______, by Michael Plaizier, Executive Director of Utah Center for Neighborhood Stabilization, a Utah nonprofit corporation, Sole Member of Utah Samll Business Growth Initiative, LLC, a Utah limited liability company, dba Business Loans of Utah.
NOTARY PUBLIC Residing at:
16 4839-5673-3007 BORROWER CERTIFICATE
This certification is made on /______in connection with the execution and delivery by /, a / (“Borrower”), of a Loan Agreement dated as of /______(the “Loan Agreement”), between Borrower and Utah Small Business Growth Initiative, LLC, a Utah limited liability company, dba Business Loans of Utah (“Lender”). Capitalized terms used herein and not otherwise defined shall have the meaning assigned to such terms in the Loan Agreement.
WE, THE UNDERSIGNED, DO HEREBY CERTIFY THAT:
1. Borrower is duly organized and validly existing under the laws of the State of /Utah and duly qualified to do business in the State of Utah, with full power and authority to execute and deliver the Loan Agreement and to undertake and perform its obligations thereunder.
2. Borrower’s execution and delivery of, and the performance of its obligations under, the Loan Agreement do not conflict with, violate or constitute a default under Borrower’s organizational documents, as amended from time, or the terms or provisions of any indenture, mortgage, deed of trust, agreement or other instrument by which Borrower is bound.
3. Borrower has duly authorized the execution and delivery of the Loan Agreement, the Loan Documents and the undertakings of Borrower’s obligations thereunder, and Borrower has obtained all necessary consents and approvals to carry out the same, and each of such documents has been duly executed and delivered by Borrower.
4. On the date hereof each of the persons listed in Exhibit A attached hereto is a duly appointed, qualified and acting officer of Borrower holding the respective office set forth opposite his or her name, and the signature of each officer set forth in Exhibit A who executed documents in connection with the Loan is his or her genuine signature. Each officer of Borrower who executed documents in connection with the Loan has full power and authority to execute such documents.
5. The representations and warranties of Borrower contained in the Loan Agreement are true and correct in all material respects as of the date hereof as though such representations and warranties had been made on and as of the date hereof; Borrower has complied with all the terms of the Loan Agreement to be complied with by it prior to or on the date hereof; and no event constituting, or which with the giving of notice or lapse of time or both would constitute, an “Event of Default” under the Loan Agreement has occurred and is continuing uncured.
6. Attached hereto as Exhibits B, C, and D respectively, are true, correct and complete copies of (1) Borrower’s organizational documents, including /Certificate of Organization and /Operating Agreement, each of which were duly adopted by the /Members of Borrower, and are in full force and effect on the date hereof, (2) the resolution of Borrower authorizing the execution and delivery of the Loan Agreement and all related documents for the transaction contemplated by the Loan Agreement, which resolution was duly adopted in accordance with all requirements of law and the organizational documents of Borrower and
4853-2119-4319 remains in full force and effect on the date hereof, and (3) a Certificate of Existence issued by the /Utah Department of Commerce, Division of Corporations and Commercial Code with respect to Borrower.
7. All of the conditions and agreements required in the Loan Agreement to be satisfied or performed by Borrower at or prior to the date hereof have been satisfied or performed by Borrower in the manner and with the effect contemplated in the Loan Agreement.
Dated: /______.
BORROWER
/, a /
By: ______Name: ______Title: ______
4853-2119-4319 EXHIBITS
A. SPECIMEN SIGNATURES B. ORGANIZATION DOCUMENTS C. UNANIMOUS WRITTEN CONSENT D. CERTIFICATES OF EXISTENCE (DELAWARE)
4853-2119-4319 EXHIBIT A SPECIMEN SIGNATURES
______Manager [INSERT NAME OF MANAGER]
______Member [INSERT NAME OF MEMBER]
4853-2119-4319 EXHIBIT B ORGANIZATIONAL DOCUMENTS
4853-2119-4319 EXHIBIT C
UNANIMOUS WRITTEN CONSENT OF THE MEMBERS OF /______
The undersigned, as all the members (the “Members”) of /, a / (the “Company”), hereby adopt, ratify, approve and consent to all of the following statements and resolutions by written consent without a meeting in the manner authorized by the Company’s /Operating Agreement, effective as of /______. Capitalized terms not otherwise defined herein shall have the meaning ascribed to such terms in the Loan Agreement among Utah Small Business Growth Initiative, LLC, a Utah limited liability company, dba Business Loans of Utah (“Lender”), and the Company, as Borrower (the “Loan Agreement”).
WHEREAS, the Members have determined it to be in the best interest of the Company to borrow up to /______Dollars (/$______) by means of the transaction described in the Loan Agreement (the “Loan”).
WHEREAS, the Company will benefit from the Loan and the Members have determined the Loan to be in the best interest of the Company.
NOW, THEREFORE, IT IS RESOLVED, that /______, the Manager, and /______, the /______, of the Company (individually, an “Authorized Person” and collectively the “Authorized Persons”) be and hereby is authorized to mortgage, pledge, transfer, endorse, hypothecate, or otherwise encumber and deliver to Lender any property now or hereafter belonging to the Company or in which the Company now or hereafter may have an interest, including without limitation all of the Company’s real property and all of the Company’s personal property (tangible or intangible), as security for the payment of any loans, derivative transactions or credit accommodations so obtained, any promissory notes so executed (including any amendments to or modifications, renewals, and extensions of such promissory notes), or any other or further indebtedness of the Company to Lender at any time owing, however the same may be evidenced. Such property may be mortgaged, pledged, transferred, endorsed, hypothecated or encumbered at the time such loans are obtained or such indebtedness is incurred, or at any other time or times, and may be either in addition to or in lieu of any property theretofore mortgaged, pledged, transferred, endorsed, hypothecated or encumbered; and be it
FURTHER RESOLVED, each Authorized Person be and hereby is authorized to execute and deliver to Lender the forms of mortgage, deed of trust, pledge agreement, hypothecation agreement, and other security agreements and financing statements which Lender may require and which shall evidence the terms and conditions under and pursuant to which such liens and encumbrances, or any of them, are given; and also to execute and deliver to Lender any other written instruments, any chattel paper, or any other collateral, of any kind or nature, which Lender may deem necessary or proper in connection with or pertaining to the giving of the liens and encumbrances.
4853-2119-4319 FURTHER RESOLVED, that the authority granted herein is deemed to be retroactive. All acts authorized by this consent resolution, but performed prior to its adoption, are hereby ratified and approved; and be it
FURTHER RESOLVED, each Authorized Person be and hereby is authorized to certify to Lender a true and correct copy of this consent resolution, with or without a designation of some or all of the names, titles, and specimen signatures of some or all of the Authorized Persons. Upon receipt of such certification, the Lender may rely on the foregoing consent resolution and the authority of any person designated as an Authorized Person to act for the Company until it receives written notice of the revocation of such person’s authority, executed by the Manager or /______of the Company, and delivered to the Lender at such place as may be reasonable to give notice to the officers or agents of the Lender who are assigned by the Company’s account and the Loan; and be it
FURTHER RESOLVED, that the Loan Documents, as defined in the Loan Agreement, are hereby approved and authorized substantially in the form presented to the Members, with such changes, additions, deletions, supplements and amendments thereto as any Authorized Person, acting in the best interest of the Company, may deem necessary or advisable, in consultation with legal counsel, each such determination to be conclusively evidenced by such Authorized Person’s execution and delivery thereof; and be it
FURTHER RESOLVED, that any Authorized Person, acting in the best interest of the Company, be, and hereby is, in the name of the Company, authorized, directed and empowered to make any and all reasonably necessary filings, to take all such actions and to execute and deliver, or cause to be executed and delivered, all such agreements, amendments, certificates, instruments and documents as any Authorized Person, acting in the best interest of the Company, may deem, in his or her sole and absolute discretion, necessary or advisable to carry out the purposes and intent of the foregoing consent resolutions, with the making of any filings, the taking of any such actions or the execution and/or delivery of any such agreement, amendment, certificate, instrument, or document constituting conclusive evidence of the Authorized Person’s authority therefor and of the approval of the Members thereof, and to take such other actions as any Authorized Person, acting in the best interest of the Company, may deem necessary, desirable, advisable or appropriate to consummate, effectuate, carry out or further the agreements and transactions contemplated by, and the intent and purpose of, and of the foregoing consent resolutions; and be it
FURTHER RESOLVED, that the omission from these consent resolutions of any agreement, document or other arrangement contemplated by any of the agreements, documents or instruments described in the foregoing consent resolutions or whereas clauses or any action to be taken in accordance with any requirement of any of the agreements, documents, or instruments described in the foregoing consent resolutions, shall in no manner derogate from the authority of any Authorized Person, acting in the best interest of the Company, to take all actions necessary, desirable, advisable or appropriate to consummate, effectuate, carry out or further the transactions contemplated by, including, without limitation, the intent and purposes of, the foregoing consent resolutions; and be it
4853-2119-4319 FURTHER RESOLVED: that any Authorized Person, acting in the best interest of the Company, be, and hereby is, authorized on behalf of the Company: (i) to prepare, execute, deliver and perform, as the case may be, such agreements, amendments, applications, approvals, certificates, communications, consents, demands, directions, documents, further assurances, instruments, notices, orders, requests, resolutions, supplements or undertakings, (ii) to pay or cause to be paid on behalf of the Company any related costs and expenses and (iii) to take such other actions, in the name and on behalf of the Company, as each such Authorized Person, in his or her discretion, shall deem necessary or advisable to complete and effect the foregoing transactions or to carry out the intent and purposes of the foregoing consent resolutions and the transactions contemplated thereby, the preparation, execution, and delivery of any such agreements, amendments, applications, approvals, certificates, communications, consents, demands, directions, documents, further assurances, instruments, notices, orders, requests, resolutions, supplements or undertakings, the payment of any such costs or expenses and the performance of any such other acts shall be conclusive evidence of the approval of the Members thereof and all matters relating thereto.
This Unanimous Written Consent may be executed in counterparts and with facsimile signatures with the effect as if all parties hereto had executed the same document and shall constitute a single Unanimous Written Consent.
IN WITNESS WHEREOF, the undersigned members of the Company have executed this Unanimous Written Consent as of the date first above written.
______, Member
______, Member
4853-2119-4319 EXHIBIT D
CERTIFICATE OF EXISTENCE
4853-2119-4319