MERCY ENTERPRISE CORPORATION
d/b/a MERCY CORPS NORTHWEST
BOARD RESOLUTION AUTHORIZING FORMATION OF ENTITIES, EXECUTION OF DOCUMENTS AND OTHER ACTIONS IN FURTHERANCE OF
COMMUNITY INVESTMENT TRUST
Recitals
WHEREAS, MERCY ENTERPRISE CORPORATION, an Oregon nonprofit corporation doing business as MERCY CORPS NORTHWEST (“MCNW”), has committed significant resources to the development of its Community Investment Trust (“CIT”) Program, including the acquisition, rehabilitation and lease-up of Plaza 122,a 29,000 square foot commercial property on 1.4 acres in the Mill Park neighborhood in Portland (“Plaza 122” or the “Project”); and
WHEREAS, MCNW is the sole member of Plaza 122 LLC, an Oregon limited liability company (the “Owner LLC”), formed by MCNW to own and operate the Project; and
WHEREAS, the CIT requires MCNW to form a C Corporation that will operate as a private REIT (the “REIT”) and will issue shares that qualified community members who satisfy residency requirements (requiring proximity to the Project) and who complete a financial literacy course conducted by MCNW (“Community Investors”) may subscribe to on an annual basis; and
WHEREAS, prior to and as a condition to the issuance of shares to Community Investors, MCNW will transfer all of its right, title and interest in and to the Project and as the sole member of the Owner LLC to the REIT; and
WHEREAS, the Community Investors will be able purchase REIT shares by making small monthly subscription payments, ranging from $10 to $100 per month, over the course of each year. These monthly payments will be made by means of Transfer Online, an Internet-based paying agent (the “Paying Agent”) who will administer Community Investor payments associated with the CIT; and
WHEREAS, to ensure that the CIT shares are a suitable investment for Community Investors and that they are adequately protected from the potential downside risks associated with investing in commercial real estate, the CIT will provide Community Investors with the right to tender their shares on a date certain each month for no less than the amount of the purchase price paid in for their shares in the CIT plus a guaranteed minimum annualized return of two percent (2.0%) on their paid-in investment (the “Fixed Return”), regardless of actual financial performance of the Project, including whether Project has generated sufficient net income to distribute dividends in the amount equal to the Fixed Return in any given year; and
WHEREAS, MCNW, acting in its capacity as sponsor of the CIT, intends to refinance current outstandingsenior lien debt related to the Project with Beneficial State Bank (the “Beneficial Bank Loan”) with the proceeds of a loan from Northwest Bank (“NW Bank” and the“NW Bank Senior Loan”), and has received a commitment from NW Bank to provide the NWBank Senior Loan; and
WHEREAS, in addition to the NW Bank Senior Loan, MCNW has received a commitment from NW Bank to provide a Letter of Credit (the “NW Bank LOC”) to provide credit support for the REIT and ensure liquidity forCommunity Investors who may elect to redeem their CIT shares; and
WHEREAS, to secure the NW Bank Senior Loan and the NW Bank LOC, the Owner LLC and NW Bank will be required to negotiate, execute and deliver and enter into certain loan, reimbursement, letter of credit, security and other documents and agreements with NW Bank (collectively, the “Bank Agreements”); and
WHEREAS, the NW Bank LOC will be held and administered by an independent bank with corporate trust powers (the “LOC Trustee”) on behalf of the REIT for the benefit of the Community Investors and in accordance with the terms of the CIT shares; and
WHEREAS, in addition to the Beneficial Bank Loan, the Owner LLC has outstanding obligations to certain individual investors (collectively, the “Impact Investors”) who provided loans to fund the acquisition of the Projectand which loans (the “Impact Bridge Loans”) will remain in place and serve as bridge financing for the Project until the CITshares are fully subscribed and paid-in by the Community Investors, with the Impact Bridge Loan paid over time from proceeds derived from the sales of CIT shares to the Community Investors; and
WHEREAS, in order to avoid adverse tax consequences and to ensure manageable allocation of the MCNW equity in the Project in connection with the transfer by MCNW of all of its right, title and interest in and to the Project and as the sole member of the Owner LLC to the REIT it is anticipated that the REIT will issue a separate class of non-voting shares in the CITto MCNW (the “Sponsor Shares”) and/or that the Owner LLC will issue one or more subordinated notes to MCNW (the “Sponsor Notes”); and
WHEREAS, as the sponsor of the CIT and to provide for the administration of the CIT and the management and operation of the Project, MCNW, either directly or through a to-be-formed affiliated entity, will also enter into a series of agreements with other entities to effect the issuance of the CIT shares, the administration of the CIT and the management and operation of the Project, including, without limitation, the following (collectively, the “Sponsor Agreements”):
- A sponsorship between MCNW and the REIT;
- A services agreement among MCNW, the Owner LLC and the REIT; and
- A trust agency agreement among MCNW, the REIT and the LOC Trustee.
WHEREAS, MCNW, as sponsor of the CIT, will be required to execute and deliver various documents in connection with the formation of the REIT, and the issuance of the CIT shares including articles of incorporation, bylaws, and shareholder and subscription agreements (the “CIT Formation Documents”), together with any disclosure and offering documentsproviding to Community Investors complete and accurate information materially relevant to their decision to purchase CIT shares, including information regarding the Project, the Owner LLC, NWBank, the NW Bank Loan and the NW LOC, the Impact Bridge Loan and the Sponsor Agreements, and foreseeable risks related to investment in the CIT (the “CIT Offering Documents”); and
WHEREAS, MCNW, as sponsor of the CIT, on its own behalf and in its capacity as the sole member of the Owner LLC,desires to authorize, approve and direct all actions necessary and appropriate to be taken in connection with the launch of the CIT, including without limitation, the formation of the REIT, the transfer of all of its right, title and interest in and to the Project and as the sole member of the Owner LLC to the REIT, the issuance, offering and sale of the CIT shares to Community Investors pursuant to the CIT Formation Documents and CIT Offering Documents, the issuance of the Sponsor Shares and the Sponsor Notes securing the NW Bank Senior Loan and the NW Bank LOC and entering into the Bank Agreements refinancing the Impact Bridge Loans, and entering into the Sponsor Agreements with the Paying Agent, the REIT, the Owner LLC and others.
NOW, THEREFORE, THE BOARD OF DIRECTORS,ACTING IN ITS OWN CAPACITY AND IN ITS CAPACITY AS THE SOLE MEMBER OF PLAZA 122 LLC, HEREBY ADOPTS THE FOLLOWING RESOLUTIONS:
- Approval of Actions in Furtherance of Community Investment Trust.
RESOLVED that the Board deems it advisable and in the best interests and in furtherance of the mission of MCNW to expressly authorize and direct certain actions and delegate authority to its Authorized Officers (as defined below) in connection with the CIT and the Project as set forth and subject to the limitations contained herein.
- Authorize the Authorized Officers to act on behalf of MCNW and Owner LLC.
RESOLVED that the Board authorizes Larry Ettner, as the Board Chair, and John Haines, as the Executive Director, and their respective duly authorized designees (each an “Authorized Officer” and together, the “Authorized Officers”) to take any and all action on behalf of MCNW and on behalf of the Owner LLC provided for by this resolution in connection with the development, launch, implementation and administration of the CIT.
- Authorize and Approve the Formation of the REIT.
RESOLVED that the Authorized Officers are hereby authorized and directed to take all actions necessary and appropriate to form the REIT as a C corporation organized under the laws of the State of Oregon, including the execution and delivery of the CIT Formation Documents.
- Authorize Transfer of MCNW’s Interest in the Owner LLC to the CIT.
RESOLVED that the Authorized Officersare hereby authorized and directed to take all actions necessary and appropriate toeffect the assignment and transfer of all of MCNW’s right, title and interest in and to the Project and in the Owner LLC, including its membership interest therein, to the REIT in exchange for the Sponsor Shares and/or the Sponsor Notes.
- Authorize and Approve NW Bank Credit Facilities and Bank Agreements.
RESOLVED that theNW Bank Senior Loan and NW Bank LOC are hereby approved and the Authorized Officers arehereby authorized and directedto negotiate the final terms and conditions of the NW Bank Senior Loan and the NW Bank LOC, and tonegotiate, execute and deliver and enter into the Bank Agreements and to take all other necessary and appropriate actions reasonably required to secure such NW Bank credit facilities and to refinance the Beneficial Bank Loan.
- Authorize and Approve Impact Bridge Loans with Impact Investors.
RESOLVED that the Impact Bridge Loans are hereby ratified and approved and the Authorized Officers are hereby authorized and directed to negotiate such additional terms and conditions of such loans with the Impact Investors and to negotiate, execute and deliver and enter into such agreements as may be necessary and appropriate to allow such loans to serve as bridge financing for the Project until the CIT shares are fully subscribed and paid-in by the Community Investors.
- Authorize and Approve Sponsor Agreements.
RESOLVED that the Authorized Officersare hereby authorized and directed to take all actions necessary and appropriate to cause MCNW, either directly or through a to-be-formed affiliated entity, to negotiate, execute and deliver and enter into the Sponsorship Agreements in connection with the issuance of the CIT shares, the administration of the CIT and the management and operation of the Project.
- Authorize and Approve Offering, Sale and Issuance of CIT Shares and CIT Formation Documents and CIT Disclosure Documents.
RESOLVEDthe Authorized Officers are hereby authorized and directed to take all actions necessary and appropriate on the part of MCNW to cause the REIT to proceed with the offering, sale and issuance of the CIT Shares to Community Investors pursuant to and in accordance with the terms and conditions of the CIT Formation Documents and the CIT Offering Documents.
- Authorize and Approve Additional Related Actions.
RESOLVED that the Authorized Officers be, and they hereby are, authorized and directed, for and on behalf of MCNW, on its own behalf and on behalf of the Owner LLC, at any time and from time to time hereafter and without further action from the Board, to do or cause to be done all such other and further acts and things as they determine to be necessary or desirable and consistent with the purposes and intents of this Resolution, and that the doing of any such act or thing shall be conclusive evidence of the determination of such Authorized Officer in that respect.
- No Assumption of Direct Liability by MCNW.
RESOLVED that all actions authorized and directed, taken or to-be-taken now or hereafter by MCNW pursuant to this Resolution in connection with the CIT shall, unless the terms of a particular agreement, instrument or document entered into by MCNW on its own behalf expressly provide otherwise, be without recourse to MCNW or any of its revenues or assets.
- Ratification of Prior Actions in Connection with CIT.
RESOLVED that all acts and deeds previously performed or taken by one of more of the Authorized Officers or their designees prior to the date of this Resolution in furtherance of the CIT are within the scope of authority conferred hereby and are hereby ratified and approved and confirmed in all respects as the acts and deeds of MCNW.
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Page 1 – Board CIT Project Resolution
CERTIFICATION
The foregoing Resolutions were adopted by the Board of Directors of MCNW on the 16th day of March 2017, during a regular meeting thereof at which a quorum was present. The foregoing Resolutions have not been rescinded or modified.
MERCY ENTERPRISE CORPORATION
d/b/a MERCY CORPS NORTHWEST
By:
Secretary
Page 1 – CIT Authorization Resolution