EFTA02479656.pdf

From: jeffrey E. <jeevacation@gmail.com> Sent: Sunday, December 13, 2015 5:33 PM To: Halperin, Alan S Subject: Re: Tenants in common idea! On Sunday, 13 December 2015, je=frey E. <jeevacation@gmail.com=/a» wrote: <mailto:jeevacation@gmail.com> Yes On Sunday, 13 December 2015, Halperin, Alan S wrote: Thanks. Our finance partner will review comments. As for the interest rate,=please recall history: you suggested following terms of B of A loan, which=included reference to LIBOR plus; we wanted to make sure that the amount w=s no less than AFR; we wanted a cap in case LIBOR rose significantly; and you instructed us to remove cap.=/div> Alan S. Halperin I Partner Paul, Weiss, Rifkind, Wharton & Garrison =LP 1285 Avenue of the Americas I New York =C2 NY 10019.6064 e) irect Fax) www.pau weiss.com <http://www.paulweiss.=om> From: jeffrey E. Sent: Sunday, December 13, 2015 11:26 AM To: Brad Wechsle alperin, Alan S Subject: my thoughts on the promissory note "Event of Default" (a) before there is a defa=lt for a failure to perform, a 5 day period runs from the occurrence =f any failure to perform or observe any covenant or agreement contained in=the note. There is no obligation to give notice of the failure and an opportunity to cure in 5 days. Just a f=ilure to perform and then a default if not corrected within 5 days of the =ailure. Notice by the Noteholder of the Payor's failure shou=d be required first and then a 5 day cure period. (b) the language of this E=ent of Default is as follows: "Any representation, warranty or =tatement made by or on behalf of Payor in this note or in any other document delivere= in connection Wherewith shall prove to have been incorrect in any m=terial respect when made or at any future date." I have issues with all the underline= language. Who is making statements on behalf of Payor? What o=her documents are being referred to? The representations, warranties= and statements should be required to be "expressly made in writing" otherwise arguments about implied reps, warranties and=statements might be made. Finally, making it a breach when any repre=entation, warranty or statement becomes incorrect at any future date is to= open-ended. EFTA_R1_01595393 EFTA02479656 (d) Making it an event of =efault in this provision if the note ceases to be "in full, force and=effect, valid or enforceable", though not unheard of, obviously limit= the ability to defend against an enforcement action. "Interest Rate". Why is it the greater of the Long Ter= AFR or LIBOR plus .25%. Why not just the Long Term AFR? "Note Obligations" includes "any indemnificati=n obligations under this Note." I did not see any "i=demnification" under the Note. I did see a requirement to pa= enforcement costs, but that is not an "indemnification".<=div> Section 3.2(b) • Requires the Payor to notify the Noteholder promptly =ut in any event no later than 5 business days upon the Payor becoming awar= of "any material adverse change in Payor's financial positi=n." What is a material adverse change? Too open en=ed .! Section 3.4 also makes reference to the Initial Net Worth statement pr=vided pursuant to Section 5.1 and requires the Payor, as of December 31 of each year, to maintain a Net Worth=of not less than 110% of the then outstanding principal amount. It d=fines net worth as total assets minus Leons total liabilities.? Section 3.5 prohibits the Payor from incurring "any liens o= any debt for bored money if the incurrence of any such debt or liens woul= have a material adverse effect on Payor's ability to make the pay=ents contemplated by this Note as such payments become due." "Material Adverse Effect" i= too vague and open-ended. Section 3.6 requires Payor to "furnish Noteholder with such=additional information as Noteholder shall reasonably request in order to =nable Noteholder to determine whether the terms, covenants, provisions and=conditions of this Note have been complied with by Payor." This seems like a very broad license to =equire Leon to provide info, particularly financial info, at any time.Q=A0 This is especially true when terms like "material adverse effect&q=ot; are used to trigger reporting obligations and violations of debt covenants. Section 6.2. Waivers of presentment, demand, protest, notice of =ntent to accelerate, notice of acceleration of maturity, notice of protest= notice of non-payment, except as are expressly provided in the Note are n=t unusual or overreaching, but they do limit Leon's defenses to enforcement actions. The consent=in Section 6.2(b) to "all waivers of any term hereof", is probably intend=d as a consent to the Noteholder waiving an enforcement term against the P=yor, but could be interpreted to mean that Payor even consents to waivers =f any term that provides the Payor with any protections like prior notice, for example. This should be modified to make it c=ear that it is only a consent to a waiver by the Noteholder of any enforce=ent term of the Note. Section 6.3 permits an assignment of the Note by the Noteholder withou= consent by the Payor. Leon's consent should be required if =he Notheolder wants to assign the note. Section 6.4 makes Leon responsible to pay any stamp or oth=r documentary taxes that are due in connection with the execution or deliv=ry of this Note. What are they? If there are none, then delete=this provision. Section 6.5 seems to make the Payor liable for the costs and expenses =f the Noteholder's "attempted enforcement" of the Note. That coul= be read to make Leon liable even if the Noteholder improperly commenced a= enforcement action and Leon won that case. It should only be payab=e if the Noteholder is the prevailing party. Moreover why not make this a reciprocal provision, so that if the Noteholder commences =ction and the Payor is the prevailing party then the Noteholder pays cost =nd expenses? Also, the Note provides that the Payor should pay the c=sts and expenses incurred in any workout? Why? 2 EFTA_R1_01595394 EFTA02479657 Section 6.7 Jury Trial waiver is an attempt to exclude a jury from hea=ing a dispute over the Note because the amounts are so big, and that might=impact the ability to get a proper result. Why not arbitration? please note The information contained in this communication is confidential, may be attorney-client privileged, may constitute inside information, and is intended only for the use of the addressee. It is the property of JEE Unauthorized use, disclosure or copying of this communication or any part thereof is strictly prohibited and may be unlawful. If you have received this communication in error, please notify us immediately by return e-mail or by e-mail to jeevacation@gmail.com, and destroy this communication and all copies thereof, including all attachments. copyright -all rights reserved This message is intended only fo= the use of the Addressee and may contain information that is privileged a=d confidential. If you are not the intended recipient, you are hereby not=fied that any dissemination of this communication is strictly prohibited. =lf you have received this communication in error, please erase all copies =f the message and its attachments and notify us immediately.=/p> =C24> please note The information contained in this communic=tion is confidential, may be attorney-client privileged, may constit=te inside information, and is intended only for the use of the addresse=. It is the property of JEE Unauthorized use, disclosure or copying =f this communication or any part thereof is strictly prohibited and =ay be unlawful. If you have received this communication in error, pleas= notify us immediately by return e-mail or by e-mail to jeevacation@gmail.com, and destroy this communication an= all copies thereof, including all attachments. copyright -all rights r=served 3 EFTA_R1_01595395 EFTA02479658 =C24> please note The information contained in this communic=tion is confidential, may be attorney-client privileged, may constit=te inside information, and is intended only for the use of the addresse=. It is the property of JEE Unauthorized use, disclosure or copying =f this communication or any part thereof is strictly prohibited and =ay be unlawful. If you have received this communication in error, pleas= notify us immediately by return e-mail or by e-mail to jeevacation@gmail.com, and<=r>destroy this communication and all copies thereof, including all atta=hments. copyright -all rights reserved 4 EFTA_R1_01595396 EFTA02479659