UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 14, 2016
Bluerock Residential Growth REIT, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Maryland | 001-36369 | 26-3136483 |
(State or other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification No.) |
712 Fifth Avenue, 9th Floor
New York, NY 10019
(Address of principal executive offices)
(212) 843-1601
(Registrant’s telephone number, including area code)
None.
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K/A filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
ITEM 1.01 | ENTRY INTO MATERIAL DEFINITIVE AGREEMENT |
The information in this Report set forth under Items 2.01 and 2.03 is incorporated herein by reference.
ITEM 2.01 | COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS |
The disclosure below describes our investment in Arium Westside (formerly known as Tenside Apartment Homes). All figures provided below are approximate.
On July 14, 2016, we, through our operating partnership, Bluerock Residential Holdings, L.P., a Delaware limited partnership, or our Operating Partnership, through BRG Tenside, LLC, a Delaware limited liability company and a wholly owned subsidiary of our Operating Partnership, or BRG Tenside, through BR Tenside JV Member, LLC, a Delaware limited liability company and a wholly owned subsidiary of BRG Tenside, or BR JV Member, acquired a 90.0% limited liability company interest, or the BRG Westside Interest, in BR Carroll Tenside JV, LLC, a Delaware limited liability company, or BR Carroll JV Entity, which is the owner and holder of a 100% limited liability company interest in BR Carroll Tenside, LLC, a Delaware limited liability company, or Property Owner. Property Owner concurrently acquired a leasehold interest in a 336-unit, Class A, mixed-use apartment community located in Atlanta, Georgia known as Tenside Apartment Homes, which, in connection with the acquisition, is being rebranded as Arium Westside, or the Arium Westside Property, and such leasehold interest, the Arium Westside Property Interest.
The material features of the investment in the joint venture are described below. The related acquisition financing for the Arium Westside Property Interest and our entry into certain guaranties under the loan documents are described under Item 2.03.
Following our investment in the Arium Westside Property Interest, the organizational structure with respect to the ownership of the Arium Westside Property Interest is such that: (i) the Arium Westside Property Interest is owned by Property Owner, (ii) Property Owner is wholly owned by BR Carroll JV Entity, (iii) and the BR Carroll JV Entity is a joint venture entity owned 90.0% by BR JV Member and 10.0% by Carroll Co-Invest IV Tenside, LLC, a Georgia limited liability company, or the Carroll Member.
BR Carroll JV Entity
BR JV Member initially invested approximately $22.17 million to acquire the BRG Westside Interest, and the Carroll Member initially invested approximately $2.46 million to acquire the remaining 10.0% equity interest in the BR Carroll JV Entity. BR JV Member and the Carroll Member have entered into a joint venture operating agreement for the BR Carroll JV Entity, or the JV Agreement. The JV Agreement contains terms, conditions, and indemnities that are customary and standard for joint ventures in the real estate industry.
Management and Major Decisions
BR JV Member is manager of BR Carroll JV Entity, subject to oversight by a management committee, which is controlled by BR JV Member. Under the JV Agreement, decisions of the management committee are subject to major decisions that are reserved to the members. These major decisions require the consent of both members, and include: (i) any capital transaction, including a refinancing or sale of the Arium Westside Property Interest; (ii) admission of additional members, subject to certain permitted affiliate transfers; (iii) liquidation, dissolution or termination of BR Carroll JV Entity or Property Owner; (iv) granting options, rights of first refusal, mortgages and similar interests in the Arium Westside Property Interest; (v) selling or otherwise disposing of the Arium Westside Property Interest; (vi) acquiring real property or other assets other than the Arium Westside Property Interest; (vii) taking actions that are reasonably likely to expose a party to liability under a loan guaranty; (viii) instituting or settling legal claims in excess of $50,000; (ix) entering into any agreement with an affiliated party; (x) amending, refinancing or replacing any financing to which BR Carroll JV Entity or Property Owner is a party, or which encumbers the Arium Westside Property Interest; (xi) incurring any capital expenses in excess of $50,000 unless pursuant to the approved annual business plan; (xii) making a loan to any member; (xiii) filing or initiating a bankruptcy or similar creditor protection action of BR Carroll JV Entity or Property Owner; (xiv) terminating the property management agreement or declaring a default thereunder, subject to cure provisions, although BR JV Member has certain heightened remedial rights with respect to a default by the Carroll-affiliated property manager; (xv) any amendment to the organizational documents of BR Carroll JV Entity or Property Owner; or (xvi) making distributions to members other than in accordance with the JV Agreement. We refer to each of these herein as a JV Major Decision.
To the extent that BR JV Member and the Carroll Member are not able to agree on a JV Major Decision on or after July 14, 2018, either party may initiate a buy-sell process compelling the other member to purchase the initiating party’s membership interest or sell to the initiating party the non-initiating party’s membership interest. On or after July 14, 2018, either party may also initiate a process to compel the sale of the Arium Westside Property Interest, and if the non-initiating party rejects the offer of sale, the initiating party may put its membership interest in BR Carroll JV Entity to the non-initiating party.
Additional Capital Contributions
The JV Agreement provides that either member may call for mandatory, protective additional capital contributions to protect BR Carroll JV Entity’s interest in the Arium Westside Property Interest (e.g., payment of taxes, repair of the property following uninsured damage, payment of insurance premiums), prevent a default under any financing (e.g., payment of debt service following an operating shortfall, reserves required by the lender, a reduction in principal required by the lender to meet loan to value requirements), or for funds required to refinance the property when the current financing has matured or will mature in the near future (e.g., commitment fees, loan application fees, equity infusions to meet market loan to value requirements). The JV Agreement further provides that the management committee may call for capital contributions as reasonably determined to be necessary to effect an investment or expenditure for the Arium Westside Property or BR Carroll JV Entity.
Distributions
Pursuant to the provisions of the JV Agreement, distributions, other than for a Sale (as defined herein), are to be made to the members in accordance with their ownership interest percentage. If the Arium Westside Property Interest is sold or all of the membership interests of Property Owner or BR JV Entity are sold (each a Sale), distributions will be made as follows: (i) first, to the members in accordance with their ownership percentages until BR JV Member has received an internal rate of return of 8%; (ii) second, to the Carroll Member in an amount equal to 1% of the gross purchase price provided in a purchase and sale agreement (or similar document) of a consummated Sale; (iii) third, to the members in accordance with their ownership percentages until BR JV Member has received the greater of an internal rate of return equal to 17.5% or a return on such capital contributions equal to a 1.75 multiple thereof; (iv) fourth, to the Carroll Member in an amount equal to 1% of the gross purchase price provided in a purchase and sale agreement (or similar document) of a consummated Sale; and (v) thereafter, to the members in accordance with their ownership percentages.
Indirect Ownership Interests in the Arium Westside Property Interest
As a result of the structure described above, we hold a 90.0% indirect equity interest in the Arium Westside Property Interest and the Carroll Member holds the remaining 10.0% equity interest.
The Arium Westside Property Interest
The Arium Westside Property is a mixed-use apartment community located at 1000 Northside Drive NW, Atlanta, Georgia 30318. The community contains 336 units. The Arium Westside Property was built in 2008 and features one-, two- and three-bedroom units averaging approximately 900 square feet. The ground floor retail includes a mix of local, regional and national tenants. The property is located within the vibrant, live-work-play West Midtown sub-market.
The business plan of BR Carroll JV Entity includes providing growth capital to lease the remaining vacant retail space and improving the exterior curb appeal, amenities, shared spaces and interior units within the multifamily complex.
In connection with our investment in the Arium Westside Property Interest, we were assigned (i) the Lease Agreement, between The Atlanta Development Authority and Ten Side Holdings, LLC, which had previously been assigned to Waterton Tenside Owner, L.L.C., or the Lease, (ii) The Atlanta Development Authority Taxable Lease Purchase Revenue Bond made to Ten Side Holdings, LLC, which had previously been assigned to Waterton Tenside Owner, L.L.C., or the Bond, and (iii) an Indenture of Trust by and between The Atlanta Development Authority and The Bank of New York Mellon Trust Company, N.A. to and for the benefit of Ten Side Holdings, LLC, which had previously been assigned to Waterton Tenside Owner, L.L.C, or the Indenture, and collectively with the Lease and the Bond, the Bond Documents. Pursuant to the Bond Documents, Property Owner owns the Arium Westside Property Interest. During the term of the Lease, Property Owner will make semi-annual lease payments to The Atlanta Development Authority as the owner of the Arium Westside Property in the exact amount that The Atlanta Development Authority is required to pay to Property Owner in principal and interest pursuant to the Bond. Thus, the payment of rent and the distribution of the debt service on the Bond is a simple ledger entry with no money actually exchanged. The purpose of this structure is to provide tax relief to the owner of the Arium Westside Property Interest. At the expiration of the Lease at midnight on January 1, 2022, Property Owner will purchase the Arium Westside Property from The Atlanta Development Authority for $1.00. Notwithstanding the foregoing, the Property Owner may, at any time before the Bond is repaid in full and the expiration of the Lease, cancel the Bond, extinguish the Lease and purchase the Arium Westside Property from The Atlanta Development Authority for $1.00.
The Arium Westside Property is managed by Carroll Management Group, LLC, an affiliate of the Carroll Member, or the Property Manager, under a property management agreement. The property management agreement prescribes a management fee of 2.50% of annual gross cash revenues, payable monthly, and an asset management fee of 0.50% of annual gross cash revenues, payable monthly in arrears. The Property Manager is also entitled to a construction management fee equal to 5.0% of any expenses incurred in connection with (a) all interior renovation projects with respect to the residential units to the extent costs exceed $10,000, in the aggregate, in any single calendar year, (b) any individual capital expenditure project set forth in the Annual Business Plan, as shown in Exhibit D to the JV Agreement and as amended from time to time, and (c) any other individual capital expenditure project the cost of which exceeds $10,000, which fee shall be calculated and paid upon each respective draw and within 30 days of final draw or following completion of restoration or satisfaction of the claim, as applicable. With respect to the retail units, the construction management fee shall only be paid to the Property Manager in connection with work performed to upgrade any currently vacant retail units from their current condition to a white box condition, the cost of which work is not expected to exceed $120,000. White box condition includes applicable framing and sheet rock installation, pre-painting preparatory work and painting of the units and the installation of applicable ceiling grid, and no construction management fee shall be paid or be payable in connection with any tenant improvement work or other tenant specific work with respect to any retail units. The Property Manager will charge an initial fee of $2,000 to cover costs for training and marketing at the Arium Westside Property. If Property Owner terminates the property management agreement pursuant to Section 11(c) thereof, the Property Manager shall be due a termination fee equal to the sum of (i) the management fees and (ii) the asset management fees paid by Property Owner for the full three months immediately preceding the date of termination.
The total purchase price paid for the Arium Westside Property Interest was approximately $74.5 million based on arm’s length negotiations with an unaffiliated seller. In evaluating the Arium Westside Property Interest as a potential investment, a variety of factors were considered, including overall valuation of net rental income, expected capital expenditures, submarket demographics, community features and amenities, location, price per unit and occupancy.
ITEM 2.03 | CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN OFF BALANCE SHEET ARRANGEMENT OF REGISTRANT |
Senior Loan Financing and Guaranty Obligations Related to the Arium Westside Property Interest
The acquisition of the Arium Westside Property Interest by Property Owner was funded with approximately $24.63 million of gross equity from BR Carroll JV Entity, and a senior mortgage loan made by Walker & Dunlop, LLC on behalf of Fannie Mae, or the Lender, to Property Owner in the original principal amount of approximately $52.15 million, or the Loan, which Loan is secured by the Arium Westside Property Interest.
The Loan will mature on August 1, 2023. The first payment on the Loan will be due September 1, 2016 in the amount of $165,257.56. Thereafter and up to and including August 1, 2021, the Loan will require monthly, interest-only payments of (i) $149,264.89 if the prior month was a 28-day month, (ii) $154,595.78 if the prior month was a 29-day month, (iii) $159,926.67 if the prior month was a 30-day month, and (iv) $165,257.56 if the prior month was a 31-day month. After August 1, 2021 and through maturity, the Loan will require monthly payments in the amount of $239,448.03 of principal and interest. The interest rate on the Loan is 3.68%.
At the closing of the Arium Westside Property Interest, we entered into a Guaranty to provide certain standard scope non-recourse carveout guarantees (and related hazardous materials indemnities) to the Loan which generally call for protection against losses by the Lender for so-called “bad acts,” such as misrepresentations, and may include full recourse liability for more significant events such as bankruptcy, or the Guaranty. Our financial obligations under the Loan and the Guaranty, as discussed in this Item 2.03, arose on July 14, 2016 in connection with the closing of the Loan. Carroll Multifamily Real Estate Fund IV, LP, an affiliate of the Carroll Member, entered into the Guaranty on a joint and several basis with us and the parties additionally entered into a backstop agreement pursuant to which the liability under the Guaranty was allocated between the parties.
ITEM 9.01 | FINANCIAL STATEMENTS AND EXHIBITS |
(a) Financial Statements of Real Estate Acquired
Since it is impracticable to provide the required financial statements for the acquired real property described in Item 2.01 at the time of this filing and no financials (audited or unaudited) are available at this time, we hereby confirm that we intend to file the required financial statements on or before September 29, 2016, by amendment to this Form 8-K.
(b) Pro Forma Financial Information. See paragraph (a) above.
(d) Exhibits.
Exhibit No. | Description | |
10.1 | Limited Liability Company Agreement of BRG Tenside, LLC by Bluerock Residential Holdings, L.P., dated as of June 2, 2016 | |
10.2 | Limited Liability Company Agreement of BR Tenside JV Member, LLC by BRG Tenside, LLC, dated as of June 2, 2016 | |
10.3 | Limited Liability Company Agreement of BR Carroll Tenside JV, LLC by and between BR Tenside JV Member, LLC and Carroll Co-Invest IV Tenside, LLC, dated as of July 14, 2016 | |
10.4 | Limited Liability Company Agreement of BR Carroll Tenside, LLC by BR Carroll Tenside JV, LLC, dated as of June 2, 2016 | |
10.5 | Agreement of Purchase and Sale by and between Waterton Tenside Owner, L.L.C. and Carroll Acquisitions, LLC, dated as of May 25, 2016 | |
10.6 | Assignment and Assumption of Purchase Agreement by and between Carroll Acquisitions, LLC and BR Carroll Tenside, LLC, dated as of July 14, 2016 | |
10.7 | Multifamily Loan and Security Agreement (Non-Recourse) by and Between BR Carroll Tenside, LLC and Walker & Dunlop, LLC, dated as of July 14, 2016 | |
10.8 | Multifamily Note by BR Carroll Tenside, LLC to and for the benefit of Walker & Dunlop, LLC, dated as of July 14, 2016 | |
10.9 | Multifamily Deed to Secure Debt, Assignment of Leases and Rents, Security Agreement and Fixture Filing by BR Carroll Tenside, LLC to and for the benefit of Walker & Dunlop, LLC, dated as of July 14, 2016 | |
10.10 | Assignment of Management Agreement by and among BR Carroll Tenside, LLC, Walker & Dunlop, LLC and Carroll Management Group, LLC, dated as of July 14, 2016 | |
10.11 | Guaranty of Non-Recourse Obligations by Bluerock Residential Growth REIT, Inc. and Carroll Multifamily Real Estate Fund IV, LP to and for the benefit of Walker & Dunlop, LLC, dated as of July 14, 2016 | |
10.12 | Environmental Indemnity Agreement by BR Carroll Tenside, LLC to and for the benefit of Walker & Dunlop, LLC, dated as of July 14, 2016 | |
10.13 | Assignment of Security Instrument (Multifamily Deed to Secure Debt, Assignment of Leases and Rents, Security Agreement and Fixture Filing) by Walker & Dunlop, LLC to Fannie Mae, dated as of July 14, 2016 | |
10.14 | Property Management Agreement by and between BR Carroll Tenside, LLC and Carroll Management Group, LLC, dated as of July 14, 2016 |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
BLUEROCK RESIDENTIAL GROWTH REIT, INC. | ||
Dated: July 20, 2016 | By: | /s/ Christopher J. Vohs |
Christopher J. Vohs | ||
Chief Accounting Officer and Treasurer |
EXHIBIT INDEX
Exhibit No. | Description | |
10.1 | Limited Liability Company Agreement of BRG Tenside, LLC by Bluerock Residential Holdings, L.P., dated as of June 2, 2016 | |
10.2 | Limited Liability Company Agreement of BR Tenside JV Member, LLC by BRG Tenside, LLC, dated as of June 2, 2016 | |
10.3 | Limited Liability Company Agreement of BR Carroll Tenside JV, LLC by and between BR Tenside JV Member, LLC and Carroll Co-Invest IV Tenside, LLC, dated as of July 14, 2016 | |
10.4 | Limited Liability Company Agreement of BR Carroll Tenside, LLC by BR Carroll Tenside JV, LLC, dated as of June 2, 2016 | |
10.5 | Agreement of Purchase and Sale by and between Waterton Tenside Owner, L.L.C. and Carroll Acquisitions, LLC, dated as of May 25, 2016 | |
10.6 | Assignment and Assumption of Purchase Agreement by and between Carroll Acquisitions, LLC and BR Carroll Tenside, LLC, dated as of July 14, 2016 | |
10.7 | Multifamily Loan and Security Agreement (Non-Recourse) by and Between BR Carroll Tenside, LLC and Walker & Dunlop, LLC, dated as of July 14, 2016 | |
10.8 | Multifamily Note by BR Carroll Tenside, LLC to and for the benefit of Walker & Dunlop, LLC, dated as of July 14, 2016 | |
10.9 | Multifamily Deed to Secure Debt, Assignment of Leases and Rents, Security Agreement and Fixture Filing by BR Carroll Tenside, LLC to and for the benefit of Walker & Dunlop, LLC, dated as of July 14, 2016 | |
10.10 | Assignment of Management Agreement by and among BR Carroll Tenside, LLC, Walker & Dunlop, LLC and Carroll Management Group, LLC, dated as of July 14, 2016 | |
10.11 | Guaranty of Non-Recourse Obligations by Bluerock Residential Growth REIT, Inc. and Carroll Multifamily Real Estate Fund IV, LP to and for the benefit of Walker & Dunlop, LLC, dated as of July 14, 2016 | |
10.12 | Environmental Indemnity Agreement by BR Carroll Tenside, LLC to and for the benefit of Walker & Dunlop, LLC, dated as of July 14, 2016 | |
10.13 | Assignment of Security Instrument (Multifamily Deed to Secure Debt, Assignment of Leases and Rents, Security Agreement and Fixture Filing) by Walker & Dunlop, LLC to Fannie Mae, dated as of July 14, 2016 | |
10.14 | Property Management Agreement by and between BR Carroll Tenside, LLC and Carroll Management Group, LLC, dated as of July 14, 2016 |
Exhibit 10.1
LIMITED LIABILITY COMPANY AGREEMENT OF
BRG TENSIDE, LLC
THIS LIMITED LIABILITY COMPANY AGREEMENT of BRG TENSIDE, LLC, a Delaware limited liability company (the “Company”), as amended from time to time, (the “Agreement”) is entered into by Bluerock Residential Holdings, LP, a Delaware limited partnership, the sole member of the Company (the “Member”).
RECITALS
A. The Company was formed as a Delaware limited liability company in accordance with the Delaware Limited Liability Company Act, as amended from time to time (the “Act”).
B. The undersigned desires to execute this Agreement to set forth the terms and conditions under which the management, business, and financial affairs of the Company will be conducted.
C. Definitions for this Agreement are set forth in Article XI.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual promises, covenants, and conditions herein contained, the receipt and sufficiency of which are hereby acknowledged, the undersigned party hereby covenants and agrees as follows:
ARTICLE I
PURPOSE AND POWERS OF COMP ANY
1.1 Purpose. The Company’s business and purpose shall consist solely of (x) the acquisition, ownership, operation, management, financing and disposition of the multi-family real estate project consisting of an approximately 336-unit multi-family apartment and retail complex with 17 ground floor retail commercial spaces and located at 1000 Northside Drive NW, Atlanta, Georgia 30318 and commonly known as Tenside Apartments (the “Property”), which will be owned by a Subsidiary, (y) the ownership and management of one or more Subsidiaries in connection with the Property and (z) such activities as are necessary, incidental or appropriate in connection therewith.
1.2 Powers. The Company shall have all powers of a limited liability company formed under the Act and not prohibited by the Act or this Agreement.
1.3 Title to Company Property. All property owned by the Company shall be owned by the Company as an entity and, insofar as permitted by applicable law, no Member shall have any ownership interest in any Company property in its individual name or right, and each Member’s Membership Interest shall be personal property for all purposes.
1.4 Term. This Agreement shall not terminate until the Company is terminated in accordance with this Agreement.
1.5 Registered Office and Registered Agent. The Company’s initial registered office and initial registered agent shall be as provided in the Certificate of Formation. The registered office and registered agent may be changed from time to time by filing the address of the new registered office and/or the name of the new registered agent pursuant to the Act.
1.6 Formation and Authorized Person. On or before execution of this Agreement, an authorized person within the meaning of the Act shall have duly filed or caused to be filed the Certificate of Formation of the Company with the office of the Secretary of State of Delaware, as provided in Section 18-201 of the Act, and the Member hereby ratifies such filing. The Member shall use its best efforts to take such other actions as may be reasonably necessary to perfect and maintain the status of the Company as a limited liability company under the laws of Delaware. Notwithstanding anything contained herein to the contrary, the Company shall not do business in any jurisdiction that would jeopardize the limitation on liability afforded to the Member and/or any subsequent members under the Act or this Agreement.
ARTICLE II
MEMBERS
2.1 Initial Member.
(a) The name, address and initial Membership Interest of the initial Member is as follows:
Name | Membership Interest | |
Bluerock Residential Holdings, LP | 100% | |
c/o Bluerock Real Estate, L.L.C. | ||
712 Fifth Avenue, 9th Floor | ||
New York, NY 10019 |
(b) The Member was admitted to the Company as a member of the Company upon its execution of a counterpart signature page to this Agreement.
ARTICLE III
MANAGEMENT BY MEMBER
3.1 In General. The powers of the Company shall be exercised by, or under the authority of, the Member. In addition, the business and affairs of the Company shall be ·managed under the direction of the Member. Subject to the limitations set forth in this Agreement, the Member shall be entitled to make all decisions and take all actions for the Company.
3.2 Management by Member. Except as otherwise limited by this Agreement, the Member shall have the power to do any and all acts necessary, convenient or incidental to or for the furtherance of the purposes described herein, including all powers, statutory or otherwise; provided, however, that the Company may, at its election, appoint one or more officers to exercise its rights under this Agreement. The Member shall be entitled to make all decisions and take all actions for the Company, and the Member has the authority to bind the Company.
3.3 Required Approval. Any provision in this Agreement that requires the approval of the Members, but does not specify the particular percentage interests or number of Members required for such approval, shall be interpreted to require the affirmative vote of the Member holding a majority of the total Membership Interests from time to time, and specifically shall not be interpreted to require unanimous consent of the Member.
3.4 Action By Member. In exercising the voting or other approval rights as provided herein, the Member may act through meetings and/or written consents.
3.5 Authorization. The Company shall possess and may exercise all of the powers and privileges granted by the Act, and the Company is hereby authorized to do any act, enter into any agreement, contract or other instrument, and otherwise to engage in any activity and to do any action not prohibited under the Act or other applicable law which is necessary, useful, desirable or convenient to the conduct, promotion and attainment of the business and purposes of the Company.
ARTICLE IV
[INTENTIONALLY OMITTED]
ARTICLE V
[INTENTIONALLY OMITTED]
ARTICLE VI
EFFECT OF BANKRUPTCY. DEATH OR INCOMPETENCY OF A MEMBER
6.1 The bankruptcy, death, dissolution, liquidation, termination or adjudication of incompetency of a Member shall not cause the termination or dissolution of the Company and the business of the Company shall continue. Upon any such occurrence, the trustee, receiver, executor, administrator, committee, guardian or conservator of such Member shall have all the rights of such Member for the purpose of settling or managing its estate or property, subject to satisfying conditions precedent to the admission of such assignee as a substitute member. The transfer by such trustee, receiver, executor, administrator, committee, guardian or conservator of any Company Interest shall be subject to all of the restrictions hereunder to which such transfer would have been subject if such transfer had been made by such bankrupt, deceased, dissolved, liquidated, terminated or incompetent Member. The foregoing shall apply to the extent permitted by applicable law. Notwithstanding any other provision of the Certificate of Formation or this Agreement, no member of the Company shall have any right under Section 18-801(b) of the Act to agree in writing to dissolve the Company upon the bankruptcy of a member of the Company or the occurrence of any event that causes a member of the Company to cease to be a member of the Company. The existence of the Company as a separate legal entity shall continue until the cancellation of its Certificate of Formation as provided in the Act.
ARTICLE VII
CONTRIBUTIONS TO THE COMPANY AND DISTRIBUTIONS
7.1 Member Capital Contributions. Upon execution of this Agreement, the Member shall contribute as the Member’s initial Capital Contribution, $100 in cash.
7.2 [Intentionally Omitted]
7.3 Distributions and Allocations. All distributions of cash or other property (except upon the Company’s dissolution, which shall be governed by the applicable provisions of the Act and Article IX hereof) and all allocations of income, profits, and loss shall be made 100% to the Member in accordance with its Membership Interest. All amounts withheld pursuant to the Code or any provisions of state or local tax law with respect to any payment or distribution to the Member from the Company shall be treated as amounts distributed to the Member pursuant to this Section 7.3. Notwithstanding any provision to the contrary contained in this Agreement, the Company shall not be required to make a distribution to the Member on account of its interest in the Company if such distribution would violate Section 18-607 of the Act or any other applicable law.
ARTICLE VIII
ASSIGNMENTS AND RESIGNATIONS
8.1 Assignment, Resignation and Admission Generally.
(a) Assignments. The Member may assign in whole or in part its Membership Interest in the Company. If the Member transfers all of its Membership Interest pursuant to this Section 8.1, the transferee shall be admitted to the Company as a member of the Company upon its execution of an instrument signifying its agreement to be bound by the terms and conditions of this Agreement, which instrument may be a counterpart signature page to this Agreement. Such admission shall be deemed effective immediately prior to the transfer and, immediately following such admission, the Member shall cease to be a member of the Company. Notwithstanding anything in this Agreement to the contrary, any successor to the Member by merger or consolidation shall, without further act, be the Member hereunder, and such merger or consolidation shall not constitute an assignment for purposes of this Agreement and the Company shall continue without dissolution.
(b) Resignation. The Member is permitted to resign. If the Member is permitted to resign pursuant to this Section 8.l(b), an additional member of the Company shall be admitted to the Company upon its execution of an instrument signifying its agreement to be bound by the terms and conditions of this Agreement, which instrument may be a counterpart signature page to this Agreement. Such admission shall be deemed effective immediately prior to the resignation and, immediately following such admission, the resigning Member shall cease to be a member of the Company.
(c) Admission of Additional Members. One or more additional members may be admitted to the Company with the written consent of the Member.
8.2 Absolute Prohibition. Notwithstanding any other provision in this Article VIII, the Membership Interest of the Member, in whole or in part, or any rights to distributions therefrom, shall not be sold, exchanged, conveyed, transferred, pledged, hypothecated, subjected to a security interest, or otherwise assigned or encumbered, if such action would result in a violation of federal or state securities laws in the opinion of counsel for the Company.
8.3 Additional Requirements. In addition to all requirements imposed in this Article VIII, any admission of a member or assignment of a Membership Interest shall be subject to all restrictions relating thereto expressly imposed by the Act.
8.4 Effect of Prohibited Action. Any assignment in violation of this Article VIII shall be, to the fullest extent permitted by law, void and of no force or effect whatsoever.
ARTICLE IX
DISSOLUTION AND TERMINATION
9.1 Dissolution. Subject to the other provisions of this Agreement, the
Company shall be dissolved upon the first to occur of the following: (a) the termination of the legal existence of the last remaining member of the Company or the occurrence of any other event which terminates the continued membership of the last remaining member of the Company unless the Company is continued without dissolution in a manner permitted by this Agreement or the Act or (b) the entry of a decree of judicial dissolution under Section 18-802 of the Act. Upon the occurrence of any event that causes the last remaining member of the Company to cease to be a member of the Company or that causes the Member to cease to be a member of the Company (other than upon continuation of the Company without dissolution upon (i) an assignment by the Member of all of its Membership Interest and the admission of the transferee pursuant to Section 8.1, or (ii) the resignation of the Member and the admission of an additional member of the Company pursuant to Section 8.1), to the fullest extent permitted by law, the personal representative of such member is hereby authorized to, and shall, within ninety (90) days after the occurrence of the event that terminated the continued membership of such member in the Company, agree in writing (x) to continue the Company and (y) to admit the personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that terminated the continued membership of the last remaining member of the Company.
9.2 Liquidation. Upon its dissolution, the Company shall wind up its affairs and distribute its assets in accordance with Section 9.4 below and the Act by either or a combination of the following methods as the Member (or the Person carrying out the liquidation) shall determine:
(a) selling the Company’s assets and, after the satisfaction of Company liabilities, distributing the net proceeds therefrom to the Member; and/or
(b) subject to the satisfaction of Company liabilities, distributing the Company’s assets to the Member in kind, with the Member accepting an undivided interest in the Company’s assets in satisfaction of its Membership Interest.
9.3 Orderly Liquidation. A reasonable time as determined by the Member (or the Person carrying out the liquidation) shall be allowed for the orderly liquidation of the assets of the Company and the discharge of liabilities to the creditors so as to minimize any losses attendant upon dissolution.
9.4 Distributions. Upon dissolution, the Company’s assets (including any cash on hand) shall be distributed in the following order and in accordance with the following priorities:
(a) first, to the satisfaction of all debts and liabilities of the Company (whether by payment or the making of reasonable provision for payment thereof) and the expenses of liquidation, including a sales commission to the selling agent, if any; then
(b) second, to the Member.
9.5 Termination. The Company shall terminate when (i) all of the assets of
the Company, after payment of or due provision for all debts, liabilities and obligations of the Company, shall have been distributed to the Member in the manner provided for in this Agreement and (ii) the Certificate of Formation shall have been canceled in the manner required by the Act. The existence of the Company as a separate legal entity shall continue until cancellation of the Certificate of Formation as provided in the Act.
ARTICLE X
MISCELLANEOUS PROVISIONS
10.1 Governing Law. This Agreement shall be construed, enforced, and interpreted in accordance with the laws of the State of Delaware, without regard to conflicts of law provisions and principles thereof.
10.2 Indemnity. The Company shall indemnify and hold harmless any person who was or is a party to any proceeding, including any proceeding brought by a member in the right of the Company or brought by or on behalf of any member of the Company, by reason of the fact that he is or was an officer of the Company, against any liability incurred by him in connection with such proceedings unless he engaged in willful misconduct or knowing violation of the criminal law or any federal or state securities laws. Furthermore, in any such proceedings brought by or on behalf of the Company or bought by or on behalf of the members of the Company, no officer shall be liable to the Company or its members for any monetary damages with respect to any transaction, occurrence, course of conduct or otherwise, except for liability resulting from such officer’s having engaged in willful misconduct or a knowing violation of the criminal law or any federal or state securities laws.
10.3 Integrated and Binding Agreement; Amendment. This Agreement contains the entire understanding and agreement among the parties hereto with respect to the subject matter hereof, and there are no other agreements, understandings, representations or warranties among the parties hereto other than those set forth herein. This Agreement may be amended only by written agreement of the Member and only as provided in this Agreement. Notwithstanding any other provision of this Agreement, the parties hereto agree that this Agreement constitutes a legal, valid and binding agreement, and is enforceable against each of them in accordance with its terms.
10.4 Construction. Whenever the singular number is used in this Agreement and when required by the context, the same shall include the plural, and the masculine gender shall include the feminine and neuter genders, and vice versa.
10.5 Headings. The headings in this Agreement are inserted for convenience only and are in no way intended to describe, interpret, define, or limit the scope, extent, or intent of this Agreement or any provision hereof.
10.6 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument.
10.7 Severability. If any provision of this Agreement or the application thereof to any Person or circumstance shall be invalid, illegal, or unenforceable to any extent, the remainder of this Agreement and the application thereof shall not be affected and shall be enforceable to the fullest extent permitted by law.
10.8 Notices. All notices under this Agreement shall be in writing and shall be given to the party entitled thereto by personal service or by mail, posted to the address maintained by the Company for such person or at such other address as he may specify in writing.
10.9 Rights and Remedies Cumulative; Waivers. The rights and remedies provided by this Agreement are cumulative and the use of any one right or remedy by any party shall not preclude or waive the right to use any or all other remedies, and are given in addition to any other rights the parties may have by law, statute, ordinance, or otherwise. The failure of any party to seek redress for violation of or to insist upon the strict performance of any covenant or condition of this Agreement shall not prevent a subsequent act, which would have originally constituted a violation, from having the effect of an original violation.
10.10 Heirs. Successors, and Assigns. Each and all of the covenants, terms, provisions, and agreements herein contained shall be binding upon, and inure to the benefit of, the parties hereto and, to the extent permitted by this Agreement, their respective heirs, legal representatives, successors, and assigns.
10.11 Partition. Each member agrees that the assets of the Company are not and will not be suitable for partition. Accordingly, each member hereby irrevocably waives (to the fullest extent permitted by law) any and all rights that he may have, or may obtain, to maintain any action for partition of any of the assets of the Company.
10.12 Tax Status. It is the intention of the Member that the Company be a disregarded entity for federal income tax purposes under Section 7701 of the Code and the Treasury Regulations promulgated pursuant thereto.
10.13 Effective Date. Pursuant to Section 18-201(d) of the Act, this Agreement shall be effective as of the time of the filing of the Certificate of Formation with the Office of the Delaware Secretary of State.
ARTICLE XI
DEFINITIONS
In addition to any other defined terms herein, the following terms used in this Agreement shall have the following meanings (unless otherwise expressly provided herein):
(a) “Affiliate” shall mean any Person controlling or controlled by or under common control with the Company, including, without limitation (i) any person who has a familial relationship, by blood, marriage or otherwise with any Member or employee of
the Company, or any Affiliate thereof and (ii) any Person which receives compensation for administrative, legal or accounting services from the Company, or any of its Affiliates. For purposes of this definition, “control” when used with respect to any specified Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.
(b) “Bankruptcy” shall mean, with respect to any Person, if such Person (i) makes an assignment for the benefit of creditors, (ii) files a voluntary petition in bankruptcy, (iii) is adjudged a bankrupt or insolvent, or has entered against it an order for relief, in any bankruptcy or insolvency proceedings, (iv) files a petition or answer seeking for itself any reorganization, arrangement, composition, readjustment, liquidation or similar relief under any statute, law or regulation, (v) files an answer or other pleading admitting or failing to contest the material allegations of a petition filed against it in any proceeding of this nature, (vi) seeks, consents to or acquiesces in the appointment of a trustee, receiver or liquidator of the Person or of all or any substantial part of its properties, or (vii) if 120 days after the commencement of any proceeding against the Person seeking reorganization, arrangement, composition, readjustment, liquidation or similar relief under any statute, law or regulation, if the proceeding has not been dismissed, or if within 90 days after the appointment without such Person’s consent or acquiescence of a trustee, receiver or liquidator of such Person or of all or any substantial part of its properties, the appointment is not vacated or stayed, or within 90 days after the expiration of any such stay, the appointment is not vacated. The foregoing definition of “Bankruptcy” is intended to replace and shall supersede and replace the definition of “Bankruptcy” set forth in Sections 18-101(1) and 18-304 of the Act.
(c) “Capital Contribution” shall mean any contribution to the capital of the Company by the Member in cash, property, or services, or a binding obligation to contribute cash, property, or services, whenever made.
(d) “Certificate of Formation” shall mean the Certificate of Formation of the Company, as amended and in force from time to time.
(e) “Company Interest” shall mean any equity interest in the Company, direct or indirect.
(h) “Code” shall mean the Internal Revenue Code of 1986, as amended, or corresponding provisions of subsequent superseding federal revenue laws and the rules and regulations promulgated thereunder.
(i) “Company shall mean BRG TENSIDE, LLC.
(j) “Entity” shall mean any general partnership, limited partnership, limited liability company, corporation, joint venture, trust, business trust, cooperative, association or other entity.
(m) “Member” shall mean the Person identified in Article II hereof and includes any Person admitted as an additional member or a substitute member of the Company
pursuant to the provisions of this Agreement, each in its capacity as a member of the Company.
(n) “Membership Interest” shall mean the Member’s limited liability company interest in the Company and the other rights and obligations with respect thereto as set forth in this Agreement. The Membership Interest is set forth beside the Member’s name in Article II of this Agreement.
(o) “Person” shall mean any individual, corporation, partnership, limited liability company, joint venture, association, joint stock company, trust (including any beneficiary thereof), unincorporated organization, or government or any agency or political subdivision thereof.
(p) “Property” is defined in Section 1.1 of this Agreement.
(q) “Subsidiary” shall mean any Entity in which the Company owns, directly or indirectly, a membership or other equity interest equal to 50% or more of the outstanding equity in that Entity.
The undersigned hereby agrees, acknowledges, and certifies that the foregoing constitutes the sole and entire Limited Liability Company Agreement of the Company.
Member: | Bluerock Residential Holdings, LP | ||||
a Delaware limited partnership | |||||
By: | Bluerock Residential Growth REIT, Inc., a Maryland corporation, its general partner | ||||
By: | /s/ Michael Konig | ||||
Name: Michael Konig Title: Authorized Signatory |
Exhibit 10.2
LIMITED LIABILITY COMPANY AGREEMENT OF
BR TENSIDE JV MEMBER, LLC
THIS LIMITED LIABILITY COMPANY AGREEMENT of BR TENSIDE JV MEMBER, LLC, a Delaware limited liability company (the “Company”), as amended from time to time, (the “Agreement”) is entered into by BRG Tenside, LLC, a Delaware limited liability company, the sole member and manager of the Company (the “Member”), and Bluerock Asset Management LLC, a Delaware limited liability company (“BAM”), as a Special Member (the “Special Member”).
RECITALS
A. The Company was formed as a Delaware limited liability company in accordance with the Delaware Limited Liability Company Act, as amended from time to time (the “Act”).
B. The undersigned desires to execute this Agreement to set forth the terms and conditions under which the management, business, and financial affairs of the Company will be conducted.
C. Definitions for this Agreement are set forth in Article XI.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual promises, covenants, and conditions herein contained, the receipt and sufficiency of which are hereby acknowledged, the undersigned party hereby covenants and agrees as follows:
ARTICLE I
PURPOSE AND POWERS OF COMP ANY
1.1 Purpose. The Company’s business and purpose shall consist solely of (x) the acquisition, ownership, operation, management, financing and disposition of the multi-family real estate project consisting of an approximately 336-unit multi-family apartment and retail complex with 17 ground floor retail commercial spaces and located at 1000 Northside Drive NW, Atlanta, Georgia 30318 and commonly known as Tenside Apartments (the “Property”), which will be owned by a Subsidiary, (y) the ownership and management of one or more Subsidiaries in connection with the Property, and (z) such activities as are necessary, incidental or appropriate in connection therewith.
1.2 Powers. The Company shall have all powers of a limited liability company formed under the Act and not prohibited by the Act or this Agreement.
1.3 Title to Company Property. All property owned by the Company shall be owned by the Company as an entity and, insofar as permitted by applicable law, no member shall have any ownership interest in any Company property in its individual name or right, and each member’s Membership Interest shall be personal property for all purposes.
1.4 Term. This Agreement shall not terminate until the Company is terminated in
accordance with this Agreement.
1.5 Registered Office and Registered Agent. The Company’s initial registered office and initial registered agent shall be as provided in the Certificate of Formation. The registered office and registered agent may be changed from time to time by filing the address of the new registered office and/or the name of the new registered agent pursuant to the Act.
1.6 Formation and Authorized Person. On or before execution of this Agreement, an authorized person within the meaning of the Act shall have duly filed or caused to be filed the Certificate of Formation of the Company with the office of the Secretary of State of Delaware, as provided in Section 18-201 of the Act, and the Manager hereby ratifies such filing. The Manager shall use its best efforts to take such other actions as may be reasonably necessary to perfect and maintain the status of the Company as a limited liability company under the laws of Delaware. Notwithstanding anything contained herein to the contrary, the Company shall not do business in any jurisdiction that would jeopardize the limitation on liability afforded to the Member under the Act or this Agreement.
ARTICLE II
MEMBERS
2.1 Initial Member.
(a) The name, address and initial Membership Interest of the initial Member is as follows:
Name | Membership Interest | |
BRG Tenside, LLC | 100% | |
c/o Bluerock Real Estate, L.L.C. | ||
712 Fifth Avenue, 9th Floor | ||
New York, NY 10019 |
(b) The Member was admitted to the Company as a member of the Company upon its execution of a counterpart signature page to this Agreement.
2.2 Special Member. Upon the occurrence of any event that causes the Member to cease to be a member of the Company (other than upon continuation of the Company without dissolution upon (a) an assignment by the Member of all of its Membership Interest and the admission of the transferee pursuant to Section 8.1 below, or (b) the resignation of the Member and the admission of an additional member of the Company pursuant to Section 8.1 below), BAM as the Special Member shall, without any action of such Person and simultaneously with the Member ceasing to be a member of the Company, automatically be admitted to the Company as a member and shall continue the Company without dissolution. No Special Member may resign from the Company or transfer its rights as Special Member unless a successor Special Member has been approved in writing by Lender and has been admitted to the Company as Special Member by executing a counterpart to this Agreement; provided, however, a Special Member shall automatically cease to be a member of the Company upon the admission to the Company of a substitute member. A Special Member shall be a member of the Company that has no interest in the profits, losses and capital of the Company and has no right to receive any distributions of Company assets. Pursuant to Section 18-301 of the Act, a Special Member shall not be required to make any capital contributions to the Company and shall not receive a Membership Interest in the Company. A Special Member, in its capacity as Special Member, may not bind the Company. Except as required by any mandatory provision of the Act, a Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Company, including, without limitation, the merger, consolidation or conversion of the Company. In order to implement the admission to the Company of each Special Member, the Person acting as a Special Member shall execute a counterpart to this Agreement. Prior to admission to the Company as Special Member, no Person executing this Agreement as a Special Member shall be a member of the Company.
ARTICLE III
MANAGEMENT
3.1 Initial Manager. The initial Manager shall be the Member.
3.2 In General. The powers of the Company shall be exercised by, or under the authority of, the Manager. In addition, the business and affairs of the Company shall be ·managed under the direction of the Manager. Subject to the limitations set forth in this Agreement, the Manager shall be entitled to make all decisions and take all actions for the Company.
3.3 Management by Manager. Except as otherwise limited by this Agreement, the Manager shall have the power to do any and all acts necessary, convenient or incidental to or for the furtherance of the purposes described herein, including all powers, statutory or otherwise; provided, however, that the Company may, at its election, appoint one or more officers to exercise its rights under this Agreement. The Manager shall be entitled to make all decisions and take all actions for the Company, and the Manager has the authority to bind the Company.
3.4 Required Approval. Any provision in this Agreement that requires the approval of the members, but does not specify the particular percentage interests or number of members required for such approval, shall be interpreted to require the affirmative vote of the members
holding a majority of the total Membership Interests from time to time, and specifically shall not be interpreted to require unanimous consent of the members.
3.5 Action By Manager. In exercising the voting or other approval rights as provided herein, the Manager may act through meetings and/or written consents.
3.6 Term of Manager. The Manager shall serve until the Member’s withdrawal from the Company. At such time any existing or new Members may elect a new Manager through vote of the Members then owning more than 50% in Membership Interests.
3.7 Authorization. The Company shall possess and may exercise all of the powers and privileges granted by the Act, and the Company is hereby authorized to do any act, enter into any agreement, contract or other instrument, and otherwise to engage in any activity and to do any action not prohibited under the Act or other applicable law which is necessary, useful, desirable or convenient to the conduct, promotion and attainment of the business and purposes of the Company.
ARTICLE IV
[INTENTIONALLY OMITTED]
ARTICLE V
[INTENTIONALLY OMITTED]
ARTICLE VI
EFFECT OF BANKRUPTCY. DEATH OR INCOMPETENCY OF A MEMBER
6.1 The bankruptcy, death, dissolution, liquidation, termination or adjudication of incompetency of a member shall not cause the termination or dissolution of the Company and the business of the Company shall continue. Upon any such occurrence, the trustee, receiver, executor, administrator, committee, guardian or conservator of such member shall have all the rights of such member for the purpose of settling or managing its estate or property, subject to satisfying conditions precedent to the admission of such assignee as a substitute member. The transfer by such trustee, receiver, executor, administrator, committee, guardian or conservator of any Company Interest shall be subject to all of the restrictions hereunder to which such transfer would have been subject if such transfer had been made by such bankrupt, deceased, dissolved, liquidated, terminated or incompetent member. The foregoing shall apply to the extent permitted by applicable law. Notwithstanding any other provision of the Certificate of Formation or this Agreement, no member of the Company shall have any right under Section 18-801(b) of the Act to agree in writing to dissolve the Company upon the bankruptcy of a member of the Company or the occurrence of any event that causes a member of the Company to cease to be a member of the Company. The existence of the Company as a separate legal entity shall continue until the cancellation of its Certificate of Formation as provided in the Act.
ARTICLE VII
CONTRIBUTIONS TO THE COMPANY AND DISTRIBUTIONS
7.1 Member Capital Contributions. Upon execution of this Agreement, the Member shall contribute as the Member’s initial Capital Contribution, $100 in cash.
7.2 Distributions and Allocations. All distributions of cash or other property (except upon the Company’s dissolution, which shall be governed by the applicable provisions of the Act and Article IX hereof) and all allocations of income, profits, and loss shall be made 100% to the members in accordance with their Membership Interest. All amounts withheld pursuant to the Code or any provisions of state or local tax law with respect to any payment or distribution to the members from the Company shall be treated as amounts distributed to the members pursuant to this Section 7.2. Notwithstanding any provision to the contrary contained in this Agreement, the Company shall not be required to make a distribution to the members on account of their interest in the Company if such distribution would violate Section 18-607 of the Act or any other applicable law.
ARTICLE VIII
ASSIGNMENTS AND RESIGNATIONS
8.1 Assignment, Resignation and Admission Generally.
(a) Assignments. A member may assign in whole or in part its Membership Interest in the Company. If a member transfers all of its Membership Interest pursuant to this Section 8.1, the transferee shall be admitted to the Company as a member of the Company upon its execution of an instrument signifying its agreement to be bound by the terms and conditions of this Agreement, which instrument may be a counterpart signature page to this Agreement. Such admission shall be deemed effective immediately prior to the transfer and, immediately following such admission, such member shall cease to be a member of the Company. Notwithstanding anything in this Agreement to the contrary, any successor to a member by merger or consolidation shall, without further act, be a member hereunder, and such merger or consolidation shall not constitute an assignment for purposes of this Agreement and the Company shall continue without dissolution.
(b) Resignation. A member is permitted to resign. If a member is permitted to resign pursuant to this Section 8.l(b), an additional member of the Company shall be admitted to the Company upon its execution of an instrument signifying its agreement to be bound by the terms and conditions of this Agreement, which instrument may be a counterpart signature page to this Agreement. Such admission shall be deemed effective immediately prior to the resignation and, immediately following such admission, the resigning member shall cease to be a member of the Company.
(c) Admission of Additional Members. One or more additional members may be admitted to the Company with the written consent of the Manager.
8.2 Absolute Prohibition. Notwithstanding any other provision in this Article VIII, the Membership Interest of a member, in whole or in part, or any rights to distributions therefrom, shall not be sold, exchanged, conveyed, transferred, pledged, hypothecated, subjected
to a security interest, or otherwise assigned or encumbered, if such action would result in a violation of federal or state securities laws in the opinion of counsel for the Company.
8.3 Additional Requirements. In addition to all requirements imposed in this Article VIII, any admission of a member or assignment of a Membership Interest shall be subject to all restrictions relating thereto expressly imposed by the Act.
8.4 Effect of Prohibited Action. Any assignment in violation of this Article VIII shall be, to the fullest extent permitted by law, void and of no force or effect whatsoever.
ARTICLE IX
DISSOLUTION AND TERMINATION
9.1 Dissolution. Subject to the other provisions of this Agreement, the Company shall be dissolved upon the first to occur of the following: (a) the termination of the legal existence of the last remaining member of the Company or the occurrence of any other event which terminates the continued membership of the last remaining member of the Company unless the Company is continued without dissolution in a manner permitted by this Agreement or the Act or (b) the entry of a decree of judicial dissolution under Section 18-802 of the Act. Upon the occurrence of any event that causes the last remaining member of the Company to cease to be a member of the Company or that causes the Manager to cease to be a member of the Company (other than upon continuation of the Company without dissolution upon an assignment by the Manager of all of its Membership Interest and the admission of the transferee pursuant to Section 8.1), to the fullest extent permitted by law, the personal representative of such member is hereby authorized to, and shall, within ninety (90) days after the occurrence of the event that terminated the continued membership of such member in the Company, agree in writing (x) to continue the Company and (y) to admit the personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that terminated the continued membership of the last remaining member of the Company.
9.2 Liquidation. Upon its dissolution, the Company shall wind up its affairs and distribute its assets in accordance with Section 9.4 below and the Act by either or a combination of the following methods as the Manager (or the Person carrying out the liquidation) shall determine:
(a) selling the Company’s assets and, after the satisfaction of Company liabilities, distributing the net proceeds therefrom to the members; and/or
(b) subject to the satisfaction of Company liabilities, distributing the Company’s assets to the members in kind in satisfaction of their Membership Interests.
9.3 Orderly Liquidation. A reasonable time as determined by the Manager (or the Person carrying out the liquidation) shall be allowed for the orderly liquidation of the assets of the Company and the discharge of liabilities to the creditors so as to minimize any losses attendant upon dissolution.
9.4 Distributions. Upon dissolution, the Company’s assets (including any cash on hand) shall be distributed in the following order and in accordance with the following priorities:
(a) first, to the satisfaction of all debts and liabilities of the Company (whether by payment or the making of reasonable provision for payment thereof) and the expenses of liquidation, including a sales commission to the selling agent, if any; then
(b) second, to the members.
9.5 Termination. The Company shall terminate when (i) all of the assets of the Company, after payment of or due provision for all debts, liabilities and obligations of the Company, shall have been distributed to the members in the manner provided for in this Agreement and (ii) the Certificate of Formation shall have been canceled in the manner required by the Act. The existence of the Company as a separate legal entity shall continue until cancellation of the Certificate of Formation as provided in the Act.
ARTICLE X
MISCELLANEOUS PROVISIONS
10.1 Governing Law. This Agreement shall be construed, enforced, and interpreted in accordance with the laws of the State of Delaware, without regard to conflicts of law provisions and principles thereof.
10.2 Indemnity. The Company shall indemnify and hold harmless any person who was or is a party to any proceeding, including any proceeding brought by a member in the right of the Company or brought by or on behalf of any member of the Company, by reason of the fact that he is or was a Manager or an officer of the Company, against any liability incurred by him in connection with such proceedings unless he engaged in willful misconduct or knowing violation of the criminal law or any federal or state securities laws. Furthermore, in any such proceedings brought by or on behalf of the Company or bought by or on behalf of the members of the Company, no Manager or officer shall be liable to the Company or its members for any monetary damages with respect to any transaction, occurrence, course of conduct or otherwise, except for liability resulting from such Manager’s or officer’s having engaged in willful misconduct or a knowing violation of the criminal law or any federal or state securities laws.
10.3 Integrated and Binding Agreement; Amendment. This Agreement contains the entire understanding and agreement among the parties hereto with respect to the subject matter hereof, and there are no other agreements, understandings, representations or warranties among the parties hereto other than those set forth herein. This Agreement may be amended only by written agreement of the Manager and only as provided in this Agreement. Notwithstanding any other provision of this Agreement, the parties hereto agree that this Agreement constitutes a legal, valid and binding agreement, and is enforceable against each of them in accordance with its terms.
10.4 Construction. Whenever the singular number is used in this Agreement and when required by the context, the same shall include the plural, and the masculine gender shall include the feminine and neuter genders, and vice versa.
10.5 Headings. The headings in this Agreement are inserted for convenience only and are in no way intended to describe, interpret, define, or limit the scope, extent, or intent of this
Agreement or any provision hereof.
10.6 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument.
10.7 Severability. If any provision of this Agreement or the application thereof to any Person or circumstance shall be invalid, illegal, or unenforceable to any extent, the remainder of this Agreement and the application thereof shall not be affected and shall be enforceable to the fullest extent permitted by law.
10.8 Notices. All notices under this Agreement shall be in writing and shall be given to the party entitled thereto by personal service or by mail, posted to the address maintained by the Company for such person or at such other address as he may specify in writing.
10.9 Rights and Remedies Cumulative; Waivers. The rights and remedies provided by this Agreement are cumulative and the use of any one right or remedy by any party shall not preclude or waive the right to use any or all other remedies, and are given in addition to any other rights the parties may have by law, statute, ordinance, or otherwise. The failure of any party to seek redress for violation of or to insist upon the strict performance of any covenant or condition of this Agreement shall not prevent a subsequent act, which would have originally constituted a violation, from having the effect of an original violation.
10.10 Heirs. Successors, and Assigns. Each and all of the covenants, terms, provisions, and agreements herein contained shall be binding upon, and inure to the benefit of, the parties hereto and, to the extent permitted by this Agreement, their respective heirs, legal representatives, successors, and assigns.
10.11 Partition. Each member agrees that the assets of the Company are not and will not be suitable for partition. Accordingly, each member hereby irrevocably waives (to the fullest extent permitted by law) any and all rights that he may have, or may obtain, to maintain any action for partition of any of the assets of the Company.
10.12 Tax Status. It is the intention of the Manager that the Company be a disregarded entity for federal income tax purposes under Section 7701 of the Code and the Treasury Regulations promulgated pursuant thereto.
10.13 Effective Date. Pursuant to Section 18-201(d) of the Act, this Agreement shall be effective as of the time of the filing of the Certificate of Formation with the Office of the Delaware Secretary of State.
ARTICLE XI
DEFINITIONS
In addition to any other defined terms herein, the following terms used in this Agreement shall have the following meanings (unless otherwise expressly provided herein):
(a) “Affiliate” shall mean any Person controlling or controlled by or under common control with the Company, including, without limitation (i) any person who has a familial relationship, by blood, marriage or otherwise with any Member or employee of the
Company, or any Affiliate thereof and (ii) any Person which receives compensation for administrative, legal or accounting services from the Company, or any of its Affiliates. For purposes of this definition, “control” when used with respect to any specified Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.
(b) “Bankruptcy” shall mean, with respect to any Person, if such Person (i) makes an assignment for the benefit of creditors, (ii) files a voluntary petition in bankruptcy, (iii) is adjudged a bankrupt or insolvent, or has entered against it an order for relief, in any bankruptcy or insolvency proceedings, (iv) files a petition or answer seeking for itself any reorganization, arrangement, composition, readjustment, liquidation or similar relief under any statute, law or regulation, (v) files an answer or other pleading admitting or failing to contest the material allegations of a petition filed against it in any proceeding of this nature, (vi) seeks, consents to or acquiesces in the appointment of a trustee, receiver or liquidator of the Person or of all or any substantial part of its properties, or (vii) if 120 days after the commencement of any proceeding against the Person seeking reorganization, arrangement, composition, readjustment, liquidation or similar relief under any statute, law or regulation, if the proceeding has not been dismissed, or if within 90 days after the appointment without such Person’s consent or acquiescence of a trustee, receiver or liquidator of such Person or of all or any substantial part of its properties, the appointment is not vacated or stayed, or within 90 days after the expiration of any such stay, the appointment is not vacated. The foregoing definition of “Bankruptcy” is intended to replace and shall supersede and replace the definition of “Bankruptcy” set forth in Sections 18-101(1) and 18-304 of the Act.
(c) “Capital Contribution” shall mean any contribution to the capital of the Company by the Member in cash, property, or services, or a binding obligation to contribute cash, property, or services, whenever made.
(d) “Certificate of Formation” shall mean the Certificate of Formation of the Company, as amended and in force from time to time.
(e) “Company Interest” shall mean any equity interest in the Company, direct or indirect.
(h) “Code” shall mean the Internal Revenue Code of 1986, as amended, or corresponding provisions of subsequent superseding federal revenue laws and the rules and regulations promulgated thereunder.
(i) “Company” shall mean BR TENSIDE JV MEMBER, LLC.
(j) “Entity” shall mean any general partnership, limited partnership, limited liability company, corporation, joint venture, trust, business trust, cooperative, association or other entity.
(k) “Lender” shall mean Walker & Dunlop, LLC and its successors and assigns.
(l) “Manager” shall mean BRG Tenside, LLC or any entity or individual subsequently elected as manager pursuant to Section 3.6 of this Agreement.
(m) “Member” shall mean the Person identified in Article II hereof and includes any Person admitted as an additional member or a substitute member of the Company pursuant to the provisions of this Agreement, each in its capacity as a member of the Company.
(m) “Membership Interest” shall mean the member’s limited liability company interest in the Company and the other rights and obligations with respect thereto as set forth in this Agreement. The Membership Interest is set forth beside the member’s name in Article II of this Agreement.
(n) “Person” shall mean any individual, corporation, partnership, limited liability company, joint venture, association, joint stock company, trust (including any beneficiary thereof), unincorporated organization, or government or any agency or political subdivision thereof.
(o) “Property” is defined in Section 1.1 of this Agreement.
(p) “Special Member” shall mean, upon such Person’s admission to the Company as a member of the Company, each of the Persons bound by this Agreement as Special Member in such Person’s capacity as a member of the Company. A Special Member shall only have the rights and duties expressly set forth in this Agreement.
(q) “Subsidiary” shall mean any Entity in which the Company owns, directly or indirectly, a membership or other equity interest equal to 50% or more of the outstanding equity in that Entity.
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The undersigned hereby agrees, acknowledges, and certifies that the foregoing constitutes the sole and entire Limited Liability Company Agreement of the Company.
Member and Manager: | ||||||
BRG Tenside, LLC, a Delaware limited liability company | ||||||
By: | Bluerock Residential Holdings, LP, a Delaware limited partnership, its sole member | |||||
By: | Bluerock Residential Growth REIT, Inc., a Maryland corporation, its general partner | |||||
By: | /s/ Michael Konig | |||||
Name: Michael Konig Title: Authorized Signatory |
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Special Member: | ||||||
Bluerock Asset Management LLC, a Delaware limited liability company | ||||||
By: | /s/ Jordan Ruddy | |||||
Name: Jordan Ruddy | ||||||
Title: Authorized Signatory |
Exhibit 10.3
LIMITED LIABILITY COMPANY AGREEMENT
OF
BR CARROLL TENSIDE JV, LLC
A DELAWARE LIMITED LIABILITY COMPANY
DATED AS OF JULY 14, 2016
LIMITED LIABILITY COMPANY AGREEMENT
OF
BR CARROLL TENSIDE JV, LLC
THIS LIMITED LIABILITY COMPANY AGREEMENT of BR CARROLL TENSIDE JV, LLC (“JV” or “Company”) is made and entered into and is effective as of July 14, 2016, by and between BR Tenside JV Member, LLC, a Delaware limited liability company (“Bluerock”) and Carroll Co-Invest IV Tenside, LLC, a Georgia limited liability company (“Carroll”) (this “Agreement”). Capitalized terms used herein shall have the meanings ascribed to such terms in this Agreement.
Effective as of July 14, 2016, the Members, by execution of this Agreement, hereby form the Company as a limited liability company pursuant to and in accordance with the Delaware Limited Liability Company Act (6 Del. C. §18-101 et seq.), as amended from time to time (the “Act”), and this Agreement; and the Members hereby agree as follows:
Section 1. Definitions. As used in this Agreement:
“Act” shall mean the Delaware Limited Liability Company Act (currently Chapter 18 of Title 6 of the Delaware Code), as amended from time to time.
“Adjusted Capital Account Deficit” shall mean, with respect to any Member, the deficit balance, if any, in such Member’s Capital Account as of the end of the applicable Fiscal Year after (i) crediting such Capital Account with any amounts which such Member is deemed to be obligated to restore pursuant to Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5), and (ii) debiting such Capital Account by the amount of the items described in Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6). The foregoing definition of Adjusted Capital Account Deficit is intended to comply with the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
“Advisor” shall mean any accountant, attorney or other advisor retained by a Member.
“Affiliate” shall mean with respect to any Person (i) more than ten percent (10%) of the issued and outstanding stock of which, or more than ten percent (10%) of the ownership interests of which, is owned, directly or indirectly, by a Person, including a Member, (ii) that now or hereafter owns, directly or indirectly, more than a ten percent (10%) ownership interest in a Person, including the Company or in any Member, (iii) any agent, trustee, officer, director, employee, partner, member, manager or shareholder or member of the family of such Person (or any member of the family of any such agent, trustee, officer, director, employee, partner, member, manager or shareholder) or (iv) any corporation, partnership, limited liability company, trust or other entity that, directly or indirectly, through one or more intermediaries, controls, or is controlled by, or is under common control with, such Person. The term “control” (including the terms “controlled by” and “under common control with”) means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. The term “family” shall be
deemed to include spouses, children, parents, brothers and sisters, and the spouse, children, parents, brothers and sisters of such spouse’s children, parents, brothers and sisters.
“Agreed Upon Value” shall mean the fair market value (net of any debt) agreed upon pursuant to a written agreement between the Members of property contributed by a Member to the capital of the Company, which shall for all purposes hereunder be deemed to be the amount of the Capital Contribution applicable to such property contributed.
“Agreement” shall mean this Limited Liability Company Agreement, as amended from time to time.
“Annual Business Plan” shall mean, with respect to the Property, the business plan for a Fiscal Year of the Company prepared by Property Manager and approved by the Members as further described in Section 9.3.
“Applicable Adjustment Percentage” shall have the meaning set forth in Section 5.2(b)(3).
“Asset Management Fee” shall have the meaning set forth in Section 9.7(b).
“Backstop Agreement” shall mean that certain agreement providing for the allocation of liability and contribution for losses arising from any “bad boy” guaranties constituting part of the Loan Documents.
“Bankruptcy Code” shall mean Title 11 of the United States Code, as amended or any other applicable bankruptcy or insolvency statute or similar law.
“Bankruptcy/Dissolution Event” shall mean, with respect to the affected party, (i) the entry of an Order for Relief under the Bankruptcy Code, (ii) the admission by such party of its inability to pay its debts as they mature, (iii) the making by it of an assignment for the benefit of creditors generally, (iv) the filing by it of a petition in bankruptcy or a petition for relief under the Bankruptcy Code or any other applicable federal or state bankruptcy or insolvency statute or any similar law, (v) the expiration of sixty (60) days after the filing of an involuntary petition under the Bankruptcy Code without such petition being vacated, set aside or stayed during such period, (vi) an application by such party for the appointment of a receiver for the assets of such party, (vii) an involuntary petition seeking liquidation, reorganization, arrangement or readjustment of its debts under any other federal or state insolvency law, provided that the same shall not have been vacated, set aside or stayed within sixty (60) days after filing, (viii) the imposition of a judicial or statutory lien on all or a substantial part of its assets unless such lien is discharged or vacated or the enforcement thereof stayed within sixty (60) days after its effective date, (ix) an inability to meet its financial obligations as they accrue, or (x) a dissolution or liquidation.
“Beneficial Owner” shall have the meaning provided in Section 5.7.
“Bluerock” shall have the meaning provided in the first paragraph of this Agreement.
“Bluerock Transferee” shall have the meaning set forth in Section 12.2(b)(2).
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“BR Affiliate” shall have the meaning provided in Section 9.8(a).
“BR REIT” shall mean Bluerock Residential Growth REIT, Inc., a Maryland corporation.
“BR Growth” shall mean Bluerock Growth Fund, LLC, a Delaware limited liability company.
“BR Growth II” shall mean Bluerock Growth Fund II, LLC, a Delaware limited liability company.
“BR SOIF II” shall mean Bluerock Special Opportunity + Income Fund II, LLC, a Delaware limited liability company.
“BR SOIF III” shall mean Bluerock Special Opportunity + Income Fund III, LLC, a Delaware limited liability company.
“Capital Account” shall have the meaning provided in Section 5.6.
“Capital Contribution” shall mean, with respect to any Member, the aggregate amount of (i) cash, and (ii) the Agreed Upon Value of other property contributed by such Member to the capital of the Company net of any liability secured by such property that the Company assumes or takes subject to.
“Carroll” shall have the meaning provided in the first paragraph of this Agreement.
“Carroll Parent” shall mean MPC Partnership Holdings LLC, a Georgia limited liability company.
“Carroll Change Event” shall mean (i) gross negligence, willful misconduct, fraud or bad faith by Carroll or any of its Affiliates in connection with or relating to the Company or the Property; (ii) a Bankruptcy/Dissolution Event shall have occurred with respect to Carroll or Property Manager; or (iii) failure to satisfy the Carroll Ownership/Control Requirement.
“Carroll Ownership/Control Requirement” as of any particular date means that each of the following conditions is satisfied: (i) at least one of the Key Individuals is not then dead, insane as determined by a qualified physician, incapacitated as determined by a qualified physician, or the subject of a Bankruptcy/Dissolution Event; and (ii) at least one of the Key Individuals is actively involved in the operation and management of (a) Carroll or Carroll Parent and (b) CMG.
“Carroll Transferee” shall have the meaning set forth in Section 12.2(b)(1).
“Cash Flow” shall mean, for any period for which Cash Flow is being calculated, gross cash receipts of the Company (but excluding Capital Contributions), less the following payments and expenditures: (i) all payments of operating expenses of the Company (or the Subsidiary owning the Property), (ii) all payments of principal of, interest on and any other amounts due with respect to indebtedness, leases or other commitments or obligations of the
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Company (or the Subsidiary owning the Property) (including on loans by Members to the Company), (iii) all sums expended by the Company (or any Subsidiary owning the Property) for capital expenditures, (iv) all prepaid expenses of the Company (or any Subsidiary owning the Property), and (v) all sums expended by the Company (or any Subsidiary owning the Property) which are otherwise capitalized.
“Cause” shall mean gross negligence, willful misconduct, fraud, bad faith or a Bankruptcy/Dissolution Event, or a termination of the Management Agreement by or at the behest of a third-party lender under an applicable Collateral Agreement.
“Certificate of Formation” shall mean the Certificate of Formation of the Company, as amended from time to time.
“CMG” shall mean Carroll Management Group, LLC, a Georgia limited liability company.
“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time, including the corresponding provisions of any successor law.
“Collateral Agreement” shall mean any agreement, instrument, document or covenant concurrently or hereafter made or entered into under, pursuant to, or in connection with this Agreement and any certifications made in connection therewith or amendment or amendments made at any time or times heretofore or hereafter to any of the same (including, without limitation, the Management Agreement and the Cost Sharing Agreement).
“Company” shall mean BR Carroll Tenside JV, LLC, a Delaware limited liability company organized under the Act.
“Company Minimum Gain” shall have the meaning given to the term “partnership minimum gain” in Regulations Sections 1.704-2(b)(2) and 1.704-2(d).
“Confidential Information” shall have the meaning provided in Section 10.01.
“Contract Sales Price” shall mean the gross purchase price provided in the purchase and sale agreement (or similar purchase document) for a consummated Sale, as amended.
“Controllable Expenses” shall mean all expenses, other than Uncontrollable Expenses, incurred by the Company or any Subsidiary of the Company with respect to the Property.
“Cost Sharing Agreement” shall mean the Agreement Regarding Purchase and Sale Contract & Acquisition Loan Fees and Deposits, dated June 6, 2016 by and between Bluerock Residential Holdings, L.P. and Carroll Acquisitions, LLC with respect to the Property.
“Default Amount” shall have the meaning provided in Section 5.2(b).
“Default Loan” shall have the meaning provided in Section 5.2(b)(1).
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“Default Loan Rate” shall have the meaning provided in Section 5.2(b)(1).
“Defaulting Member” shall have the meaning provided in Section 5.2(b).
“Delaware UCC” shall mean the Uniform Commercial Code as in effect in the State of Delaware from time to time.
“Dissolution Event” shall have the meaning provided in Section 13.2.
“Distributable Funds” with respect to any month or other period, as applicable, shall mean an amount equal to the Cash Flow of the Company for such month or other period, as applicable, as reduced by reserves for anticipated capital expenditures, future working capital needs and operating expenses, contingent obligations and other purposes of the Company or any Subsidiary, selling expenses associated with a Sale (including, without limitation, brokerage expenses), the amounts of which shall be reasonably determined from time to time by the Management Committee.
“Distributions” shall mean the distributions payable (or deemed payable) to a Member (including, without limitation, its allocable portion of Distributable Funds).
“Emergency Expenditure” shall have the meaning provided in the Management Agreement.
“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time.
“Fiscal Year” shall mean each calendar year ending December 31.
“First Tier Preferred Return” shall mean, with regard to any and all Capital Contributions made by a Member an Internal Rate of Return equal to eight percent (8%). The First Tier Preferred Return shall be calculated from the date that any such Capital Contributions are made including, in the case of any amounts funded pursuant to the Cost Sharing Agreement, the date such amounts are actually funded under the Cost Sharing Agreement.
“Flow Through Entity” shall have the meaning provided in Section 5.7.
“Foreign Corrupt Practices Act” shall mean the Foreign Corrupt Practices Act of the United States, 15 U.S.C. Sections 78a, 78m, 78dd-1, 78dd-2, 78dd-3, and 78ff, as amended, if applicable, or any similar law of the jurisdiction where the Property is located or where the Company or any of its Subsidiaries transacts business or any other jurisdiction, if applicable.
“Imputed Closing Costs” means an amount (not to exceed one and one quarter percent (1.25%) of the purchase price) that would normally be incurred by the Company or a Subsidiary if the Property were sold for an amount specified in Section 15.1 or Section 15.2 (as applicable), for title insurance premiums, survey costs, brokerage commissions, legal fees, and other commercially reasonable closing costs.
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“Income” shall mean the gross income of the Company for any month, Fiscal Year or other period, as applicable, including gains realized on the sale, exchange or other disposition of the Company’s assets.
“Indemnified Party” shall have the meaning provided in Section 14.4(a).
“Indemnifying Party” shall have the meaning provided in Section 14.4(a).
“Inducement Agreements” shall have the meaning provided in Section 14.4(a).
“Initial Business Plan” shall have the meaning provided in Section 9.3(a).
“Initiating Member” shall have the meaning provided in Section 15.2(a).
“Interest” of any Member shall mean the entire limited liability company interest of such Member in the Company, which includes, without limitation, any and all rights, powers and benefits accorded a Member under this Agreement and the duties and obligations of such Member hereunder.
“Internal Rate of Return” and “IRR” shall mean, as of any date, the internal rate of return on the Total Investment of a Member to such date, calculated to be that discount rate (expressed on a percent per annum basis) which, when divided by twelve (12), compounded annually and applied to such Total Investment and the corresponding Distributions with respect thereto, causes the net present value, as of such date, of such Distributions and Total Investment to equal zero (calculated with the “XIRR” function in Microsoft Excel and using the latest version of Microsoft Excel available as of the date hereof). For this purpose, Capital Contributions and Distributions shall be assumed to have occurred as of the end of the month in which such Capital Contribution or Distribution takes place. For purposes of determining the Internal Rates of Return hereunder, calculations shall be denominated and calculated in US Dollars.
“Key Individual” shall mean each of Patrick Carroll and Joshua Champion.
“Loan” shall mean the acquisition loan in the initial principal amount of Fifty Two Million One Hundred Fifty Thousand Dollars ($52,150,000) originally made by Walker & Dunlop, LLC, which is secured by the Property.
“Loss” shall mean the aggregate of losses, deductions and expenses of the Company for any month, Fiscal Year or other period, as applicable, including losses realized on the sale, exchange or other disposition of the Company’s assets.
“Major Decision” means any decision for the Company to take, or refrain from taking, any action or incurring any obligation with respect to the following matters (or the effectuation of any such action or obligation):
(i) | any merger, conversion or consolidation involving the Company or any Subsidiary or the sale, lease, transfer, exchange or other disposition of all or substantially all of the Company’s assets or all of the Interests of the Members in the Company, in one or a series of related transactions; |
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(ii) | except as expressly provided in Section 12 with respect to Transfers by Bluerock or a Bluerock Transferee to a Bluerock Transferee and with respect to Transfers by Carroll as permitted thereunder, the admission or removal of any Member or the Company’s issuance to any third party of any equity interest in the Company (including interests convertible into, or exchangeable for, equity interests in the Company); |
(iii) | except upon the occurrence of any Dissolution Event, any liquidation, dissolution or termination of the Company or any Subsidiary; |
(iv) | giving, granting or undertaking any options, rights of first refusal, deeds of trust, mortgages, pledges, ground leases, security or other interests in or encumbering the Property, any portion thereof or any other material assets; |
(v) | selling, conveying or effecting any other direct or indirect transfer of the Property, any Subsidiary or other material asset of the Company or any portion thereof or the entering into of any agreement, commitment or assumption with respect to any of the foregoing; |
(vi) | acquiring, directly or through any Subsidiaries, by purchase, ground lease or otherwise, any real property or other material asset or the entry into of any agreement, commitment or assumption with respect to any of the foregoing, or the making or posting of any deposit (refundable or non-refundable); |
(vii) | taking any action by the Company or any Subsidiary that is reasonably likely to result in any Member or any of its Affiliates having individual liability under any so called “bad boy” guaranties or similar agreements provided to third party lenders in respect of financings relating to the Company, the Subsidiaries or any of their assets which provide for recourse as a result of willful misconduct, fraud or gross negligence or failure to comply with the covenants or any other provisions of such “bad boy” guaranties; |
(viii) | institute or settle any Company or Subsidiary legal claims in excess of $50,000; |
(ix) | employ, enter into any contract with (or materially modify any contract with), or otherwise compensate, directly or indirectly, the Manager or any Affiliate of the Manager; |
(x) | amend, modify, recast, refinance or replace any financing to which the Company or a Subsidiary is a party or which encumbers the Property or any portion thereof; |
(xi) | incur on behalf of the Company or a Subsidiary during any year any capital expenditures in excess of $50,000 in the aggregate unless pursuant to the Annual Business Plan approved by the Members; |
(xii) | make any loan to any Member, except as expressly provided for in this Agreement; |
(xiii) | cause or permit the Company or a Subsidiary to file for or fail to contest a bankruptcy proceeding, or seek or permit a receivership or make an assignment for the benefit of its creditors; |
(xiv) | terminate the Management Agreement or issue a notice of default pursuant to the Management Agreement; provided, however, that (A) such termination shall be |
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subject to the terms of the Management Agreement and (B) in the event of a default by CMG under the Management Agreement, which default is not cured in any available cure period, only Bluerock shall be authorized to take any action with respect to any remedies on behalf of the Company or any Subsidiary, including the right to terminate the Management Agreement, and to solicit bids for, and enter into any replacement Management Agreement with, any replacement manager thereunder;
(xv) | cause or permit any of the organizational documents, including this Agreement, of the Company or of any Subsidiary of the Company to be amended in any manner, other than any amendment (A) required (1) by a lender to the Company or any Subsidiary of the Company or (2) in order for a REIT Member to qualify as a “real estate investment trust” under the Code, in each case, to the extent such amendment referenced in clauses (1) and (2) of this subparagraph does not result in the dilution of any Member, does not adversely affect any Member’s right to Distributions pursuant to Section 6 and does not otherwise have a materially adverse effect on the rights of any Member, or (B) that is solely ministerial in nature to reflect or implement this Agreement under its express terms (such as, for example, to periodically update the Members’ respective Capital Contribution amounts, Percentage Interests or Management Committee representatives on Exhibit A); or |
(xvi) | make distributions to the Members, except in accordance with Section 6 hereof. |
“Management Agreement” shall mean that certain property management agreement attached hereto as Exhibit C to be entered into between the Company (or any Subsidiary of the Company), as owner, and Property Manager, as manager, pursuant to which Property Manager will provide certain management services for the Property.
“Management Committee” shall have the meaning provided in Section 9.2(a).
“Manager” shall have the meaning provided in Section 9.1(a).
“Material Deviation” shall have the meaning provided in Section 9.3(f).
“Member” and “Members” shall mean Bluerock, Carroll and any other Person admitted to the Company pursuant to this Agreement. For purposes of the Act, the Members shall constitute a single class or group of members.
“Member in Question” shall have the meaning provided in Section 16.12.
“Member Minimum Gain” shall mean an amount, determined in accordance with Regulations Section 1.704-2(i)(3) with respect to each Member Nonrecourse Debt, equal to the Company Minimum Gain that would result if such Member Nonrecourse Debt were treated as a Nonrecourse Liability.
“Member Nonrecourse Debt” shall have the meaning given the term “partner nonrecourse debt” in Regulations Section 1.704-2(b)(4).
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“Member Nonrecourse Deductions” shall have the meaning given the term “partner nonrecourse deductions” in Regulations Section 1.704-2(i).
“Net Income” shall mean the amount, if any, by which Income for any period exceeds Loss for such period.
“Net Loss” shall mean the amount, if any, by which Loss for any period exceeds Income for such period.
“New York UCC” shall have the meaning set forth in Section 16.17.
“Non-Initiating Member” shall have the meaning provided in Section 15.2(a).
“Nonrecourse Deduction” shall have the meaning given such term in Regulations Section 1.704-2(b)(1).
“Nonrecourse Liability” shall have the meaning given such term in Regulations Section 1.704-2(b)(3).
“Offer” shall have the meaning provided in Section 15.2(a).
“Offeror” shall have the meaning provided in Section 15.1(b).
“Offeree” shall have the meaning provided in Section 15.1(b).
“Oversight Fee” shall have the meaning provided in Section 9.7(b).
“Owner” shall mean BR Carroll Tenside, LLC.
“Ownership Entity” shall have the meaning provided in Section 15.2(a).
“Percentage Interest” shall have the meaning provided in Section 5.3.
“Person” shall mean any individual, corporation, partnership, joint venture, association, joint-stock company, limited liability company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other legal entity.
“Property” shall have the meaning provided in Section 3.
“Property Management Fee” shall have the meaning provided in Section 9.7(b).
“Property Manager” shall mean CMG so long as the initial Management Agreement is in full force and effect and, thereafter, the entity performing similar services for the Company (or any Subsidiary that owns the Property) with respect to the Property.
“Property Manager Reports” shall have the meaning set forth in Section 8.2(c).
“Protective Capital Call” shall mean a Capital Call necessary or advisable to (a) protect the Company’s (or any Subsidiary’s) interest in the Property (e.g., payment of taxes,
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repair of the Property following uninsured damage thereto, payment of insurance premiums, etc.); (b) to prevent a default with respect to any financing obtained by the Company or any Subsidiary (e.g., payment of debt service following an operating shortfall, reserves required by the lender, a reduction in principal required by the lender to meet loan to value requirements); or (c) funds required to refinance the Property when the current financing has matured or will mature in the near future (e.g., commitment fees, loan application fees, equity infusions to meet market loan to value requirements, etc.).
“Purchase Agreement” means that certain Agreement of Purchase and Sale, dated May 25, 2016, by and between Seller and Carroll Acquisitions, LLC.
“Pursuer” shall have the meaning provided in Section 10.3.
“Regulations” shall mean the Treasury Regulations promulgated pursuant to the Code, as amended from time to time, including the corresponding provisions of any successor regulations.
“Reimbursable Expenses” shall have the meaning provided in the Management Agreement.
“REIT” shall mean a real estate investment trust as defined in Code Section 856.
“REIT Member” shall mean any Member, if such Member is a REIT or a direct or indirect subsidiary of a REIT.
“REIT Requirements” shall mean the requirements for qualifying as a REIT under the Code and Regulations.
“Representatives” shall have the meaning provided in Section 9.2(a).
“Response Period” shall have the meaning provided in Section 15.2(b).
“Sale” shall mean a bona fide sale of the Property, or all of the membership interest in any Subsidiary holding title to the Property, by the Company or any Subsidiary, as applicable, or similar transfer for value, to a third party, or parties not Affiliated with any Member.
“Sale Notice” shall have the meaning provided in Section 15.2(a).
“Second Tier Preferred Return” shall mean, with regard to any and all Capital Contributions made by a Member, the greater of (a) an Internal Rate of Return equal to seventeen and one-half percent (17.5%) or (b) a return on such capital contributions equal to a 1.75 multiple thereof. The Second Tier Preferred Return shall be calculated from the date that any such Capital Contributions are made including, in the case of any amounts funded pursuant to the Cost Sharing Agreement, the date such amounts are actually funded under the Cost Sharing Agreement.
“Securities Act” shall mean the Securities Act of 1933, as amended.
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“Seller” shall mean Waterton Tenside Owner, L.L.C., a Delaware limited liability company.
“SOIFs” shall mean, collectively, BR SOIF II and BR SOIF III.
“Subsidiary” shall mean, with respect to any Person, any corporation, partnership, limited liability company or other entity of which at least a majority of the capital stock or other equity securities is owned by such Person.
“Tax Matters Member” shall have the meaning provided in Section 8.3.
“Total Investment” shall mean the sum of the aggregate Capital Contributions made by a Member.
“Transfer” means, as a noun, any transfer, sale, assignment, exchange, charge, pledge, gift, hypothecation, conveyance, encumbrance or other disposition, voluntary or involuntary, by operation of law or otherwise and, as a verb, voluntarily or involuntarily, by operation of law or otherwise, to transfer, sell, assign, exchange, charge, pledge, give, hypothecate, convey, encumber or otherwise dispose of.
“Uncontrollable Expenses” shall mean the following expenses with respect to the Company, Subsidiary or Property: taxes and insurance; licenses; utilities; unanticipated material repairs that are essential to preserve or protect the Property; debt service; and costs due to a change in law.
“Valuation Amount” shall have the meaning provided in Section 15.1(b).
Section 2. Organization of the Company.
2.1 Name. The name of the Company shall be “BR Carroll Tenside JV, LLC”. The business and affairs of the Company shall be conducted under such name or such other name as the Members deem necessary or appropriate to comply with the requirements of law in any jurisdiction in which the Company may elect to do business.
2.2 Place of Registered Office; Registered Agent. The address of the registered office of the Company in the State of Delaware is 160 Greentree Drive, Suite 101, Dover, Delaware 19904. The name and address of the registered agent for service of process on the Company in the State of Delaware is National Registered Agents, Inc., 160 Greentree Drive, Suite 101, Dover, Delaware 19904. The Management Committee may at any time on five (5) days prior notice to all Members change the location of the Company’s registered office or change the registered agent.
2.3 Principal Office. The principal address of the Company shall be c/o Bluerock Real Estate, L.L.C., 712 Fifth Avenue, 9th Floor, New York, New York 10019 and the principal office of Property Manager shall be c/o Carroll Organization, LLC, 3340 Peachtree Road, Suite 1620, Atlanta, Georgia 30326, or, in each case, at such other place or places as may be determined by the Management Committee from time to time.
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2.4 Filings. On or before execution of this Agreement, an authorized person within the meaning of the Act shall have duly filed or caused to be filed the Certificate of Formation of the Company with the office of the Secretary of State of Delaware, as provided in Section 18-201 of the Act, and the Members hereby ratify such filing. The Manager shall use its best efforts to take such other actions as may be reasonably necessary to perfect and maintain the status of the Company as a limited liability company under the laws of Delaware. Notwithstanding anything contained herein to the contrary, the Company shall not do business in any jurisdiction that would jeopardize the limitation on liability afforded to the Members under the Act or this Agreement.
2.5 Term. The Company shall continue in existence from the date hereof until December 31, 2065, unless extended by the Members, or until the Company is dissolved as provided in Section 13, whichever shall occur earlier.
2.6 Expenses of the Company. Other than the reimbursement of costs and expenses as provided herein and the fees described in Section 9.7, no fees, costs or expenses shall be payable by the Company to any Member (or its Affiliates).
Section 3. Purpose.
The purpose of the Company, subject in each case to the terms hereof, shall be to engage, directly or through a Subsidiary, in the business of acquiring, owning, operating, developing, renovating, repositioning, managing, leasing, selling, financing and refinancing the real estate and any real estate related investments (or portions thereof) consisting of an approximately 336-unit multi-family apartment and retail complex with 17 ground floor retail commercial spaces located at 1000 Northside Drive NW, Atlanta Georgia 30318 and to be hereafter commonly known as Tenside Apartments, which will be owned by the Company or a Subsidiary of the Company (any property acquired as aforesaid shall hereinafter be referred to as the “Property”), and all other activities reasonably necessary to carry out such purpose.
Section 4. Conditions.
4.1 Bluerock Conditions. The obligation of Bluerock to consummate the transactions contemplated herein and to make the initial Capital Contributions under Section 5.1 is subject to fulfillment of all of the following conditions on or prior to the closing date under the Purchase Agreement for the Property:
(a) Subject to the terms of the Cost Sharing Agreement, Carroll shall deposit in the Company’s bank account or the designated escrow account of Chicago Title Insurance Company (“Title Company”) the aggregate amount of its initial Capital Contribution set forth on Exhibit A hereto;
(b) The Purchase Agreement for the Property shall have been assigned to the Company (or a Subsidiary of the Company);
(c) The Cost Sharing Agreement has been executed and Carroll and its affiliates are in full compliance with the terms thereof;
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(d) The Management Agreement shall have been executed by the Company (or a Subsidiary of the Company) and Property Manager;
(e) All of the representations and warranties of Carroll and Property Manager contained in this Agreement and the Collateral Agreements shall be true and correct as of the date hereof;
(f) The Company (or a Subsidiary of the Company) shall have borrowed (or be concurrently borrowing) the Loan, as contemplated by the loan documents (the “Loan Documents”); and
(g) The form of Backstop Agreement shall have been approved by, and executed by, the applicable parties and delivered to Bluerock.
4.2 Carroll Conditions. The obligation of Carroll to consummate the transactions contemplated herein and to make the initial Capital Contributions under Section 5.1 is subject to fulfillment of all of the following conditions on or prior to the closing date under the Purchase Agreement for the Property:
(a) Subject to the terms of the Cost Sharing Agreement, Bluerock shall deposit into the Company’s bank account or Title Company’s designated escrow account the amount of its aggregate initial Capital Contribution set forth on Exhibit A hereto;
(b) The Purchase Agreement for the Property shall have been assigned to the Company (or a Subsidiary of the Company);
(c) The Cost Sharing Agreement has been executed and Bluerock and its affiliates are in full compliance with the terms thereof;
(d) The Company (or a Subsidiary of the Company) shall have borrowed (or be concurrently borrowing) the Loan contemplated by the Loan Documents;
(e) The Management Agreement shall have been executed between the Company (or a Subsidiary of the Company) and Property Manager;
(f) All of the representations and warranties of Bluerock contained in this Agreement and the Collateral Agreements shall be true and correct as of the date hereof; and
(g) The form of Backstop Agreement shall have been approved by, and executed by, the applicable parties and delivered to Carroll.
Section 5. Capital Contributions, Loans, Percentage Interests and Capital Accounts.
5.1 Initial Capital Contributions. Subject to satisfaction of the conditions set forth in Section 4, upon execution of this Agreement, Bluerock and Carroll shall each make an initial Capital Contribution to the Company of cash in an amount equal to the respective amounts set forth in Exhibit A attached hereto; provided, however, any funds advanced by Bluerock or Carroll (or their respective affiliates) pursuant to the terms of the Cost Sharing Agreement shall be
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credited against the applicable Member’s obligation and provided, further, in the case of Carroll, its initial Capital Contribution to the Company shall be credited with $372,500 for the agreed value of certain contractual rights and intangibles contributed to the Company, including the assignment of the Purchase Agreement to acquire the Property to the Company or its Subsidiary.1 The initial Capital Contribution of the Members to the Company may include amounts for working capital.
5.2 Additional Capital Contributions.
(a) Additional Capital Contributions may be called for from the Members (i) by either Member if the same is a Protective Capital Call, or (ii) as reasonably determined by the Management Committee, by written notice to the Members from time to time as and to the extent capital is necessary to effect an investment or expenditures for the Property, the Company, or its subsidiary. Except as otherwise agreed by the Members, such additional Capital Contributions shall be in an amount for each Member equal to the product of the amount of the aggregate Capital Contribution called multiplied by each Member’s then current Percentage Interest. Such additional Capital Contributions shall be payable by the Members to the Company upon the earlier of (i) twenty (20) days after written request from the Company, or (ii) the date when the Capital Contribution is required, as set forth in a written request from the Company.
(b) If a Member (a “Defaulting Member”) fails to make a Capital Contribution that is required as provided in Section 5.2(a) within the time frame required therein (the amount of the failed contribution and related loan shall be the “Default Amount”), the other Member, provided that it has made the Capital Contribution required to be made by it, in addition to any other remedies it may have hereunder or at law, shall have one or more of the following remedies:
(1) to advance to the Company on behalf of, and as a loan to the Defaulting Member, an amount equal to the Default Amount to be evidenced by a promissory note in form reasonably satisfactory to the non-failing Member (each such loan, a “Default Loan”). The Capital Account of the Defaulting Member shall be credited with the amount of such Default Amount attributable to a Capital Contribution and the aggregate of such amounts shall constitute a debt owed by the Defaulting Member to the non-failing Member. Any Default Loan shall bear interest at the rate of twenty percent (20%) per annum, but in no event in excess of the highest rate permitted by applicable laws (the “Default Loan Rate”), and shall be payable by the Defaulting Member on demand from the non-failing Member and from any Distributions due to the Defaulting Member hereunder. Interest on a Default Loan, to the extent unpaid, shall accrue and compound on a quarterly basis. A Default Loan shall be prepayable, in whole or in part, at any time or from time to time without penalty. Any such Default Loans shall be with full recourse to the Defaulting Member and shall be secured by the Defaulting Member’s interest in the Company including, without limitation, such Defaulting Member’s right to Distributions. In furtherance thereof, upon
1 At closing of the acquisition of the Property, $372,500 shall be added to the required equity for closing and each Member shall be responsible for funding its pro-rata share of such amount at the closing as part of its Initial Capital Contribution according to its Percentage Interest; provided, Carroll’s required Initial Capital Contribution shall be net of the credit amount provided in Section 5.1.
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the making of any such Default Loan, the Defaulting Member hereby pledges, assigns and grants a security interest in its Interest to the non-failing Member and agrees to promptly execute such documents and statements reasonably requested by the non-failing Member to further evidence and secure such security interest. Any advance by the non-failing Member on behalf of a Defaulting Member pursuant to this Section 5.2(b)(1) shall be deemed to be a Capital Contribution made by the Defaulting Member except as otherwise expressly provided herein. All Distributions to the Defaulting Member hereunder shall be applied first to payment of any interest due under any Default Loan and then to principal until all amounts due thereunder are paid in full. While any Default Loan is outstanding, the Company shall be obligated to pay directly to the non-failing Member, for application to and until all Default Loans have been paid in full, the amount of (x) any Distributions payable to the Defaulting Member, and (y) any proceeds of the sale of the Defaulting Member’s Interest in the Company;
(2) subject to any applicable thin capitalization limitations on indebtedness of the Company for U.S. federal income tax purposes, to treat the non-failing Member’s portion of such Capital Contribution as a loan to the Company (rather than a Capital Contribution) and to advance to the Company as a loan to the Company an amount equal to the Default Amount, which loan shall be evidenced by a promissory note in form reasonably satisfactory to the non-failing Member and which loan shall bear interest at the Default Loan Rate and be payable on a first priority basis by the Company from available Cash Flow and prior to any Distributions made to any Member. If each Member has loans outstanding to the Company under this provision, such loans shall be payable to each Member in proportion to the outstanding balances of such loans to each Member at the time of payment. Any advance to the Company pursuant to this Section 5.2(b)(2) shall not be treated as a Capital Contribution made by the Defaulting Member;
(3) to make an additional Capital Contribution to the Company equal to the Default Amount whereupon the Percentage Interests of the Members shall be recalculated to (i) increase the non-defaulting Member’s Percentage Interest by the percentage (“Applicable Adjustment Percentage”) determined by dividing one hundred fifty percent (150%) of the Default Amount by the sum of the Members’ Total Investment (taking into account the actual amount of such additional Capital Contribution) and by increasing its Total Investment solely for purposes of determining the Member’s Percentage Interest, by one and one-half of the amount of the Default Amount, and (ii) to reduce the Defaulting Member’s Percentage Interest by the Applicable Adjustment Percentage and by decreasing its Total Investment solely for purposes of determining the Member’s Percentage Interest by one-half of the amount of the Default Amount; or
(4) in lieu of the remedies set forth in subparagraphs (1), (2) or (3), revoke its portion of such additional Capital Contribution, whereupon the portion of the Capital Contribution made by the non-failing Member shall be returned within ten (10) days.
(c) Notwithstanding the foregoing provisions of this Section 5.2, no additional Capital Contributions shall be required from any Member if (i) the Company or any other Person shall be in default (or with notice or the passage of time or both, would be in default) in any material respect under any loan, indenture, mortgage, non-residential lease, agreement or
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instrument to which the Company or any of its Subsidiaries is a party or by which the Company (or any of its Subsidiaries) or any of its properties or assets is or may be bound, (ii) any other Member, the Company or any of its Subsidiaries shall be insolvent or bankrupt or in the process of liquidation, termination or dissolution, (iii) any other Member, the Company or any of its Subsidiaries shall be subjected to any pending litigation (x) in which the amount in controversy exceeds $500,000, (y) which litigation is not being defended by an insurance company who would be responsible for the payment of any judgment in such litigation, and (z) which litigation if adversely determined could have a material adverse effect on such other Member and/or the Company or any of its Subsidiaries and/or could interfere with their ability to perform their obligations hereunder or under any Collateral Agreement, or (iv) there has been a material adverse change in (including, but not limited to, the financial condition of) any other Member (and/or its Affiliates) which, in such Member’s reasonable judgment, prevents such other Member (and/or its Affiliates) from performing, or substantially interferes with their ability to perform, their obligations hereunder or under any Collateral Agreement. If any of the foregoing events shall have occurred and any Member elects not to make a Capital Contribution on account thereof, then any other Member which has made its pro rata share of such Capital Contribution shall be entitled to a return of such Capital Contribution from the Company.
5.3 Percentage Ownership Interest. The Members shall have the initial percentage ownership interests (as the same are adjusted as provided in this Agreement, a “Percentage Interest”) in the Company set forth on Exhibit A immediately following the Capital Contributions provided for in Section 5.1. The Percentage Interests of the Members in the Company shall be adjusted monthly, and if appropriate to reflect any pending adjustments that have been determined but not yet effected, prior to any request for Additional Capital Contributions pursuant to Section 5.2 or any distributions to Members pursuant to Section 6.1, so that the respective Percentage Interests of the Members at any time shall be in proportion to their respective cumulative Total Investment made (or deemed to be made) pursuant to Sections 5.1 and 5.2, as the same may be further adjusted pursuant to Section 5.2(b)(3). Percentage Interests shall not be adjusted by Distributions made (or deemed made) to a Member.
5.4 Return of Capital Contribution. Except as approved by each of the Members, no Member shall have any right to withdraw or make a demand for withdrawal of the balance reflected in such Member’s Capital Account (as determined under Section 5.6) until the full and complete winding up and liquidation of the business of the Company.
5.5 No Interest on Capital. Interest earned on Company funds shall inure solely to the benefit of the Company, and no interest shall be paid upon any Capital Contributions nor upon any undistributed or reinvested income or profits of the Company.
5.6 Capital Accounts. A separate capital account (the “Capital Account”) shall be maintained for each Member in accordance with Section 1.704-1(b)(2)(iv) of the Regulations. Without limiting the foregoing, the Capital Account of each Member shall be increased by (i) the amount of any Capital Contributions made by such Member, (ii) the amount of Income allocated to such Member and (iii) the amount of income or profits, if any, allocated to such Member not otherwise taken into account in this Section 5.6. The Capital Account of each Member shall be reduced by (i) the amount of any cash and the fair market value of any property distributed to the Member by the Company (net of liabilities secured by such distributed property that the Member
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is considered to assume or take subject to), (ii) the amount of Loss allocated to the Member and (iii) the amount of expenses or losses, if any, allocated to such Member not otherwise taken into account in this Section 5.6. The Capital Accounts of the Members shall not be increased or decreased pursuant to Regulations Section 1.704-1(b)(2)(iv)(f) to reflect a revaluation of the Company’s assets on the Company’s books in connection with any contribution of money or other property to the Company pursuant to Section 5.2 by existing Members. If any property other than cash is distributed to a Member, the Capital Accounts of the Members shall be adjusted as if such property had instead been sold by the Company for a price equal to its fair market value, the gain or loss allocated pursuant to Section 7, and the proceeds distributed in the manner set forth in Section 6.1 or Section 13.3(d)(3). No Member shall be obligated to restore any negative balance in its Capital Account. No Member shall be compensated for any positive balance in its Capital Account except as otherwise expressly provided herein. The foregoing provisions and the other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with the provisions of Regulations Section 1.704-1(b)(2) and shall be interpreted and applied in a manner consistent with such Regulations.
5.7 New Members. Upon approval by Bluerock and Carroll, the Company may issue additional Interests and thereby admit a new Member or Members, as the case may be, to the Company, only if such new Member (i) has delivered to the Company its Capital Contribution, (ii) has agreed in writing to be bound by the terms of any Collateral Agreements (including the Backstop Agreement) and this Agreement by becoming a party hereto, and (iii) has delivered such additional documentation as the Company shall reasonably require to so admit such new Member to the Company. Without the prior written consent of each then-current Member, a new Member may not be admitted to the Company if the Company would, or may, have in the aggregate more than one hundred (100) members. For purposes of determining the number of members under this Section 5.7, a Person (the “beneficial owner”) indirectly owning an interest in the Company through a partnership, grantor trust or S corporation (as such terms are used in the Code) (the “flow-through entity”) shall be considered a member, but only if (i) substantially all of the value of the beneficial owner’s interest in the flow-through entity is attributable to the flow-through entity’s interest (direct or indirect) in the Company and (ii) in the sole discretion of the Management Committee, a principal purpose of the use of the flow-through entity is to permit the Company to satisfy the 100-member limitation.
Section 6. Distributions.
6.1 Distribution of Distributable Funds
(a) The Management Committee shall calculate and determine the amount of Distributable Funds for each applicable period. Except as provided in Sections 5.2(b), 6.1 or 13.3 or otherwise provided hereunder, Distributable Funds, if any, shall be distributed to the Members, on a monthly basis based on a calendar year, so long as the Loan is outstanding. Thereafter, such distributions shall be made on the 15th day of each month or from time to time as determined by the Management Committee.
(b) Any Distributions otherwise payable to a Member under this Agreement shall be applied first to satisfy amounts due and payable on account of the indemnity and/or contribution obligations of such Member under this Agreement and/or any other agreement
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delivered by such Member to the Company or any other Member but shall be deemed distributed to such Member for purposes of this Agreement.
(c) Distributable Funds available other than from the proceeds of a Sale shall be distributed to the Members in proportion to their respective Percentage Interests.
(d) Distributable Funds available from the proceeds of a Sale shall be distributed in the following order and priority:
(1) First, to the Members in proportion to their respective Percentage Interests until Bluerock shall realize through Distributions (including, without limitation, any Distribution received by such Member pursuant to Section 6.1(c) above), and actually receive, the First Tier Preferred Return; and
(2) Second, to Carroll, in an amount equal to one percent (1%) of the Contract Sale Price; and
(3) Third, to the Members in proportion to their respective Percentage Interests until Bluerock shall realize through Distributions (including, without limitation, any Distribution received by such Member pursuant to Section 6.1(c), (d)(1) and (d)(2) above), and actually receive, the Second Tier Preferred Return; and
(4) Fourth, to Carroll, in an amount equal to one percent (1%) of the Contract Sale Price; and
(5) Fifth, the balance, if any, of such Distributable Funds remaining after Distributions (1) through (4) above shall be to the Members in proportion to their respective Percentage Interests.
6.2 Distributions in Kind. In the discretion of the Management Committee, Distributable Funds may be distributed to the Members in cash or in kind and Members may be compelled to accept a distribution of any asset in kind even if the percentage of that asset distributed to it exceeds a percentage of that asset that is equal to the percentage in which such Member shares in Distributions from the Company. In the case of all assets to be distributed in kind, the amount of the Distribution shall equal the fair market value of the asset distributed as determined by the Management Committee. In the case of a Distribution of publicly traded property, the fair market value of such property shall be deemed to be the average closing price for such property for the thirty (30) day period immediately prior to the Distribution, or if such property has not yet been publicly traded for thirty (30) days, the average closing price of such property for the period prior to the Distribution in which the property has been publicly traded.
Section 7. Allocations.
7.1 Allocation of Net Income and Net Losses Other than in Liquidation. Except as otherwise provided in this Agreement, Net Income and Net Losses of the Company for each Fiscal Year shall be allocated among the Members in a manner such that, as of the end of such Fiscal Year and taking into account all prior allocations of Net Income and Net Losses of the Company and all Distributions made by the Company through such date, the Capital Account of
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each Member is, as nearly as possible, equal to the Distributions that would be made to such Member pursuant to Section 6.1 if the Company were dissolved, its affairs wound up and assets sold for cash equal to their tax basis (or book value in the case of assets that have been revalued in accordance with Section 704(b) of the Code), all Company liabilities were satisfied, and the net assets of the Company were distributed in accordance with Section 6.1 immediately after such allocation.
7.2 Allocation of Net Income and Net Losses in Liquidation. Net Income and Net Losses realized by the Company in connection with the liquidation of the Company pursuant to Section 13 shall be allocated among the Members in a manner such that, taking into account all prior allocations of Net Income and Net Losses of the Company and all Distributions made by the Company through such date, the Capital Account of each Member is, as nearly as possible, equal to the amount which such Member is entitled to receive pursuant to Section 13.3(d)(3).
7.3 U.S. Tax Allocations.
(a) Subject to Section 704(c) of the Code, for U.S. federal and state income tax purposes, all items of Company income, gain, loss, deduction and credit shall be allocated among the Members in the same manner as the corresponding item of income, gain, loss, deduction or credit was allocated pursuant to the preceding paragraphs of this Section 7.
(b) In accordance with Code Section 704(c) and the Treasury regulations promulgated thereunder, income and loss with respect to any property contributed to the capital of the Company (including, if the property so contributed constitutes a partnership interest, the applicable distributive share of each item of income, gain, loss, expense and other items attributable to such partnership interest whether expressly so allocated or reflected in partnership allocations) shall, solely for U.S. federal income tax purposes, be allocated among the Members so as to take account of any variation between the adjusted basis of such property to the Company for U.S. federal income tax purposes and its Agreed Upon Value at the time of contribution. Such allocation shall be made in accordance with the “traditional method” set forth in Regulations Section 1.704-3(b) unless the Members unanimously agree to another permissible method under such Regulations.
(c) Any elections or other decisions relating to such allocations shall be made by the Members in any manner that reasonably reflects the purpose and intention of this Agreement. Allocations pursuant to this Section 7.3 are solely for purposes of U.S. federal, state and local income taxes and shall not affect, or in any way be taken into account in computing, any Member’s share of Net Income, Net Loss, other items or distributions pursuant to any provisions of this Agreement.
Section 8. Books, Records, Tax Matters and Bank Accounts.
8.1 Books and Records. The books and records of account of the Company shall be maintained in accordance with industry standards and shall be based on the Property Manager Reports. The books and records shall be maintained at the Company’s principal office or at a location designated by the Management Committee, and all such books and records (and the dealings and other affairs of the Company and its Subsidiaries) shall be available to any
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Member at such location for review, investigation, audit and copying, at such Member’s sole cost and expense, during normal business hours on at least twenty-four (24) hours prior notice. In connection with such review, investigation or audit, such Member (and its representatives and agents) shall have the unfettered right to meet and consult with any and all employees of Property Manager (or any of their respective Affiliates) and to attend meetings and independently meet and consult with any and all third parties having dealings or any other relationship with the Company or any of its Subsidiaries or with Property Manager in respect of the Company or any of its Subsidiaries.
8.2 Reports and Financial Statements.
(a) Within thirty (30) days of the end of each Fiscal Year, the Manager shall cause each Member to be furnished with two sets of the following additional annual reports computed as of the last day of the Fiscal Year:
(1) An unaudited balance sheet of the Company;
(2) An unaudited statement of the Company’s profit and loss; and
(3) A statement of the Members’ Capital Accounts and changes therein for such Fiscal Year.
(b) Within fifteen (15) days of the end of each quarter of each Fiscal Year, and provided that any such request was made prior to the end of the quarter, the Property Manager shall cause to be furnished to Bluerock such information as requested by Bluerock as is necessary for any reporting requirements of the SOIFs, BR Growth, or BR Growth II (to the extent any of such affiliates of Bluerock are hereafter a Member or direct or indirect owner of a Member of the Company) and any reporting requirements of any REIT Member (whether a direct or indirect owner) to determine its qualification as a REIT and its compliance with REIT Requirements as shall be reasonably requested by Bluerock. Further, the Property Manager shall cooperate in a reasonable manner at the request of any Member to work in good faith with any designated accountants or auditors of such Member or its Affiliates so that such Member or its Affiliate is able to comply with its public reporting, attestation, certification and other requirements under the Securities Exchange Act of 1934, as amended, applicable to such entity, and to work in good faith with the designated accountants or auditors of the Member or any of its Affiliates in connection therewith, including for purposes of testing internal controls and procedures of such Member or its Affiliates.
(c) The Members acknowledge that the Property Manager is obligated to perform Property-related accounting and furnish Property-related accounting statements under the terms of the Management Agreement (the “Property Manager Reports”). Manager shall be entitled to rely on the Property Manager Reports with respect to its obligations under this Section 8, and the Members acknowledge that the reports to be furnished shall be based on the Property Manager Reports, without any duty on the part of the Manager to further investigate the completeness, accuracy or adequacy of the Property Manager Reports.
8.3 Tax Matters Member. Bluerock is hereby designated as the “tax matters partner” of the Company and the Subsidiaries, as defined in Section 6231(a)(7) of the Code (the
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“Tax Matters Member”) and shall prepare or cause to be prepared all income and other tax returns of the Company and its Subsidiaries pursuant to the terms and conditions of Section 8.5. Except as otherwise provided in this Agreement, all elections required or permitted to be made by the Company and its Subsidiaries under the Code or state tax law shall be timely determined and made by Bluerock after consultation with Carroll. The Members intend that the Company be treated as a partnership for U.S. federal, state and local tax purposes, and the Members will not elect or authorize any person to elect to change the status of the Company from that of a partnership for U.S. federal, state and local income tax purposes. Bluerock agrees to consult with Carroll with respect to any written notice of any material tax elections and any material inquiries, claims, assessments, audits, controversies or similar events received from any taxing authority. In addition, upon the request of any Member, the Company and each of its Subsidiaries shall make an election pursuant to Code Section 754 to adjust the basis of the Company’s property in the manner provided in Code Sections 734(b) and 743(b). The Company hereby indemnifies and holds harmless Bluerock from and against any claim, loss, expense, liability, action or damage resulting from its acting or its failure to take any action as the “tax matters partner” of the Company and its Subsidiaries, provided that any such action or failure to act does not constitute gross negligence or willful misconduct by Bluerock.
8.4 Bank Accounts. All funds of the Company are to be deposited in the Company’s name in such bank account or accounts as may be designated by the Management Committee or in the Management Agreement and shall be withdrawn on the signature of such Person or Persons as the Management Committee may authorize.
8.5 Tax Returns. Bluerock shall cause to be prepared all income and other tax returns of the Company and its Subsidiaries required by applicable law and shall submit such returns to the Management Committee for its review, comment and approval at least twenty (20) days prior to the due date or extended due date thereof and shall thereafter cause the same to be filed in a timely manner (including extensions). No later than the due date or extended due date, Manager shall deliver or cause to be delivered to each Member a copy of the tax returns for the Company and such Subsidiaries with respect to such Fiscal Year, together with such information with respect to the Company and such Subsidiaries as shall be necessary for the preparation by such Member of its U.S. federal and state income or other tax and information returns.
8.6 Expenses. Notwithstanding any contrary provision of this Agreement, the Members acknowledge and agree that the reasonable expenses and charges incurred directly or indirectly by or on behalf of the Manager, Bluerock, Carroll or the Property Manager in connection with its obligations under this Section 8 will be reimbursed by the Company to the applicable party. Further, it is expressly understood and agreed that all reasonable expenses of Bluerock, Carroll and their principals and Affiliates associated with the Company or the Property, along with all accounting and administrative expenses for Carroll, shall be reimbursed by the Company, including without limitation, filing fees, tax returns, closing costs, due diligence and travel.
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Section 9. Management and Operations.
9.1 Management.
(a) The Company shall be managed by Bluerock (“Manager”), who shall have the authority to exercise all of the powers and privileges granted by the Act, any other law or this Agreement, together with any powers incidental thereto, and to take any other action not prohibited under the Act or other applicable law, so far as such powers or actions are necessary or convenient or related to the conduct, promotion or attainment of the business, purposes or activities of the Company. Manager shall manage the operations and affairs of the Company, subject to the oversight of the Management Committee. To the extent that Bluerock or a Bluerock Transferee Transfers all or a portion of its Interest in accordance with Section 12 to a Bluerock Transferee, such Bluerock Transferee may be appointed as the Manager under this Section 9.1(a) by Bluerock or a Bluerock Transferee then holding all or a portion of an Interest without any further action or authorization by any Member.
(b) The Management Committee may appoint individuals to act on behalf of the Company with such titles and authority as determined from time to time by the Management Committee.
(c) Notwithstanding the foregoing, all Major Decisions shall require the consent of both Members.
9.2 Management Committee.
(a) Bluerock and Carroll hereby establish a management committee (the “Management Committee”). The Management Committee shall consist of four (4) individuals appointed to act as “representatives” of the Member that appointed him or her (the “Representatives”) as follows: (i) Bluerock shall be entitled to designate two (2) Representatives to represent Bluerock; and (ii) Carroll shall be entitled to designate two (2) Representatives to represent Carroll. The initial members of the Management Committee are set forth on Exhibit A. Bluerock and Carroll each represents, warrants and covenants that the Representatives designated by them on Exhibit A have, and shall at all times have, the full power and authority to make decisions and vote as a member of the Management Committee, and that such Representatives’ votes as members of the Management Committee will be binding on each of them and any transferee of all or a portion of their Interest; unless and until such time as Bluerock or Carroll or their transferee notifies the other Member of a change in a Representative, after which time this sentence shall apply only with respect to the replacement Representative.
(b) Each member of the Management Committee shall hold office until death, resignation or removal at the pleasure of the Member that appointed him or her. If a vacancy occurs on the Management Committee, the Person with the right to appoint and remove such vacating Representative shall appoint his or her successor. A Member shall lose its right to have Representatives on the Management Committee, and its Representatives on the Management Committee shall be deemed to be automatically removed, as of the date on which such Member ceases to be a Member or as otherwise provided in this Agreement. If Bluerock or a Bluerock Transferee Transfers all or a portion of its Interest to a Bluerock Transferee pursuant to Section
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12.2, such Bluerock Transferee shall automatically, and without any further action or authorization by any Member, succeed to the rights and powers of Bluerock under this Section 9 as may be agreed to between Bluerock or the Bluerock Transferee which is transferring the Interest, on the one hand, and the Bluerock Transferee to which the Interest is being transferred, on the other hand, including the shared or unilateral right to appoint the Representatives that Bluerock was theretofore entitled to appoint pursuant to Section 9.2(a).
(c) The Management Committee shall meet once every quarter (unless waived by mutual agreement of the Members) and at such other times as may be necessary for the conduct of the Company’s business on at least five (5) days prior written notice of the time and place of such meeting given by any Representative. Notice of regular meetings of the Management Committee is not required. Representatives may waive in writing the requirements for notice before, at or after a special meeting, and attendance at such a meeting without objection by a Representative shall be deemed a waiver of such notice requirement.
(d) The Management Committee shall have the right, but not the obligation, to elect one of the Representatives or another person to serve as Secretary of the Management Committee. Such person shall hold office until his or her death, resignation or removal by a vote of the Management Committee. The Secretary or a person designated by him or her shall take written minutes of the proceedings of the meetings of the Management Committee, and such minutes shall be filed with the records of the Company.
(e) The only Representatives required to constitute a quorum for a meeting of the Management Committee shall be one (1) Representative appointed by Bluerock and one (1) Representative appointed by Carroll; provided, however, that if Carroll has not appointed at least one (1) Representative to the Management Committee at the time of such meeting (for example, if each Carroll Representative has been removed and not replaced), then a quorum for a meeting of the Management Committee shall be one (1) Representative appointed by Bluerock. Each of the two (2) Representatives appointed by Bluerock shall be entitled to cast two (2) votes on any matter that comes before the Management Committee and each of the Representatives appointed by Carroll shall be entitled to cast one (1) vote on any matter that comes before the Management Committee. Approval by the Management Committee of any matter shall require the affirmative vote (including votes cast by proxy) of at least a majority of the votes of the Representatives then in office voting at a duly held meeting of the Management Committee.
(f) Any meeting of the Management Committee may be held by conference telephone call, video conference or through similar communications equipment by means of which all persons participating in the meeting can communicate with each other. Participation in a telephonic and/or video conference meeting held pursuant to this Section 9 shall constitute presence in person at such meeting.
(g) Any action required or permitted to be taken at a meeting of the Management Committee may be taken without a meeting, without prior notice and without a vote if a consent or consents in writing, setting forth the action so taken, shall be signed by the Representatives having not less than the minimum of votes that would be necessary to authorize or take such action at a meeting at which all Representatives entitled to vote thereon were present
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and voted. All consents shall be filed with the minutes of the proceedings of the Management Committee.
(h) Except as otherwise expressly provided in this Agreement, none of the Members or their Representatives (in their capacities as members of the Management Committee) only, shall have any duties or liabilities to the Company or any other Member (including any fiduciary duties), whether or not such duties or liabilities otherwise arise or exist in law or in equity, and each Member hereby expressly waives any such duties or liabilities; provided, however, that this Section 9.2(h) shall not eliminate or limit the liability of such Representatives or the Members (A) for acts or omissions that involve fraud, intentional misconduct or a knowing and culpable violation of law, or (B) for any transaction not permitted or authorized under or pursuant to this Agreement from which such Representative or Member derived a personal benefit unless the Management Committee has approved in writing such transaction in accordance with this Agreement; provided, further, however, that the duty of care of each of such Representatives and the Members is to not act with fraud, intentional misconduct or a knowing and culpable violation of law. Except as provided in this Agreement, whenever in this Agreement a Representative of a Member and/or a Member is permitted or required to make a decision affecting or involving the Company, any Member or any other Person, such Representative and/or such Member shall be entitled to consider only such interests and factors as he, she or it desires, including a particular Member’s interests, and shall, to the fullest extent permitted by applicable law, have no duty or obligation to give any consideration to any interest of or factors affecting the Company or any Member.
9.3 Annual Business Plan.
(a) The initial Annual Business Plan for the balance of calendar year 2016 with respect to the Property is attached hereto as Exhibit D and is incorporated herein for all intents and purposes under this Agreement (the “Initial Business Plan”).
(b) For Annual Business Plans for calendar years 2017 and 2018, respectively, Property Manager shall prepare the Annual Business Plan for the operation of the Property for the Owner’s review and approval, no later than September 15 of the immediately preceding year for the 2017 calendar year Annual Business Plan and September 15 of the immediately preceding year for the 2018 calendar year (and any subsequent) Annual Business Plan. If final approval of an Annual Business Plan by Owner has not been given by the beginning of the year to which such proposed Annual Business Plan relates, Property Manager shall operate the Property on the basis of the previous year’s approved Annual Business Plan adjusted by (i) assuming that the revenue from the Property will increase to 103% of the revenues collected in the prior year, (ii) assuming that the Controllable Expenses will increase to 103% of the amount of the actual Controllable Expenses incurred in the prior year, (iii) increasing all Uncontrollable Expenses by any anticipated or known increases in such Uncontrollable Expenses, and (iv) including any Emergency Expenditure. Notwithstanding the foregoing to the contrary, if, prior to the commencement of calendar year 2017, the parties have not agreed on the budget for capital expenditures at the Property in the Annual Business Plan for calendar year 2017, there shall be no budgeted capital expenditures for calendar year 2017; provided, however, that any incomplete capital projects commenced in calendar year 2016 and contemplated in the Initial Business Plan shall be funded as provided in the Initial Business Plan until such capital projects are completed.
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(c) If Property Manager and Owner agreed to the Annual Business Plan for calendar year 2018 in accordance with subsection (b) above, then the Annual Business Plan for calendar year 2019 shall also be determined in accordance with the applicable provisions of subsection (b) above. If, however, Property Manager and Owner were unable to agree to the Annual Business Plan for calendar year 2018, then Owner may establish the Annual Business Plan for calendar year 2019, without Property Manager’s consent.
(d) For Annual Business Plans for calendar years 2020 and all subsequent calendar years, if applicable, Property Manager shall have the right to prepare and propose an Annual Business Plan for such calendar year on or prior to September 15 of the immediately preceding year (without obligation to do so), and Owner may, regardless of the information contained in Property Manager’s proposal, establish the Annual Business Plan for the applicable calendar year, without Property Manager’s consent.
(e) Property Manager and the Company, on behalf of Owner, each acknowledge and agree that, in establishing the Annual Business Plans in accordance with this Section 9.3, each shall be obligated to act reasonably and in good faith, taking into account past performance of the Property, leasing trends and competitive properties within the market where the Property is located, the age of the Property and the units at the time such Annual Business Plan is established, and such other factors as reasonably prudent owners and managers of multifamily and retail assets substantially similar to the Property would take into account in order to maximize revenue therefrom.
(f) No Material Deviations (as defined herein) from any item in an Annual Business Plan approved in accordance with the terms herein shall be made by Property Manager without the prior approval of the Management Committee, to the extent required hereunder. The Property Manager shall provide quarterly updates to the Annual Business Plan, solely for informational purposes. Each Annual Business Plan shall include the information set forth in Exhibit B. The Company, for itself and on behalf of the Owner, will consider the proposed Annual Business Plan in accordance with the terms hereof and will consult with Property Manager prior to the commencement of the forthcoming calendar year in order to agree on an Annual Business Plan for such calendar year. In no event shall the Company, acting on behalf of Owner, have the right to modify the Annual Business Plan to reduce the Property Management Fee or Reimbursable Expenses otherwise due. In no event shall Property Manager be deemed in default under the Management Agreement if such changes by the Company, acting on behalf of Owner, to the Annual Business Plan cause Property Manager to have insufficient funds to perform its obligations thereunder. Property Manager agrees to use commercially reasonable efforts to ensure that the actual costs of maintaining and operating the Property shall not exceed the amount reasonably necessary and, in any event, will not exceed the Annual Business Plan either in total amount or in any one accounting category. Notwithstanding anything to the contrary, Property Manager shall secure the Company’s, on behalf of Owner, prior written approval for any expenditure that will result in an excess of the annual budgeted amount set forth in the Annual Business Plan in any one accounting category by more than the lesser of ten percent (10%) or $10,000, or $25,000.00 in the aggregate for all categories (a “Material Deviation”). Property Manager shall promptly advise and inform the Company, acting on behalf of Owner, of any transaction, notice, event or proposal
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directly relating to the management and operation of the Property which does or is likely to significantly affect, either adversely or favorably, the Property, other assets of the Owner or cause a Material Deviation from the Annual Business Plan. Nothing contained herein shall in any way diminish the obligations or duties of Property Manager hereunder.
(g) Notwithstanding the terms of Section 9.3(a) through Section 9.3(f) above, (i) the Annual Business Plan may, at any time, be amended upon unanimous approval by the Members, and (ii) failure on the part of the Members to agree on any such Annual Business Plan (or any amendment thereto) shall not constitute the failure to obtain agreement on a Major Decision and shall not entitle either Member to exercise the rights under Section 15 applicable to a failure to obtain agreement on Major Decisions.
(h) For all purposes of this Section 9.3, decisions on behalf of Owner or the Company shall be made by the Management Committee.
9.4 Implementation of Plan by Property Manager. Property Manager shall, subject to the limitations contained herein, the availability of operating revenues and other cash flow and any other matters outside of the reasonable control of Property Manager, implement and shall not vary or modify the then applicable Annual Business Plan without the prior written approval of the Management Committee. Property Manager shall promptly advise and inform the Management Committee of any transaction, notice, event or proposal directly relating to the management and operation of the Property, other assets of the Company or the Company or any Subsidiary of the Company which does or is likely to significantly affect, either adversely or favorably, such Property, other assets of the Company or the Company or such Subsidiary or cause a significant deviation from the Annual Business Plan. Nothing contained herein shall in any way diminish the obligations or duties of Property Manager hereunder.
9.5 Affiliate Transactions. No agreement shall be entered into by the Company or any Subsidiary with a Member or any Affiliate of a Member and no decision shall be made in respect of any such agreement (including, without limitation, the enforcement or termination thereof) unless such agreement or related decision shall have been approved in writing by all Members. Without limiting the foregoing, any such agreement shall be on arm’s length terms and conditions, be terminable on fifteen (15) days’ notice without penalty and the terms and conditions of such agreement shall be disclosed to all Representatives prior to the execution and delivery thereof. Further, the written approval of Bluerock shall be required prior to the use of the name “Bluerock” in connection with any matter or transaction.
9.6 Other Activities.
(a) Right to Participation in Other Member Ventures. Neither the Company nor any Member (or any Affiliate of any Member) shall have any right by virtue of this Agreement either to participate in or to share in any other now existing or future ventures, activities or opportunities of any of the other Members or their Affiliates, or in the income or proceeds derived from such ventures, activities or opportunities.
(b) Limitation on Actions of Members; Binding Authority. No Member shall, without the prior written consent of the other Members, take any action on behalf of, or in the
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name of, the Company, or enter into any contract, agreement, commitment or obligation binding upon the Company, or, in its capacity as a Member or Manager of the Company, perform any act in any way relating to the Company or the Company’s assets, except in a manner and to the extent consistent with the provisions of this Agreement.
9.7 Management Agreement.
(a) Independent Contractor. CMG, as Property Manager, has agreed to provide management services to the Company (or a Subsidiary of the Company) with respect to the Property on the terms set forth in the Management Agreement; and it is agreed that Property Manager shall provide such management services to the Company (or a Subsidiary of the Company) as an independent contractor.
(b) Management and Oversight Fees. The Company (or a Subsidiary of the Company) has entered into the Management Agreement for the Property with Property Manager (which Management Agreement shall be updated and supplemented from time to time) pursuant to which Property Manager will provide the management services described therein to the Company (or a Subsidiary of the Company). Pursuant to the Management Agreement and subject to the terms of the Loan Documents, Property Manager will be entitled to receive a net property management fee equal to two and one half percent (2.50%) of Monthly Gross Receipts (as defined in the Management Agreement) (the “Property Management Fee”) and an asset management fee equal to one half of one percent (0.50%) of Monthly Gross Receipts (the “Asset Management Fee”). The foregoing notwithstanding, if at any time the Company elects to hire a separate property management company solely with respect to the property management activities related to the retail commercial spaces, then the Property Management Fee and the Asset Management Fee shall be reduced on a dollar for dollar basis to offset the corresponding fees payable to such replacement retail property manager. CMG, as Property Manager, shall also be entitled to a construction management fee of five percent (5.0%) of any expenses incurred in connection with certain interior renovation projects and capital expenditures for the Property, as set forth and described in the Management Agreement and in the Annual Business Plan. The foregoing notwithstanding, with respect to the retail commercial spaces, the construction management fee shall only be paid to CMG, as Property Manager, in connection with any work performed to upgrade any currently vacant retail space from its current condition to a white box condition, the cost of which work is not expected to exceed $120,000. For purposes hereof, white box condition will include applicable framing and sheet rock installation, pre-painting preparatory work and painting of the units and the installation of applicable ceiling grid. Finally, for the avoidance of doubt, the parties acknowledge and agree that no construction management fee shall be paid or be payable in connection with any tenant improvement work or other tenant specific work with respect to any retail space. If CMG has been terminated as the Property Manager for Cause, then Bluerock will be entitled to retain a new Property Manager and receive an oversight fee equal to one percent (1.00%) of the Monthly Gross Receipts (the “Oversight Fee”). It is understood that if CMG is terminated as the Property Manager without Cause, Bluerock shall not be entitled to the Oversight Fee, unless Bluerock purchases the Interest of Carroll pursuant to Section 15 or otherwise by agreement of the parties. The foregoing shall not be deemed to imply that Bluerock will have any unilateral right to purchase the Interest of Carroll solely on account of the termination of CMG as Property Manager.
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(c) Termination of Management Agreement.
(1) The Management Agreement shall be terminable as provided under its terms and conditions by the Company or Bluerock or, as long as the Property Manager is CMG, by Property Manager.
(2) Notwithstanding anything to the contrary in this Section 9.7(c), no termination of the Management Agreement or buyout of the other party’s Interest in the Company shall be permitted unless permitted or approved under any applicable Collateral Agreement or under the Loan Documents.
(d) Delegation. Any delegation of the responsibilities of Property Manager or the subcontracting for such services will be subject to the prior written consent of the Management Committee. Separate agreements may also be entered into with Carroll, Bluerock, their respective Affiliates, or with third parties for certain services to be provided to the Company (or a Subsidiary of the Company), including leasing, construction management, property management, asset management, technology services, etc. Such arrangements shall be at market rates, and shall be entered into only with the prior written approval of the Management Committee, consistent with an approved budget and business plan for each asset. Unless otherwise agreed, all such contracts will be payable on a monthly basis and will be terminable upon thirty (30) days’ notice for any reason or no reason.
9.8 Operation in Accordance with REOC/REIT Requirements.
(a) The Members acknowledge that Bluerock or one or more of its Affiliates (a “BR Affiliate”) intends or may intend to qualify as a “real estate operating company” or “venture capital operating company” within the meaning of U.S. Department of Labor Regulation 29 C.F.R. §2510.3-101 (a “REOC”), and agree that the Company and its Subsidiaries shall in such case be operated in a manner that will enable Bluerock and such BR Affiliate to so qualify. Notwithstanding anything herein to the contrary, the Company and its Subsidiaries shall not take, or refrain from taking, any action that Bluerock notifies the Company would result in Bluerock or a BR Affiliate from failing to qualify as a REOC. The Members acknowledge and agree that Bluerock may assign any or all of its rights or powers under this Agreement as Manager, to designate committee representatives, to provide consents and approvals, or any other rights or powers to one or more of its BR Affiliates as it deems appropriate, and the exercise of any such rights or powers by a BR Affiliate shall have full force and effect under this Agreement without the need for any further consent or approval. Except as disclosed to Bluerock, Carroll (a) shall not fund any Capital Contribution "with the 'plan assets' of any 'employee benefit plan' within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended or any 'plan' as defined by Section 4975 of the Internal Revenue Code of 1986, as amended", and (b) shall comply with any reasonable requirements specified by Bluerock in order to ensure compliance with this Section 9.8.
(b) Except for the Property, neither the Company nor its Subsidiaries shall hold any investment, incur any indebtedness or otherwise take any action that would cause any Member of the Company (or any Person holding an indirect interest in the Company through an entity or series of entities treated as partnerships for U.S. federal income tax purposes) to realize
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any “unrelated business taxable income” as such term is defined in Code Sections 511 through 514, unless specifically agreed to by the Manager in writing. No Manager or Member shall be liable for any income or other taxes, damages, costs or expenses incurred by the Company or any Member by reason of the recognition by the Company of UBTI.
(c) The Company (and any direct or indirect Subsidiary of the Company) may not engage in any activities or hold any assets that would constitute or result in the occurrence of a REIT Prohibited Transaction as defined herein. Notwithstanding anything to the contrary contained in this Agreement, during the time a REIT Member is a Member of the Company, neither the Company, any direct or indirect Subsidiary of the Company, nor any Member of the Company shall take or refrain from taking any action which, or the effect of which, would constitute or result in the occurrence of a REIT Prohibited Transaction by the Company or any direct or indirect Subsidiary thereof, including without limiting the generality of the foregoing, but in amplification thereof:
(i) Entering into any lease, license, concession or other agreement or permitting any sublease, license, concession or other agreement that provides for rent or other payment based in whole or in part on the income or profits of any person, excluding for this purpose a lease that provides for rent based in whole or in part on a fixed percentage or percentages of gross receipts or gross sales of any person without reduction for any costs of the lessee (and in the case of a sublease, without reduction for any sublessor costs);
(ii) Leasing personal property, excluding for this purpose a lease of personal property that is entered into in connection with a lease of real property where the rent attributable to the personal property is less than 15% of the total rent provided for under the lease;
(iii) Acquiring or holding any debt investments, excluding for these purposes “debt” solely between wholly-owned Subsidiaries of the Company, unless (I) the amount of interest income received or accrued by the Company under such loan does not, directly or indirectly, depend in whole or in part on the income or profits of any person, and (II) the debt is fully secured by mortgages on real property or on interests in real property. Notwithstanding anything to the contrary herein, in the case of debt issued to the Company by a Subsidiary which is treated as a “taxable REIT subsidiary” of the REIT Member, such debt shall be secured by a mortgage or similar security interest, or by a pledge of the equity ownership of a subsidiary of such taxable REIT subsidiary;
(iv) Acquiring or holding, directly or indirectly, more than 10% of the outstanding securities of any one issuer (by vote or value) other than an entity which either (i) is taxable as a partnership or a disregarded entity for United States federal income tax purposes, (ii) has properly elected to be a taxable REIT subsidiary of the REIT Member by jointly filing with REIT, IRS Form 8875, or (iii) has properly elected to be a real estate investment trust for U.S. federal income tax purposes;
(v) Entering into any agreement where the Company receives amounts, directly or indirectly, for rendering services to the tenants of any property that is owned, directly or indirectly, by the Company other than (i) amounts received for services that are customarily furnished or rendered in connection with the rental of real property of a similar class in the
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geographic areas in which the Property is located where such services are either provided by (A) an Independent Contractor (as defined in Section 856(d)(3) of the Code) who is adequately compensated for such services and from which the Company or REIT Member do not, directly or indirectly, derive revenue or (B) a taxable REIT subsidiary of REIT Member who is adequately compensated for such services or (ii) amounts received for services that are customarily furnished or rendered in connection with the rental of space for occupancy only (as opposed to being rendered primarily for the convenience of the Property’s tenants);
(vi) Entering into any agreement where a material amount of income received or accrued by the Company under such agreement, directly or indirectly, does not qualify as either (i) “rents from real property” or (ii) “interest on obligations secured by mortgages on real property or on interests in real property,” in each case as such terms are defined in Section 856(c) of the Code;
(vii) Holding cash of the Company available for operations or distribution in any manner other than a traditional bank checking or savings account;
(viii) Selling or disposing of any property, subsidiary or other asset of the Company prior to (i) the completion of a two (2) year holding period with such period to begin on the date the Company acquires a direct or indirect interest in such property and begins to hold such property, subsidiary or asset for the production of rental income, and (ii) the satisfaction of any other requirements under Section 857 of the Code necessary for the avoidance of a prohibited transaction tax on the REIT; or
(ix) Failing to make current cash distributions to REIT Member each year in an amount which does not at least equal the taxable income allocable to REIT Member for such year; provided, however, any such cash distributions shall be made in accordance with the priorities set forth in Section 6.1(c).
Notwithstanding the foregoing provisions of this Section 9.8(c), the Company may enter into a REIT Prohibited Transaction if it receives the prior written approval of the REIT Member specifically acknowledging that the REIT Member is approving a REIT Prohibited Transaction pursuant to this Section 9.8(c). For purposes of this Section 9.8(c), “REIT Prohibited Transactions” shall mean any of the actions specifically set forth in Sections 9.8(c)(i) through (c)(ix) as well as any action of which the Company receives notice from Bluerock or a REIT Member that such action would result in a REIT Member losing its REIT status under IRC Section 856 or would cause such REIT Member to be subject to any punitive taxation pursuant to IRC Section 857(b)(6). The Loan or any loan contemplated by Section 5.2(b) shall not be considered a REIT Prohibited Transaction.
9.9 FCPA.
(a) In compliance with the Foreign Corrupt Practices Act, each Member will not, and will ensure that its officers, directors, employees, shareholders, members, agents and Affiliates, acting on its behalf or on the behalf of the Company or any of its Subsidiaries or Affiliates do not, for a corrupt purpose, offer, directly or indirectly, promise to pay, pay, promise to give, give or authorize the paying or giving of anything of value to any official representative
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or employee of any government agency or instrumentality, any political party or officer thereof or any candidate for office in any jurisdiction, except for any facilitating or expediting payments to government officials, political parties or political party officials the purpose of which is to expedite or secure the performance of a routine governmental action by such government officials or political parties or party officials. The term “routine governmental action” for purposes of this provision shall mean an action which is ordinarily and commonly performed by the applicable government official in (i) obtaining permits, licenses, or other such official documents which such Person is otherwise legally entitled to; (ii) processing governmental papers; (iii) providing police protection, mail pick-up and delivery or scheduling inspections associated with contract performance or inspections related to transit of goods across country; (iv) providing phone service, power and water supply, loading and unloading of cargo, or protecting perishable products or commodities from deterioration; or (v) actions of a similar nature.
(b) The term routine governmental action does not include any decision by a government official whether, or on what terms, to award new business to or to continue business with a particular party, or any action taken by an official involved in the decision making process to encourage a decision to award new business to or continue business with a particular party.
(c) Each Member agrees to notify immediately the other Member of any request that such Member or any of its officers, directors, employees, shareholders, members, agents or Affiliates, acting on its behalf, receives to take any action that may constitute a violation of the Foreign Corrupt Practices Act.
Section 10. Confidentiality.
10.1 Any information relating to a Member’s business, operation or finances which are proprietary to, or considered proprietary by, a Member are hereinafter referred to as “Confidential Information”. All Confidential Information in tangible form (plans, writings, drawings, computer software and programs, etc.) or provided to or conveyed orally or visually to a receiving Member, shall be presumed to be Confidential Information at the time of delivery to the receiving Member. All such Confidential Information shall be protected by the receiving Member from disclosure with the same degree of care with which the receiving Member protects its own Confidential Information from disclosure. Each Member agrees: (i) not to disclose such Confidential Information to any Person except to those of its employees or representatives who need to know such Confidential Information in connection with the conduct of the business of the Company and who have agreed to maintain the confidentiality of such Confidential Information and (ii) neither it nor any of its employees or representatives will use the Confidential Information for any purpose other than in connection with the conduct of the business of the Company; provided that such restrictions shall not apply if such Confidential Information is or hereafter becomes public, other than by breach of this Agreement; was already in the receiving Member’s possession prior to any disclosure of the Confidential Information to the receiving Member by the divulging Member; or has been or is hereafter obtained by the receiving Member from a third party not bound by any confidentiality obligation with respect to the Confidential Information; provided, further, that nothing herein shall prevent any Member from disclosing any portion of such Confidential Information (1) to the Company and allowing the Company to use such Confidential Information in connection with the Company’s business, (2) pursuant to judicial order or in response to a governmental inquiry, by subpoena or other legal process, but only to the extent
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required by such order, inquiry, subpoena or process, and only after reasonable notice to the original divulging Member, (3) as necessary or appropriate in connection with or to prevent the audit by a governmental agency of the accounts of Carroll or Bluerock, (4) in order to initiate, defend or otherwise pursue legal proceedings between the parties regarding this Agreement, (5) necessary in connection with a Transfer of an Interest permitted hereunder or (6) to a Member’s respective attorneys or accountants or other representatives.
10.2 The Members and their Affiliates shall each act to safeguard the secrecy and confidentiality of, and any proprietary rights to, any non-public information relating to the Company and its business, except to the extent such information is required to be disclosed by law or reasonably necessary to be disclosed in order to carry out the business of the Company. Each Member may, from time to time, provide the other Members written notice of its non-public information which is subject to this Section 10.2.
10.3 Without limiting any of the other terms and provisions of this Agreement (including, without limitation, Section 9.6), to the extent a Member (the “Pursuer”) provides the other Member with information relating to a possible investment opportunity then being actively pursued by the Pursuer on behalf of the Company, the other Member receiving such information shall not use such information to pursue such investment opportunity for its own account to the exclusion of the Pursuer so long as the Pursuer is actively pursuing such opportunity on behalf of the Company and shall not disclose any Confidential Information to any Person (except as expressly permitted hereunder) or take any other action in connection therewith that is reasonably likely to cause damage to the Pursuer.
Section 11. Representations and Warranties.
11.1 In General. As of the date hereof, each of the Members hereby makes each of the representations and warranties applicable to such Member as set forth in Section 11.2. Such representations and warranties shall survive the execution of this Agreement.
11.2 Representations and Warranties. Each Member hereby represents and warrants that:
(a) Due Incorporation or Formation; Authorization of Agreement. Such Member is a corporation duly organized or a partnership or limited liability company duly formed, validly existing and in good standing under the laws of the jurisdiction of its incorporation or formation and has the corporate, partnership or company power and authority to own its property and carry on its business as owned and carried on at the date hereof and as contemplated hereby. Such Member is duly licensed or qualified to do business and in good standing in each of the jurisdictions in which the failure to be so licensed or qualified would have a material adverse effect on its financial condition or its ability to perform its obligations hereunder. Such Member has the corporate, partnership or company power and authority to execute and deliver this Agreement and to perform its obligations hereunder, and the execution, delivery and performance of this Agreement has been duly authorized by all necessary corporate, partnership or company action. This Agreement constitutes the legal, valid and binding obligation of such Member.
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(b) No Conflict with Restrictions; No Default. Neither the execution, delivery or performance of this Agreement nor the consummation by such Member (or any of its Affiliates) of the transactions contemplated hereby (i) does or will conflict with, violate or result in a breach of (or has conflicted with, violated or resulted in a breach of) any of the terms, conditions or provisions of any law, regulation, order, writ, injunction, decree, determination or award of any court, any governmental department, board, agency or instrumentality, domestic or foreign, or any arbitrator, applicable to such Member or any of its Affiliates, (ii) does or will conflict with, violate, result in a breach of or constitute a default under (or has conflicted with, violated, resulted in a breach of or constituted a default under) any of the terms, conditions or provisions of the articles of incorporation, bylaws, partnership agreement or operating agreement of such Member or any of its Affiliates or of any material agreement or instrument to which such Member or any of its Affiliates is a party or by which such Member or any of its Affiliates is or may be bound or to which any of its properties or assets is subject, (iii) does or will conflict with, violate, result in (or has conflicted with, violated or resulted in) a breach of, constitute (or has constituted) a default under (whether with notice or lapse of time or both), accelerate or permit the acceleration of (or has accelerated) the performance required by, give (or has given) to others any material interests or rights or require any consent, authorization or approval under any indenture, mortgage, lease, agreement or instrument to which such Member or any of its Affiliates is a party or by which such Member or any of its Affiliates or any of their properties or assets is or may be bound or (iv) does or will result (or has resulted) in the creation or imposition of any lien upon any of the properties or assets of such Member or any of its Affiliates.
(c) Governmental Authorizations. Any registration, declaration or filing with, or consent, approval, license, permit or other authorization or order by, or exemption or other action of, any governmental, administrative or regulatory authority, domestic or foreign, that was or is required in connection with the valid execution, delivery, acceptance and performance by such Member under this Agreement or consummation by such Member (or any of its Affiliates) of any transaction contemplated hereby has been completed, made or obtained on or before the date hereof.
(d) Litigation. There are no actions, suits, proceedings or investigations pending, or, to the knowledge of such Member or any of its Affiliates, threatened against or affecting such Member or any of its Affiliates or any of their properties, assets or businesses in any court or before or by any governmental department, board, agency or instrumentality, domestic or foreign, or any arbitrator which could, if adversely determined (or, in the case of an investigation could lead to any action, suit or proceeding which if adversely determined could) reasonably be expected to materially impair such Member’s ability to perform its obligations under this Agreement or to have a material adverse effect on the consolidated financial condition of such Member; such Member or any of its Affiliates has not received any currently effective notice of any default, and such Member or any of its Affiliates is not in default, under any applicable order, writ, injunction, decree, permit, determination or award of any court, any governmental department, board, agency or instrumentality, domestic or foreign, or any arbitrator which could reasonably be expected to materially impair such Member’s (or any of its Affiliate’s) ability to perform its obligations under this Agreement or to have a material adverse effect on the consolidated financial condition of such Member.
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(e) Investigation. Such Member is acquiring its Interest based upon its own investigation, and the exercise by such Member of its rights and the performance of its obligations under this Agreement will be based upon its own investigation, analysis and expertise. Such Member is a sophisticated investor possessing an expertise in analyzing the benefits and risks associated with acquiring investments that are similar to the acquisition of its Interest.
(f) Broker. No broker, agent or other person acting as such on behalf of such Member was instrumental in consummating this transaction and that no conversations or prior negotiations were had by such party with any broker, agent or other such person concerning the transaction that is the subject of this Agreement.
(g) Investment Company Act. Neither such Member nor any of its Affiliates is, nor will the Company as a result of such Member holding an interest therein be, an “investment company” as defined in, or subject to regulation under, the Investment Company Act of 1940, as amended.
(h) Securities Matters.
(1) None of the Interests are registered under the Securities Act or any state securities laws. Such Member understands that the offering, issuance and sale of the Interests are intended to be exempt from registration under the Securities Act, based, in part, upon the representations, warranties and agreements contained in this Agreement. Such Member is an “accredited investor” as such term is defined in Rule 501 of Regulation D promulgated under the Securities Act.
(2) Neither the Securities and Exchange Commission nor any state securities commission has approved the Interests or passed upon or endorsed the merits of the offer or sale of the Interests. Such Member is acquiring the Interests solely for such Member’s own account for investment and not with a view to resale or distribution thereof in violation of the Securities Act.
(3) Such Member is unaware of, and in no way relying on, any form of general solicitation or general advertising in connection with the offer and sale of the Interests, and no Member has taken any action which could give rise to any claim by any person for brokerage commissions, finders’ fees (without regard to any finders’ fees payable by the Company directly) or the like relating to the transactions contemplated hereby.
(4) Such Member is not relying on the Company or any of its officers, directors, employees, advisors or representatives with regard to the tax and other economic considerations of an investment in the Interests, and such Member has relied on the advice of only such Member’s advisors.
(5) Such Member understands that the Interests may not be sold, hypothecated or otherwise disposed of unless subsequently registered under the Securities Act and applicable state securities laws, or an exemption from registration is available. Such Member agrees that it will not attempt to sell, transfer, assign, pledge or otherwise dispose of all or any portion of the Interests in violation of this Agreement.
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(6) Such Member has adequate means for providing for its current financial needs and anticipated future needs and possible contingencies and emergencies and has no need for liquidity in the investment in the Interests.
(7) Such Member has significant prior investment experience, including investment in non-listed and non-registered securities. Such Member is knowledgeable about investment considerations and has a sufficient net worth to sustain a loss of such Member’s entire investment in the Company in the event such a loss should occur. Such Member’s overall commitment to investments which are not readily marketable is not excessive in view of such Member’s net worth and financial circumstances and the purchase of the Interests will not cause such commitment to become excessive. The investment in the Interests is suitable for such Member.
(8) Such Member represents to the Company that the information contained in this subparagraph (h) and in all other writings, if any, furnished to the Company with regard to such Member (to the extent such writings relate to its exemption from registration under the Securities Act) is complete and accurate and may be relied upon by the Company in determining the availability of an exemption from registration under federal and state securities laws in connection with the sale of the Interests.
Section 12. Sale, Assignment, Transfer or other Disposition.
12.1 Prohibited Transfers. Except as otherwise provided in this Section 12, Sections 5.2(b), 15.1 and 15.2, or as approved by the Management Committee, no Member shall Transfer all or any part of its Interest, whether legal or beneficial, in the Company, and any attempt to so Transfer such Interest (and such Transfer) shall be null and void and of no effect. Notwithstanding the foregoing, either Member shall have the right, with the consent of the other Member, at any time to pledge to a lender or creditor, directly or indirectly, all or any part of its Interest in the Company for such purposes as it deems necessary in the ordinary course of its business and operations.
12.2 Affiliate Transfers.
(a) Subject to the provisions of Section 12.2(b) hereof, and subject in each case to the prior written approval of each Member (such approval not to be unreasonably withheld), any Member may Transfer all or any portion of its Interest in the Company at any time to an Affiliate of such Member, provided that such Affiliate shall remain an Affiliate of such Member at all times that such Affiliate holds such Interest. If such Affiliate shall thereafter cease being an Affiliate of such Member while such Affiliate holds such Interest, such cessation shall be a non-permitted Transfer and shall be deemed void ab initio, whereupon the Member having made the Transfer shall, at its own and sole expense, cause such putative transferee to disgorge all economic benefits and otherwise indemnify the Company and the other Member(s) against loss or damage under any Collateral Agreement.
(b) Notwithstanding anything to the contrary contained in this Agreement, the following Transfers shall not require the approval set forth in Section 12.2(a):
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(1) Any Transfer by Carroll of up to one hundred percent (100%) of its Interest to any Affiliate of Carroll Parent (a “Carroll Transferee”), it being expressly understood and agreed that transfers of ownership interests in Carroll shall not be prohibited as long as at least one of the Key Individuals (collectively or individually) remains actively involved in the operation and management of Carroll (to the extent that it continues to hold, or control, any interest in the Company), Carroll Parent and any Carroll Transferee; and
(2) Any Transfer by Bluerock or a Bluerock Transferee of up to one hundred percent (100%) of its Interest to any Affiliate of Bluerock, including but not limited to (A) BR Growth or any Person that is directly or indirectly owned by BR Growth; (B) BR SOIF II or any Person that is directly or indirectly owned by BR SOIF II; (C) BR SOIF III or any Person that is directly or indirectly owned by BR SOIF III; (D) BR REIT or any Person that is directly or indirectly owned by BR REIT; or (E) BR Growth II, or any Person that is directly or indirectly owned by BR Growth II (collectively, a “Bluerock Transferee”);
provided however, as to subparagraphs (b)(1) and (b)(2), and as to subparagraph (a), no Transfer shall be permitted and shall be void ab initio if it shall violate any “Transfer” provision of the Loan Documents or any applicable Collateral Agreement with third party lenders.
(c) Upon the execution by any such Carroll Transferee or Bluerock Transferee of such documents necessary to admit such party into the Company and to cause the Carroll Transferee or Bluerock Transferee (as applicable) to become bound by this Agreement, the Carroll Transferee or Bluerock Transferee (as applicable) shall become a Member, without any further action or authorization by any Member.
(d) The Transfer of any interest in Manager and any transferee of an interest in Manager shall be recognized and permitted under this Agreement and by the Members, without any further action or authorization by any Member.
12.3 Admission of Transferee; Partial Transfers. Notwithstanding anything in this Section 12 to the contrary and except as provided in Section 5.2(b), no Transfer of Interests in the Company shall be permitted unless the potential transferee is admitted as a Member under this Section 12.3:
(a) If a Member Transfers all or any portion of its Interest in the Company, such transferee may become a Member if (i) such transferee executes and agrees to be bound by this Agreement, (ii) the transferor and/or transferee pays all reasonable legal and other fees and expenses incurred by the Company in connection with such assignment and substitution and (iii) the transferor and transferee execute such documents and deliver such certificates to the Company and the remaining Members as may be required by applicable law or otherwise advisable; and
(b) Notwithstanding the foregoing, any Transfer or purported Transfer of any Interest, whether to another Member or to a third party, shall be of no effect and void ab initio, and such transferee shall not become a Member or an owner of the purportedly transferred Interest, if the Management Committee determines in its sole discretion that:
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(1) the Transfer would require registration of any Interest under, or result in a violation of, any federal or state securities laws;
(2) the Transfer would result in a termination of the Company under Code Section 708(b); provided, however, that any such determination under this Section 12.3(b)(2) shall require the reasonable determination and approval of at least one (1) Representative appointed by Carroll.
(3) as a result of such Transfer the Company would be required to register as an investment company under the Investment Company Act of 1940, as amended, or any rules or regulations promulgated thereunder;
(4) if as a result of such Transfer the aggregate value of Interests held by “benefit plan investors” including at least one benefit plan investor that is subject to ERISA, could be “significant” (as such terms are defined in U.S. Department of Labor Regulation 29 C.F.R. 2510.3-101(f)(2)) with the result that the assets of the Company could be deemed to be “plan assets” for purposes of ERISA;
(5) as a result of such Transfer, the Company would or may have in the aggregate more than one hundred (100) members and material adverse federal income tax consequences would result to a Member. For purposes of determining the number of members under this Section 12.3(b)(5), a Person (the “beneficial owner”) indirectly owning an interest in the Company through a partnership, grantor trust or S corporation (as such terms are used in the Code) (the “flow-through entity”) shall be considered a member, but only if (i) substantially all of the value of the beneficial owner’s interest in the flow-through entity is attributable to the flow-through entity’s interest (direct or indirect) in the Company and (ii) in the sole discretion of the Management Committee, a principal purpose of the use of the flow-through entity is to permit the Company to satisfy the 100-member limitation; or
(6) the transferor failed to comply with the provisions of Sections 12.2(a) or (b).
The Management Committee may require the provision of a certificate as to the legal nature and composition of a proposed transferee of an Interest of a Member and from any Member as to its legal nature and composition and shall be entitled to rely on any such certificate in making such determinations under this Section 12.3.
12.4 Withdrawals. Each of the Members does hereby covenant and agree that it will not withdraw, resign, retire or disassociate from the Company, except as a result of a Transfer of its entire Interest in the Company permitted under the terms of this Agreement and that it will carry out its duties and responsibilities hereunder until the Company is terminated, liquidated and dissolved under Section 13. No Member shall be entitled to receive any distribution or otherwise receive the fair market value of its Interest in compensation for any purported resignation or withdrawal not in accordance with the terms of this Agreement.
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Section 13. Dissolution.
13.1 Limitations. The Company may be dissolved, liquidated and terminated only pursuant to the provisions of this Section 13, and, to the fullest extent permitted by law but subject to the terms of this Agreement, the parties hereto do hereby irrevocably waive any and all other rights they may have to cause a dissolution of the Company or a sale or partition of any or all of the Company’s assets.
13.2 Exclusive Events Requiring Dissolution. The Company shall be dissolved only upon the earliest to occur of the following events (a “Dissolution Event”):
(a) the expiration of the specific term set forth in Section 2.5;
(b) at any time at the election of all of the Members in writing;
(c) at any time there are no Members (unless otherwise continued in accordance with the Act);
(d) the entry of a decree of judicial dissolution pursuant to Section 18-802 of the Act; or
(e) the Purchase Agreement has not been closed by July 14, 2016.
13.3 Liquidation. Upon the occurrence of a Dissolution Event, the business of the Company shall be continued to the extent necessary to allow an orderly winding up of its affairs, including the liquidation of the assets of the Company pursuant to the provisions of this Section 13.3, as promptly as practicable thereafter, and each of the following shall be accomplished:
(a) The Management Committee shall cause to be prepared a statement setting forth the assets and liabilities of the Company as of the date of dissolution, a copy of which statement shall be furnished to all of the Members.
(b) The property and assets of the Company shall be liquidated or distributed in kind under the supervision of the Management Committee as promptly as possible, but in an orderly, businesslike and commercially reasonable manner.
(c) Any gain or loss realized by the Company upon the sale of its property shall be deemed recognized and allocated to the Members in the manner set forth in Section 7.2. To the extent that an asset is to be distributed in kind, such asset shall be deemed to have been sold at its fair market value on the date of distribution, the gain or loss deemed realized upon such deemed sale shall be allocated in accordance with Section 7.2 and the amount of the distribution shall be considered to be such fair market value of the asset.
(d) The proceeds of sale and all other assets of the Company shall be applied and distributed as follows and in the following order of priority:
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(1) to the satisfaction of the debts and liabilities of the Company (contingent or otherwise) and the expenses of liquidation or distribution (whether by payment or reasonable provision for payment), other than liabilities to Members or former Members for Distributions;
(2) to the satisfaction of loans made pursuant to Section 5.2(b) in proportion to the outstanding balances of such loans at the time of payment;
(3) the balance, if any, to the Members in accordance with Section 6.1.
13.4 Continuation of the Company. Notwithstanding anything to the contrary contained herein, the death, retirement, resignation, expulsion, bankruptcy, dissolution or removal of a Member shall not in and of itself cause the dissolution of the Company, and the Members are expressly authorized to continue the business of the Company in such event, without any further action on the part of the Members.
Section 14. Indemnification.
14.1 Exculpation of Members. No Member, Manager, Representative or officer of the Company shall be liable to the Company or to the other Members for damages or otherwise with respect to any actions or failures to act taken or not taken relating to the Company, except to the extent any related loss results from fraud, gross negligence or willful or wanton misconduct on the part of such Member, Manager, Representative or officer or the willful breach of any obligation under this Agreement.
14.2 Indemnification by Company. The Company hereby indemnifies, holds harmless and defends the Members, the Manager, the Representatives, the officers and each of their respective agents, officers, directors, members, managers, partners, shareholders and employees from and against any loss, expense, damage or injury suffered or sustained by them (including but not limited to any judgment, award, settlement, reasonable attorneys’ fees and other costs or expenses incurred in connection with the defense of any actual or threatened action, proceeding or claim) by reason of or arising out of (i) their activities on behalf of the Company or in furtherance of the interests of the Company, including, without limitation, the provision of guaranties to third party lenders in respect of financings relating to the Company or any of its assets (but specifically excluding from such indemnity by the Company any so called “bad boy” guaranties or similar agreements which provide for recourse as a result of failure to comply with covenants, willful misconduct or gross negligence), (ii) their status as Members, Managers, Representatives, employees or officers of the Company, or (iii) the Company’s assets, property, business or affairs (including, without limitation, the actions of any officer, director, member, manager or employee of the Company or any of its Subsidiaries), if the acts or omissions were not performed or omitted fraudulently or as a result of gross negligence or willful or wanton misconduct by the indemnified party or as a result of the willful breach of any obligation under this Agreement by the indemnified party. For the purposes of this Section 14.2, officers, directors, members, managers, employees and other representatives of Affiliates of a Member who are functioning as representatives of such Member in connection with this Agreement shall be considered representatives of such Member for the purposes of this Section 14. Reasonable expenses incurred by the indemnified party in connection with any such proceeding relating to the
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foregoing matters shall be paid or reimbursed by the Company in advance of the final disposition of such proceeding upon receipt by the Company of (x) written affirmation by the Person requesting indemnification of its good faith belief that it has met the standard of conduct necessary for indemnification by the Company and (y) a written undertaking by or on behalf of such Person to repay such amount if it shall ultimately be determined by a court of competent jurisdiction that such Person has not met such standard of conduct, which undertaking shall be an unlimited general obligation of the indemnified party but need not be secured.
14.3 Indemnification by Members for Misconduct.
(a) Carroll hereby indemnifies, defends and holds harmless the Company, Bluerock, each Bluerock Transferee and each of their subsidiaries and their agents, officers, directors, members, managers, partners, shareholders and employees from and against all losses, costs, expenses, damages, claims and liabilities (including reasonable attorneys’ fees) as a result of or arising out of any fraud, gross negligence or willful or wanton misconduct on the part of, or by, Carroll, the Key Individual, any entity controlled directly or indirectly by the Key Individual that directly or indirectly controls Carroll, or any Representative appointed by Carroll.
(b) Bluerock hereby indemnifies, defends and holds harmless the Company, Carroll, each Carroll Transferee and each of their subsidiaries and their agents, officers, directors, members, managers, partners, shareholders and employees from and against all losses, costs, expenses, damages, claims and liabilities (including reasonable attorneys’ fees) as a result of or arising out of any fraud, gross negligence or willful or wanton misconduct on the part of, or by, Bluerock or any entity controlled directly or indirectly by Bluerock, or any Representative appointed by Bluerock.
14.4 General Indemnification by the Members.
(a) Notwithstanding any other provision contained herein, each Member (the “Indemnifying Party”) hereby indemnifies and holds harmless the other Members, the Company and each of their subsidiaries and their agents, officers, directors, members, managers, partners, shareholders and employees (each, an “Indemnified Party”) from and against all losses, costs, expenses, damages, claims and liabilities (including reasonable attorneys’ fees) as a result of or arising out of (i) any breach of any obligation of the Indemnifying Party under this Agreement, or (ii) any breach of any obligation by or any inaccuracy in or breach of any representation or warranty made by the Indemnifying Party or its Affiliates, whether in this Agreement or in any other agreement with respect to the conveyance, assignment, contribution or other transfer of the Property (or interests therein), assets, agreements, rights or other interests conveyed, assigned, contributed or otherwise transferred to the Company (collectively, the “Inducement Agreements”).
(b) Except as otherwise provided herein or in any other agreement, recourse for the indemnity obligation of the Members under this Section 14.4 shall be limited to such Indemnifying Party’s Interest in the Company; provided, however, that recourse against either Member under its indemnity obligations under this Agreement or otherwise shall be further limited to an aggregate amount equal to the value of such Member’s Interest as determined by and being limited to the then current liquidation value of such Member’s Interest assuming the Company
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were liquidated in an orderly fashion and all net proceeds thereof were distributed in accordance with Section 6.
(c) The indemnities, contributions and other obligations under this Agreement shall be in addition to any rights that any Indemnified Party may have at law, in equity or otherwise. The terms of this Section 14 shall survive termination of this Agreement.
Section 15. Sale Rights.
15.1 Push / Pull Rights.
(a) Availability of Rights. If, at any time following the second anniversary of the date that the Property is initially acquired, the Members are unable to agree on a Major Decision and such failure to agree has continued for fifteen (15) days after written notice from one Member to the other Member indicating an intention to exercise rights under this Section 15.1, either Member may exercise its right to initiate the provisions of this Section 15.1.
(b) Exercise. The Member wishing to exercise its rights pursuant to this Section 15.1 (the “Offeror”) shall do so by giving notice to the other Member (the “Offeree”) setting forth a statement of intent to invoke its rights under this Section 15.1, stating therein the aggregate dollar amount (the “Valuation Amount”) that the Offeror would be willing to pay for the assets of the Company as of the Closing Date (as defined below) free and clear of all liabilities, and setting forth all oral or written offers and inquiries received by the Offeror during the previous twelve-month period relating to the financing, disposition or leasing of any Company property (including proposals for the formation of a new entity for the ownership and operation of the Property).
(c) Offeree Response. After receipt of such notice, the Offeree shall elect to either (i) sell its entire Interest to the Offeror for an amount equal to the amount the Offeree would have been entitled to receive if the Company had sold its assets for the Valuation Amount on the Closing Date and the Company had immediately paid all Company liabilities and Imputed Closing Costs and distributed the net proceeds of sale to the Members in satisfaction of their Interests pursuant to Section 13.3, or (ii) purchase the entire Interest of the Offeror for an amount equal to the amount the Offeror would have been entitled to receive if the Company had sold all of its assets for the Valuation Amount on the Closing Date and the Company had immediately paid all Company liabilities and Imputed Closing Costs and distributed the net proceeds of the sale to the Members in satisfaction of their Interests pursuant to Section 13.3. The Offeree shall have thirty (30) days from the giving of the Offeror’s notice in which to exercise either of its options by giving written notice to the Offeror. If the Offeree does not elect to acquire the Offeror’s Interest within such time period, the Offeree shall be deemed to have elected to sell its Interest to the Offeror as provided in subsection (i) above.
(d) Earnest Money. Within five (5) business days after an election has been made or deemed made under Section 15.1(c), the acquiring Member shall deposit with a mutually acceptable third-party escrow agent a non-refundable earnest money deposit in the amount of two percent (2%) of the amount the selling Member is entitled to receive for its Interest under this Section 15.1, which amount shall be applied to the purchase price at closing. If the acquiring Member should thereafter fail to consummate the transaction for any reason other than a default
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by the selling Member or a refusal by any lender of the Company (or any Subsidiary of the Company) who has a right under its loan documents to consent to such transfer to so consent, (i) (A) the earnest money deposit shall be distributed from escrow to the selling Member, free of all claims of the acquiring Member, as liquidated damages and constituting the sole and exclusive remedy available to the selling Member because of a default by the acquiring Member or (B) the selling Member may, by delivering to the acquiring Member written notice thereof, elect to buy the acquiring Member’s entire Interest for an amount equal to the amount the acquiring Member would have been entitled to receive if the Company had sold all of its assets for the Valuation Amount and the Company had immediately paid all Company liabilities and Imputed Closing Costs and distributed the net proceeds of the sale to the Members in satisfaction of their Interests pursuant to Section 13.3, in which case, the Closing Date therefor shall be the date specified in the selling Member’s notice, and (ii) if the acquiring Member was the Offeror, the non-refundable earnest money deposit for any future election by the acquiring Member to buy the selling Member’s Interest shall be twenty percent (20%) of the amount the selling Member is entitled to receive for its Interest in connection with such future election.
(e) Closing. The closing of an acquisition pursuant to this Section 15.1 shall be held on a mutually acceptable date (the “Closing Date”) not later than sixty (60) days (or, if the Offeree is the acquiring Member, ninety (90) days) after an election has been made or deemed made under Section 15.1(c). At such closing, the following shall occur:
(1) The selling Member shall assign to the acquiring Member or its designee the selling Member’s Interest in accordance with the instructions of the acquiring Member, and shall execute and deliver to the acquiring Member all documents which may be required to give effect to the disposition and acquisition of such interests, in each case free and clear of all liens, claims, and encumbrances, with covenants of general warranty; and
(2) The acquiring Member shall pay to the selling Member the consideration therefor in cash.
(f) Enforcement. It is expressly agreed that the remedy at law for breach of the obligations of the Members set forth in this Section 15.1 is inadequate in view of (i) the complexities and uncertainties in measuring the actual damage to be sustained by reason of the failure of a Member to comply fully with such obligations, and (ii) the uniqueness of the Company’s business and the Members’ relationships. Accordingly, each of such obligations shall be, and is hereby expressly made, enforceable by an order of specific performance.
15.2 Forced Sale Rights.
(a) Offers. If, at any time following the second anniversary of the date that the Property is initially acquired, either Member (i) desires to offer the Property for sale on specified terms, or (ii) receives from an unaffiliated purchaser a bona fide written cash offer (i.e., not seller financed) for the purchase of the Property at a price in excess of the then-pending balance due under the Loan and otherwise on terms that such Member desires for the Company, or any Subsidiary that owns the Property (individually or collectively, the “Ownership Entity”) to accept (such specified terms or bona fide offer being herein called the “Offer”), then the Member desiring
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to make or accept the Offer (the “Initiating Member”) shall provide written notice of the terms of such Offer (the “Sale Notice”) to the other Member (the “Non-Initiating Member”).
(b) Response. The Non-Initiating Member shall have thirty (30) days from the date of the Sale Notice (the “Response Period”) to provide written notice to the Initiating Member of whether the Ownership Entity should make or accept the Offer; the failure to timely deliver such notice shall be deemed to constitute an election to accept the Offer and sell such Property on the terms of the Offer.
(c) Offer Unacceptable.
(1) If the Non-Initiating Member does not wish for the Company, or the Ownership Entity, to make or accept the Offer, the Initiating Member may elect to sell its Interest to the Non-Initiating Member, in which case the Non-Initiating Member must purchase the Initiating Member’s Interest for an amount equal to the amount that would be distributable to the Initiating Member if the Company had accepted the Offer, closed the sale pursuant to such Offer and wound up its affairs pursuant to Section 13.
(2) For purposes of the foregoing calculations, the purchase price for a sale shall be reduced by Imputed Closing Costs therefor. The Initiating Member must exercise this option, if at all, by delivering written notice thereof to the Non-Initiating Member within twenty (20) days after the end of the Response Period. The Non-Initiating Member shall pay the Company cash for each Ownership Entity or the Initiating Member cash for its Interest, as the case may be. Closing shall take place on or before the date specified in the Sale Notice, but if the Non-Initiating Member is purchasing the Initiating Member’s Interest or one or more Ownership Entities, the Non-Initiating Member shall have until 120 days after the Sale Notice in which to close. If the Initiating Member or the Non-Initiating Member defaults at closing, the non-defaulting party shall have the right to bring suit for damages, for specific performance, or exercise any other remedy available at law or in equity. Upon payment at closing, the Initiating Member shall execute and deliver all documents reasonably required to transfer the interest being sold.
(d) Offer Acceptable. If the Non-Initiating Member consents (or is deemed to have consented) to the Company or the Ownership Entities selling the Property on the terms of the Offer, then the Initiating Member shall be allowed to sell the Property for cash on the terms of the Offer for a period of up to one hundred eighty (180) days following the expiration of the Response Period. If the Initiating Member obtains a bona fide third party contract to sell the Property on the terms of the offer within such one hundred eighty (180) day period, the Initiating Member shall have an additional period of ninety (90) days after the date of such contract (that is, not to exceed 270 days after the expiration of the Response Period) in which to consummate the sale. If after having received the consent (or deemed consent) of the Non-Initiating Member to the sale of such Property on the terms of the Offer, the Initiating Member is unable to obtain a bona fide contract within such one hundred eighty (180) day period, or if after having obtained such bona fide contract, the Initiating Member is unable to consummate such sale within 270 days after the expiration of the Response Period, then the Initiating Member must again submit an Offer to the Non-Initiating Member under the terms of this Section 15.2 before it may sell such Property.
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Section 16. Miscellaneous.
16.1 Notices.
(a) All notices, requests, approvals, authorizations, consents and other communications required or permitted under this Agreement shall be in writing and shall be (as elected by the Person giving such notice) hand delivered by messenger or overnight courier service, mailed (airmail, if international) by registered or certified mail (postage prepaid), return receipt requested, or sent via facsimile (provided such facsimile is immediately followed by the delivery of an original copy of same via one of the other foregoing delivery methods) addressed to:
If to Bluerock:
c/o Bluerock Real Estate, L.L.C.
712 Fifth Avenue, 9th Floor
New York, New York 10019
Attention: James G. Babb, III
Facsimile No. (646) 278-4220]
with copies to:
c/o Bluerock Real Estate, L.L.C.
712 Fifth Avenue, 9th Floor
New York, New York 10022
Attention: Michael Konig, Esq.
Facsimile No. (646) 278-4220
and
Kaplan, Voekler, Cunningham & Frank, PLC
1401 East Cary Street
Richmond, VA 23223
Attention: S. Edward Flanagan, Esq.
Facsimile No. (804) 823-4099
If to Carroll:
c/o Carroll Organization, LLC
3340 Peachtree Road, Suite 1620
Atlanta, Georgia 30326
Attention: M. Patrick Carroll
Facsimile No. (404) 523-9372
With a copy to:
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Morris, Manning & Martin LLP
1600 Atlanta Financial Center
3343 Peachtree Road, NE
Atlanta, Georgia 30326
Attention: Corey B. May, Esq.
Facsimile: (404) 365-9532
(b) Each such notice shall be deemed delivered (i) on the date delivered if by hand delivery or overnight courier service or facsimile, and (ii) on the date upon which the return receipt is signed or delivery is refused or the notice is designated by the postal authorities as not deliverable, as the case may be, if mailed (provided, however, if such actual delivery occurs after 5:00 p.m. (local time where received), then such notice or demand shall be deemed delivered on the immediately following business day after the actual day of delivery).
(c) By giving to the other parties at least fifteen (15) days written notice thereof, the parties hereto and their respective successors and assigns shall have the right from time to time and at any time during the term of this Agreement to change their respective addresses.
16.2 Governing Law; Forum. This Agreement and the rights of the Members hereunder shall be governed by, and interpreted in accordance with, the laws of the State of Delaware, without regard to its conflicts of law provisions. Any legal action or other legal proceeding relating to this Agreement or the enforcement of any provision of this Agreement shall only be brought or otherwise commenced in any state or federal court located in the State of New York. Each of the parties hereto:
(a) Expressly and irrevocably consents and submits to the exclusive personal jurisdiction of and venue in each state and federal court located in the State of New York (and each appellate court located in the State of New York), in connection with any such legal proceeding;
(b) Agrees that each state and federal court located in the State of New York shall be deemed to be a convenient forum; and
(c) Agrees not to assert (by way of motion, as a defense or otherwise), in any such legal proceeding commenced in any state or federal court located in the State of New York, any claim that it is not subject personally to the jurisdiction of such court, that such legal proceeding has been brought in an inconvenient forum, that the venue for such proceeding is improper or that this Agreement or the subject matter of this Agreement may not be enforced in or by such court.
Each of the parties hereto designates CT Corporation System, 1633 Broadway, New York, New York 10019, as its agent for service of process in the State of New York, which designation may only be changed on not less than ten (10) days’ prior notice to all of the other parties.
16.3 Successors. This Agreement shall be binding upon, and inure to the benefit of, the parties and their successors and permitted assigns. Except as otherwise provided herein, any Member who Transfers its Interest as permitted by the terms of this Agreement shall have no further liability or obligation hereunder, except with respect to claims arising prior to such Transfer.
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16.4 Pronouns. Whenever from the context it appears appropriate, each term stated in either the singular or the plural shall include the singular and the plural, and pronouns stated in either the masculine, the feminine or the neuter gender shall include the masculine, feminine and neuter.
16.5 Captions Not Part of Agreement. The captions contained in this Agreement are inserted only as a matter of convenience and in no way define, limit or extend the scope or intent of this Agreement or any provisions hereof.
16.6 Severability. If any provision of this Agreement shall be held invalid, illegal or unenforceable in any jurisdiction or in any respect, then the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired, and the Members shall use their best efforts to amend or substitute such invalid, illegal or unenforceable provision with enforceable and valid provisions which would produce as nearly as possible the rights and obligations previously intended by the Members without renegotiation of any material terms and conditions stipulated herein.
16.7 Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed an original but all of which shall constitute one and the same instrument.
16.8 Entire Agreement and Amendment. This Agreement and the other written agreements described herein between the parties hereto entered into as of the date hereof, constitute the entire agreement between the Members relating to the subject matter hereof. In the event of any conflict between this Agreement and such other written agreements, the terms and provisions of this Agreement shall govern and control. No amendment or waiver by a party shall be enforceable against that party unless it is in writing and duly executed by such party.
16.9 Further Assurances. Each Member agrees to execute and deliver any and all additional instruments and documents and do any and all acts and things as may be necessary or expedient to effectuate more fully this Agreement or any provisions hereof or to carry on the business contemplated hereunder.
16.10 No Third Party Rights. The provisions of this Agreement are for the exclusive benefit of the Members and the Company, and no other party (including, without limitation, any creditor of the Company) shall have any right or claim against any Member by reason of those provisions or be entitled to enforce any of those provisions against any Member.
16.11 Incorporation by Reference. Every Exhibit and Annex attached to this Agreement is incorporated in this Agreement by reference.
16.12 Limitation on Liability. Except as set forth in Section 14 and with respect to a Default Loan as set forth in Section 5.2(b), the Members shall not be bound by, or be personally liable for, by reason of being a Member, a judgment, decree or order of a court or in any other manner, for the expenses, liabilities or obligations of the Company, and the liability of each Member shall be limited solely to the amount of its Capital Contributions as provided under Section 5. Except as set forth in Section 14.3 and with respect to a Default Loan as set forth in Section 5.2(b), any claim against any Member (the “Member in Question”) which may arise under
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this Agreement shall be made only against, and shall be limited to, such Member in Question’s Interest, the proceeds of the sale by the Member in Question of such Interest or the undivided interest in the assets of the Company distributed to the Member in Question pursuant to Section 13.3(d) hereof. Except as set forth in Section 14.3 and with respect to a Default Loan as set forth in Section 5.2(b), any right to proceed against (i) any other assets of the Member in Question or (ii) any agent, officer, director, member, manager, partner, shareholder or employee of the Member in Question or the assets of any such Person, as a result of such a claim against the Member in Question arising under this Agreement or otherwise, is hereby irrevocably and unconditionally waived.
16.13 Remedies Cumulative. The rights and remedies given in this Agreement and by law to a Member shall be deemed cumulative, and the exercise of one of such remedies shall not operate to bar the exercise of any other rights and remedies reserved to a Member under the provisions of this Agreement or given to a Member by law. In the event of any dispute between the parties hereto, the prevailing party shall be entitled to recover from the other party reasonable attorney’s fees and costs incurred in connection therewith.
16.14 No Waiver. One or more waivers of the breach of any provision of this Agreement by any Member shall not be construed as a waiver of a subsequent breach of the same or any other provision, nor shall any delay or omission by a Member to seek a remedy for any breach of this Agreement or to exercise the rights accruing to a Member by reason of such breach be deemed a waiver by a Member of its remedies and rights with respect to such breach.
16.15 Limitation On Use of Names. Notwithstanding anything contained in this Agreement or otherwise to the contrary, each of Bluerock and Carroll as to itself agree that neither it nor any of its Affiliates, agents, or representatives is granted a license to use or shall use the name of the other under any circumstances whatsoever, except such name may be used in furtherance of the business of the Company but only as and to the extent unanimously approved by the Members. Any change in the name of the Property must be approved by the Management Committee.
16.16 Publicly Traded Partnership Provision. Each Member hereby severally covenants and agrees with the other Members for the benefit of such Members, that (a) it is not currently making a market in Interests in the Company and will not in the future make such a market and (b) it will not Transfer its Interest on an established securities market, a secondary market or an over-the-counter market or the substantial equivalent thereof within the meaning of Code Section 7704 and the Regulations, rulings and other pronouncements of the U.S. Internal Revenue Service or the Department of the Treasury thereunder. Each Member further agrees that it will not assign any Interest in the Company to any assignee unless such assignee agrees to be bound by this Section 16.16 and to assign such Interest only to such Persons who agree to be similarly bound.
16.17 Uniform Commercial Code. The interest of each Member in the Company shall be an “uncertificated security” governed by Article 8 of the Delaware UCC and the UCC as enacted in the State of New York (the “New York UCC”), including, without limitation, (i) for purposes of the definition of a “security” thereunder, the interest of each Member in the Company
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shall be a security governed by Article 8 of the Delaware UCC and the New York UCC and (ii) for purposes of the definition of an “uncertificated security” thereunder.
16.18 Public Announcements. Neither Carroll nor any of its Affiliates shall, without the prior approval of Bluerock, issue any press releases or otherwise make any public statements with respect to the Company or the transactions contemplated by this Agreement, except as may be required by applicable law or regulation or by obligations pursuant to any listing agreement with any national securities exchange so long as Carroll or such Affiliate has used reasonable efforts to obtain the approval of Bluerock prior to issuing such press release or making such public disclosure.
16.19 No Construction Against Drafter. This Agreement has been negotiated and prepared by Bluerock and Carroll and their respective attorneys and, should any provision of this Agreement require judicial interpretation, the court interpreting or construing such provision shall not apply the rule of construction that a document is to be construed more strictly against one party.
Section 17. Insurance. During the Term, Property Manager, pursuant to the terms of the Management Agreement, shall procure and maintain insurance as is determined to be appropriate by the Management Committee (in form and with endorsements, waivers and deductibles and with insurance companies, designated or approved by Bluerock) naming the Company (and the Subsidiary owning the Property), Bluerock and Carroll as insureds thereunder.
[SIGNATURES ON FOLLOWING PAGES]
48 |
IN WITNESS WHEREOF, this Agreement is executed by the Members, effective as of the date first set forth above.
BR TENSIDE JV MEMBER, LLC, | ||||||
a Delaware limited liability company | ||||||
By: | BRG Tenside, LLC, a Delaware limited liability company, its manager | |||||
By: | Bluerock Residential Holdings, L.P., a Delaware limited partnership, its sole member | |||||
By: | Bluerock Residential Growth REIT, Inc., a Maryland corporation, its general partner | |||||
By: | /s/ Michael Konig | |||||
Name: Michael Konig | ||||||
Title: Authorized Signatory |
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
[Signature page to Limited Liability Company Agreement of BR Carroll Tenside JV, LLC] |
CARROLL CO-INVEST IV TENSIDE, LLC, | ||||||||
a Georgia limited liability company | ||||||||
By: | Carroll Multi-Family Real Estate Fund IV, LP, | |||||||
a Delaware limited partnership, its manager | ||||||||
By: | MPC Property Holdings IV, LLC, | |||||||
a Georgia limited liability company, its general partner | ||||||||
By: | MPC Partnership Holdings LLC, | |||||||
a Georgia limited liability company, its sole member | ||||||||
By: | P. Carroll Capitol Partners, LLC, | |||||||
a Georgia limited liability company, its managing member | ||||||||
By: | HUP Investment Company, LLC, | |||||||
a Georgia limited liability company, its sole member | ||||||||
By: | /s/ M. Patrick Caroll | |||||||
Name: M. Patrick Caroll | ||||||||
Title: Sole Member | ||||||||
For purposes of Sections 8.2(b), 9.3, 9.4, 9.7 and 17 only, and only for the term Carroll Management Group, LLC is Property Manager under the Management Agreement. | ||||||||
CARROLL MANAGEMENT GROUP, LLC | ||||||||
By: | /s/ Josh Champion | |||||||
Name: Josh Champion | ||||||||
Title: President | ||||||||
[Signature page to Limited Liability Company Agreement of BR Carroll Tenside JV, LLC] |
EXHIBIT A
Initial Capital Contributions and Percentage Interests
Member Name | Capital Contributions | Percentage Interest |
BR Tenside JV Member, LLC | $22,171,493.70 | 90% |
Carroll Co-Invest IV Tenside, LLC | $2,463,499.30** | 10% |
**Including $372,500 in intangibles allocable to the Property
Management Committee Representatives
Bluerock:
James G. Babb, III
Jordan B. Ruddy
Carroll:
Patrick Carroll
Joshua Champion
EXHIBIT B
Annual Business Plan Information
1. | a narrative description of any acquisitions or sales that are planned and any other activities proposed to be undertaken; |
2. | a projected annual income statement (accrual basis) on a quarter-by-quarter basis; |
3. | a projected balance sheet as of the end of the next Fiscal Year; |
4. | a schedule of projected operating cash flow (including itemized operating revenues, project costs and project expenses) for such Fiscal Year on a quarter-by-quarter basis, including a schedule of projected operating deficits, if any; |
5. | a marketing plan indicating the portions of the Property that Property Manager recommends be made available for sale or lease and the proposed terms and conditions relating thereto; |
6. | a detailed budget reflecting on a line by line basis all projected operating expenses and any proposed construction and capital expenditures for the Property, including projected dates for commencement and completion of the foregoing; |
7. | a description of the proposed investment of any funds of the Company which are (or are expected to become) available for investment; |
8. | a description, including the identity of the recipient (if known) and the amount and purpose, of all fees and other payments proposed, expected or projected to be paid for professional services and, if a fee or payment exceeds $25,000, for other services rendered to or on behalf of the Company by third parties; |
9. | a projection of the amount of any anticipated additional Capital Contributions which may be called for pursuant to Section 5.2(a) and the purposes for which such additional Capital Contributions may be used; and |
10. | such other information requested from time to time by any Member. |
EXHIBIT C
Management Agreement
Exhibit D
Initial Annual Business Plan
Exhibit 10.4
LIMITED LIABILITY COMPANY AGREEMENT OF
BR CARROLL TENSIDE, LLC
THIS LIMITED LIABILITY COMPANY AGREEMENT of BR CARROLL TENSIDE, LLC, a Delaware limited liability company (the “Company”), as amended from time to time, (the “Agreement”) is entered into by BR CARROLL TENSIDE JV, LLC, a Delaware limited liability company, the sole member of the Company (the “Member”).
RECITALS
A. The Company was formed as a Delaware limited liability company in accordance with the Delaware Limited Liability Company Act, as amended from time to time (the “Act”).
B. The undersigned desires to execute this Agreement to set forth the terms and conditions under which the management, business, and financial affairs of the Company will be conducted.
C. Definitions for this Agreement are set forth in Article XI.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual promises, covenants, and conditions herein contained, the receipt and sufficiency of which are hereby acknowledged, the undersigned party hereby covenants and agrees as follows:
ARTICLE I
PURPOSE AND POWERS OF COMP ANY
1.1 Purpose. The Company’s business and purpose shall consist solely of (x) the acquisition, ownership, operation, management, financing and disposition of the multi-family real estate project consisting of an approximately 336-unit multi-family apartment and retail complex with 17 ground floor retail commercial spaces and located at 1000 Northside Drive NW, Atlanta, Georgia 30318 and commonly known as Tenside Apartments (the “Property”), which will be owned by a Subsidiary and (y) such activities as are necessary, incidental or appropriate in connection therewith.
1.2 Powers. The Company shall have all powers of a limited liability company formed under the Act and not prohibited by the Act or this Agreement.
1.3 Title to Company Property. All property owned by the Company shall be owned by the Company as an entity and, insofar as permitted by applicable law, no Member shall have any ownership interest in any Company property in its individual name or right, and each Member’s Membership Interest shall be personal property for all purposes.
1.4 Term. This Agreement shall not terminate until the Company is terminated
in accordance with this Agreement.
1.5 Registered Office and Registered Agent. The Company’s initial registered office and initial registered agent shall be as provided in the Certificate of Formation. The registered office and registered agent may be changed from time to time by filing the address of the new registered office and/or the name of the new registered agent pursuant to the Act.
1.6 Formation and Authorized Person. On or before execution of this Agreement, an authorized person within the meaning of the Act shall have duly filed or caused to be filed the Certificate of Formation of the Company with the office of the Secretary of State of Delaware, as provided in Section 18-201 of the Act, and the Member hereby ratifies such filing. The Member shall use its best efforts to take such other actions as may be reasonably necessary to perfect and maintain the status of the Company as a limited liability company under the laws of Delaware. Notwithstanding anything contained herein to the contrary, the Company shall not do business in any jurisdiction that would jeopardize the limitation on liability afforded to the Member and/or any subsequent members under the Act or this Agreement.
ARTICLE II
MEMBERS
2.1 Initial Member.
(a) The name, address and initial Membership Interest of the initial Member is as follows:
Name | Membership Interest | |
BR CARROLL TENSIDE JV, LLC | 100% | |
c/o Bluerock Real Estate, L.L.C. | ||
712 Fifth Avenue, 9th Floor | ||
New York, NY 10019 |
(b) The Member was admitted to the Company as a member of the Company upon its execution of a counterpart signature page to this Agreement.
ARTICLE III
MANAGEMENT BY MEMBER
3.1 In General. The powers of the Company shall be exercised by, or under the authority of, the Member. In addition, the business and affairs of the Company shall be ·managed under the direction of the Member. Subject to the limitations set forth in this Agreement, the Member shall be entitled to make all decisions and take all actions for the Company.
3.2 Management by Member. Except as otherwise limited by this Agreement, the Member shall have the power to do any and all acts necessary, convenient or incidental to or for the furtherance of the purposes described herein, including all powers, statutory or otherwise; provided, however, that the Company may, at its election, appoint one or more officers to exercise its rights under this Agreement. The Member shall be entitled to make all decisions and take all actions for the Company, and the Member has the authority to bind the Company.
3.3 Required Approval. Any provision in this Agreement that requires the approval of the Members, but does not specify the particular percentage interests or number of Members required for such approval, shall be interpreted to require the affirmative vote of the Member holding a majority of the total Membership Interests from time to time, and specifically shall not be interpreted to require unanimous consent of the Member.
3.4 Action By Member. In exercising the voting or other approval rights as provided herein, the Member may act through meetings and/or written consents.
3.5 Authorization. The Company shall possess and may exercise all of the powers and privileges granted by the Act, and the Company is hereby authorized to do any act, enter into any agreement, contract or other instrument, and otherwise to engage in any activity and to do any action not prohibited under the Act or other applicable law which is necessary, useful, desirable or convenient to the conduct, promotion and attainment of the business and purposes of the Company.
ARTICLE IV
[INTENTIONALLY OMITTED]
ARTICLE V
[INTENTIONALLY OMITTED]
ARTICLE VI
EFFECT OF BANKRUPTCY. DEATH OR INCOMPETENCY OF A MEMBER
6.1 The bankruptcy, death, dissolution, liquidation, termination or adjudication of incompetency of a Member shall not cause the termination or dissolution of the Company and the business of the Company shall continue. Upon any such occurrence, the trustee, receiver, executor, administrator, committee, guardian or conservator of such Member shall have all the rights of such Member for the purpose of settling or managing its estate or property, subject to satisfying conditions precedent to the admission of such assignee as a substitute member. The transfer by such trustee, receiver, executor, administrator, committee, guardian or conservator of any Company Interest shall be subject to all of the restrictions hereunder to which such transfer would have been subject if such transfer had been made by such bankrupt, deceased, dissolved, liquidated, terminated or incompetent Member. The foregoing shall apply to the extent permitted by applicable law. Notwithstanding any other provision of the Certificate of Formation or this Agreement, no member of the Company shall have any right under Section 18-801(b) of the Act to agree in writing to dissolve the Company upon the bankruptcy of a member of the Company or the occurrence of any event that causes a member of the Company to cease to be a member of the Company. The existence of the Company as a separate legal entity shall continue until the cancellation of its Certificate of Formation as provided in the Act.
ARTICLE VII
CONTRIBUTIONS TO THE COMPANY AND DISTRIBUTIONS
7.1 Member Capital Contributions. Upon execution of this Agreement, the Member shall contribute as the Member’s initial Capital Contribution, $100 in cash.
7.2 [Intentionally Omitted]
7.3 Distributions and Allocations. All distributions of cash or other property (except upon the Company’s dissolution, which shall be governed by the applicable provisions of the Act and Article IX hereof) and all allocations of income, profits, and loss shall be made 100% to the Member in accordance with its Membership Interest. All amounts withheld pursuant to the Code or any provisions of state or local tax law with respect to any payment or distribution to the Member from the Company shall be treated as amounts distributed to the Member pursuant to this Section 7.3. Notwithstanding any provision to the contrary contained in this Agreement, the Company shall not be required to make a distribution to the Member on account of its interest in the Company if such distribution would violate Section 18-607 of the Act or any other applicable law.
ARTICLE VIII
ASSIGNMENTS AND RESIGNATIONS
8.1 Assignment, Resignation and Admission Generally.
(a) Assignments. The Member may assign in whole or in part its Membership Interest in the Company. If the Member transfers all of its Membership Interest pursuant to this Section 8.1, the transferee shall be admitted to the Company as a member of the Company upon its execution of an instrument signifying its agreement to be bound by the terms and conditions of this Agreement, which instrument may be a counterpart signature page to this Agreement. Such admission shall be deemed effective immediately prior to the transfer and, immediately following such admission, the Member shall cease to be a member of the Company. Notwithstanding anything in this Agreement to the contrary, any successor to the Member by merger or consolidation shall, without further act, be the Member hereunder, and such merger or consolidation shall not constitute an assignment for purposes of this Agreement and the Company shall continue without dissolution.
(b) Resignation. The Member is permitted to resign. If the Member is permitted to resign pursuant to this Section 8.l(b), an additional member of the Company shall be admitted to the Company upon its execution of an instrument signifying its agreement to be bound by the terms and conditions of this Agreement, which instrument may be a counterpart signature page to this Agreement. Such admission shall be deemed effective immediately prior to the resignation and, immediately following such admission, the resigning Member shall cease to be a member of the Company.
(c) Admission of Additional Members. One or more additional members may be admitted to the Company with the written consent of the Member.
8.2 Absolute Prohibition. Notwithstanding any other provision in this Article VIII, the Membership Interest of the Member, in whole or in part, or any rights to distributions therefrom, shall not be sold, exchanged, conveyed, transferred, pledged, hypothecated, subjected to a security interest, or otherwise assigned or encumbered, if such action would result in a violation of federal or state securities laws in the opinion of counsel for the Company.
8.3 Additional Requirements. In addition to all requirements imposed in this Article VIII, any admission of a member or assignment of a Membership Interest shall be subject to all restrictions relating thereto expressly imposed by the Act.
8.4 Effect of Prohibited Action. Any assignment in violation of this Article VIII shall be, to the fullest extent permitted by law, void and of no force or effect whatsoever.
ARTICLE IX
DISSOLUTION AND TERMINATION
9.1 Dissolution. Subject to the other provisions of this Agreement, the
Company shall be dissolved upon the first to occur of the following: (a) the termination of the legal existence of the last remaining member of the Company or the occurrence of any other event which terminates the continued membership of the last remaining member of the Company unless the Company is continued without dissolution in a manner permitted by this Agreement or the Act or (b) the entry of a decree of judicial dissolution under Section 18-802 of the Act. Upon the occurrence of any event that causes the last remaining member of the Company to cease to be a member of the Company or that causes the Member to cease to be a member of the Company (other than upon continuation of the Company without dissolution upon (i) an assignment by the Member of all of its Membership Interest and the admission of the transferee pursuant to Section 8.1, or (ii) the resignation of the Member and the admission of an additional member of the Company pursuant to Section 8.1), to the fullest extent permitted by law, the personal representative of such member is hereby authorized to, and shall, within ninety (90) days after the occurrence of the event that terminated the continued membership of such member in the Company, agree in writing (x) to continue the Company and (y) to admit the personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that terminated the continued membership of the last remaining member of the Company.
9.2 Liquidation. Upon its dissolution, the Company shall wind up its affairs and distribute its assets in accordance with Section 9.4 below and the Act by either or a combination of the following methods as the Member (or the Person carrying out the liquidation) shall determine:
(a) selling the Company’s assets and, after the satisfaction of Company liabilities, distributing the net proceeds therefrom to the Member; and/or
(b) subject to the satisfaction of Company liabilities, distributing the Company’s assets to the Member in kind, with the Member accepting an undivided interest in the Company’s assets in satisfaction of its Membership Interest.
9.3 Orderly Liquidation. A reasonable time as determined by the Member (or the Person carrying out the liquidation) shall be allowed for the orderly liquidation of the assets of the Company and the discharge of liabilities to the creditors so as to minimize any losses attendant upon dissolution.
9.4 Distributions. Upon dissolution, the Company’s assets (including any cash on hand) shall be distributed in the following order and in accordance with the following priorities:
(a) first, to the satisfaction of all debts and liabilities of the Company (whether by payment or the making of reasonable provision for payment thereof) and the expenses of liquidation, including a sales commission to the selling agent, if any; then
(b) second, to the Member.
9.5 Termination. The Company shall terminate when (i) all of the assets of
the Company, after payment of or due provision for all debts, liabilities and obligations of the Company, shall have been distributed to the Member in the manner provided for in this Agreement and (ii) the Certificate of Formation shall have been canceled in the manner required by the Act. The existence of the Company as a separate legal entity shall continue until cancellation of the Certificate of Formation as provided in the Act.
ARTICLE X
MISCELLANEOUS PROVISIONS
10.1 Governing Law. This Agreement shall be construed, enforced, and interpreted in accordance with the laws of the State of Delaware, without regard to conflicts of law provisions and principles thereof.
10.2 Indemnity. The Company shall indemnify and hold harmless any person who was or is a party to any proceeding, including any proceeding brought by a member in the right of the Company or brought by or on behalf of any member of the Company, by reason of the fact that he is or was an officer of the Company, against any liability incurred by him in connection with such proceedings unless he engaged in willful misconduct or knowing violation of the criminal law or any federal or state securities laws. Furthermore, in any such proceedings brought by or on behalf of the Company or bought by or on behalf of the members of the Company, no officer shall be liable to the Company or its members for any monetary damages with respect to any transaction, occurrence, course of conduct or otherwise, except for liability resulting from such officer’s having engaged in willful misconduct or a knowing violation of the criminal law or any federal or state securities laws.
10.3 Integrated and Binding Agreement; Amendment. This Agreement contains the entire understanding and agreement among the parties hereto with respect to the subject matter hereof, and there are no other agreements, understandings, representations or warranties among the parties hereto other than those set forth herein. This Agreement may be amended only by written agreement of the Member and only as provided in this Agreement. Notwithstanding any other provision of this Agreement, the parties hereto agree that this Agreement constitutes a legal, valid and binding agreement, and is enforceable against each of them in accordance with its terms.
10.4 Construction. Whenever the singular number is used in this Agreement and when required by the context, the same shall include the plural, and the masculine gender shall include the feminine and neuter genders, and vice versa.
10.5 Headings. The headings in this Agreement are inserted for convenience only and are in no way intended to describe, interpret, define, or limit the scope, extent, or intent of this Agreement or any provision hereof.
10.6 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument.
10.7 Severability. If any provision of this Agreement or the application thereof to any Person or circumstance shall be invalid, illegal, or unenforceable to any extent, the remainder of this Agreement and the application thereof shall not be affected and shall be enforceable to the fullest extent permitted by law.
10.8 Notices. All notices under this Agreement shall be in writing and shall be given to the party entitled thereto by personal service or by mail, posted to the address maintained by the Company for such person or at such other address as he may specify in writing.
10.9 Rights and Remedies Cumulative; Waivers. The rights and remedies provided by this Agreement are cumulative and the use of any one right or remedy by any party shall not preclude or waive the right to use any or all other remedies, and are given in addition to any other rights the parties may have by law, statute, ordinance, or otherwise. The failure of any party to seek redress for violation of or to insist upon the strict performance of any covenant or condition of this Agreement shall not prevent a subsequent act, which would have originally constituted a violation, from having the effect of an original violation.
10.10 Heirs. Successors, and Assigns. Each and all of the covenants, terms, provisions, and agreements herein contained shall be binding upon, and inure to the benefit of, the parties hereto and, to the extent permitted by this Agreement, their respective heirs, legal representatives, successors, and assigns.
10.11 Partition. Each member agrees that the assets of the Company are not and will not be suitable for partition. Accordingly, each member hereby irrevocably waives (to the fullest extent permitted by law) any and all rights that he may have, or may obtain, to maintain any action for partition of any of the assets of the Company.
10.12 Tax Status. It is the intention of the Member that the Company be a disregarded entity for federal income tax purposes under Section 7701 of the Code and the Treasury Regulations promulgated pursuant thereto.
10.13 Effective Date. Pursuant to Section 18-201(d) of the Act, this Agreement shall be effective as of the time of the filing of the Certificate of Formation with the Office of the Delaware Secretary of State.
ARTICLE XI
DEFINITIONS
In addition to any other defined terms herein, the following terms used in this Agreement shall have the following meanings (unless otherwise expressly provided herein):
(a) “Affiliate” shall mean any Person controlling or controlled by or under common control with the Company, including, without limitation (i) any person who has a familial relationship, by blood, marriage or otherwise with any Member or employee of
the Company, or any Affiliate thereof and (ii) any Person which receives compensation for administrative, legal or accounting services from the Company, or any of its Affiliates. For purposes of this definition, “control” when used with respect to any specified Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.
(b) “Bankruptcy” shall mean, with respect to any Person, if such Person (i) makes an assignment for the benefit of creditors, (ii) files a voluntary petition in bankruptcy, (iii) is adjudged a bankrupt or insolvent, or has entered against it an order for relief, in any bankruptcy or insolvency proceedings, (iv) files a petition or answer seeking for itself any reorganization, arrangement, composition, readjustment, liquidation or similar relief under any statute, law or regulation, (v) files an answer or other pleading admitting or failing to contest the material allegations of a petition filed against it in any proceeding of this nature, (vi) seeks, consents to or acquiesces in the appointment of a trustee, receiver or liquidator of the Person or of all or any substantial part of its properties, or (vii) if 120 days after the commencement of any proceeding against the Person seeking reorganization, arrangement, composition, readjustment, liquidation or similar relief under any statute, law or regulation, if the proceeding has not been dismissed, or if within 90 days after the appointment without such Person’s consent or acquiescence of a trustee, receiver or liquidator of such Person or of all or any substantial part of its properties, the appointment is not vacated or stayed, or within 90 days after the expiration of any such stay, the appointment is not vacated. The foregoing definition of “Bankruptcy” is intended to replace and shall supersede and replace the definition of “Bankruptcy” set forth in Sections 18-101(1) and 18-304 of the Act.
(c) “Capital Contribution” shall mean any contribution to the capital of the Company by the Member in cash, property, or services, or a binding obligation to contribute cash, property, or services, whenever made.
(d) “Certificate of Formation” shall mean the Certificate of Formation of the Company, as amended and in force from time to time.
(e) “Company Interest” shall mean any equity interest in the Company, direct or indirect.
(h) “Code” shall mean the Internal Revenue Code of 1986, as amended, or corresponding provisions of subsequent superseding federal revenue laws and the rules and regulations promulgated thereunder.
(i) “Company shall mean BR CARROLL TENSIDE, LLC.
(j) “Entity” shall mean any general partnership, limited partnership, limited liability company, corporation, joint venture, trust, business trust, cooperative, association or other entity.
(m) “Member” shall mean the Person identified in Article II hereof and includes any Person admitted as an additional member or a substitute member of the Company
pursuant to the provisions of this Agreement, each in its capacity as a member of the Company.
(n) “Membership Interest” shall mean the Member’s limited liability company interest in the Company and the other rights and obligations with respect thereto as set forth in this Agreement. The Membership Interest is set forth beside the Member’s name in Article II of this Agreement.
(o) “Person” shall mean any individual, corporation, partnership, limited liability company, joint venture, association, joint stock company, trust (including any beneficiary thereof), unincorporated organization, or government or any agency or political subdivision thereof.
(p) “Property” is defined in Section 1.1 of this Agreement.
(q)
The undersigned hereby agrees, acknowledges, and certifies that the foregoing constitutes the sole and entire Limited Liability Company Agreement of the Company.
Member: | BR CARROLL TENSIDE JV, LLC, a Delaware limited partnership | ||||||
By: | BR Tenside JV Member, LLC, a Delaware limited liability company, its manager | ||||||
By: | Bluerock Residential Holdings, L.P., a Delaware limited partnership, its sole member | ||||||
By: | Bluerock Residential Growth REIT, Inc., a Maryland corporation, its general partner | ||||||
By: | /s/ Michael Konig | ||||||
Name: Michael Konig Title: Authorized Signatory |
Exhibit 10.5
AGREEMENT OF PURCHASE AND SALE
Project Name: | Tenside Apartments | |
1000 Northside Drive NW | ||
Atlanta, Georgia 30318 | ||
Date: | May 25, 2016 |
AGREEMENT OF PURCHASE AND SALE
THIS AGREEMENT OF PURCHASE AND SALE (this “Agreement”) is made as of the 25th day of May, 2016 (the “Effective Date”), by and between WATERTON TENSIDE OWNER, L.L.C., a Delaware limited liability company (the “Seller”), and CARROLL ACQUISITIONS, LLC, a Georgia limited liability company (the “Buyer”).
RECITALS
Seller is the owner of the Property described below. Seller desires to assign and transfer to Buyer, and Buyer desires to purchase from Seller, the Property, subject to and in accordance with the terms, conditions and other provisions of this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
Section 1. CERTAIN DEFINITIONS
The following capitalized terms shall have the meanings set forth in this Section 1 for all purposes under this Agreement:
Access Agreement. That certain Confidentiality and License Agreement by and between Buyer and Seller dated as of May 9, 2016.
Additional Earnest Money. Defined in Section 2.3(a) below.
Additional Property. Seller’s right, title and interest in, to and under any licenses, permits, and warranties applicable or appurtenant to the other components of the Property, if any.
Atlanta Development Authority Lease. The term “Atlanta Development Authority Lease” shall have the meaning ascribed thereto in subsection 4.2(c)(vi) hereof.
Atlanta Development Authority Lease Documents. The term “Atlanta Development Authority Lease Documents” shall have the meaning ascribed thereto in subsection 4.2(c)(vi) hereof.
Atlanta Development Authority Lease and Bond Transfer Documents. The term “Atlanta Development Authority Lease and Bond Transfer Documents” shall have the meaning ascribed thereto in subsection 4.2(c)(vii) hereof.
Bond. The term “Bond” shall have the meaning ascribed thereto in subsection 4.2(c)(vi) hereof.
Broker. Walker & Dunlop Investment Sales, LLC.
Closing. The consummation of the transactions described herein as more fully described in Section 4 below.
Closing Date. June 29, 2016.
1 |
Due Diligence Expiration Date. June 8, 2016.
Due Diligence Period. The period commencing on May 9, 2016 and continuing until 5:00 p.m. Atlanta time on the Due Diligence Expiration Date.
Earnest Money. Defined in Section 2.2(a) below.
Escrow Company. Chicago Title Insurance Company, c/o Fidelity National Title Group, 5565 Glenridge Drive, Suite 300, Atlanta, Georgia 30342, Attn: Chris Valentine (chris.valentine@fntg.com).
Excluded Documents. All (a) correspondence, documents or reports prepared by or for Seller in connection with the proposed sale of the Property, (b) communications between Seller or any affiliate and their attorneys or other agents or representatives, (c) appraisals, assessments or other evaluations of the Real Property or the Property in the possession of Seller or its representatives, and (d) other correspondence, memoranda and documents prepared or intended for the internal use of Seller and/or its representatives.
Excluded Personal Property. The rights to any and all operating systems, operating manuals, software and information associated with or contained in any computers and telephone equipment located at the Real Property or used in connection with the Real Property or the Property (exclusive of the computer and telecommunication equipment and hardware); the rights to any websites or domain names maintained by Seller or Property Manager with respect to the Property; and all mobile shop tools and parts systems.
Improvements. The buildings and other improvements situated on the Land (hereinafter defined), excluding, however, any building or other improvements situated on any easement parcels described in Exhibit A attached hereto.
Indemnified Seller Parties. Defined in Section 3.2(d) below.
Land. The parcel(s) of land legally described in Exhibit A attached hereto.
Leases. Collectively, the Retail Leases and the Residential Leases.
Personal Property. The items of personal property listed on Exhibit C attached hereto, but specifically excluding the Excluded Personal Property.
Property. The Personal Property and all of Seller’s right, title and interest in, to and under the Bond, Atlanta Development Authority Lease, Leases, Service Contracts (hereinafter defined), and Additional Property.
Property Manager. Waterton Residential, L.L.C.
Purchase Price. SEVENTY-FOUR MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($74,500,000.00).
2 |
Real Property. The Land and the Improvements.
Residential Leases. All residential leases, licenses, and other agreements to use or occupy all or any part of the Land or Improvements, together with all amendments thereto for those tenants listed on the Rent Roll attached hereto as Exhibit B-1 attached hereto, and any new Residential Leases entered into after the Effective Date in accordance with this Agreement.
Retail Leases. All retail leases, licenses, and other agreements to use or occupy all or any part of the Land or Improvements, together with all amendments thereto for those tenants listed on the Rent Roll attached hereto as Exhibit B-2 attached hereto, and any new Retail Leases entered into after the Effective Date in accordance with this Agreement.
Seller Parties. Collectively, (a) Seller, (b) its counsel, (c) Property Manager, (d) any direct or indirect equity owner, officer, director, employee, or agent of Seller, its counsel or Property Manager, and (e) any other entity or individual affiliated or related in any way to any of the foregoing.
Service Contracts. The service contracts and equipment leases listed in Exhibit D attached hereto.
Termination Surviving Obligations. Buyer’s obligations under Sections 3.1 and 3.2 hereof and Buyer’s and Seller’s obligations under Sections 10 and 14.3 hereof.
Title Company. Chicago Title Insurance Company, c/o Fidelity National Title Group, 5565 Glenridge Drive, Suite 300, Atlanta, Georgia 30342, Attn: Chris Valentine (chris.valentine@fntg.com).
Transaction. The purchase and sale transaction contemplated by this Agreement.
Section 2. AGREEMENT TO SELL AND PURCHASE: PURCHASE PRICE
Section 2.1 Agreement to Sell and Purchase. Seller agrees to sell to Buyer, and Buyer agrees to purchase from Seller, the Property, subject to and in accordance with the terms, conditions and provisions hereof.
Section 2.2 Payment of Purchase Price. The total purchase price to be paid by Buyer to Seller for the Property shall be the Purchase Price described in Section 1 above. The Purchase Price shall be payable in the following manner:
(a) Earnest Money. Buyer shall, within two (2) business days after the Effective Date, deposit with the Escrow Company, as escrow agent, the sum of $500,000 as earnest money (said amount being referred to herein as the “Initial Earnest Money”, and, together with the “Additional Earnest Money” deposit described below, and all interest accruing thereon, being herein referred to collectively as the “Earnest Money”), which shall be in the form of a wire transfer of immediately available funds. Provided that Buyer has not terminated this Agreement pursuant to Section 3.2 below, within two (2) business days after the Due Diligence Expiration Date, Buyer shall increase the Earnest Money to $1,500,000 by depositing with the Escrow Company an additional $1,000,000 by wire transfer of immediately available funds (the “Additional Earnest Money”). Upon the expiration of the Due Diligence Period, all of the Earnest Money shall become fully non-refundable and payable to Seller, except as otherwise expressly provided herein. The Earnest Money shall be held and disbursed by the Escrow Company pursuant to the escrow agreement in the form of Exhibit E attached hereto (the “Escrow Agreement”), which the parties have executed and delivered simultaneously with the execution and delivery of this Agreement. The Earnest Money shall be invested as provided in said Escrow Agreement, with all interest accruing thereon being deemed part of the Earnest Money for all purposes hereunder. In the event Buyer fails to deliver any portion of the Earnest Money within the time provided in this Agreement, Seller may, prior to Buyer’s deposit of such portion of the Earnest Money with the Escrow Company, at Seller’s option and without limiting any of its other rights or remedies, terminate this Agreement by written notice to Buyer, whereupon any portion of the Earnest Money previously delivered to Escrow Company shall be immediately delivered to Seller, this Agreement shall terminate, and the parties hereto shall have no further obligations to the other except for the Termination Surviving Obligations. If the sale hereunder is consummated in accordance with the terms hereof, the Earnest Money shall be paid to Seller and applied to the Purchase Price to be paid by Buyer at the Closing. In all other instances, the Earnest Money shall be paid to Seller or Buyer as provided in other provisions of this Agreement.
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(b) Balance of Purchase Price. Buyer shall pay to Seller the balance of the Purchase Price, plus or minus net proration credits (as such credits may be determined in accordance with Section 5 and other applicable provisions of this Agreement) and as otherwise adjusted pursuant to the provisions of this Agreement, at Closing by wire transfer of immediately available funds. Such funds must be received by the Escrow Company, and Buyer shall authorize the disbursement thereof to Seller, no later than the time reasonably required by the Escrow Company to deliver the payoff for Seller's loan on the Property prior to the lender's payoff deadline on the Closing Date (the “Payoff Deadline”). Notwithstanding the foregoing, if such payoff is delivered to Seller's lender after the Payoff Deadline and Seller is charged additional interest, Buyer shall be responsible for the payment of such additional interest. In anticipation of such occurrence, along with the funds otherwise due by Buyer pursuant to this Agreement, Buyer shall deliver to the Escrow Company prior to Closing the additional funds required to pay interest on Seller's loan after the Payoff Deadline through the business day following the Closing Date (the “Additional Interest”); provided, however, that if the amounts due Seller's lender are actually delivered to such lender prior to the Payoff Deadline, or received by Seller's lender thereafter on the Closing Date and Seller is not in fact charged additional interest, the Additional Interest shall be returned to Buyer. Further, notwithstanding anything to the contrary in this Agreement, if on or before the Closing Date Buyer fails to deliver the funds due by Buyer pursuant to this Agreement, Buyer shall be in default of this Agreement.
Section 3. SELLER’S DELIVERIES; CONDITIONS PRECEDENT
Section 3.1 Seller’s Deliveries. Except for any Excluded Documents, Seller shall provide to Buyer, or make available at the Real Property as specified below, promptly after the date hereof the following items (or copies thereof) relating to the ownership and operation of the Real Property or the Property:
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(a) the Leases and lease files containing related documentation, which shall be made available on-site;
(b) the Service Contracts;
(c) existing owner’s title policy;
(d) existing Survey;
(e) any plans and specifications relating to the Real Property, in Seller’s possession (if any);
(f) twelve-month operating statements for 2014, 2015, and a current trailing twelve-month operating statement for 2016;
(g) current rent roll in Seller’s standard form in use at the Real Property;
(h) schedule of insurance losses for the prior three (3) years;
(i) real estate tax bills for the current and prior year;
(j) the Fannie Mae Phase I Environmental Site Assessment, dated November 9, 2011, and the Compliance Status Report Update, dated October 14, 2011;
(k) the Atlanta Development Authority Lease Documents; and
(l) the Bond.
In the event that this Agreement terminates for any reason, Buyer shall promptly return to Seller all written and other physical materials (whether from Seller, Seller’s agents or otherwise) received by Buyer relating to the Real Property and the Property or Seller and all Third Party Reports (hereinafter defined); provided, however, that with respect to the Third Party Reports, same shall be delivered without representation or warranty of any kind, express or implied, Seller acknowledging and agreeing that (i) same were prepared by unaffiliated third parties, and (ii) that Seller shall not be entitled to rely upon such Third Party Reports without the express written consent of the third party that prepared same, which Seller may obtain at its sole cost and expense.
Except as otherwise expressly set forth in this Agreement and in the documents delivered by Seller at Closing, Seller makes no representations or warranties, either expressed or implied, and shall have no liability with respect to the accuracy or completeness of the information, data or conclusions contained in the information provided to Buyer, and Buyer shall make its own independent inquiry regarding the economic feasibility, physical condition and environmental state of the Real Property (and the Property, as applicable) during the Due Diligence Period.
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Section 3.2 Inspections and Access. Buyer and its representatives shall be permitted to enter upon the Real Property during business hours upon forty-eight (48) hours’ prior written notice to Seller’s agent, Field Stern via email (field.stern@waterton.com) during the Due Diligence Period to examine, inspect and investigate the Real Property and the Personal Property and all books, records, drawings and other documentation relating thereto in Seller’s possession (collectively, the “Inspections”), subject to the terms, conditions and limitations set forth in the following provisions of this Section 3.2. All of the Inspections shall be conducted at the expense of Buyer without contribution from Seller of any kind or amount.
(a) Subject to the rights of tenants of the Real Property, Buyer shall have a right to enter the Real Property for the purpose of conducting the Inspections and for no other purpose, provided that in each such instance (i) Buyer notifies Seller’s agent of the intended Inspections not less than 48 hours prior to such entry; (ii) such Inspections are scheduled with Field Stern by electronic mail (field.stern@waterton.com); and (iii) Buyer is in full compliance with Section 3.2(d) hereof. At Seller’s election, a representative of Seller shall be present during any entry by Buyer or its representatives onto the Real Property for conducting said Inspections. Buyer shall take all necessary actions to insure that neither it nor any of its representatives shall interfere with the ongoing operations occurring at the Real Property during the course of performing any such Inspections, including, without limitation, any activities of tenants or other occupants. Buyer shall not cause or permit any mechanics’ liens or other liens to be filed against the Real Property or the Property as a result of the Inspections. Notwithstanding anything set forth herein to the contrary, Buyer shall not be permitted to: (w) perform any Phase II environmental assessments or any other tests that require the physical alteration of the Real Property (including, without limitation, borings or samplings) without the prior written consent of Seller, which may be withheld by Seller in its sole discretion; (x) review any of the Excluded Documents; (y) interview any tenants, owners or other occupants of the Real Property; or (z) discuss employment opportunities with any employees of Seller or Property Manager. Promptly upon (i) receipt of the written request of Seller; or (ii) termination of this Agreement for any reason, Buyer shall deliver to Seller a complete copy of any written studies, reports, tests results or similar documents prepared by or on behalf of Buyer or its agents (collectively, the “Third Party Reports”); provided that same shall be delivered without representation or warranty of any kind, express or implied, Seller acknowledging and agreeing that (A) same were prepared by unaffiliated third parties, and (B) that Seller shall not be entitled to rely upon such Third Party Reports without the express written consent of the third party that prepared same, which Seller may obtain at its sole cost and expense.
(b) Buyer shall have until the Due Diligence Expiration Date in which to conduct its due diligence investigations and analysis of the Real Property and the Property and of all information pertaining to the Real Property and the Property to determine whether the Real Property and the Property is acceptable to Buyer. If during the Due Diligence Period, Buyer so elects, for any reason or no reason, Buyer may, as its sole and exclusive right and remedy, terminate this Agreement by giving written notice of termination to Seller on or before the Due Diligence Expiration Date. If Buyer does not give such notice of termination on or before the Due Diligence Expiration Date, Buyer shall be deemed to have waived its right to terminate this Agreement pursuant to this
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Section 3.2 and this Agreement shall continue in full force and effect. In the event of such termination, the Earnest Money shall be returned to Buyer and neither party shall have any further obligations to the other party hereunder, except for the Termination Surviving Obligations.
(c) Buyer agrees and covenants with Seller not to disclose to any third party (other than lenders, accountants, equity partners, attorneys and other professionals and consultants working for Buyer in connection with the acquisition of the Real Property and the Property) without Seller’s prior written consent, unless Buyer is obligated by law to make such disclosure (in which case Buyer shall provide concurrent written notice of such mandatory disclosure to Seller), any of the reports or any other documentation or information provided by Seller or Seller’s agents or obtained by Buyer which relates to the Property, the Real Property, or Seller in any way, all of which shall be used by Buyer and its agents solely in connection with the transactions contemplated hereby.
(d) Buyer agrees to indemnify, defend and hold Seller and its members, managers, partners, trustees, beneficiaries, shareholders, directors, officers, advisors and other agents and their respective employees and affiliates (collectively, the “Indemnified Seller Parties”) harmless from and against any and all claims, losses, damages, costs and expense (including, without limitation, attorneys’ fees and court costs) (collectively, the “Claims”) suffered or incurred by any of the Indemnified Seller Parties as a result of or in connection with any activities of Buyer (including activities of any of Buyer’s employees, consultants, contractors or other agents, collectively, the “Buyer Parties”) conducted pursuant to or in violation of this Section 3.2 or otherwise, including, without limitation, mechanics’ liens, damage to the Real Property or the Property, and injury to persons or property resulting from such activities; provided, however, in no event shall Buyer have any obligation to indemnify any of the Indemnified Seller Parties with respect to Claims arising (x) as a result of Buyer’s mere discovery, without exacerbation, of an existing environmental or other condition on the Real Property; or (y) solely due to the negligence or intentional misconduct of any of the Indemnified Seller Parties. In connection with the foregoing indemnity, in the event that the Real Property or the Property is damaged, disturbed or altered in any way as a result of such activities, Buyer shall promptly restore the Real Property or the Property, as applicable, to its condition existing prior to the commencement of such activities. Furthermore, as set forth herein, Buyer shall deliver to Seller certificates of insurance issued by reputable insurers authorized to do business in the State where the Real Property is located having a rating of at least “A-VII” by A.M. Best Company evidencing (i) worker’s compensation insurance meeting the legally mandated limits of coverage, and (ii) commercial general liability insurance on an occurrence basis with limits of not less than One Million Dollars ($1,000,000) per occurrence and Two Million Dollars ($2,000,000) in the aggregate (it being understood, however, that the availability of such insurance shall not serve to limit or define the scope of Buyer’s indemnity obligations under this Agreement). Additionally, with respect to any of the Buyer Parties performing environmental assessments, Buyer shall have provided environmental legal liability insurance with limits of at least Two Million Dollars ($2,000,000) per claim. The above required commercial general liability insurance shall not have a deductible of more than Twenty-Five Thousand Dollars ($25,000). The commercial general liability insurance shall be primary and non-contributory as to coverage for claims arising out of or resulting from work undertaken by or on behalf of Buyer. The commercial general liability insurance shall contain a waiver of subrogation in favor of Seller, shall be occurrence-based and shall be maintained in full force and effect until closing of the sale of the Property to Buyer or earlier termination of this Agreement. Such insurance shall name Seller, Waterton Residential, L.L.C., and Waterton Associates L.L.C. as additional insured parties and shall be with companies, with deductibles, and otherwise in a form reasonably acceptable to Seller. Buyer shall deliver to Seller prior to commencing any of the activities described in this Section 3.2 evidence reasonably satisfactory to Seller that the insurance required hereunder is in full force and effect.
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Section 3.3 Title. Seller has previously delivered or made available to Buyer for its review, a title commitment (or preliminary title report) covering the Real Property issued by the Title Company (the “Title Commitment”), and the existing plat of survey of the Real Property, if any, in Seller’s possession (the “Existing Survey”). If Buyer so elects, Buyer may order an update of the Existing Survey (the “Updated Survey”) at Buyer’s sole cost and expense. Buyer shall have until 5:00 p.m. Atlanta time on the date that is five (5) business days before the Due Diligence Expiration Date (the “Title Review Deadline”) for examination of the Title Commitment and Existing Survey (or the Updated Survey if obtained by Buyer prior to the Title Review Deadline) and the making of any objections thereto, said objections to be made in writing (the “Objections”) and delivered to Seller on or before the Title Review Deadline. If Buyer shall have obtained an Updated Survey prior to the Title Review Deadline, such Updated Survey shall be the “Survey”, as hereinafter described; otherwise, the Existing Survey shall be the “Survey”, as hereinafter described. Buyer shall be deemed to have accepted all exceptions to the Title Commitment and the form and substance of the Survey, except only for matters expressly objected to in a written notice delivered to Seller on or before the Title Review Deadline. If any objections to the Title Commitment or Survey are properly made on or before the Title Review Deadline, Seller shall have the right, but not the obligation (except with respect to the Mandatory Cure Items, as described below), on or before the date that is five (5) business days after receipt of the Objections (the “Seller Cure Date”), to cure such Objections (by removal or by endorsement or other method reasonably acceptable to Buyer) or to agree in writing to cure the same prior to Closing. If the Objections are not so cured by Seller (or agreed to be cured by Seller), or waived by Buyer, on or before the Seller Cure Date, then Buyer may, at its option, and as its sole and exclusive right and remedy, terminate this Agreement by written notice thereof delivered to Seller on or before the date (the “Election Date”) that is the earlier to occur of the Due Diligence Expiration Date or five (5) days after the Seller Cure Date. If Buyer does not give such notice of termination on or before the Election Date, Buyer shall be deemed to have waived its right to terminate this Agreement pursuant to this Section 3.3 and this Agreement shall continue in full force and effect. In the event of such termination, the Earnest Money shall be returned to Buyer and neither party shall have any further obligations to the other party hereunder, except for the Termination Surviving Obligations. Notwithstanding the foregoing, Seller agrees to pay off at Closing Seller’s mortgage loans encumbering the Property and any and all judgment liens, tax liens and mechanics’ and materialmens’ liens caused by, through, or under Seller, and to cause the mortgage evidencing such loans and all such liens, if any, to be removed from the Title Commitment (the “Mandatory Cure Items”). Notwithstanding anything to the contrary contained herein, at or prior to Closing, Seller shall record a Covenant Regarding Condominium Conversion against the Real Property in the form attached hereto as Exhibit F (the “Covenant”) subject to any reasonable and non-substantive revisions requested by Buyer’s lender and reasonably approved by Seller. Buyer acknowledges and agrees that the Covenant will be an exception on Buyer’s Title Commitment, which Buyer is obligated to accept as a title matter.
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Section 3.4 New Title Matters. At any time prior to Closing, Buyer shall have the right to obtain an updated Title Commitment. If after the effective date of the most-recently updated Title Commitment new adverse matters are revealed by any update of the Title Commitment (collectively, “New Matters”), Buyer shall have the right to submit to Seller additional Objections, provided that such new Objections must be submitted by Buyer on or prior to the date that is the earlier to occur of (a) the Closing Date, or (b) the date that is five (5) days after Buyer’s receipt of such update, as applicable. If Buyer timely notifies Seller in writing of such New Matters, Seller, in Seller’s sole discretion, may, but shall have no obligation to, cure such New Matters on or prior to Closing. Seller shall be deemed to have given notice to Buyer that Seller refuses to cure any such New Matters, which Seller may so do in its sole discretion, unless Seller, within five (5) days after receipt of Objections from Buyer, shall deliver a notice indicating whether Seller will attempt to cure (whether by removal or by endorsement or other method reasonably acceptable to Buyer) or refuses to cure such New Matters. If Seller’s notice indicates that Seller refuses to cure said New Matters (or if Seller is deemed to refuse to cure said New Matters), Buyer may (a) terminate this Agreement within two (2) business days after (i) receipt of such notice from Seller, or (ii) if no such notice is given by Seller, the date that Seller is deemed to have given notice that Seller refuses to cure such New Matters (which shall be deemed to have occurred on the date that is five (5) days after receipt of Buyer’s Objections to the New Matters), and in either event the Earnest Money shall be returned to Buyer, and neither party shall have further rights or obligations pursuant to this Agreement, except for the Termination Surviving Obligations; or (b) if Buyer fails to so terminate, Buyer shall be deemed to have waived such New Matters and shall accept the Real Property and the Property subject thereto, in which event there shall be no reduction in the Purchase Price. If applicable, the Closing shall be extended to provide Seller and Buyer with the full response periods provided in this Section 3.4.
Section 3.5 Approvals Not a Condition to Buyer’s Performance. Subject to Buyer’s right to terminate this Agreement prior to the expiration of the Due Diligence Period in accordance with the terms of Section 3.2(b) hereof, Buyer acknowledges and agrees that its obligation to perform under this Agreement is not contingent upon Buyer’s ability to obtain any (a) governmental or quasi-governmental approval of changes or modifications in use or zoning, (b) modification of any existing land use restriction, or (c) mortgage financing.
Section 3.6 Closing Conditions. The obligation of Buyer to close the transaction which is the subject of this Agreement is subject to the fulfillment as of the Closing Date of each of the following conditions, unless any unfulfilled condition is waived in writing by Buyer:
(i) Delivery from Seller to Buyer of a written consent from the Atlanta Development Authority to the assignment and assumption of the Atlanta Development Authority Lease Documents and the Bond from the “Issuer” and the “Trustee” (as such terms are defined in the Atlanta Development Authority Lease Documents) by Buyer pursuant to the terms of this Agreement or other written evidence that no such consent is required for such assignment and assumption (the “ADA Consent”). Buyer shall reasonably cooperate with Seller in its efforts to obtain the ADA Consent;
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(ii) Delivery from Seller to Buyer of an estoppel executed by the Atlanta Development Authority in the form attached hereto as Schedule 3.6(ii) (the “ADA Estoppel”) or in such other customary and reasonable form executed by the Atlanta Development Authority pursuant to Section 13.14 of the Atlanta Development Authority Lease. Buyer shall reasonably cooperate with Seller in its efforts to obtain the ADA Estoppel;
(iii) Delivery from Seller to Buyer, if and to the extent required by Buyer’s lender, subordination, non-disturbance and attornment agreements executed by Three Dollar Café, Atlanta’s Best Burgers (5 Guys) and Zen on Ten substantially in the respective, reasonable forms requested by Buyer’s lender and delivered from Buyer to Seller prior to the expiration of the Due Diligence Period; and
(iv) Delivery from Seller to Buyer of an estoppel certificate executed by each of Three Dollar Café, Atlanta’s Best Burgers (5 Guys) and Zen on Ten substantially in the form attached hereto as Schedule 3.6(iii), provided Buyer delivers the completed forms of estoppel certificates to Seller prior to the expiration of the Due Diligence Period.
If any conditions precedent set forth above are not satisfied as of the date specified for satisfaction, Buyer may either (a) waive satisfaction of such condition(s) and proceed to Closing or (b) terminate this Agreement by delivering written notice to Seller in which event the Earnest Money shall be promptly returned to Buyer and neither party shall have any further obligations to the other party hereunder except for the Termination Surviving Obligations.
Section 4. CLOSING
Section 4.1 Time and Place. The Closing shall be administered by the Escrow Company through an assignment and money escrow closing (also referred to as a so-called “New York style” closing) on the Closing Date.
Section 4.2 Deliveries. At Closing Seller and Buyer shall execute and deliver the following items:
(a) Seller shall deliver to the Escrow Company (for delivery to Buyer upon Closing):
(i) the Covenant in the form of Exhibit F attached hereto;
(ii) the Assignment and Transfer of Bond in the form of Exhibit G-1 attached hereto, assigning and transferring to Buyer all of Seller’s right, title and interest in and to the Bond;
(iii) an Allonge to Bond R-1 in the form of Exhibit G-2 attached hereto;
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(iv) a bill of sale in the form of Exhibit H attached hereto, conveying to Buyer all of Seller’s right, title and interest in and to the Personal Property;
(v) a non-foreign transferor certification as required under Section 1445 of the Internal Revenue Code;
(vi) evidence of Seller’s authority to consummate the transactions described herein, as required by the Title Company;
(vii) evidence that Seller is a Georgia resident for purposes of O.C.G.A. § 48-7-128 or that Seller is otherwise exempt from the withholding requirements of O.C.G.A. § 48-7-128 or that such requirements are not applicable. Absent any such evidence of exemption or that such requirements are not applicable, Buyer shall withhold as and to the extent required by Georgia law;
(viii) an affidavit regarding brokers in the form of Exhibit L attached hereto;
(ix) a lien waiver executed by Broker in the form of Exhibit M attached hereto; and
(x) an opinion letter, at the sole cost and expense of Seller, as required by the Atlanta Development Authority in connection with the transfer of the Bond contemplated in this Agreement, provided, Buyer shall execute and deliver to Seller a certificate as to factual matters that may be required by Seller’s counsel in connection with such opinion (the “Opinion Certificate”).
(b) Buyer shall pay or deliver to the Escrow Company (for delivery to Seller upon Closing):
(i) the balance of the Purchase Price by wire transfer, as provided in Section 2.2 hereof;
(ii) evidence of Buyer’s authority to consummate the transactions described herein, as required by the Title Company;
(iii) an affidavit regarding brokers in the form of Exhibit N attached hereto;
(iv) a lien waiver executed by Broker in the form of Exhibit O attached hereto; and
(v) the Opinion Certificate executed by Buyer.
(c) Seller and Buyer shall jointly deliver to the Escrow Company (for delivery to each other upon Closing):
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(i) the Assignment and Assumption of Leases in the form of Exhibit I attached hereto, whereby Seller assigns to Buyer and Buyer assumes all of Seller’s right, title, interests, duties, obligations and liabilities under the Leases;
(ii) the Assignment and Assumption of Contracts and Additional Property in the form of Exhibit J attached hereto, whereby Seller assigns to Buyer and Buyer assumes all of Seller’s assignable rights, title, interests, duties, obligations and liabilities under and with respect to the Service Contracts and Additional Property;
(iii) a closing statement describing all prorations and other applicable credits pursuant to this Agreement in form and substance reasonably acceptable to Buyer and Seller;
(iv) all transfer declarations, affidavits of value or similar documentation required by law;
(v) notices to each of the tenants of the Real Property in the form of Exhibit K attached hereto;
(vi) the Assignment and Assumption of Lease Documents and Option Rights in the form of Exhibit P-1 attached hereto, assigning to Buyer all of Seller’s right, title and interest in and to the following documents and agreements executed in connection with the issuance of that certain revenue bond identified as The Atlanta Development Authority Taxable Lease Purchase Revenue Bond (Tivoli Tenside Project) Series 2009 in the principal amount of $70 million (the “Bond”): (1) the Lease Agreement dated as of December 1, 2009, between Seller (as assignee of and successor in interest to Ten Side Holdings, LLC, a Georgia limited liability company (the “Original Bond Purchaser”) and the Atlanta Development Authority, a public body corporate and politic of the State of Georgia (the “Issuer”), and the Memorandum of Lease dated as of December 29, 2009, between Seller (as assignee of and successor-in-interest to the Original Bond Purchaser) and the Issuer, recorded on December 30, 2009, in the Official Records of the Superior Court of Fulton County, Georgia in Deed Book 48667, Page 521, demising the Real Property (collectively, the “Atlanta Development Authority Lease”); and (2) the Memorandum of Agreement Regarding Lease Structure and Valuation of Leasehold Interest (Ten Side Holdings, LLC) dated February 9, 2010, among the Issuer, Seller (as assignee of and successor in interest to the Original Bond Purchaser), and Fulton County Board of Assessors (the “Memorandum”), as such Atlanta Development Authority Lease and the Memorandum have been assigned to Seller pursuant to that certain Assignment and Assumption of Lease Documents and Option Rights dated as of August 24, 2011, between Original Bond Purchaser and Seller, recorded on August 25, 2011, in the Official Records of the Superior Court of Fulton County, Georgia in Deed Book 50326, Page 652 (the Atlanta Development Authority Lease and the Memorandum, as so assigned, collectively, the “Atlanta Development Authority Lease Documents”);
(vii) the Assignment and Assumption of Bond Documents in the form of Exhibit P-2 attached hereto, assigning to Buyer all of Seller’s right, title and interest in and to the following documents and agreements executed in connection with the issuance of the Bond: (1) the Bond Purchase Agreement, dated as of December 1, 2009, among Issuer, Seller, in its capacity as purchaser thereunder (as assignee of and successor in interest to the Original Bond Purchaser), and Seller, in its capacity as lessee under the Atlanta Development Authority Lease (as assignee of and successor-in-interest to the Original Bond Purchaser), (2) the Guaranty Agreement, dated as of December 1, 2009, between Seller (as assignee of and successor in interest to the Original Bond Purchaser) and The Bank of New York Mellon Trust Company, N.A., as Trustee (“Trustee”), and (3) the Home Office Payment Agreement, dated as of December 1, 2009, among the Issuer, Trustee, and Seller, in its capacity as purchaser thereunder (as assignee of and successor in interest to the Original Bond Purchaser) (collectively, the “Bond Documents”), and pursuant to which Buyer shall assume certain of Seller’s obligations under the Bond Documents (the Assignment and Assumption of Lease Documents and Option Rights, the Assignment and Transfer of Bond, the Allonge to Bond R-1, and the Assignment and Assumption of Bond Documents referenced in subsections 4.2(a)(i) and (ii) hereof, subsection 4.2(c)(vi), and this subsection 4.2(c)(vii) are herein collectively referred to as the “Atlanta Development Authority Lease and Bond Transfer Documents”);
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(viii) notices to the other party to each Service Contract assumed by Buyer pursuant to this Agreement, in a form reasonably acceptable to Seller and Buyer.
(d) Seller shall deliver to the Escrow Company:
(i) A title or owner’s affidavit as may be reasonably required by the Title Company in connection with the issuance of the title policy to Buyer at Closing;
(ii) Such other documentation as is reasonably required by the Title Company to remove or satisfy applicable requirements or other Objections which Seller is obligated to cure pursuant to Section 3 above; and
(iii) Any tax-related documentation as required in the jurisdiction in which the Real Property is located in connection with the transfer of real property and such other tax-related documentation (including, without limitation, a 1099-S Information sheet) as may be reasonably required by the Title Company in connection with its performance of its duties as the “Designated Representative” with respect to the transaction contemplated by this Agreement.
(e) Simultaneously with the Closing Seller shall deliver to the Buyer at the Real Property: (i) copies of all books, records, warranties, guaranties, certificates of occupancy, plans, specifications, lease files, credit reports and other documents related to the ownership, construction, operation and leasing of the Property, in Seller’s possession, except to the extent that any such items are Excluded Documents; (ii) originals (or copies to the extent originals are unavailable) of the Leases; and (iii) all keys, combinations and other similar items required to properly deliver possession and control of the Property to Buyer.
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Section 5. PRORATIONS
All items of income and expense applicable to the Real Property or the Property shall be paid, prorated or adjusted as of the close of business on the day prior to the Closing Date in the manner hereinafter set forth:
Section 5.1 Real Estate Taxes and Assessments. Real estate and personal property taxes and assessments due and payable with respect to the Real Property or the Property in the calendar year in which the Closing occurs, together with any costs incurred by Seller in protesting such taxes or the assessments on the Real Property or the Property if such protest shall apply to the calendar year in which the Closing occurs, shall be prorated on a cash basis and not on an accrual basis based on the portion of the calendar year which has elapsed prior to the Closing Date. If the amount of the real estate tax bill for the year in which the Closing occurs has not been determined as of Closing, the proration credit shall be based on the most recent ascertainable taxes and such proration shall be reprorated upon issuance of the final tax bill. There shall be no proration of any real estate taxes or assessments which become due and payable after the calendar year in which the Closing occurs, and Buyer shall be solely responsible for paying all tax bills for the Real Property and the Property which are due and payable after the Closing. Seller shall also give Buyer a credit for any special assessments against the Real Property or the Property which are due and payable prior to Closing, and Buyer shall be responsible for all special assessments due and payable on or after the Closing. If, after the Closing, Buyer or Seller receives (in the form of a refund, credit, or otherwise) any amounts as a result of a real property tax contest, appeal, or protest (a “Protest”), such amounts will be applied as follows: first, to reimburse Buyer or Seller, as applicable, for all costs incurred in connection with the Protest; and second to Seller to the extent that such Protest covers the period prior to the Closing Date and to Buyer to the extent that such Protest covers the period from and after the Closing Date.
Section 5.2 Rent. All rent and other amounts paid by the tenants under the Leases (collectively, “Rent”), for the month of Closing shall be prorated as of the Closing Date based on the respective number of days of ownership of Seller and Buyer for such month; provided, however, that neither Buyer nor Seller shall receive credit at Closing for any Rent that is past due (the “Past Due Rent”). Following the Closing, if Buyer or Seller receives any payment from any tenant for which Past Due Rent is outstanding, such payment shall be distributed in the following order of priority: (a) first, to Buyer for Rent then due and payable by such tenant under its Lease which accrues on or after the Closing Date, (b) next, on a prorated basis to Buyer and Seller for Rent due and payable by such tenant under its Lease which accrues in the month in which the Closing Date occurs, and (c) then, after payment in full of all such amounts then due and payable to Buyer from such tenant, to Seller to the extent of all Past Due Rent owed by such tenant, together with interest and late charges, if applicable. If any Past Due Rent is not paid to Seller within sixty (60) days after Closing, Seller shall have the right during the initial six (6) month period immediately following the Closing Date, to attempt to effect collection by litigation or otherwise so long as Seller does not take any action to terminate the tenant's lease or right to possession. Buyer shall cooperate with Seller in its efforts to collect Past Due Rent but shall not be required to incur any cost with respect to such cooperation or take any action against any tenant to terminate the tenant's lease or right to possession.
Section 5.3 Security Deposits. Buyer shall receive a credit at Closing for all refundable security deposits and other refundable deposits (if any) paid to Seller under the Leases to the extent that such deposits have not been applied by Seller to cure tenants’ defaults. Seller shall retain, and Buyer shall not receive any credit for, any non-refundable tenant fees, including, without limitation, payments made under the Sure Deposit or Lease Protect programs, cleaning fees, redecorating fees and pet fees.
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Section 5.4 Utilities. Utility meters for utility services payable by Seller and not directly metered to tenants shall be read on or immediately prior to the Closing Date, if possible, and the amounts due as disclosed by such readings shall be paid by Seller or credited to Buyer. Otherwise all utility charges and billings shall be prorated using the prior month’s bill as of the Closing Date and shall be reprorated upon receipt of actual bills for the period in question. Seller shall retain, and Buyer shall not receive any credit for, any utility deposits or deposits with governmental or quasi-governmental authorities.
Section 5.5 Expenses. Except as otherwise expressly provided in this Agreement (concerning taxes, assessments and utility charges), operating expenses of Seller or Property Manager for the Real Property and the Property shall be payable by Seller and Buyer on an accrual basis in accordance with the parties’ respective periods of ownership so that Seller pays all expenses accruing prior to the Closing Date and Buyer pays all expenses accruing on or after the Closing Date.
Section 5.6 Lump Sum Payments from Vendors. Under no circumstances shall Buyer be entitled to receive any portion of any lump sum, inducement or similar payments made to Seller (or Seller’s predecessor owners) by cable or other utility companies or other vendors in exchange for the right of those companies or vendors to install equipment or provide services or other benefits to the Real Property or the Property or its tenants.
Section 5.7 Leasing Costs. Any costs and leasing commissions due under leases entered into prior to the Effective Date and due prior to the Closing Date shall be paid by Seller prior to Closing.
Section 5.8 Atlanta Development Authority Lease Documents – Rent. All rent and other amounts paid or payable by Seller, as tenant, under the Atlanta Development Authority Lease Documents, for the month of Closing shall be prorated as of the Closing Date based on the respective number of days of ownership of Seller and Buyer for such month.
Section 5.9 Miscellaneous. In the event any prorations or computations made under this Section 5 are based on estimates or prove to be incorrect, then either party shall be entitled to an adjustment to correct the same, provided that it makes written demand on the party from whom it is entitled to such adjustment within ninety (90) days after the end of the calendar year in which the Closing occurs (except with respect to Taxes, which adjustment must occur, if at all, within ninety (90) days after the actual Taxes are determined). For purposes of calculating the prorations provided for in this Agreement, Buyer shall be deemed to be the owner of the Property on the Closing Date.
Section 6. SELLER’S REPRESENTATIONS AND WARRANTIES
Section 6.1 List of Representations and Warranties. Seller hereby represents and warrants to Buyer as follows:
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(a) Authority; Organization; Employees. Seller has the legal power, right and authority to enter into this Agreement and to consummate the transactions contemplated hereby. Seller is a duly organized and validly existing limited liability company, is in good standing in Delaware and is authorized to transact business in the State of Georgia. There are no employees of the Real Property or Seller who will become employees of Buyer or for which Buyer shall become responsible as an employer in any way. There are no collective bargaining agreements, other union contracts of any nature, pension plans or other benefit plans of any nature in existence to which Seller is a party and which affect the Real Property or the Property or the operation thereof.
(b) Conflicts. Neither the execution and delivery of this Agreement, nor the consummation of the transactions herein contemplated conflict with or result in the material breach of any terms, conditions or provisions of or constitute a default under, any bond, note, or other evidence of indebtedness or any agreement to which Seller is a party. Except as set forth in this Agreement, no order, permission, consent, approval, license, authorization, registration or validation of, or filing with, or exemption by, any governmental agency or public authority is required to authorize, or is required in connection with, the execution, delivery and performance of this Agreement by Seller or the taking by Seller of any action contemplated by this Agreement.
(c) Residential Leases; Rent Roll. To Seller’s knowledge (1) the rent roll attached hereto as Exhibit B-1 is true, correct and complete in all material respects, (2) the Residential Leases to which Buyer was given access to at the Real Property were true, correct and complete copies thereof, (3) Seller is not in default of any of its obligations as “Landlord” under any of the Residential Leases, and (4) the receivables report Seller provided to Buyer is the form of report Seller relies on in considering tenant delinquencies at the Real Property. There are no locator fees, leasing or brokerage commissions due and payable with respect to any of the Residential Leases for tenants under Residential Leases in occupancy prior to Closing Date which Seller has not paid (or will not have paid) prior to the Closing Date. All such fees associated with tenants commencing occupancy pursuant to a Residential Lease post-closing will be the obligation of Buyer.
(d) Retail Leases; Rent Roll. To Seller’s knowledge (1) the rent roll attached hereto as Exhibit B-2 is true, correct and complete in all material respects, (2) the Retail Leases to which Buyer was given access to at the Real Property were true, correct and complete copies thereof together with all amendments and other modifications thereto, and are in full force and effect, (3) except as otherwise disclosed to Buyer in connection with Three Dollar Café, Seller is not in default of any of its obligations as “Landlord” under any of the Retail Leases, (4) Seller has completed all work to be performed by landlord under any Retail Lease, and no tenant under any Retail Lease is entitled to any tenant improvement allowance, (5) there are no subleases or assignments of the Retail Leases other than those delivered or made available to Buyer pursuant to this Agreement, (6) except as otherwise disclosed to Buyer in connection with Three Dollar Café, Seller has not received written notice from any tenant under any of the Retail Leases exercising any termination right, termination option or other contraction right under such tenant’s Retail Lease, or contesting any amounts currently due and payable under such tenant’s Retail Lease which has not been resolved prior to the date hereof, and (7) the receivables report Seller provided to Buyer is the form of report Seller relies on in considering tenant delinquencies at the Real Property. There are no outstanding commissions due and payable to any third party broker with respect to the Retail Leases for which Buyer shall have any responsibility on or after the Closing Date.
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(e) Service Contracts. To Seller’s knowledge, attached hereto as Exhibit D is a complete and accurate list of the Service Contracts and equipment leases which apply to the operation of the Real Property and will be binding on Buyer after the Closing. To Seller’s knowledge, all of the copies of the Service Contracts delivered by Seller to Buyer are true, correct and complete copies thereof, and Seller has not received any written notice from any third party of any defaults under any of the Service Contracts, nor is Seller aware of any defaults by any such third party.
(f) Violations of Laws. To Seller’s knowledge, except as set forth on Schedule 6.1(e) attached hereto, Seller has not received any written notice that the Real Property is currently in violation of any applicable zoning, building, fire or other safety laws or regulations (specifically excluding any environmental matters, none of which are not intended to be covered by this Agreement).
(g) Litigation. To Seller’s knowledge, except as set forth on Schedule 6.1(f) attached hereto, no litigation has been served upon Seller, or threatened in writing, with respect to Seller or the Real Property or the Property that remains outstanding and which would adversely affect Seller’s ability to convey the Real Property or the Property, or Buyer’s ability to operate the Real Property or the Property after Closing.
(h) Eminent Domain. Seller has not received any written notice of any pending eminent domain, condemnation proceedings, or other governmental taking of the Real Property or any part thereof and, to Seller’s knowledge, no such proceedings have been threatened.
(i) No Options/Rights of First Refusal. Seller has granted no options, rights of first refusal or any other right to acquire any interest in the Real Property or the Property to any party, other than granting occupancy rights to tenants pursuant to the Leases.
(j) Atlanta Development Authority Lease Documents. To Seller’s knowledge, Seller has delivered or made available to Buyer copies of all of the Atlanta Development Authority Lease Documents and the Bond Documents in Seller’s possession and, to Seller’s knowledge, Seller is not aware of any Atlanta Development Authority Lease Documents or Bond Documents that Seller did not deliver or make available to Buyer.
Section 6.2 Survival. The representations and warranties of Seller set forth in this Agreement shall be deemed remade as of Closing, provided that Seller may give Buyer on or before the Closing Date one or more notices of any modifications (each a “Statement of Modifications”) to such representations and warranties which arise after the date hereof, and said representations and warranties as so remade and modified shall survive Closing for a period of six (6) months after the Closing Date (the “Survival Period”), after which all of the representations and warranties of Seller shall become void and of no further force or effect, except for Seller’s representations and warranties concerning its authority in Section 6.1(a), which shall survive Closing without limitation on duration. In the event Buyer is either (i) notified by Seller prior to Closing, or (ii) otherwise obtains knowledge prior to Closing that any representation or warranty of Seller in this Agreement is materially untrue or incorrect in any material respect (including in a Statement of Modifications), and in either event Seller does not (y) agree to either cure the untrue or incorrect representation or warranty prior to Closing, or (z) give Buyer a credit at Closing for the lesser of the cost to cure such untrue or incorrect representation or warranty, or the actual out of pocket damages suffered by Buyer due to such untrue or incorrect representation or warranty, Buyer shall have the right, as its sole and exclusive remedy, to either (a) terminate this Agreement, in which event the Earnest Money shall be promptly returned to Buyer and neither party shall have any further obligations to the other party hereunder except for the Termination Surviving Obligations, or (b) to close and take title to the Real Property and the Property notwithstanding that such representation or warranty is untrue or incorrect, and Buyer shall be deemed to have waived any rights or remedies against Seller because of such untrue or incorrect representation or warranty. The provisions of this Section 6.2 shall survive the Closing.
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Section 6.3 Definition of Knowledge. As used in this Section 6 or other provisions of this Agreement, the term “to Seller’s knowledge” or “best of Seller’s knowledge” or any other reference to the knowledge of Seller (a) shall mean and apply to the actual knowledge of Lela Cirjakovic, the Executive Vice President of Operations (the “Knowledge Individual”) and not to any other persons or entities, (b) shall mean the actual (and not implied or constructive) knowledge of such individual, without any duty on such individual to conduct any investigation or inquiry of any kind, other than such investigation or inquiry that would otherwise be regularly made in connection with the performance of his or her respective duties in his or her above-referenced capacities, and (c) shall not apply to or be construed to apply to information or material which may be in the possession of Seller generally or incidentally, but which is not actually known to the Knowledge Individual. Similarly, any reference to any written notice, claim, litigation, filing or other correspondence or transmittal to Seller set forth herein shall be limited to refer to only those actually received by or known to the Knowledge Individual in the limited manner provided in clauses (a) - (c) above. Under no circumstances shall the Knowledge Individual have any personal obligations or liabilities under this Agreement or otherwise. The provisions of this Section 6.3 shall survive the Closing.
Section 6.4 Limitations Concerning Buyer’s Knowledge. Notwithstanding anything contained in this Agreement to the contrary, all of the representations, warranties and certifications(collectively, the “Representations”) which are made by Seller and set forth herein or in any of the documents or instruments required to be delivered by Seller hereunder, shall be subject to the following conditions and limitations: (a) there shall be no liability on the part of Seller for any breach of a Representation arising from any matter or circumstance of which Buyer had actual knowledge at Closing (including matters and circumstances described in any Statement of Modifications); (b) in the event that prior to the time of Closing, during the course of Buyer’s inspections, studies, tests and investigations conducted pursuant to Section 3.2 hereof, or through other sources (including any Statement of Modifications), Buyer gains actual knowledge of a fact or circumstance which, by its nature, indicates that a Representation was or has become materially untrue or incorrect in any material respect, and such fact or circumstance was not intentionally withheld from Buyer by Seller with the intent to defraud Buyer and in either event Seller does not either (y) agree to cure the untrue or incorrect representation or warranty prior to Closing, or (z) give Buyer a credit at Closing for the lesser of the cost to cure such untrue or incorrect representation or warranty, or the actual out of pocket damages suffered by Buyer due to such untrue or incorrect representation or warranty, then Buyer shall not have the right to bring any lawsuit or other legal action against Seller, nor pursue any other remedies against Seller, as a result of the breach of the Representation caused thereby, but Buyer’s sole and exclusive right and remedy shall be to terminate this Agreement, in which event the Earnest Money shall be returned to Buyer and neither party shall have any further obligations to the other party hereunder, except for the Termination Surviving Obligations. Without limiting Section 15.6 or any other provision hereof, the parties hereto expressly acknowledge and agree that none of Seller’s representations, warranties or covenants herein may be relied on by the Title Company or Escrow Company, whether by subrogation or otherwise. The provisions of this Section 6.4 shall survive the Closing.
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Section 6.5 Other Limitations. Notwithstanding anything to the contrary set forth in this Agreement or in any other agreement or document delivered in connection herewith, Seller shall have no liability whatsoever to Buyer for a breach of any representation, warranty, covenant agreement or other requirement or provision hereof or thereof unless (i) the valid claims for all such breaches collectively aggregate to more than Fifty Thousand Dollars ($50,000), in which event the full amount of such valid claims shall be actionable up to, but not in excess of, Nine Hundred Fifty-Five Thousand One Hundred Twenty-Eight Dollars ($955,128) (the “Cap”) in the aggregate for all liability, and (ii) written notice containing a description of the specific nature of such breach shall have been given by Buyer to Seller prior to the end of the Survival Period and an action shall have been commenced by Buyer against Seller within nine (9) months after the Closing Date. In no event shall Seller be liable for any incidental, consequential or punitive damages, or for any damages in excess of the Cap, except as otherwise expressly provided in this Agreement. The provisions of this Section 6.5 shall survive the Closing.
Section 7. AS-IS AND RELEASE
Section 7.1 AS-IS. EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES OF SELLER EXPRESSLY SET FORTH IN THIS AGREEMENT AND IN THE DOCUMENTS DELIVERED BY SELLER AT CLOSING, BUYER WARRANTS AND ACKNOWLEDGES TO AND AGREES WITH SELLER THAT BUYER IS PURCHASING THE PROPERTY IN ITS "AS-IS, WHERE IS" CONDITION "WITH ALL FAULTS" AS OF THE CLOSING DATE AND SPECIFICALLY AND EXPRESSLY WITHOUT ANY WARRANTIES, REPRESENTATIONS OR GUARANTEES, EITHER EXPRESS OR IMPLIED, AS TO ITS CONDITION, FITNESS FOR ANY PARTICULAR PURPOSE, MERCHANTABILITY, OR ANY OTHER WARRANTY OF ANY KIND, NATURE, OR TYPE WHATSOEVER FROM OR ON BEHALF OF SELLER. EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES OF SELLER EXPRESSLY SET FORTH IN THIS AGREEMENT AND IN THE DOCUMENTS DELIVERED BY SELLER AT CLOSING, SELLER SPECIFICALLY DISCLAIMS ANY WARRANTY, GUARANTY OR REPRESENTATION, ORAL OR WRITTEN, PAST OR PRESENT, EXPRESS OR IMPLIED, CONCERNING (A) THE VALUE, NATURE, QUALITY OR CONDITION OF THE REAL PROPERTY OR THE PROPERTY, INCLUDING, WITHOUT LIMITATION, THE WATER, SOIL AND GEOLOGY, (B) THE INCOME TO BE DERIVED FROM THE REAL PROPERTY OR THE PROPERTY, (C) THE SUITABILITY OF THE REAL PROPERTY OR THE PROPERTY FOR ANY AND ALL ACTIVITIES AND USES WHICH BUYER MAY CONDUCT THEREON, INCLUDING THE POSSIBILITIES FOR FUTURE DEVELOPMENT OF THE REAL PROPERTY OR THE PROPERTY, (D) THE COMPLIANCE OF OR BY THE REAL PROPERTY OR THE PROPERTY OR ITS OPERATION WITH ANY LAWS, RULES, ORDINANCES OR REGULATIONS OF ANY APPLICABLE GOVERNMENTAL AUTHORITY OR BODY,(E) THE HABITABILITY, MERCHANTABILITY, MARKETABILITY, PROFITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF THE REAL PROPERTY OR THE PROPERTY, (F) THE MANNER OR QUALITY OF THE CONSTRUCTION OR MATERIALS, IF ANY, INCORPORATED INTO THE REAL PROPERTY, (G) THE MANNER, QUALITY, STATE OF REPAIR OR LACK OF REPAIR OF THE REAL PROPERTY, (H) THE PRESENCE OR ABSENCE OF HAZARDOUS MATERIALS AT, ON, UNDER, OR ADJACENT TO THE REAL PROPERTY OR ANY OTHER ENVIRONMENTAL MATTER OR CONDITION OF THE REAL PROPERTY, (I) THE LEASES OR OTHER AGREEMENTS AFFECTING THE REAL PROPERTY OR THE PROPERTY, OR (J) ANY OTHER MATTER WITH RESPECT TO THE REAL PROPERTY OR THE PROPERTY, INCLUDING, BUT NOT LIMITED TO, VALUE, TITLE, INCOME, FEASIBILITY, COST, MARKETING, AND INVESTMENT RETURNS. BUYER ACKNOWLEDGES AND AGREES THAT, EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES OF SELLER CONTAINED IN THIS AGREEMENT AND IN THE DOCUMENTS DELIVERED BY SELLER AT CLOSING, ANY INFORMATION PROVIDED BY OR ON BEHALF OF SELLER WITH RESPECT TO THE REAL PROPERTY OR THE PROPERTY WAS OBTAINED FROM A VARIETY OF SOURCES AND THAT SELLER HAS NOT MADE ANY INDEPENDENT INVESTIGATION OR VERIFICATION OF SUCH INFORMATION AND MAKES NO REPRESENTATIONS OR WARRANTIES AS TO THE ACCURACY OR COMPLETENESS OF SUCH INFORMATION. SELLER SHALL NOT BE LIABLE OR BOUND IN ANY MANNER BY ANY ORAL OR WRITTEN STATEMENTS, REPRESENTATIONS OR INFORMATION PERTAINING TO THE REAL PROPERTY OR THE PROPERTY, OR ANY OTHER DOCUMENTS RELATED THERETO, OR THE OPERATION THEREOF, FURNISHED BY ANY REAL ESTATE BROKER, AGENT, EMPLOYEE, SERVANT OR OTHER PERSON EXCEPT FOR THE EXPRESS REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS AGREEMENT. BUYER FURTHER ACKNOWLEDGES AND AGREES THAT BUYER IS A SOPHISTICATED AND EXPERIENCED BUYER OF PROPERTIES SUCH AS THE REAL PROPERTY OR THE PROPERTY, AND HAS BEEN DULY REPRESENTED BY COUNSEL IN CONNECTION WITH THE NEGOTIATION OF THIS AGREEMENT. SELLER HAS MADE NO AGREEMENT TO ALTER, REPAIR OR IMPROVE ANY OF THE REAL PROPERTY.
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Section 7.2 Release of Seller. Buyer acknowledges that it will have the opportunity to inspect the Real Property and the Property during the Due Diligence Period, and during such period, observe its physical characteristics and existing conditions and the opportunity to conduct such investigation and study on and of the Real Property and adjacent areas as Buyer deems necessary, and, except as otherwise expressly provided in the provisions of this Agreement, Buyer hereby FOREVER RELEASES AND DISCHARGES Seller from all duties, obligations, responsibility and liability pertaining to the Real Property or the Property in any way, including its condition, valuation, salability, financability or utility of the Real Property or the Property, or its suitability for any purpose whatsoever (including, but not limited to, with respect to the presence in the soil, air, structures and surface and subsurface waters, of Hazardous Materials or other materials or substances that have been or may in the future be determined to be toxic, hazardous, undesirable or subject to regulation and that may need to be specially treated, handled and/or removed from the Real Property under current or future federal, state and local laws, regulations or guidelines, and any structural and geologic conditions, subsurface soil and water conditions and solid and hazardous waste and Hazardous Materials on, under, adjacent to or otherwise affecting the Property), including without limitation liabilities under any Environmental Laws. By Closing this transaction, Buyer will be deemed to have WAIVED any and all objections and complaints (including, but not limited to, federal, state and local statutory and common law based actions, and any private right of action under any federal, state or local laws, regulations or guidelines to which the Property is or may be subject, including, but not limited to, CERCLA) concerning any physical characteristics and any existing conditions of the Real Property or the Property, whether arising before or after the date of this Agreement, including, without limitation, any obligations relating to the physical, environmental or legal compliance status of the Real Property or the Property, or the lessor's obligations under the Leases. Buyer further hereby assumes the risk of changes in applicable laws and regulations relating to past, present and future environmental conditions on the Real Property and the risk that adverse physical characteristics and conditions, including, without limitation, the presence of Hazardous Materials or other contaminants, may not have been revealed by its investigation. Buyer, for Buyer and Buyer's successors and assigns, hereby waives any right it may have to commence a judicial proceeding or arbitration naming Seller or any other Seller Parties as a defendant alleging Seller is a “Developer” of the Real Property or the Property.
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Section 7.3 Definitions. For purposes, of this Agreement, the term “Environmental Laws” includes without limitation the Resource Conservation and Recovery Act and the Comprehensive Environmental Response Compensation and Liability Act ("CERCLA") and other federal laws governing Hazardous Materials as in effect on the date of this Agreement, together with their implementing regulations and guidelines as of the date of this Agreement, and all state and local laws, regulations and ordinances that regulate Hazardous Materials in effect as of the date of this Agreement. “Hazardous Materials” means any substance which is (i) designated, defined, classified or regulated as a hazardous substance, hazardous material, hazardous waste, pollutant or contaminant under any applicable law, as currently in effect as of the date of this Agreement (ii) petroleum hydrocarbon, including crude oil or any fraction thereof and all petroleum products, (iii) PCBs, (iv) lead, (v) radon, (vi) asbestos, (vii) flammable explosives, (viii) mold or other bacteria or infectious materials, or (ix) radioactive materials.
Section 7.4 Survival. The provisions of this Section 7 shall expressly survive the Closing, not merge with the provisions of any closing documents and shall be deemed incorporated into the Atlanta Development Authority Lease and Bond Transfer Documents. Buyer acknowledges and agrees that the releases, waivers and disclaimers and other agreements set forth herein are an integral part of this Agreement and that Seller would not have agreed to sell the Property to Buyer for the Purchase Price without the releases, waivers and disclaimers and other agreements set forth above.
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Section 8. REPRESENTATIONS AND WARRANTIES
Buyer hereby represents and warrants to Seller as follows:
(a) Authority. Buyer has the legal power, right and authority to enter into this Agreement and to consummate the transactions contemplated hereby. Buyer is a duly organized and validly existing limited liability company and is in good standing in its state of organization.
(b) Conflicts. Neither the execution and delivery of this Agreement nor the consummation of the transactions herein contemplated conflict with or result in the material breach of any terms, conditions or provisions of or constitute a default under, any bond, note, or other evidence of indebtedness or any agreement to which Buyer is a party.
(c) Litigation. There is no action, suit or proceeding pending or, to Buyer’s knowledge, threatened against Buyer in any court or by or before any other governmental agency or instrumentality which would materially and adversely affect the ability of Buyer to carry out the transactions contemplated by this Agreement.
(d) No Bankruptcy. Buyer has not (i) made a general assignment for the benefit of creditors, (ii) filed any voluntary petition in bankruptcy or suffered the filing of any involuntary petition by Buyer’s creditors, (iii) suffered the appointment of a receiver to take possession of all, or substantially all, of Buyer’s assets, (iv) suffered the attachment or other judicial seizure of all, or substantially all, of Buyer’s assets, (v) admitted in writing its inability to pay its debts as they come due, or (vi) made an offer of settlement, extension or composition to its creditors generally.
(e) Patriot Act Compliance. Neither Buyer nor, to Buyer’s actual knowledge, any person, group, entity or nation that Buyer is acting, directly or indirectly, for or on behalf of, is named by any Executive Order (including the September 24, 2001, Executive Order Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism) or the United States Treasury Department as a terrorist, “Specially Designated National and Blocked Person,” or is otherwise a banned or blocked person, group, entity, or nation pursuant to any law that is enforced or administered by the Office of Foreign Assets Control, and, to Buyer’s knowledge, Buyer is not engaging in this transaction, directly or indirectly, on behalf of, or instigating or facilitating this transaction, directly or indirectly, on behalf of, any such person, group, entity or nation. To Buyer’s knowledge, Buyer is not engaging in this transaction, directly or indirectly, in violation of any laws relating to drug trafficking, money laundering or predicate crimes to money laundering. To Buyer’s knowledge, none of the funds of Buyer have been or will be derived from any unlawful activity with the result that the investment of direct or indirect equity owners in Buyer is prohibited by law or that the transaction or this Agreement is or will be in violation of law. Buyer has and will continue to implement procedures, and has consistently and will continue to consistently apply those procedures, to ensure the foregoing representations and warranties remain true and correct at all times prior to Closing.
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(f) ERISA. Buyer is not (and, throughout the period transactions are occurring pursuant to this Agreement, will not be) and is not acting on behalf of (and, throughout the period transactions are occurring pursuant to this Agreement, will not be acting on behalf of) an “employee benefit plan” as defined in Section 3(3) of ERISA, that is subject to Title I of ERISA, a “plan” as defined in and subject to Section 4975 of the Internal Revenue Code of 1986, as amended, or an entity deemed to hold the plan assets of any of the foregoing pursuant to 29 C.F.R. Section 2510.3-101, as modified by Section 3(42) of ERISA. Buyer is either not, and is not using the assets of, a “governmental plan” as defined in Section 3(32) of ERISA or, if Buyer is, or is using the assets of, a governmental plan, the transactions contemplated by this Agreement are not in violation of any laws applicable to Buyer, regulating investments of, or fiduciary obligations with respect to, governmental plans.
The representations and warranties of Buyer set forth in this Agreement shall be deemed remade as of Closing, and said representations and warranties as so remade shall survive the Closing without limitation on duration.
Section 9. CLOSING COSTS
Seller shall pay the following expenses incurred in connection with the transactions described herein: (a) one-half of all closing fees charged by the Title Company (including escrow and New York Style closing charges); (b) Seller’s legal fees and expenses; (c) any transfer taxes which may be assessed as a result of the transfer contemplated by this Agreement; and (d) any costs, expenses, fees, or other charges payable to Issuer or Trustee or in obtaining any required signature guarantee with respect to the Atlanta Development Authority Lease and Bond Transfer Documents and the assignments and transfers set forth therein; provided, however, in no event shall Seller be responsible for Buyer’s attorneys’ fees incurred in connection with the negotiation and transfer of the Atlanta Development Authority Lease and Bond Transfer Documents. Buyer shall pay the following expenses incurred in connection with the transaction described herein: (a) the costs to obtain (I) an ALTA leasehold title insurance policy, (II) extended coverage for the title policy, and (III) any title endorsements; (b) one-half of all closing fees charged by the Title Company; (c) the cost of the Updated Survey; (d) the fee for the recording of those Atlanta Development Authority Lease and Bond Transfer Documents to be recorded, as applicable; (e) any taxes, fees or charges in connection with any financing obtained by Buyer, the recordation of any documents in connection therewith, and any title charges with respect to the loan policy or any endorsements thereto; and (f) Buyer’s legal fees and expenses.
Section 10. BROKERAGE COMMISSIONS
Seller shall be solely responsible for the payment of the commission to Broker (subject to and in accordance with a separate listing agreement between Seller and Broker). Seller and Buyer each warrant and represent to the other that, other than Broker, neither has had any dealings with any broker, agent or finder relating to the sale of the Property or the other transactions contemplated hereby, and each agrees to indemnify, defend and hold the other harmless from and against any claim for brokerage commissions, compensation or fees by any broker, agent or finder in connection the sale of the Property or the other transactions contemplated hereby resulting from the acts of the indemnifying party. This provision shall survive a Closing or a termination of this Agreement.
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Section 11. NOTICE
All notices, demands and communications (a “Notice”) under this Agreement shall be delivered or sent by: (a) hand delivery, (b) first class, registered or certified mail, postage prepaid, return receipt requested (c) facsimile transmission; or (d) nationally recognized overnight carrier; or (e) by e-mailing a .pdf or .tif file (provided that such e-mail shall be immediately followed by delivery of such notice pursuant to clause (a), (b) or (d) above), delivered to the address, fax number or e-mail address of the intended recipient set forth below or to such other address or fax number as either party may designate by notice pursuant to this Section:
Notices to Seller: | c/o Waterton Associates | |
30 South Wacker, Suite 3600 | ||
Chicago, IL 60606 | ||
Attn: Erin Ankin, Esq. | ||
Fax: (312) 476-2060 | ||
Email: erin.ankin@waterton.com | ||
With a copy to: | Greenberg Traurig, LLC | |
77 West Wacker Drive, Suite 3100 | ||
Chicago, IL 60601 | ||
Attn: Meredith Katz, Esq. | ||
Fax: (312) 456-1019 | ||
Email: katzmer@gtlaw.com | ||
Notices to Buyer: | Carroll Acquisitions | |
c/o Carroll Organization | ||
3340 Peachtree Road, NE | ||
Suite 250 | ||
Atlanta, Georgia 30326 | ||
Attn: Josh Champion | ||
Email: josh.champion@carrollorg.com | ||
With a copy to: | Morris, Manning & Martin, LLP | |
3343 Peachtree Road, NE | ||
1600 Atlanta Financial Center | ||
Atlanta, Georgia 30326 | ||
Attn: Corey B. May | ||
Fax: (404) 365-9532 | ||
Email: cmay@mmmlaw.com |
Notices shall be deemed given: (i) on the date delivered, if sent by hand delivery; (ii) on the date of transmission if sent by facsimile or electronic mail (and in respect of a facsimile only, confirmation of completed transmission is received) prior to 5:00 P.M. Atlanta time (and if sent later than such time, then the next business day); (iii) one business day after delivery to the overnight carrier, if sent by nationally recognized overnight carrier or (iv) upon receipt (or refusal of delivery), if sent by first class, registered or certified mail, postage prepaid, return receipt requested. Notices may be sent by counsel for a party and such shall be deemed notice by the party so represented. Notices shall be deemed served as set forth above, even if such notices are rejected by the intended recipient.
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Section 12. CASUALTY AND CONDEMNATION
Section 12.1 Casualty. If the Real Property or the Property or any part thereof is damaged by fire or other casualty prior to the Closing Date which would cost in excess of $2,000,000 to repair (as determined by an insurance adjuster mutually selected by Buyer and Seller), Buyer may, as its sole and exclusive right and remedy, terminate this Agreement by written notice to Seller given on or before the earlier of (a) fifteen (15) days following such casualty or (b) the Closing Date. In the event of such termination, the Earnest Money shall be returned to Buyer and neither party shall have any further obligation under this Agreement, except for the Termination Surviving Obligations. If Buyer is not entitled to or does not timely elect to so terminate this Agreement, then the Closing shall take place as herein provided without abatement of the Purchase Price, and Seller shall assign and transfer to Buyer on the Closing Date, without warranty or recourse, all of Seller’s right, title and interest in and to all insurance proceeds paid or payable to Seller on account of such fire or casualty (including, without limitation, rent loss proceeds applicable to the period on and after the Closing Date), less Seller’s reasonable costs of collection thereof and of amounts used for reasonable repair. Notwithstanding the foregoing to the contrary, if proceeds have not been disbursed to Seller by Seller’s insurance company, and Seller’s insurance company refuses to transfer or assign to Buyer the right to the balance of any such insurance proceeds at or prior to Closing, then, regardless of whether the casualty is deemed material pursuant to this Section 12.1, Buyer shall have the right to terminate this Agreement and receive a return of the Earnest Money, unless, in lieu of such transfer by Seller’s insurance company, Seller agrees to provide Buyer with a credit at Closing equal to the amount the Buyer is otherwise entitled pursuant to this Section 12.1 as a result of such casualty.
Section 12.2 Condemnation. If any material portion of the Real Property or the Property is taken in eminent domain proceedings prior to Closing, Buyer may, as its sole and exclusive right and remedy, terminate this Agreement by notice to Seller given on or before the earlier of (a) fifteen (15) days after such taking or (b) the Closing Date, and, in the event of such termination the Earnest Money (including the Non- Refundable Earnest Money) shall be returned to Buyer and neither party shall have any further obligation under this Agreement, except for the Termination Surviving Obligations. If Buyer is not entitled to or does not timely elect to so terminate, the Closing shall take place as herein provided without abatement of the Purchase Price, and Seller shall assign and transfer to Buyer on the Closing Date, without warranty or recourse, all of Seller’s right, title and interest in and to all condemnation awards paid or payable to Seller on account of such eminent domain proceedings (less Seller’s reasonable costs of collection thereof and of amounts used for reasonable repair). For purposes of this Section 12.2, a “material portion” of the Real Property or the Property shall be deemed taken if the cost of repair or restoration of the damage to the Improvements on account of such condemnation shall exceed an amount equal to $2,000,000 or if the condemnation would materially impede access to the Real Property or reduce available parking below that which is required by laws or any agreement applicable to the Real Property, or otherwise cause the Real Property to no longer be compliant with applicable zoning and use regulations.
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Section 13. OPERATIONS PRIOR TO CLOSING OR TERMINATION
Seller covenants and agrees with Buyer that after the date hereof until the Closing or termination of this Agreement, Seller shall conduct its business involving the Property as follows:
(a) Seller shall refrain from transferring title to any of the Property (other than use of regular business inventory or transfer of Personal Property no longer used in the operation of the Real Property, all in the ordinary course of business) or creating on the Property any mortgages which will survive Closing.
(b) Seller shall refrain from entering into or amending any contracts or other agreements (excluding leases, which Seller may continue to do in accordance with Section 13(c) below) pertaining to the Property, other than contracts or other agreements entered into in the ordinary course of business and which are cancelable by the owner of the Property without penalty within thirty (30) days after giving notice thereof.
(c) Seller shall continue to lease the Property in the ordinary course of business, consistent with its past leasing practices, the same as if this Agreement had not been entered into by the parties; provided, however, that, notwithstanding Seller’s past practices or anything else in this Agreement to the contrary, in no event shall Seller enter into any Residential Lease or amend or otherwise modify any existing Residential Lease without Buyer’s prior written consent (i) to provide for a term of less than six (6) months or more than fifteen (15) months or (ii) which is not in accordance with the guidelines recommended by Seller’s revenue management software; and after the Due Diligence Expiration Date, Seller shall not enter into any new Retail Lease or amend or otherwise modify any existing Retail Lease without first obtaining Buyer’s prior written approval of same, which approval Buyer may withhold in its sole discretion. Prior to the Due Diligence Expiration Date, Seller shall keep Buyer informed with respect to any new Retail Lease, or amendment or modification to any existing Retail Lease, provided Buyer shall have no approval rights.
(d) Seller shall refrain from offering the Property for sale or marketing the same.
(e) Seller shall terminate any terminable Service Contract promptly after receiving written notice from Buyer during the Due Diligence Period requesting such termination; provided, however, that Buyer acknowledges and agrees that: (i) all costs and expenses associated with any such termination shall be paid by Buyer; (ii) any such termination may be conditioned on the completion of the Closing; and (iii) any such termination shall be effective only after expiration of any notice or grace period specified in the provisions of the applicable Service Contract (which may not occur until after the Closing). Any and all Service Contracts not fully and effectively terminated as of Closing shall be assumed by Buyer at Closing as contemplated under Section 4.2(c)(ii) above.
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(f) Seller agrees to keep all vacant apartment units at the Real Property in so-called “rent ready” condition in accordance with Seller’s customary procedures pertaining to same; provided, however, that Seller shall have no such obligation with respect to any units that become vacant on or after the date that is five (5) days before the Closing. To the extent that any apartment unit at the Real Property (a) becomes vacant at any time prior to the date that is five (5) days before the Closing Date, and remains vacant at Closing, and (b) Seller has not made such unit rent ready in accordance with Seller’s customary procedures pertaining to same, then, at the time of Closing, Seller shall give to Buyer a credit of $500 for each such unit that is not rent ready, as the sole compensation to Buyer for the same.
(g) If and to the extent required by Buyer’s lender, Seller shall use commercially reasonable efforts to obtain and deliver to Buyer at or prior to Closing a subordination, non-disturbance and attornment agreement executed by each tenant under the Retail Leases provided Buyer delivers such completed subordination, non-disturbance and attornment agreements in the reasonable form as required by Buyer’s lender to Seller prior to the expiration of the Due Diligence Period.
(h) Provided Buyer promptly delivers to Seller completed forms of estoppel certificates in the form attached hereto as Schedule 3.6(iii) prior to the expiration of the Due Diligence Period, Seller shall use commercially reasonable efforts to obtain and deliver to Buyer at or prior to Closing an estoppel certificate from each tenant under the Retail Leases in the form as previously described.
Section 14. DEFAULTS AND REMEDIES
Section 14.1 Seller Defaults. In the event that Seller, on or prior to the Closing Date, shall default in the performance of its obligations hereunder, Buyer, as its sole and exclusive remedy, may either (a) seek specific performance of Seller’s obligations hereunder, (b) terminate this Agreement and receive a refund of the Earnest Money, along with reimbursement by Seller of up to One Hundred Thousand Dollars ($100,000) of Buyer's reasonable out-of pocket costs and expenses actually incurred in connection with the transaction contemplated by this Agreement, including, without limitation, legal fees and expenses, loan fees, rate-lock fees, deposits, third party inspection costs and travel expenses, whereupon neither party shall have any further obligation to the other party hereunder except for the Termination Surviving Obligations. Notwithstanding the foregoing to the contrary, if Buyer elects to pursue the equitable remedy of specific performance, and, due to the wrongful or intentional act of Seller, the equitable remedy of specific performance is not available; Buyer may seek any other right or remedy available at law or in equity except as otherwise limited by this Agreement. Further, notwithstanding anything to the contrary in this Agreement, Seller shall not be liable to Buyer for any damages, including, without limitation, any direct, punitive, speculative or consequential damages. The provisions of this Section shall not limit Buyer's or Seller's right to pursue and recover on a claim with respect to any of the Termination Surviving Obligations.
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Section 14.2 Buyer Defaults. In the event that Buyer, on or prior to the Closing Date, shall default in the performance of its obligations under this Agreement, it will be impractical and extremely difficult to estimate the damages that Seller may suffer. Therefore, the parties have agreed that a reasonable estimate of the total net detriment that Seller would suffer in such event is the amount of the Earnest Money and Seller, as its sole and exclusive remedy, may terminate this Agreement by notifying Buyer thereof and receive and retain the Earnest Money as liquidated damages, provided that this provision shall not limit Seller’s or Buyer’s rights to pursue and recover on a claim with respect to any of the Termination Surviving Obligations. Such liquidated damages are not intended as a forfeiture or penalty within the meaning of applicable law. Buyer shall not be liable to Seller for any other damages, including, without limitation, direct, punitive, speculative or consequential damages. In the event Seller is entitled to the Earnest Money as liquidated damages, and to the extent Seller has not already received the Earnest Money, the Earnest Money shall, subject to the terms of the Escrow Agreement, be immediately paid to Seller by the Escrow Company upon receipt of written notice from Seller that Buyer has defaulted under this Agreement, and Buyer agrees to take all such actions and execute and deliver all such documents necessary or appropriate to effect such payment.
Section 14.3 Attorneys’ Fees and Costs. In the event legal action is instituted to interpret or enforce the provisions of this Agreement, the prevailing party shall be entitled to recover from the other party the prevailing party’s costs and attorney’s fees, including, without limitation, all costs and fees that are incurred in any trial, on any appeal and/or in any bankruptcy proceeding.
Section 15. MISCELLANEOUS
Section 15.1 Entire Agreement; Amendments. This Agreement, together with the exhibits attached hereto, constitute the entire agreement of the parties hereto regarding the purchase and sale of the Property, and all prior agreements, understandings, representations and statements, oral or written, including any so-called letters of intent, are hereby merged herein and superseded hereby. This Agreement may only be amended or modified by an instrument in writing, signed by the party or parties intended to be bound thereby.
Section 15.2 Time. All parties hereto agree that time is of the essence in the performance of the provisions of this Agreement.
Section 15.3 Counterpart/Electronic Execution. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original. Furthermore, executed counterparts of this Agreement may be delivered by facsimile or other reliable electronic means (including emails of pdf documents), and such facsimile or other electronic transmission shall be valid and binding for all purposes when transmitted to and actually received by the other party. Notwithstanding the foregoing, each party delivering executed documents by facsimile or other electronic means agrees to provide the other party with an original, hard copy of the relevant signed documents promptly after the request of the other party.
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Section 15.4 Governing Law. This Agreement shall be deemed to be a contract made under the laws of the State of Georgia and for all purposes shall be governed by and interpreted in accordance with the laws of the State of Georgia.
Section 15.5 Recordation. Buyer shall not record this Agreement or a memorandum or other notice thereof in any public office or records without the express written consent of Seller. A breach by Buyer of this covenant shall constitute a material default by Buyer under this Agreement.
Section 15.6 Assignment; Third Party Beneficiaries. Buyer shall not assign this Agreement without Seller’s prior written consent, which consent may be withheld for any reason or no reason in Seller’s sole discretion; provided, however, that, upon five (5) business days’ prior written notice to Seller, Buyer, at Closing, may assign this Agreement to an entity with respect to which the day-to-day operations are, directly or indirectly, controlled by the principals of Buyer (a “Buyer Affiliate”), or to an entity wholly owned by a joint venture between Buyer or a Buyer Affiliate and an affiliate of Bluerock Residential Growth REIT, Inc. (each, a Permitted Assignee”) in which case such Permitted Assignee and Buyer shall be jointly and severally liable for Buyer’s obligations hereunder. Subject to the previous sentence, this Agreement shall inure to the benefit of and be binding on and enforceable against the parties hereto and their respective successors and assigns. In addition, Buyer shall not re-sell the Property or assign its rights or obligations under this Agreement (or make an offer or enter into negotiations to do so) through a “double escrow” or other similar mechanism without Seller’s prior written consent. This Agreement is intended for the benefit of Buyer and Seller, and except as provided in the indemnities granted by Buyer to the Indemnified Seller Parties herein, no other person or entity shall be entitled to rely on this Agreement, receive any benefit from it or enforce any provisions of it against Buyer or Seller.
Section 15.7 Section Headings. The Section headings contained in this Agreement are for convenience only and shall in no way enlarge or limit the scope or meaning of the various and several Sections hereof.
Section 15.8 Severability. If any portion of this Agreement is held to be unenforceable by a court of competent jurisdiction, the remainder of this Agreement shall remain in full force and effect.
Section 15.9 WAIVER OF TRIAL BY JURY. SELLER AND BUYER, TO THE EXTENT THEY MAY LEGALLY DO SO, HEREBY EXPRESSLY WAIVE ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION, CAUSE OF ACTION OR PROCEEDING ARISING UNDER OR WITH RESPECT TO THIS AGREEMENT, OR IN ANY WAY CONNECTED WITH, OR RELATED TO, OR INCIDENTAL TO, THE DEALINGS OF THE PARTIES HERETO WITH RESPECT TO THIS AGREEMENT OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND IRRESPECTIVE OF WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE. TO THE EXTENT THEY MAY LEGALLY DO SO, SELLER AND BUYER HEREBY AGREE THAT ANY SUCH CLAIM, DEMAND, ACTION, CAUSE OF ACTION OR PROCEEDING SHALL BE DECIDED BY A COURT TRIAL WITHOUT A JURY AND THAT ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE OTHER PARTY OR PARTIES HERETO TO WAIVER OF ITS OR THEIR RIGHT TO TRIAL BY JURY.
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Section 15.10 Exculpation of Related Parties. Notwithstanding anything to the contrary contained in this Agreement or in any of the documents executed pursuant to this Agreement (this Agreement and said documents being hereinafter collectively referred to as the “Documents”) or provided under or required by law, the Documents shall not be binding on the members, partners, shareholders, beneficiaries, or any other direct or indirect equity holders of Seller, or any of their managers, employees, advisors, representatives or other agents or affiliates, but shall only be binding on Seller and its assets, subject to the other limitations set forth herein. No present or future partner, member, manager, director, officer, shareholder, employee, advisor, affiliate or agent of or in Seller or any affiliate of Seller shall have any personal liability, directly or indirectly, under or in connection with this Agreement or any agreement made or entered into under or in connection with the provisions of this Agreement, or any amendment or amendments to any of the foregoing made at any time or times, heretofore or hereafter, and Buyer and its successors and assigns and, without limitation, all other persons and entities, shall look solely to Seller’s assets for the payment of any claim or for any performance, and Buyer hereby waives any and all such personal liability. For purposes of this Section, no negative capital account or any contribution or payment obligation of any partner or member in Seller shall constitute an asset of Seller. The limitations of liability contained in this Section shall survive the termination of this Agreement or the Closing Date, as applicable, and are in addition to, and not in limitation of, any limitation on liability applicable to Seller provided elsewhere in this Agreement or by law or by any other contract, agreement or instrument.
Section 15.11 Independent Counsel; Interpretation. Buyer and Seller each acknowledge that: (a) they have been represented by independent counsel in connection with this Agreement; (b) they have executed this Agreement with the advice of such counsel; and (c) this Agreement is the result of arm’s length negotiations between the parties hereto and the advice and assistance of their respective counsel. Notwithstanding any rule of law to the contrary: (i) the fact that this Agreement was prepared by Seller’s counsel as a matter of convenience shall have no import or significance, and any uncertainty or ambiguity in this Agreement shall not be construed against Seller because Seller’s counsel prepared this Agreement; and (ii) no deletions from prior drafts of this Agreement shall be construed to create the opposite intent of the deleted provisions.
Section 15.12 Governmental Approvals. Nothing contained in this Agreement shall be construed as authorizing Buyer to apply for a zoning change, variance, subdivision maps, lot line adjustment, or other discretionary governmental act, approval or permit with respect to the Real Property or the Property prior to the Closing, and Buyer agrees not to do so. Buyer agrees not to submit any reports, studies or other documents, including, without limitation, plans and specifications, impact statements for water, sewage, drainage or traffic, environmental review forms, or energy conservation checklists to any governmental agency, or any amendment or modification to any such instruments or documents prior to the Closing. Buyer’s obligation to purchase the Property shall not be subject to or conditioned upon Buyer’s obtaining any variances, zoning amendments, subdivision, condominium, lot line adjustment or other discretionary governmental act, approval or permit.
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Section 15.13 No Waiver. No covenant, term or condition of this Agreement, other than as expressly set forth herein, shall be deemed to have been waived by Seller or Buyer unless such waiver is in writing and executed by Seller or Buyer, as the case may be.
Section 15.14 1031 Exchange. Seller may desire to effectuate a tax-deferred exchange also known as a §1031 exchange (an “Exchange”) in connection with the purchase and sale of the Property. Buyer hereby agrees to cooperate with Seller in connection with the Exchange, provided that: (1) all documents executed by Buyer in connection with the Exchange shall be subject to the prior reasonable approval of Buyer and shall recognize that Buyer is acting solely as an accommodating party to the Exchange, shall have no liability with respect thereto, and is making no representation or warranty that the Exchange qualified as a tax-free exchange under §1031 of the Code or any applicable state or local laws; and (2) in no event shall Buyer be obligated to acquire any property or otherwise be obligated to take title, or appear in the records of title, to any property other than the Land in connection with the Exchange.
Section 15.15 Survival. The Termination Surviving Obligations shall survive any termination of this Agreement. Except as otherwise expressly provided herein, no conditions and no representations, warranties, covenants, agreements or other obligations of Seller in this Agreement shall survive the Closing and no action based thereon shall be commenced after the Closing.
Section 15.16 CONDOMINIUM INDEMNITY, DISCLAIMER, AND RELEASE. AS AN ESSENTIAL INDUCEMENT TO SELLER TO ENTER INTO THIS AGREEMENT, WITHOUT LIMITATION OF ANY OTHER TERM OR PROVISION OF THIS AGREEMENT OR OF THE COVENANT, BUYER ACKNOWLEDGES, UNDERSTANDS AND AGREES AS OF THE DATE HEREOF AND AS OF THE CLOSING DATE AS FOLLOWS:
IN THE EVENT BUYER CONVERTS THE LAND AND IMPROVEMENTS TO A CONDOMINIUM IN VIOLATION OF THE TERMS OF THE COVENANT, IN ADDITION TO THE REMEDIES SET FORTH IN THE COVENANT, BUYER, ITS SUCCESSORS AND/OR ASSIGNS, WILL BE THE “DEVELOPER” OF THE CONDOMINIUM AND THE DECLARANT UNDER ANY CONDOMINIUM DOCUMENTS. BUYER, FOR ITSELF AND ITS SUCCESSORS AND ASSIGNS, HEREBY AGREES TO INDEMNIFY, DEFEND AND HOLD THE INDEMNIFIED SELLER PARTIES HARMLESS FROM ALL CLAIMS, DEMANDS, LOSSES, JUDGMENTS, LIABILITIES, COSTS, DAMAGES AND EXPENSES (INCLUDING ATTORNEYS’ FEES AND COSTS), OF WHATEVER KIND, NATURE OR DESCRIPTION, ARISING DIRECTLY OR INDIRECTLY OUT OF OR IN CONNECTION WITH ANY CONVERSION OF THE APARTMENT UNITS LOCATED ON THE REAL PROPERTY TO CONDOMINIUM UNITS BY BUYER OR ANY SUBSEQUENT BUYER OF THE REAL PROPERTY OR THE PROPERTY, INCLUDING, WITHOUT LIMITATION; (A) CONSTRUCTION WARRANTY CLAIMS (WHETHER ARISING BY CONTRACT OR BY LAW), (B) CONSTRUCTION DISPUTES, (C) CLAIMS FOR INJURY TO PERSON OR PROPERTY ARISING OUT OF THE CONDITION OF THE REAL PROPERTY OR THE PROPERTY, INCLUDING, WITHOUT LIMITATION, CONSTRUCTION DEFECTS, (D) ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, OUT-OF-POCKET COSTS AND EXPENSES (INCLUDING, WITHOUT LIMITATION, REASONABLE ATTORNEYS’ FEES), CAUSES OF ACTION, SUITS, CLAIMS, DEMANDS AND JUDGMENTS OF ANY NATURE OR DESCRIPTION WHATSOEVER ARISING UNDER ANY LAWS, STATUTES, CODES, ORDINANCES, RULES, RULINGS, ORDERS, JUDGMENTS, DECREES, INJUNCTIONS, ARBITRAL DECISIONS, REGULATIONS, AUTHORIZATIONS, DETERMINATIONS, DIRECTIVES, AND ANY OTHER REQUIREMENTS AND/OR PROVISIONS (INCLUDING BUILDING CODES AND ZONING REGULATIONS AND ORDINANCES) OF THE GOVERNMENT OF THE UNITED STATES OF AMERICA, ANY POLITICAL SUBDIVISION THEREOF, WHETHER STATE OR LOCAL, AND ANY AGENCY, AUTHORITY, INSTRUMENTALITY, REGULATORY BODY, COURT, OR OTHER ENTITY EXERCISING EXECUTIVE, LEGISLATIVE, JUDICIAL, TAXING, REGULATORY, OR ADMINISTRATIVE POWERS OR FUNCTIONS OF OR PERTAINING TO GOVERNMENT, WHETHER NOW OR HEREAFTER IN FORCE (INCLUDING, WITHOUT LIMITATION, THE CONSUMER PROTECTION ACT, THE CONDOMINIUM ACT IN EFFECT IN THE STATE WHERE THE REAL PROPERTY IS LOCATED, OR ANY ADDITIONAL, RELATED OR SUCCESSOR EXECUTIVE, LEGISLATIVE, JUDICIAL, TAXING, REGULATORY, OR ADMINISTRATIVE POWERS OR FUNCTIONS GOVERNING THE CONVERSION OF APARTMENTS TO CONDOMINIUMS, THE SALE, USE, OCCUPANCY, OR OPERATION OF CONDOMINIUMS, OR OTHERWISE RELATED TO CONDOMINIUMS), AND (E) ANY CLAIMS MADE BY ANY SUCCESSOR OWNER OR OCCUPANT OF THE REAL PROPERTY, INCLUDING ANY BUYER OF A CONDOMINIUM UNIT AT THE REAL PROPERTY. UPON NOTICE FROM ANY OF THE INDEMNIFIED SELLER PARTIES OF A CLAIM FOR WHICH SUCH PARTY IS INDEMNIFIED HEREUNDER, BUYER WILL DEFEND SUCH PARTY, AT BUYER’S EXPENSE, USING COUNSEL APPROVED IN WRITING BY THE INDEMNIFIED SELLER PARTY REQUESTING SUCH DEFENSE. THE PROVISIONS OF THIS SECTION 15.16 SHALL SURVIVE THE CLOSING AND SHALL NOT MERGE WITH THE PROVISIONS OF ANY CLOSING DOCUMENTS AND SHALL BE DEEMED INCORPORATED INTO THE DOCUMENTS EXECUTED BY BUYER.
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Section 15.17 Press Releases. During the term of this Agreement and after Closing, Buyer agrees, except as required by law, not to make any public disclosure of the transaction contemplated in this Agreement without the prior written consent of Seller which may be withheld in its sole discretion.
Section 15.18 Binding Effect. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns.
Section 15.19 Attorneys’ Fees. Should either party employ attorneys to enforce any of the provisions hereof, the party against whom any final judgment is entered agrees to pay the prevailing party all reasonable costs, charges and expenses, including attorneys’ fees and expenses and court costs, expended or incurred in connection therewith.
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Section 15.20 Designation Agreement. Section 6045(e) of the United States Internal Revenue Code and the regulations promulgated thereunder (herein collectively called the “Reporting Requirements”) require an information return to be made to the United States Internal Revenue Service, and a statement to be furnished to Seller, in connection with the Transaction. Escrow Agent is either (i) the person responsible for closing the Transaction (as described in the Reporting Requirements) or (ii) the disbursing title or escrow company that is most significant in terms of gross proceeds disbursed in connection with the Transaction (as described in the Reporting Requirements). Accordingly:
(a) Escrow Agent is hereby designated as the “Reporting Person” (as defined in the Reporting Requirements) for the Transaction. Escrow Agent shall perform all duties that are required by the Reporting Requirements to be performed by the Reporting Person for the Transaction
(b) Seller and Buyer shall furnish to Escrow Agent, in a timely manner, any information requested by Escrow Agent and necessary for Escrow Agent to perform its duties as Reporting Person for the Transaction.
(c) Escrow Agent hereby requests Seller to furnish to Escrow Agent Seller’s correct taxpayer identification number. Seller acknowledges that any failure by Seller to provide Escrow Agent with Seller’s correct taxpayer identification number may subject Seller to civil or criminal penalties imposed by law. Accordingly, Seller hereby certifies to Escrow Agent, under penalties of perjury, that Sellers’ correct taxpayer identification numbers are as follows:
(i) Seller: 352407834
(ii) Buyer: __________
(d) Each of the parties hereto shall retain this Agreement for a period of four (4) years following the calendar year during which Closing occurs.
Section 15.21 Post-Closing Obligations Regarding Financial Information. Buyer has advised Seller that Buyer may be required to file, in compliance with certain laws and regulations (including, without limitation, Regulation S-X of the Securities and Exchange Commission [“SEC”]), audited financial statements, pro forma financial statements and other financial information related to the Property for up to one (1) fiscal year prior to Closing and any interim period during the fiscal year in which the Closing occurs (the “Financial Information”). If Buyer or its principals give notice to Seller that it is (or they are) obligated to provide such information, following the Closing and for a period of ninety (90) days thereafter, Seller agrees to use its commercially reasonable efforts to cooperate with Buyer and its representatives and agents in the preparation of the Financial Information; provided, however, Seller shall not be required to (i) incur any out of pocket expenses or costs unless Buyer reimburses Seller for the same, or (ii) provide information that was previously made available to Buyer. For a period of ninety (90) days after Closing, Seller shall maintain, and after reasonable advance written notice from Buyer, Seller shall provide access to such books and records of Seller and Property Manager reasonably related to the Property except as otherwise limited by this Section 15.20. Further, so long as the persons in charge of management of the Property at the time of Closing remain in the employ of Seller or an affiliate of Seller, after reasonable written notice to Seller, it will make such persons available for interview; provided, however, that Seller shall be allowed to have other representatives present during any such interviews. Notwithstanding the foregoing, Seller shall not be required to provide any information concerning (a) Seller’s, or any of Seller’s affiliate’s or member’s (collectively with Seller, the “Seller Financial Parties”), capital structure or debt, (b) any Seller Financial Parties’ financial analyses or projections, investment analyses, account summaries or other documents prepared solely for any Seller Financial Parties’ internal purposes or not directly related to the operation of the Property, (c) any Seller Financial Parties’ tax returns, or (d) any Seller Financial Parties’ financial statements (other than Property-level financial statements otherwise required pursuant to this Section 15.20). Seller acknowledges and agrees that any information provided or made available pursuant to this Section 15.20 will, to Seller’s knowledge at the time provided, be true, accurate and complete in all material respects. Buyer acknowledges and agrees that Buyer may not use any information provided pursuant to this Section 15.20 or the results of its review or interviews pursuant to this Section 15.20 to pursue any claim against any Indemnified Seller Parties.
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THE SUBMISSION OF THIS AGREEMENT FOR EXAMINATION IS NOT INTENDED TO NOR SHALL IT CONSTITUTE AN OFFER TO SELL, OR A RESERVATION OF, OR OPTION OR PROPOSAL OF ANY KIND FOR THE PURCHASE OF THE PROPERTY. EITHER PARTY MAY TERMINATE DISCUSSIONS OR NEGOTIATIONS AT ANY TIME FOR ANY REASON. THE DELIVERY OF ANY DRAFT DOCUMENTS AND THE PROVISION OF ANY COMMENTS IN RESPONSE THERETO BY THE PARTIES’ COUNSEL WILL NOT PRECLUDE THE PARTIES FROM RAISING COMMENTS OR RESPONDING TO PROVISIONS, EVEN IF THOSE PROVISIONS WERE SET FORTH IN PRIOR DRAFTS OR COMMENTARY. IN NO EVENT SHALL ANY DRAFT OF THIS AGREEMENT CREATE ANY OBLIGATION OR LIABILITY, IT BEING UNDERSTOOD THAT THIS AGREEMENT SHALL BE EFFECTIVE AND BINDING ONLY WHEN A COUNTERPART HEREOF HAS BEEN EXECUTED AND DELIVERED BY EACH PARTY HERETO AND THE INITIAL EARNEST MONEY IS DELIVERED TO THE TITLE COMPANY.
[Remainder of Page Left Intentionally Blank.
Signature Page Follows.]
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IN WITNESS WHEREOF, each party hereto has caused this Agreement to be executed as of the Effective Date.
SELLER:
WATERTON TENSIDE OWNER, L.L.C., a Delaware limited liability company
By: /s/ Douglas Denyer Name: Douglas Denyer Its: Chief Financial Officer
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BUYER:
CAROLL ACQUISITIONS LLC, a Georgia limited liability company
By: /s/ Josh Champion Name: Josh Champion Its: President |
LIST OF SCHEDULES AND EXHIBITS
SCHEDULES
Schedule 3.6(ii) - Form of ADA Estoppel
Schedule 3.6(iii) - Form of Retail Estoppel
Schedule 6.1(e) - Violations of Laws
Schedule 6.1(f) - Litigation
EXHIBITS
A | Legal Description of Land |
B-1 | Residential Rent Roll |
B-2 | Retail Rent Roll |
C | List of Personal Property |
D | List of Service Contracts and Equipment Leases |
E | Form of Earnest Money Escrow Agreement |
F | Form of Covenant Regarding Condominium Conversion |
G-1 | Form of Assignment and Transfer of Bond |
G-2 | Form of Allonge to Bond R-1 |
H | Form of Bill of Sale |
I | Form of Assignment and Assumption of Leases |
J | Form of Assignment and Assumption of Contracts and Additional Property |
K | Form of Notices to Tenants regarding Transfer of Property |
L | Form of Seller’s Affidavit Regarding Brokers |
M | Form of Broker’s Lien Waiver and Acknowledgment of Payment for Seller’s Broker |
N | Form of Purchaser’s Affidavit Regarding Brokers |
O | Form of Broker’s Lien Waiver and Acknowledgment of Payment for Purchaser’s Broker |
P-1 | Form of Assignment and Assumption of Lease Documents and Option Rights |
P-2 | Form of Assumption of Bond Documents |
SCHEDULE 3.6(ii)
FORM OF ADA ESTOPPEL
GROUND LEASE ESTOPPEL CERTIFICATE
PROPERTY: | Tenside | |
Atlanta, Georgia | ||
LEASE DATE: | December 1, 2009 | |
GROUND LESSOR: | The Atlanta Development Authority | |
TRUSTEE: | The Bank of New York Mellon Trust Company, N.A. | |
CURRENT GROUND LESSEE: | Waterton Tenside Owner, L.L.C. (as assignee of and successor-in-interest to Tenside Holdings, LLC) |
THE ATLANTA DEVELOPMENT AUTHORITY (the ''Original Lessor”) leased a parcel of land in the City of Atlanta, County of Fulton, Georgia (the “Property”) under the above-referenced lease (the “Lease”) to TEN SIDE HOLDINGS, LLC, predecessor-in-interest to WATERTON TENSIDE OWNER, L.L.C. (the “Current Lessee”). Original Lessor's interest in the Lease was subsequently assigned to THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A. (the ''Trustee” and together with Original Lessor, the “Lessor”). Current Lessee intends to assign its right, title, and interest in and to the Lease to _________________________ (“Proposed Lessee”), and, in anticipation of such assignment, Lessor hereby certifies to Proposed Lessee and to its lender, ___________________, together with its successors and assigns (“Lender''), as follows, as of the date hereof:
1. | A true, complete, and correct copy of the Lease is attached hereto as Exhibit A. Other than as attached on Exhibit A, the Lease has not been modified, changed, altered, assigned, supplemented or amended in any respect. The Lease represents the entire agreement between the Lessor and the Current Lessee with respect to the Property. |
2. | The term of the Lease commenced on December 1, 2009, and will expire on January 1, 2022. |
3. | The rent under the Lease is equal to the amount of principal and interest due on the bond issued in connection with the Lease, payable on January 1 and July 1 of each year through the end of the lease term. The outstanding principal amount of such bond as of the date hereof is approximately $___________. |
4. | To the best of Lessor's knowledge, there is no existing default or unfulfilled obligations on the part of the Lessor or Lessee in any of the terms and conditions of the Lease, and no event has occurred or condition exists which, with the passing of time or giving of notice or both, would constitute an event of default under the Lease. |
Schedule 3.6(ii)-1 |
5. | This Ground Lease Estoppel Certificate is being executed and delivered to Proposed Lessee and Lender in connection with the aforesaid proposed assignment of Current Lessee’s right, title, and interest in and to the Lease to Proposed Lessee and with Lender making a mortgage loan (the ''Loan'') to Proposed Lessee in the approximate principal amount of $_______________ to be evidenced by a _____________ Note and secured by a _________________ Leasehold Deed to Secure Debt that will encumber Proposed Lessee's leasehold interest in the Property under the Lease. Lessor hereby consents to each of such assignment to Proposed Lessee and the Loan and acknowledges that Lender shall have all rights of a ''Leasehold Mortgagee'' under the Lease. |
All capitalized terms used but not defined herein shall have the meanings given in the Lease.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
Schedule 3.6(ii)-2 |
Made this ____ day of ___________________, 2016.
GROUND LESSOR: | ||
THE ATLANTA DEVELOPMENT AUTHORITY, | ||
a public body corporate and politic of the State of Georgia | ||
By: | ||
Name: | ||
Title: |
Schedule 3.6(ii)-3 |
EXHIBIT A
LEASE
[attached]
Schedule 3.6(ii)-4 |
SCHEDULE 3.6(iii)
FORM OF RETAIL ESTOPPEL
(See Following Page)
Schedule 3.6(iii)-1 |
SCHEDULE 6.1(e)
VIOLATION OF LAWS
None.
Schedule 6.1(e)-1 |
SCHEDULE 6.l(f)
LITIGATION
As previously disclosed to Buyer, there is a a dispute with Three Dollar Café with respect to rent due under the Retail Lease with Three Dollar Café.
Schedule 6.1(f)-1 |
EXHIBIT A
LEGAL DESCRIPTION
ALL THAT TRACT OR PARCEL OF LAND lying and being in Land Lot(s) 149 & 150 of the 17TH District, Fulton County, Georgia and being more particularly described as follows:
Beginning at a pk nail set at the southwest end of the mitered intersection of the westerly right-of-way line of Northside Drive (90' R/W) and the northerly right-of-way line of Tenth Street (60' R/W) said point being the POINT OF BEGINNING; thence along the northerly right-of-way line of Tenth Street (60' R/W the following courses and distances: North 89 degrees 35 minutes 01 seconds West a distance of 27.90 feet to a point; thence, North 89 degrees 34 minutes 09 seconds West a distance of 243.08 foot to a point; thence North 89 degrees 31 minutes 07 seconds West a distance of 149.89 feet to a pk nail set at the intersection of said right-of-way line and the easterly right-of-way line of Watkins street (R/W Varies); thence along the easterly right-of-way line of Watkins skeet (R/W Varies) North 02 degrees 59 minutes 27 seconds East a distance of 245.14 feet to a pk nail set at the intersection of said right-of-way line and the southerly right-of-way line of Edgehill Avenue (40' R/W); thence along the southerly right-of-way line of Edgehill Avenue (40' R/W) South 84 degrees 28 minutes 25 seconds East a distance of 149.84 feet to a point; thence leaving said right-of-way line North 00 degrees 03 minutes 05 seconds West a distance of 40.33 feet to a point; thence North 00 degrees 05 minutes 47 seconds East, a distance of 107.91 feet to a pk nail set; thence South 89 degrees 42 minutes 31 seconds East a distance of 39.73 feet to a pk nail set; thence North 00 degrees 22 minutes 13 seconds East a distance of 100.06 feet to a pk nail set on the southerly right-of-way line of Eleventh Street (40' R/W); thence along said right-of-way line the following courses and distances: North 89 degrees 56 minutes 42 seconds East a distance of 142.12 feet to a point; thence South 89 degrees 58 minutes 43 seconds East a distance of 105.45 feet to a pk nail set of the intersection of said right-of-way line and the westerly right-of-way line of Northside Drive (90' R/W); thence along the westerly right-of-way line of Northside Drive (90' R/W) the following courses and distances: South 00 degrees 19 minutes 26 seconds West a distance of 147.18 feet to a point; thence South 00 degrees 26 minutes 51 seconds West a distance of 69.53 feet to a point; thence South 00 degrees 32 minutes 10 seconds West a distance of 242.59 feet to a pk nail set; thence South 48 degrees 31 minutes 09 seconds West a distance of 34.07 feet to a pk nail set and the TRUE POINT OF BEGINNING.
Exhibit A-1-1 |
EXHIBIT B-1
RESIDENTIAL RENT ROLL
[attached]
Exhibit B-1-1 |
Exhibit B-1-2 |
Exhibit B-1-3 |
Exhibit B-1-4 |
Exhibit B-1-5 |
Exhibit B-1-6 |
Exhibit B-1-7 |
Exhibit B-1-8 |
Exhibit B-1-9 |
Exhibit B-1-10 |
Exhibit B-1-11 |
Exhibit B-1-12 |
Exhibit B-1-13 |
Exhibit B-1-14 |
EXHIBIT B-2
RETAIL RENT ROLL
[attached]
Exhibit B-2-1 |
Exhibit B-2-2 |
EXHIBIT C
LIST OF PERSONAL PROPERTY
Office Leasing Area:
1 | Office desks |
1 | HP Computer/ Keyboard and Mouse |
1 | ViewSonic Flatscreen Monitor |
1 | Rolling Computer Desk Chair |
2 | Metal Leather backed Guest Chairs |
1 | Credenza w/ shelves and cabinets above |
2 | Curtain (4 panels, 2 rods) |
2 | Artwork (Paintings – Medium) |
2 | Tables (long, rectangle with stone top surface) |
1 | Coffee Table (rectangular wood) |
4 | Black Leather Arm Chairs |
2 | Small, thin, rectangular metal end tables |
1 | Metal dish (candy dish) |
7 | Vases (2 metal, 2 white pottery, 3 multicolored glass) |
1 | Flat screen wall mounted television (approx. 42”) |
Leasing Office Hallway/Kitchen:
4 | Artwork (Paintings – Medium) |
3 | Design Boards (Framed Tenside Finish Design Board Displays) |
1 | Set of Whirlpool Appliances (Stainless Steel Fridge, Microwave, Dishwasher) |
1 | Toaster Oven |
1 | Kitchenaid Coffeemaker |
1 | Blender |
1 | Bar Top Table |
2 | Bar stools |
1 | 13 gallon Trash Can |
2 | Vases (Pottery vases) |
1 | Dry Erase Board |
Leasing Office Restroom:
1 | Round Corner Table |
2 | Trash Cans (Large and small silver metal) |
1 | Artwork (Painting – Large) |
1 | Artwork (Painting – Medium) |
1 | Mirror (Oval – over sink) |
1 | Wooden decorative bowl |
Exhibit C-1 |
Leasing Office Hallway Closet – File Room:
2 | File Cabinets (5 drawer lateral) |
1 | Sound System (includes: Yamaha receiver, speaker control system, Alibi CD player) |
1 | HP Tower |
Leasing Office “Back Room”:
1 | Keytrak Machine (2 drawers, monitor, mouse, keyboard, computer) |
2 | HP Desktop Computers & Keyboards, Mouse |
2 | Acer flatscreen monitors |
1 | HP LaserJet Printer (HP LaserJet P1505) |
1 | Rolling Desk Chair |
1 | Small Fellows Paper Shredder |
1 | ILCO Series 045 Key Maker |
1 | Toshiba Phone |
2 | Peg Boards |
1 | Electric Swingline 3 Hole Punch |
1 | Dry Erase Board |
1 | Ricoh Coper (Afico MP C300 series) |
2 | Trash Cans |
2 | Security Systems (Ecor 264 16x1 – Includes 2 Monitors video receivers and full systems) |
Leasing Office Conference Room:
2 | Artwork (Paintings – Large) |
1 | Curtains (2 panels and rod) |
1 | Conference Table (Rectangular Wooden) |
5 | Rolling Desk Chairs |
1 | Clear Plastic Chair |
1 | Conference Board (Wall mounted cabinet style) |
1 | Trash Can |
3 | Plastic Rolling Carts |
1 | Metal Dolly |
Managers Office:
1 | Office Desk |
1 | Toshiba Phone |
1 | Rolling Computer Desk Chair |
2 | Metal Leather backed Guest Chairs |
1 | Credenza |
1 | Credenza w/ shelves and cabinets above |
1 | HP LaserJet Printer (HP LaserJet 2035) |
1 | HP Desktop Computer & Keyboard, Mouse, Speaker |
1 | ViewSonic Flatscreen Monitor |
Exhibit C-2 |
1 | Curtains (2 panels with rod) |
2 | Art work (Paintings – Large) |
1 | Trash Can |
1 | Safe |
Assistant Managers Office:
1 | L” Shape Desk |
3 | Rolling Computer/Desk Chairs |
1 | Credenza |
1 | Trash Can |
1 | Shredder |
1 | Check Scanner |
1 | Toshiba Phone |
1 | HP Desktop Computer & Keyboard, Mouse, Speakers |
1 | HP LaserJet Printer (HP LaserJet 2015) |
1 | ViewSonic Flatscreen Monitor |
2 | Curtains (4 panels and 2 rods) |
2 | Art work (Paintings – Large) |
1 | 2-hole hole punch |
1 | Post-It Note Holder |
Business Center:
2 | Bar Top Tables (Metal Base) |
4 | Bar Top Chairs |
1 | Printer (HP LaserJet 3050) |
2 | Trash Cans (1 Large, 1 Small) |
3 | Dell Desktop Computers & Keyboard/Mouse |
3 | Flatscreen OptiPlex 7040 Monitors |
3 | Desk Chairs |
2 | Artwork (Pictures – Large) |
1 | Cabinet (Single Door free standing black) |
1 | Flavia Coffee Machine |
1 | Flavia Coffee Holder (9 Drawer plastic fixture) |
1 | Accessory holder (black plastic) |
Model Unit 1210 (Kitchen):
1 | Floor Rug (Orange, Rectangular 2x3) |
3 | Glass Jars (Large, Medium, Small) |
1 | Teapot |
1 | Artwork (Small framed picture) |
2 | Placemats (Rectangular, Black) |
2 | Place Settings (large wooden square plate, large round white plate, small round white plate, white bowl, small clear glass, 2 spoons, 2 forks, cloth napkin, napkin ring) |
Exhibit C-3 |
2 | Barstools (Metal base with red fabric seating, adjustable height) |
Model Unit 1210 (Hallway):
1 | Artwork (Large rectangular painting) |
Model Unit 1210 (Living Room):
1 | Arm Chair – Zebra print |
1 | Couch – Beige velour fabric |
1 | Throw Pillow – Large, Red |
2 | Arm Chairs – Black Leather with wooden arm accents |
1 | Coffee Table – 2 tiered pieces, glass, rectangle |
1 | Area Rug – Geometric, multi-colored browns 5x8 |
1 | Nesting Table – Set of 2, black, square |
1 | TV Stand – Rectangular, 4 drawer with center door |
1 | Extending Floor Lamp – Rectangular marble base with stainless steel metal pole overhand and round stainless steel shade |
4 | Vases |
2 | Silk Plants – large and small |
1 | 10 piece wall décor – 5 wooded blocks and 5 ceramic vases |
1 | Faux mounted television |
1 | Table top décor – black wooden leaf |
Model Unit 1210 (Sunroom):
1 | Desk – Glass w/metal frame |
1 | Rolling Desk Chair |
1 | Desktop Décor – Red box/organizer |
1 | Artwork – Medium Picture |
9 | Books |
1 | Shelf Unit – Wooden w/6 shelves |
3 | Vases – Brown |
1 | Bowl – Designed metal, large |
1 | Decoration – 3 tiered décor – large, medium, small |
1 | Vase – small, white, ceramic |
1 | Curtains – 2 panel, rod |
1 | Faux Laptop |
Model Unit 1210 (Closet):
2 | Photo Boxes – red |
1 | Vase – clear, tall, glass |
1 | Hamper – Round, wooden |
Exhibit C-4 |
Model Unit 1210 (Bedroom):
1 | Queen Mattress |
1 | Queen Bed Frame – Fabric covered base and headboard |
1 | Queen Comforter Set – Sheets, shams, comforter, throw blanket, pillows (2) |
2 | Throw Pillows |
1 | Curtains – 2 panels, rod |
2 | Bedside Tables – wooden with drawers |
3 | Lamps – SS base with white lamp shades |
1 | Dresser – Black, large, 8 drawers |
1 | Side Chair – Grey Fabric |
1 | Silk plant – Small |
2 | Vases – Red |
1 | Décor – Silver orb |
1 | Book |
1 | Artwork – Large rectangular painting |
1 | Wall Décor – Silver round wall hanging |
Model Unit 1210 (Bathroom):
1 | Shower Curtain |
2 | Artwork – Large, Small |
1 | Towel |
2 | Décor – SS soap pump and dish |
Fitness Area:
1 | Fitco Strength System SP4403 Multi-Press Machine |
1 | Precor FTS Glide Machine |
1 | Fitco Strength System Lat/Row Machine |
1 | Fitco Strength System Inner/Outer Thigh Machine |
1 | Fitco Strength System Bicep/Tricep/Curl Extension Machine |
1 | Fitco Strength System Leg Extension/Curl Machine |
1 | Fitco Strength System Leg Press/Calf Raise Machine |
1 | Fitco Strength System Ab Crunch/Back Extension Machine |
1 | Precor EFX5321 Cross Ramp Machine w/Cardio Theater |
1 | Precor 842I Adjustable Bike w/Cardio Theater |
1 | Precor 946I Treadmill w/Cardio Theater |
1 | Precor EFX534I Elliptical w/Cardio Theater |
2 | Precor Stretch Trainer |
1 | Precor Assisted Ab Crunch Bench |
2 | Star Trac TRX Treadmills w/Cardio Theater |
1 | Star Trac SCTX Elliptical w/Cardio Theater |
1 | Performance Series Deluxe Vertical Knee Raise |
2 | Yoga Balls |
12 | Workout Mats – Black, padded, tri-fold |
Exhibit C-5 |
1 | TAG Weight Bench |
1 | TKO 3 tier Weight Storage Shelf |
1 | Set TKO Weight Balls – 2 each of 2,4 and 12 lbs |
1 | Set TKO Weight Balls – 1 each of 8,9, and 10 lbs |
1 | Set Kettlebells – 2 each of 10, 12,15, 18, 20, 25, 35, 40 lbs |
1 | Set TKO Metal Dumbbells – 2 each of 5, 10, 15, 20, 25, 30, 35, 40, 45, 50 lbs |
2 | 32” Flat panel TVs |
7 | Artwork – Large fitness pictures |
1 | Trash Can |
1 | Soda Machine (Outside fitness room) |
Clubroom:
4 | 42” Panasonic Flat panel TVs |
3 | Round Bar Top Tables |
9 | Bar Top Chairs – White Leather |
3 | Table Top Décor – Large clear blue glass lidded jars |
4 | Arm Chairs – Grey Velour |
4 | Accent Pillows |
1 | Coffee Table – Oval wooden |
3 | Table Top Décor – Small clear blue glass vases |
1 | Pool Table – Complete w/cues, balls, rack |
7 | Window Treatments – Window box valances |
1 | Bar Height Long Table – Long wavy shape, metal base, glass top |
9 | Bar Height Chairs – Metal base, clear plastic seats |
2 | Chairs – Brown fabric |
2 | Accent Pillows |
1 | Shuffleboard game – Large w/accessories and electronic scoreboard |
1 | Foosball Table – Full size |
6 | Artwork – Large Paintings |
1 | SS Whirlpool Kitchen Appliances – Fridge, Microwave, Warming Drawer |
1 | 13 gallon trash can |
Laundry Room:
1 | 27” Mounted Flat screen TV |
1 | Rolling Cart/Basket |
4 | Washers – Maytag heavy Duty Coin Operated |
6 | Dryers – Maytag stacked commercial Coin Operated |
4 | Artwork – Small Pictures |
2 | Wooden Benches |
1 | Wooden Coffee Table |
1 | Change Machine |
1 | Trash Can |
Exhibit C-6 |
Pool:
32 | Lounge Chairs |
8 | Bar Height Tables – Square |
36 | Bar Height Chairs |
3 | Table Umbrellas – Blue |
16 | Planters |
8 | Side Tables – Short, Small |
8 | Hanging Planters |
6 | Outdoor Trash Cans |
1 | SS Gas Grill |
1 | Picnic Table |
2 | Wooden Benches |
3 | Pool Cleaning Tools – Skimmer/Pole/Brush |
1 | Life Preserver |
Maintenance Shop:
1 | Mobile Shop Cart |
1 | Recovery HVAC Unit |
1 | HVAC Vacuum Pump |
2 | Portable A/C units |
4 | Outside unit fan motor |
2 | Inside fan motor |
1 | UV light leak detection system |
2 | Refrigerant charging scales |
1 | TIF Refrigerant leak detector |
1 | Carpet fan blower |
1 | Purging regulator |
1 | Gas-Mate Gas leak detector |
2 | Heat gun |
1 | Kwikset Pro-Door lock installation kit |
1 | FLLKE network Toner and Probe kit |
1 | DEWALT Power tool kit |
1 | Moisture meter |
1 | Outside HVAC unit |
2 | Shop Vac |
2 | Inside HVAC units |
1 | Microwave |
1 | Stove |
1 | Dishwasher |
1 | Landscaping air blower |
1 | Pressure washer with water heater |
1 | Grill |
4 | Refrigerator doors |
Exhibit C-7 |
EXHIBIT D
LIST OF SERVICE CONTRACTS AND EQUIPMENT LEASES
# | VENDOR NAME | TYPE OF SERVICE |
1 | Advanced Disposal Services Atlanta, LLC ("Advanced Disposal") 1 | Waste Removal Services |
2 | At&t 2 | Gate Phone Line Service |
3 | Austin Outdoor, LLC 3 | Landscaping Service |
4 | Cantrell Pest Management Inc. | Extermination Service |
5 | ChoreMate Amenity Services 4 | Valet Trash (Door to Door Pick-Up Service) |
6 | Colt Security | Alarm Monitoring |
7 | Comcast 2 | Cable Service (Apartment Units, Fitness Center & Club Room) |
8 | Conex Recycling | Recycling Pick-Up Service |
9 | Door King 5 | Electronic Directory Repairs |
10 | Fire & Life Safety America, Inc. | Fire Sprinkler/Extinguisher/Alarm Inspections (Not Monitoring) |
11 | Fitness Equipment Sales | Fitness Equipment Maintenance |
12 | Jowers & Company | Janitorial Services |
13 | KeyTrak, Inc. 6 | Key Control System |
14 | Kings III of America, Inc. | Elevator & Pool Emergency Phone Lines |
15 | Mac-Gray Services, Inc. 4 | Laundry Room Equipment |
16 | Ricoh 3 | Copier Service & Maintenance |
17 | Surround Protection & Investigation, LLC | Courtesy Patrol Service |
18 | ThyssenKrupp Elevator Corporation | Elevator Maintenance |
19 | Wesley Contracting, Inc | Unit Turn Service |
20 | Windstream (Originally Nuvox) | Office Phones/ Internet |
1. | If this agreement is not assumed, a termination fee will be charged. Reference the service agreement to determine the termination fee. |
2. | There is no agreement for this vendor. A copy of an invoice is being made available for review. |
3. | This agreement is assumable with vendor approval. |
4. | This agreement is binding upon a sale and requires the Purchaser to assume the agreement. |
5. | This service is not assignable to the Purchaser. The Purchaser will need to engage the vendor for a new service/membership agreement. |
6. | This agreement is assumable with vendor approval and a $200 transfer fee. |
Exhibit D-1 |
EXHIBIT E
FORM OF EARNEST MONEY ESCROW AGREEMENT
Escrow No.:____________
Date:__________________
EARNEST MONEY ESCROW AGREEMENT
The sum of $_________ of earnest money will be deposited with Chicago Title Insurance Company, as escrowee (“Escrowee”), on or about the time of the execution of this Agreement, and an additional $______________ of earnest money may be deposited with Escrowee, subject to and in accordance with the terms and conditions of Section 2.3(a) of the Agreement of Purchase and Sale described below. All of the funds deposited with Escrowee hereunder shall be disbursed by Escrowee only upon the joint order of the undersigned or their respective legal representatives or assigns.
Except for any such joint order, Escrowee is hereby expressly authorized to disregard, in its sole discretion, any and all notices or warnings given by any of the parties hereto, or by any other person or corporation, but Escrowee is hereby expressly authorized to comply with and obey any and all orders or decrees entered or issued by any court, with or without jurisdiction, and in case Escrowee obeys or complies with any such order or decree of any court it shall not be liable to any of the parties hereto or any other person, firm or corporation by reason of such compliance, notwithstanding any such order or decree being entered without jurisdiction or being subsequently reversed, modified, annulled, set aside or vacated. In case of any suit or proceeding regarding this escrow agreement to which Escrowee is or may at any time become a party (except a suit or proceeding arising from Escrowee’s breach of its obligations hereunder), Escrowee shall have a lien on the contents hereof for any and all out-of-pocket costs, including reasonable attorneys’ fees, whether such attorneys shall be regularly retained or specially employed, and any other reasonable expenses which it may have incurred or become liable for on account thereof, and it shall be entitled to reimburse itself therefor out of said deposit, and the undersigned jointly and severally agree to pay Escrowee, upon demand, all such costs, fees and expenses so incurred. In no case shall the above mentioned deposits be surrendered except on an order signed by the parties hereto, their respective legal representatives or assigns, or in obedience of the process or order of court as aforesaid.
Deposits made pursuant to these instructions may be invested on behalf of any party or parties hereto; provided that any direction to Escrowee for such investment shall be expressed in writing and contain the consent of all the parties to this escrow agreement, and also provided that Escrowee is in receipt of the taxpayer’s identification number and investment forms as required. Escrowee will, upon request, furnish information concerning its procedures and fee schedules for investment.
In the event the Escrowee is requested to invest deposits hereunder, Escrowee is not to be held responsible for any loss of principal or interest which may be incurred as a result of making the investment for the purposes of these escrow instructions unless such loss results from the negligence or intentional misconduct of Escrowee.
Exhibit E-1 |
Except as to deposits of funds for which Escrowee has received express written direction concerning investment or other handling, the parties hereto agree that the Escrowee shall be under no duty to invest or reinvest any deposits at any time held by it hereunder. Escrowee may commingle any uninvested deposits with other deposits or with its own funds in the manner permitted under applicable law; provided, however, nothing herein shall diminish Escrowee’s obligation to apply the full amount of the deposits, plus all interest and earnings thereon, in accordance with the terms of this Agreement.
The undersigned Purchaser and Seller acknowledge that the amount deposited hereunder is the Earnest Money described in and governed by that certain Agreement of Purchase and Sale dated _____________, 2016 between the undersigned Seller and Purchaser. Seller and Purchaser agree to execute all joint directions and take all other actions required hereunder to cause the Earnest Money to be disbursed and applied in the manner required under said Agreement of Purchase and Sale.
SELLER:
WATERTON TENSIDE OWNER, L.L.C., a Delaware limited liability company
By:________________________________ Its:________________________________
| |
PURCHASER:
__________________________________
By:________________________________ Its:________________________________
| |
ACCEPTED BY ESCROWEE:
CHICAGO TITLE INSURANCE COMPANY
By:________________________________ Name:______________________________ Its:_________________________________
Address: |
|
Exhibit E-2 |
EXHIBIT F
FORM OF COVENANT REGARDING CONDOMINIUM CONVERSION
DECLARATION OF RESTRICTIONS
THIS DECLARATION OF RESTRICTIONS (this “Declaration”), made as of this ____ day of ________, 2016, by WATERTON TENSIDE OWNER, L.L.C., a Delaware limited liability company (“Declarant”), with its principal offices located at c/o Waterton Associates, 30 South Wacker, Suite 3600, Chicago, Illinois 60606.
RECITALS
A. Pursuant to that certain Lease Agreement dated as of December 1, 2009, between Ten Side Holdings, LLC, a Georgia limited liability company (the “Original Lessee”), as lessee, and the Atlanta Development Authority, a public body corporate and politic of the State of Georgia (“Lessor”), and that certain Memorandum of Lease dated as of December 29, 2009, by and between Original Lessee, as lessee, and Lessor, as lessor, recorded on December 30, 2009, in the Official Records of the Superior Court of Fulton County, Georgia in Deed Book 48667, Page 521, as assigned to Declarant pursuant to that certain Assignment and Assumption of Lease Documents and Option Rights dated as of August 24, 2011, between Original Lessee and Declarant, recorded on August 25, 2011, in the Official Records of the Superior Court of Fulton County Georgia, in Deed Book 50326, Page 652 (collectively, as amended and assigned, the “Lease”), Declarant is the lessee of a tract of land located in Atlanta, Georgia, more particularly described on Exhibit A attached hereto and incorporated herein by reference (the “Property”).
B. The Property has been developed as a [___] residential unit (each, a “Residential Unit”) “for-rent” multi-family apartment complex on the Property (the “Project”).
C. During the Restriction Period, hereinafter set forth, Declarant intends to assure that no Residential Unit may be converted to or sold as a condominium unit.
D. Declarant desires to impose a restriction on the Property inuring to the benefit of Declarant and its members prohibiting the conversion or sale of any Residential Units to third parties as condominium units at any time prior to the expiration of the Restriction Period, subject to the terms hereof.
STATEMENT OF RESTRICTIONS
NOW, THEREFORE, in consideration of the covenants set forth in this Declaration and for the purposes set forth above, Declarant hereby imposes and places upon the Property the following restrictions:
1.1 Definitions. For purposes of this Declaration, the following terms used in this Declaration shall have the meaning ascribed to them below:
1.1.1 Reserved.
Exhibit F-1 |
1.1.2 “Owner” shall mean and refer to Declarant or its successor in title then owning the rights, interests, benefits, and privileges of the lessee under the Lease.
1.1.3 The “Restriction Period” shall be the period beginning on the date this Declaration is recorded and ending upon the earliest of (i) expiration of the applicable statute of limitation or repose under Georgia law for any cause of action against Owner for construction defects in respect to the construction of the Project; or (ii) the written consent of the Declarant to any earlier termination of the Restriction Period; or (iii) so long as Georgia law limits the period during which covenants restricting lands to certain uses may run, any provision of this Declaration affected by any such limitation shall run with and bind the land for the maximum period permitted by Georgia law from the date this Declaration is filed for record in the office of the Clerk of Superior Court of Fulton County, Georgia (including any extensions of such maximum period that may be enacted after such filing), after which time, to the extent permitted by applicable law, and subject to any earlier expiration or termination of this Declaration pursuant to the foregoing clause (i) or (ii), this Declaration shall be automatically extended and renewed for successive periods of ten (10) years each unless an instrument in writing signed by Declarant and Owner has been recorded agreeing to terminate this Declaration.
1.2 Restriction Limiting the Sale of Residential Units.
1.2.1 During the Restriction Period, unless otherwise consented to in writing by Declarant: (i) no portion of the Project or the Property shall be converted to a condominium or similar form of ownership; and (ii) no portion of the Project or the Property shall be marketed, conveyed, sold or otherwise transferred as condominium units or similar type of ownership units.
1.2.2 Upon the expiration or earlier termination of the Restriction Period, this Declaration shall terminate with respect to periods of time after such expiration or earlier termination, and Declarant shall execute any and all documents reasonably requested by Owner to confirm such termination, but such termination shall occur automatically without the necessity of any execution of such document by Declarant; provided, however, that such termination shall not operate to relieve Owner from liability for a default under the Declaration occurring prior to the date of termination and Owner shall remain obligated to Declarant with respect to any such liability.
1.3 Amendment to Declaration. This Declaration may be amended only by a written agreement executed by Owner and Declarant.
1.4 Binding Effect. It is understood that this Declaration is a covenant running with the Property and each portion thereof and that this Declaration shall be binding upon Owner and inure to the benefit of, Declarant and all successors and assigns and successors in title of Declarant and any other party that may hereafter acquire any right in and to all or any part of the Property. Notwithstanding any provisions in this Declaration to the contrary, an Owner shall be personally liable for the covenants and obligations accruing hereunder during the period it owns the Property only, it being intended that upon the conveyance of an Owner’s leasehold interest in the Property, that Owner shall thereupon be released of any liability hereunder as to the Property conveyed for any breach of this Declaration or claim arising under this Declaration accruing after (and not on or before) the date of such conveyance.
Exhibit F-2 |
1.5 Remedies for Breach. The terms and conditions of this Declaration shall be enforceable by Owner and Declarant, and their respective successors and assigns and successors in title, by actions for damages, specific performance or injunction, in addition to any other remedies available at law or in equity. Failure of any person to enforce this Declaration shall not be deemed a waiver of the right to do so. Any person who prevails in any action to enforce this Declaration will be entitled to recover reasonable attorneys’ fees and other reasonable costs of enforcement.
1.6 Private Agreement. This Declaration shall not be construed to grant any rights to the public in general or other third parties not expressly benefited by this Agreement.
1.7 Miscellaneous. A determination that any provision of this Declaration is invalid or unenforceable will not affect the validity or enforceability of any other provision of this Declaration or the enforceability of that provision under other circumstances.
[Signatures on following page]
Exhibit F-3 |
IN WITNESS WHEREOF, Declarant has executed this Declaration under seal as of the day and year first above written.
DECLARANT: | |||
WATERTON TENSIDE OWNER, L.L.C., | |||
a Delaware limited liability company | |||
By: | |||
Name: Title: Authorized Signatory |
STATE OF ILLINOIS }
} SS.
COUNTY OF COOK }
I, the undersigned a Notary Public in and for the County and State aforesaid, DO HEREBY CERTIFY, that the above named _________________, being an Authorized Signatory of Waterton Tenside Owner, L.L.C., a Delaware limited liability company, personally known to me to be the same person whose name is subscribed to the foregoing instrument as such Authorized Signatory, appeared before me this day in person and acknowledged that he/she signed and delivered the said instrument as his/her own free and voluntary act and as the free and voluntary act of said company for the uses and purposes therein set forth.
Given under my hand and Notary Seal, this ___ day of ___, 2016.
________________________________
Notary Public
My Commission Expires:
________________________________
Exhibit F-4 |
EXHIBIT G-1
FORM OF ASSIGNMENT AND TRANSFER OF BOND
ASSIGNMENT AND TRANSFER OF BOND
(The Atlanta Development Authority Taxable Lease Purchase Revenue Bond
(Tivoli Tenside Project) Series 2009 in the principal amount of $70 million
and designated “R-1”)
FOR VALUE RECEIVED, Waterton Tenside Owner, L.L.C., a Delaware limited liability company, the undersigned, hereby sells, assigns and transfers unto ______________________________________, a _____________________________ (Tax Identification No. ____________________________), the within Bond and all rights thereunder, and hereby irrevocably constitutes and appoints The Bank of New York Mellon Trust Company, N.A., as Trustee attorney to transfer the within Bond on the books kept for registration thereof, with full power of substitution in the premises.
Dated: _______________, 2016
Signature Guarantee: | Waterton Tenside Owner, L.L.C., a Delaware limited liability company | |||
By: | ||||
Name: | ||||
Authorized Officer | Its: | |||
Signature must be guaranteed by an institution which is a participant in the Securities Transfer Agent Medallion Program (STAMP) or similar program. |
Exhibit G-1-1 |
EXHIBIT G-2
FORM OF ALLONGE TO BOND R-1
ALLONGE
to
Bond R-1
(Atlanta Development Authority
Taxable Lease Purchase Revenue Bond
(Tivoli Tenside Project) Series 2009
in the principal amount of $70 million
and designated “R-1”)
A request to transfer the attached Bond R-1 to ______________________________, a ___________________________, has been made to The Bank of New York Mellon Trust Company, N.A., as Trustee, under the Indenture of Trust (the “Indenture”) between The Atlanta Development Authority and said Trustee, dated as of December 1, 2009, pursuant to Section 207 of the Indenture. This Bond R-1 will be surrendered for Bond R-2 registered to ______________________________, a ___________________________, upon its execution, authentication and delivery.
THIS BOND R-1 CANNOT BE TRANSFERRED TO ANY OTHER ENTITY AND REMAINS SUBJECT TO ALL RESTRICTIONS GOVERNING BOND R-1, INCLUDING ANY TRANSFER RESTRICTIONS SET FORTH THEREIN.
[Remainder of page is blank; signature pages follow]
Exhibit G-2-1 |
IN WITNESS WHEREOF, the undersigned have executed this Allonge as of the date written below.
Waterton Tenside Owner, L.L.C., | |||
a Delaware limited liability company | |||
By: | |||
Date of signature:_________________ | Name: | ||
Its: |
[signatures continue on next page]
Exhibit G-2-2 |
______________________________, a ___________________________, as transferee of Bond R-1 | |||
By: | |||
Name: | |||
Date of signature:_________________ | Its: |
Exhibit G-2-3 |
EXHIBIT H
FORM OF BILL OF SALE
BILL OF SALE
KNOW ALL MEN BY THESE PRESENTS, that WATERTON TENSIDE OWNER, L.L.C., a Delaware limited liability company (“Seller”), in consideration of Ten and 00/00 Dollars ($10.00), the receipt and sufficiency of which are hereby acknowledged, does hereby sell, assign, transfer, quit claim and set over unto _______________ (“Purchaser”), all personal property described on Exhibit A attached hereto (the “Personal Property”) located at the property legally described on Exhibit B attached hereto.
TO HAVE AND TO HOLD the Personal Property unto Purchaser and Purchaser’s legal representatives, successors and assigns forever.
THE PERSONAL PROPERTY SOLD HEREUNDER IS SOLD IN ITS “AS IS”, “WHERE IS” CONDITION WITHOUT ANY REPRESENTATION OR WARRANTY BY SELLER. The covenants, agreements, indemnities and limitations provided in that certain Agreement of Purchase and Sale, dated as of __________, 2016 (the “Agreement”), by and between Seller and Purchaser, with respect to the property conveyed hereunder are hereby incorporated herein by this reference as if herein set out in full and shall inure to the benefit of and shall be binding upon Seller and Purchaser and their respective successors and assigns.
This Bill of Sale shall be governed by Sections 7.1, 7.2, 14.3, 15.4 and 15.9 of the Agreement.
IN WITNESS WHEREOF, Seller has executed this Bill of Sale as of the _____ day of ________________, 2016.
SELLER: | |||
WATERTON TENSIDE OWNER, L.L.C., | |||
a Delaware limited liability company | |||
By: | |||
Its: |
Exhibit H-1 |
EXHIBIT I
ASSIGNMENT AND ASSUMPTION OF LEASES
FOR AND IN CONSIDERATION of the sum of Ten Dollars ($10.00) and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, WATERTON TENSIDE OWNER, L.L.C., a Delaware limited liability company (“Assignor”), hereby sells, transfers, assigns, delegates and sets over unto ____________________ (“Assignee”), its legal representatives, successors and assigns, all of Assignor’s rights, title, interests, duties, obligations and liabilities in, to and under those certain leases and other leasing agreements referred to on Exhibit A attached hereto (the “Leases”) affecting the property legally described on Exhibit B attached hereto.
Assignee does hereby accept the foregoing assignment of the Leases, and does hereby assume and agree to perform, fulfill and observe all of the duties, obligations and liabilities to be performed, fulfilled or observed by the landlord under the Leases arising on and after the date hereof, as if Assignee was the original landlord under the Leases. Assignor shall defend, indemnify and hold harmless Assignee from and against any and all Claims (as defined below) asserted against or incurred by Assignee as a result of any acts or omissions of Assignor prior to the date of this Assignment and Assignee shall defend, indemnify and hold harmless Assignor from and against any all Claims asserted against or incurred by Assignor as a result of any acts or omissions of Assignee on or after the date of this Assignment. "Claims" means claims, demands, causes of action, losses, damages, liabilities, judgments, costs and expenses (including attorneys' fees, whether suit is instituted or not). Notwithstanding the foregoing, Assignor shall have no liability whatsoever to Assignee for any Claims: (a) unless the valid Claims collectively aggregate more than Fifty Thousand Dollars ($50,000), in which event the full amount of such valid Claims along with (i) any amount due by Assignor pursuant to the Assignment and Assumption of Contracts and Additional Property of even date herewith made by Assignor and Assignee, and (ii) Section 6.5 of the Agreement (as defined below) shall be actionable up to, but not in excess of Nine Hundred Fifty-Five Thousand One Hundred Twenty Eight Dollars ($955,128) (the "Cap") in the aggregate for all liability; and (b) unless written notice containing a description of the specific nature of any such Claims shall have been given by Assignee to Assignor prior to the end of the Survival Period (as defined in the Agreement) and an action shall have been commenced by Assignor against Assignee within nine (9) months after the date of this Assignment. In no event shall Assignor be liable for any incidental, consequential or punitive damages, or for any damages in excess of the Cap.
The covenants, agreements, indemnities and limitations provided in that certain Agreement of Purchase and Sale, dated as of _____________, 2016, by and between Assignor and Assignee (the “Agreement”), with respect to the property conveyed hereunder are hereby incorporated herein by this reference as if herein set out in full and shall inure to the benefit of and shall be binding upon Assignor and Assignee, and their respective successors and assigns. This Assignment and Assumption of Leases shall be governed by Sections 7.1, 7.2, 14.3, 15.4 and 15.9 of the Agreement.
Exhibit I-1
This Assignment and Assumption of Leases may be executed in counterparts, and as so executed shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Assignment and Assumption of Leases as of the ____ day of ___________, 2016.
ASSIGNOR: | |||
WATERTON TENSIDE OWNER, L.L.C., | |||
a Delaware limited liability company | |||
By: | |||
Its: | |||
ASSIGNEE: | |||
By: | |||
Its: |
Exhibit I-2
EXHIBIT J
ASSIGNMENT AND ASSUMPTION OF CONTRACTS
AND ADDITIONAL PROPERTY
FOR AND IN CONSIDERATION of the sum of Ten Dollars ($10.00) and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, WATERTON TENSIDE OWNER, L.L.C., a Delaware limited liability company (“Assignor”), hereby sells, transfers, assigns, delegates and sets over unto _________________ (“Assignee”), its legal representatives, successors and assigns, all of Assignor’s rights, title, interests, duties, obligations and liabilities under or with respect to the “Service Contracts” and “Additional Property,” as such terms are defined and described in that certain Agreement of Purchase and Sale dated _____________, 2016 between Assignor and Assignee, which relate to the operation of the property described on Exhibit A attached hereto (the “Property”).
Assignee does hereby accept the foregoing assignment of the Service Contracts and the Additional Property, and does hereby assume and agree to perform, fulfill and observe all of the duties, obligations and liabilities to be performed, fulfilled or observed by the owner (or tenant) of the Property under or with respect to the Service Contracts or the Additional Property, as if Assignee was the original named party under the Service Contracts and with respect to the Additional Property. Assignee does hereby accept the foregoing assignment of the Leases, and does hereby assume and agree to perform, fulfill and observe all of the duties, obligations and liabilities to be performed, fulfilled or observed by the landlord under the Leases arising on and after the date hereof, as if Assignee was the original landlord under the Leases. Assignor shall defend, indemnify and hold harmless Assignee from and against any and all Claims (as defined below) asserted against or incurred by Assignee as a result of any acts or omissions of Assignor prior to the date of this Assignment and Assignee shall defend, indemnify and hold harmless Assignor from and against any all Claims asserted against or incurred by Assignor as a result of any acts or omissions of Assignee on or after the date of this Assignment. "Claims" means claims, demands, causes of action, losses, damages, liabilities, judgments, costs and expenses (including attorneys' fees, whether suit is instituted or not). Notwithstanding the foregoing, Assignor shall have no liability whatsoever to Assignee for any Claims: (a) unless the valid Claims collectively aggregate more than Fifty Thousand Dollars ($50,000), in which event the full amount of such valid Claims along with (i) any amount due by Assignor pursuant to the Assignment and Assumption of Contracts and Additional Property of even date herewith made by Assignor and Assignee, and (ii) Section 6.5 of the Agreement (as defined below) shall be actionable up to, but not in excess of Nine Hundred Fifty-Five Thousand One Hundred Twenty Eight Dollars ($955,128) (the "Cap") in the aggregate for all liability; and (b) unless written notice containing a description of the specific nature of any such Claims shall have been given by Assignee to Assignor prior to the end of the Survival Period (as defined in the Agreement) and an action shall have been commenced by Assignor against Assignee within nine (9) months after the date of this Assignment. In no event shall Assignor be liable for any incidental, consequential or punitive damages, or for any damages in excess of the Cap.
The covenants, agreements, representations, warranties, indemnities and limitations provided in the Agreement, with respect to the interests conveyed hereunder are hereby incorporated herein by this reference as if herein set out in full. This Assignment and Assumption of Contracts and Additional Property shall be binding on and shall inure to the benefit of Assignor and Assignee and their respective legal representatives, heirs, successors and assigns, and shall also be governed by Sections 7.1, 7.2, 14.3, 15.4 and 15.9 of the Agreement.
Exhibit J-1 |
This Assignment and Assumption of Contracts and Additional Property may be executed in counterparts, and as so executed shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Assignment and Assumption of Contracts and Additional Property as of the ____ day of _______________, 2016.
ASSIGNOR: | |||
WATERTON TENSIDE OWNER, L.L.C., | |||
a Delaware limited liability company | |||
By: | |||
Its: | |||
ASSIGNEE: | |||
By: | |||
Its: |
Exhibit J-2 |
EXHIBIT K
FORM OF NOTICE TO TENANTS
____________, 2016
TO ALL TENANTS OF TENSIDE APARTMENTS
Re: Transfer of Ownership of Property
Dear Tenant:
You are hereby advised that the above referenced property in which you are a tenant was sold and your lease was assigned and transferred effective as the date of this letter to [PURCHASER]. Your security deposit, if any, has been transferred to the new owner, whose address is set forth below. The above referenced property will be managed by [MANAGEMENT COMPANY] and all checks for rent and other charges should be made payable to [PURCHASER] and forwarded to:
[MANAGEMENT COMPANY]
[Property Address]
In accordance with the terms of your lease, copies of all future notices to landlord should be sent to:
[PURCHASER]
Your security deposit, if any, delivered to Landlord pursuant to your lease has been transferred to [PURCHASER], and will be held at the following financial institution:
[INSERT NAME AND ADDRESS OF PURCHASER BANK]
If you have any questions or need any additional information, please feel free to contact the management office at [Telephone Number].
Exhibit K-1 |
Sincerely, | |||
SELLER: | |||
WATERTON TENSIDE OWNER, L.L.C., | |||
a Delaware limited liability company | |||
By: | |||
Its: | |||
PURCHASER: | |||
By: | |||
Its: |
Exhibit K-2 |
EXHIBIT L
FORM OF SELLER’S AFFIDAVIT REGARDING BROKERS
The undersigned deponent, [Seller Contact: ____________________] (the “Deponent”), having personally appeared before the undersigned notary public and first having been duly sworn according to law, deposes and says under oath, to the actual present knowledge of Deponent (without inquiry), as follows:
1. Deponent is presently a ____________ of [Seller Owner: _________________________], [Seller Owner: a _________________________], which is a ______________ of [Seller: ____________________], [Seller: a ____________________] (the “Owner”).
2. In such capacity, the Deponent has personal knowledge of the facts sworn to in this affidavit and such facts are true and correct.
3. The Owner is the owner of a certain leasehold interest in real estate, a description of which is set forth on Exhibit A to that certain Assignment and Assumption of Lease Documents executed as of even date herewith from Owner in favor of [Grantee/Assignee: _______________________] (“Grantee”) and made a part hereof (the “Property”).
4. [OPTION: NO BROKER: Owner has not entered into any written agreement with, or otherwise engaged the services of, any commercial real estate broker for the payment of a real estate commission or fee relating to the purchase, sale, management, leasing or other licensed services pertaining to Commercial Real Estate (as defined in O.C.G.A. § 44-14-601(3)), and Owner has received no notice of any lien for any such services. This Affidavit is given to induce a title insurance company to permit a policy or policies of title insurance to be issued without exception for any possible lien arising from the Commercial Real Estate Broker Lien Act (O.C.G.A. § 44-14-600 et seq.).
4. [OPTION: YES, BROKER: Except only for [Seller Broker Company: _____________], who is to be paid a commission upon closing of the conveyance of the Property in the amount set forth on the Closing Statement between Owner and Grantee of even date herewith and any other commercial real estate broker disclosed on said Closing Statement (and except for [Buyer Broker Company: _____________], who is to be paid a portion of such commission by [Seller Broker Company: _____________]), Owner has not entered into any written agreement with, or otherwise engaged the services of, any commercial real estate broker for the payment of a real estate commission or fee relating to the purchase, sale, management, leasing or other licensed services pertaining to Commercial Real Estate (as defined in O.C.G.A. § 44-14-601(3)), and Owner has received no notice of any lien for any such services. With respect to [Seller Broker Company: _____________] and any other commercial real estate broker disclosed on said Closing Statement, the amount shown thereon is payment in full satisfaction of all amounts owed to said broker or brokers. This Affidavit is given to induce a title insurance company to permit a policy or policies of title insurance to be issued without exception for any possible lien arising from the Commercial Real Estate Broker Lien Act (O.C.G.A. § 44-14-600 et seq.).
Exhibit L-1 |
5. This affidavit is made to induce the title insurance company to issue its owner’s policy insuring Grantee in the amount of said sum; and to induce the attorney certifying title so to certify.
Certified, sworn to and subscribed before me this ___ day of ____________, [Closing Year: 20__]. | ||||
Name: [Seller Contact: | ] | |||
Notary Public | ||||
My Commission Expires: _________________ | ||||
(NOTARIAL SEAL) |
Exhibit L-2 |
JOINDER
The undersigned hereby joins in the foregoing Affidavit to certify as to the accuracy of the statements set forth above concerning the undersigned, and the undersigned makes such certification and agreement without protection or benefit of whether any such statement was accurate as to any Deponent on account of any express or implied qualification based on the knowledge of any Deponent, but such certification and agreement shall in all events be limited and subject to the actual present knowledge of the Knowledge Individual (as defined in that certain Agreement of Purchase and Sale dated _____________, 2016 between Owner, as seller, and Grantee, as purchaser [, as amended by — Add Description of Amendments, if any], without inquiry.
IN WITNESS WHEREOF, the undersigned, intending to be legally bound hereby, has caused this Joinder to be duly executed under seal, as of [Closing Date: _________________].
[Seller: ____________________], [Seller: a ____________________] | ||||
By: | ||||
Name: | ||||
Title: |
Exhibit L-3 |
EXHIBIT M
STATE OF [State: _________________]
COUNTY OF [County: _________________]
FORM OF BROKER’S LIEN WAIVER AND ACKNOWLEDGMENT OF PAYMENT
WHEREAS, the undersigned, [Seller Broker Company: _____________] (the “Broker”), has a written contract for licensed brokerage services regarding the real property (the “Property”) described on Exhibit A attached hereto and by reference made part hereof; and
WHEREAS, [Seller: ____________________], [Seller: a ____________________] (the “Seller”) has contracted to convey a leasehold interest in the Property to [Grantee/Assignee: _______________________], [Grantee/Assignee: a _______________________] (the “Grantee”) and Seller and Grantee desire to close the conveyance of the Property;
NOW, THEREFORE, for and in consideration of the sum of One Dollar ($1.00) in hand paid by Seller and Grantee to Broker, and other good and valuable considerations, the receipt and sufficiency whereof are hereby acknowledged, and in order to induce Grantee to acquire the Property, Broker does hereby for itself, its employees, agents, personal representatives, successors and assigns, agree as follows:
a. Acknowledgment of Receipt. Broker hereby acknowledges receipt in full of all commissions, fees or other consideration due Broker in connection with the management, sale, leasing or other conveyance or transfer of any interest in the Property or otherwise for licensed brokerage services relating to the Property.
b. Waiver. Broker does hereby waive, relinquish and release any and all rights, claims and liens which Broker may now or hereafter have in and to the Property, including, without limitation, any rights, claims and liens of Broker, or rights to file or have filed any liens, claims of lien, pursuant to Official Code of Georgia Annotated Sec. 44-14-600, et seq. on or against said Property on account of brokerage services furnished by Broker on or before the date hereof. In addition, Broker shall and does hereby indemnify and hold harmless Seller and Grantee from and against any such claim or lien which may be asserted by any agent, broker, or other intermediary by reason of any act or agreement of Broker.
c. All Parties Paid. Broker does hereby certify, warrant and represent that any and all agents, cooperating brokers and other parties who have performed brokerage services for Broker in connection with the Property have been paid in full.
d. Authorization. Broker does hereby warrant and represent that the undersigned Broker (or the individual executing this instrument on behalf of Broker) has personal knowledge of the matters herein stated, and is authorized and fully qualified to execute this instrument as or on behalf of the Undersigned.
Exhibit M-1 |
e. Reliance. This instrument may be relied on by Seller, Grantee, any lender providing a mortgage loan secured by the Property, any title insurance company insuring title or mortgagee title to the Property or any other party having any interest in and to the Property or the conveyance referenced above, and is given to induce Grantee to acquire the Property free and clear of any rights, claims, and liens of Broker.
WITNESS the hand and seal of the Undersigned, as of [Closing Date: _________________].
Signed, sealed, sworn to and subscribed before the undersigned unofficial witness and notary public: | [Seller Broker Company: _____________] | ||||
Unofficial Witness | By: | (SEAL) | |||
Name: | |||||
Title: | |||||
Notary Public | |||||
(NOTARY SEAL) | |||||
My Commission Expires: _________________ | |||||
(Attachment: Property Description) |
Exhibit M-2 |
EXHIBIT N
form of PURCHASER’S AFFIDAVIT REGARDING BROKERS
The undersigned deponent, [Buyer Signer: ___________] (the “Deponent”), having personally appeared before the undersigned notary public and first having been duly sworn according to law, deposes and says under oath as follows:
1. Deponent is presently a ____________ of [Grantee/Assignee: _______________________], [Grantee/Assignee: a _______________________] (the “Grantee”).
2. In such capacity, the Deponent has personal knowledge of the facts sworn to in this affidavit and such facts are true and correct.
3. The Grantee is this day acquiring from [Seller: ____________________] (“Owner”) a leasehold interest in certain real estate, a description of which is set forth in that certain Assignment and Assumption of Lease Documents executed as of even date herewith from Owner in favor of Grantee and made a part hereof (the “Property”).
4. [OPTION: NO BROKER: Grantee has not entered into any written agreement with, or otherwise engaged the services of, any commercial real estate broker for the payment of a real estate commission or fee relating to the purchase, sale, management, leasing or other licensed services pertaining to Commercial Real Estate (as defined in O.C.G.A. § 44-14-601(3)), and Grantee has received no notice of any lien for any such services. This Affidavit is given to induce a title insurance company to permit a policy or policies of title insurance to be issued without exception for any possible lien arising from the Commercial Real Estate Broker Lien Act (O.C.G.A. § 44-14-600 et seq.).
4. [OPTION: YES, BROKER: Except only for [Seller Broker Company: _____________], who is to be paid a commission upon closing of the conveyance of the Property in the amount set forth on the Closing Statement between Owner and Grantee of even date herewith and any other commercial real estate broker disclosed on said Closing Statement (and except for [Buyer Broker Company: _____________], who is to be paid a portion of such commission by [Seller Broker Company: _____________]), Grantee has not entered into any written agreement with, or otherwise engaged the services of, any commercial real estate broker for the payment of a real estate commission or fee relating to the purchase, sale, management, leasing or other licensed services pertaining to Commercial Real Estate (as defined in O.C.G.A. § 44-14-601(3)), and Grantee has received no notice of any lien for any such services. With respect to [Seller Broker Company: _____________] and any other commercial real estate broker disclosed on said Closing Statement, the amount shown thereon is payment in full satisfaction of all amounts owed to said broker or brokers. This Affidavit is given to induce a title insurance company to permit a policy or policies of title insurance to be issued without exception for any possible lien arising from the Commercial Real Estate Broker Lien Act (O.C.G.A. § 44-14-600 et seq.).
Exhibit N-1 |
5. This affidavit is made to induce Owner to convey the Property for the sum of [Purchase Price: $_______________________]; to induce the title insurance company to issue its owner’s policy insuring Grantee in the amount of said sum; and to induce the attorney certifying title so to certify.
Certified, sworn to and subscribed before me this ___ day of ____________, [Closing Year: 20__]. | ||||
Name: [Buyer Signer: | ] | |||
Notary Public | ||||
My Commission Expires: _________________ | ||||
(NOTARIAL SEAL) |
Exhibit N-2 |
JOINDER
The undersigned hereby joins in the foregoing Affidavit to certify as to the accuracy of the statements set forth above concerning the undersigned, and hereby agrees to indemnify and hold harmless said title insurance company for all loss or damage arising out of any reliance upon the statements made in this Affidavit.
IN WITNESS WHEREOF, the undersigned, intending to be legally bound hereby, has caused this Joinder to be duly executed under seal, as of [Closing Date: _________________].
[Grantee/Assignee: _______________________], [Grantee/Assignee: a _______________________] | |||
By: | |||
Name: [Buyer Signer: ___________] | |||
Title: Vice President |
Exhibit N-3 |
EXHIBIT O
STATE OF [State: _________________]
COUNTY OF [County: _________________]
FORM OF BROKER’S LIEN WAIVER AND ACKNOWLEDGMENT OF PAYMENT
WHEREAS, the undersigned, [Buyer Broker Company: _____________] (the “Broker”), has a written contract for licensed brokerage services regarding the real property (the “Property”) described on Exhibit A attached hereto and by reference made part hereof; and
WHEREAS, [Seller: ____________________], [Seller: a ____________________] (the “Seller”) has contracted to convey the Property to [Grantee/Assignee: _______________________], [Grantee/Assignee: a _______________________] (the “Grantee”) and Seller and Grantee desire to close the conveyance of the Property;
NOW, THEREFORE, for and in consideration of the sum of One Dollar ($1.00) in hand paid by Seller and Grantee to Broker, and other good and valuable considerations, the receipt and sufficiency whereof are hereby acknowledged, and in order to induce Grantee to acquire the Property, Broker does hereby for itself, its employees, agents, personal representatives, successors and assigns, agree as follows:
a. Acknowledgment of Receipt. Broker hereby acknowledges receipt in full of all commissions, fees or other consideration due Broker in connection with the management, sale, leasing or other conveyance or transfer of any interest in the Property or otherwise for licensed brokerage services relating to the Property.
b. Waiver. Broker does hereby waive, relinquish and release any and all rights, claims and liens which Broker may now or hereafter have in and to the Property, including, without limitation, any rights, claims and liens of Broker, or rights to file or have filed any liens, claims of lien, pursuant to Official Code of Georgia Annotated Sec. 44-14-600, et seq. on or against said Property on account of brokerage services furnished by Broker on or before the date hereof. In addition, Broker shall and does hereby indemnify and hold harmless Seller and Grantee from and against any such claim or lien which may be asserted by any agent, broker, or other intermediary by reason of any act or agreement of Broker.
c. All Parties Paid. Broker does hereby certify, warrant and represent that any and all agents, cooperating brokers and other parties who have performed brokerage services for Broker in connection with the Property have been paid in full.
d. Authorization. Broker does hereby warrant and represent that the undersigned Broker (or the individual executing this instrument on behalf of Broker) has personal knowledge of the matters herein stated, and is authorized and fully qualified to execute this instrument as or on behalf of the Undersigned.
Exhibit O-1 |
e. Reliance. This instrument may be relied on by Seller, Grantee, any lender providing a mortgage loan secured by the Property, any title insurance company insuring title or mortgagee title to the Property or any other party having any interest in and to the Property or the conveyance referenced above, and is given to induce Grantee to acquire the Property free and clear of any rights, claims, and liens of Broker.
WITNESS the hand and seal of the Undersigned, as of [Closing Date: _________________].
Signed, sealed, sworn to and subscribed before the undersigned unofficial witness and notary public: | [BUYER Broker Company: _____________] | ||||
Unofficial Witness | By: | (SEAL) | |||
Name: | |||||
Title: | |||||
Notary Public | |||||
(NOTARY SEAL) | |||||
My Commission Expires: _________________ | |||||
(Attachment: Property Description) |
Exhibit O-2 |
EXHIBIT P-1
FORM OF ASSIGNMENT AND ASSUMPTION OF LEASE DOCUMENTS
------------------------------------------- Space Above This Line for Recorder’s Use -------------------------------------------
WHEN RECORDED, RETURN TO:
Kilpatrick Townsend & Stockton LLP
1100 Peachtree Street
Atlanta, Georgia 30309
Attn: Mark A. Palmer |
Exhibit P-1-1 |
STATE OF GEORGIA
COUNTY OF FULTON
ASSIGNMENT AND ASSUMPTION OF LEASE DOCUMENTS
AND OPTION RIGHTS
This ASSIGNMENT AND ASSUMPTION OF LEASE DOCUMENTS AND OPTION RIGHTS (this “Agreement”), is made as of this ____ day of _________, 2016, by and between Waterton Tenside Owner, L.L.C., a Delaware limited liability company (“Assignor”); and ______________________________, a ___________________________ (“Assignee”),
W I T N E S S E T H:
WHEREAS, pursuant to a Bond Resolution (the “Bond Resolution”) adopted by the Atlanta Development Authority, a public body corporate and politic of the State of Georgia (the “Issuer”) on November 20, 2008, and an Indenture of Trust (the “Indenture”) dated as of December 1, 2009, between the Issuer and The Bank of New York Mellon Trust Company, N.A., as Trustee (the “Trustee”), the Issuer authorized the issuance of its “The Atlanta Development Authority Taxable Lease Purchase Revenue Bond (Tivoli Tenside Project) Series 2009” to finance a capital project (the “Project”), and on December 30, 2009, the Issuer issued the initial bond, designated “R-1”, to Assignor in the amount of $70,000,000 (the “Bond”);
WHEREAS, Assignor wishes to assign to Assignee all of its right, title, and interest in and to, and obligations under each of the following documents and agreements executed in connection with the issuance of the Bond: (1) the Lease Agreement dated as of December 1, 2009, between Assignor (as successor in interest to and assignee of Ten Side Holdings, LLC, a Georgia limited liability company (“Ten Side Holdings”), as the original lessee thereunder) and the Issuer and the Memorandum of Lease, dated as of December 29, 2009, between Assignor (as successor in interest to and assignee of Ten Side Holdings, as the original lessee thereunder) and the Issuer, recorded on December 30, 2009, in the Official Records of the Superior Court of Fulton County, Georgia in Deed Book 48667, Page 521 (collectively, the “Lease”), demising the leased premises located in the City of Atlanta, Fulton County, Georgia and described therein and legally described in Exhibit A, attached hereto and incorporated herein by reference (the “Premises”); and (2) the Memorandum of Agreement Regarding Lease Structure and Valuation of Leasehold Interest (Ten Side Holdings, LLC) dated February 9, 2010, among the Issuer, Assignor (as successor in interest to and assignee of Ten Side Holdings, as an original party thereto), and Fulton County Board of Assessors (the “Memorandum”) (the Lease and the Memorandum, collectively, the “Lease Documents”); and
WHEREAS, Assignee wishes to assume certain of Assignor’s obligations under the Lease Documents arising from and after the date of this Agreement.
Exhibit P-1-2 |
A G R E E M E N T:
NOW, THEREFORE, for and in consideration of the covenants and agreements herein contained, the parties hereby agree as follows:
1. Defined Terms. Capitalized terms not defined herein shall have the meanings ascribed thereto in the Lease Documents.
2. Transfer of Rights and Assumption of Obligations.
(a) Assignor does hereby absolutely and unconditionally grant, set over, deliver, sell, assign, transfer, and convey to Assignee (1) all of the right, title, interest, remedies, powers, options (including, without limitation, options to purchase the leased premises under the Lease), benefits, and privileges of the “Lessee”, and all, if any, other right, title, interest, remedies, powers, options, benefits, and privileges of Assignor, in, to and under the Lease Documents, together with all right, title and interest of the “Lessee” under the Lease, and all, if any, other right, title and interest of Assignor, in and to the Premises and any and all rights, members and appurtenances thereto (collectively, the “Leasehold Estate”); and Assignor shall warrant and forever defend the right and title to the Leasehold Estate unto Assignee, and the successors, legal representatives and assigns of Assignee, against the claims of all persons whomsoever claiming by, through, or under Assignor but not otherwise.
(b) Assignee hereby assumes all duties and obligations of the “Lessee” under the Lease Documents arising from and after the date of this Agreement.
3. Miscellaneous. This Agreement and the rights and obligations of Assignor and Assignee hereunder shall be binding upon and inure to the benefit of Assignor and Assignee and their respective successors, assigns, heirs, executors, administrators, and personal representatives, shall be governed by and construed in accordance with the laws of the State of Georgia, and may not be modified or amended in any manner other than by a written agreement signed by all parties hereto.
Exhibit P-1-3 |
IN WITNESS WHEREOF, each of the parties hereto has caused this instrument to be executed, sealed and delivered by its duly authorized representative, all effective as of the day and year first written above.
Signed, sealed, sworn to and subscribed before the undersigned unofficial witness and notary public: | ASSIGNOR: | |||
WATERTON TENSIDE OWNER, L.L.C., | ||||
Unofficial Witness | a Delaware limited liability company | |||
By: | ||||
Notary Public | Name: | |||
Its: | ||||
(NOTARY SEAL) | ||||
My Commission Expires: _________________ | ||||
ASSIGNEE: | ||||
Signed, sealed, sworn to and subscribed before the undersigned unofficial witness and notary public: | , a | |||
By: | (SEAL) | |||
Unofficial Witness | Name: | |||
Title: | ||||
Notary Public | ||||
(NOTARY SEAL) | ||||
My Commission Expires: _________________ |
Exhibit P-1-4 |
EXHIBIT A
LEGAL DESCRIPTION
Exhibit P-1-5 |
EXHIBIT P-2
FORM OF ASSUMPTION OF BOND DOCUMENTS
ASSIGNMENT AND ASSUMPTION OF BOND DOCUMENTS
This ASSIGNMENT AND ASSUMPTION OF BOND DOCUMENTS (this “Agreement”), is made as of this ____ day of __________, 2016, by and between Waterton Tenside Owner, L.L.C., a Delaware limited liability company (“Assignor”); and ______________________________, a ___________________________ (“Assignee”),
W I T N E S S E T H:
WHEREAS, pursuant to a Bond Resolution (the “Bond Resolution”) adopted by the Atlanta Development Authority, a public body corporate and politic of the State of Georgia (the “Issuer”) on November 20, 2008, and an Indenture of Trust (the “Indenture”) dated as of December 1, 2009, between the Issuer and The Bank of New York Mellon Trust Company, N.A., as Trustee (the “Trustee”), the Issuer authorized the issuance of its “Atlanta Development Authority Taxable Lease Purchase Revenue Bond (Tivoli Tenside Project) Series 2009” to finance a capital project (the “Project”), and on December 30, 2009, the Issuer issued the initial bond, designated “R-1”, to Assignor in the amount of $70,000,000 (the “Bond”). Pursuant to that certain Assignment and Transfer of Bond dated on or about the date hereof, Assignor has sold, assigned and transferred unto Assignee the Bond and all rights thereunder.
WHEREAS, Assignor wishes to assign to Assignee all of its right, title, and interest in and to, and obligations under each of the following documents and agreements executed in connection with the issuance of the Bond: (1) the Bond Purchase Agreement, dated as of December 1, 2009, among the Issuer, Assignor (as successor in interest to and assignee of Ten Side Holdings, LLC, a Georgia limited liability company (“Ten Side Holdings”), as the original purchaser thereunder), in its capacity as purchaser thereunder (in such capacity, the “Purchaser”), and Assignor (as successor in interest to and assignee of Ten Side Holdings, as the original lessee thereunder), in its capacity as lessee under the Lease (as defined therein), (2) the Guaranty Agreement, dated as of December 1, 2009, between Assignor (as successor in interest to and assignee of Ten Side Holdings, as the original guarantor thereunder) and Trustee, and (3) the Home Office Payment Agreement, dated as of December 1, 2009, among the Issuer, Trustee, and Assignor (as successor in interest to and assignee of Ten Side Holdings, as the original purchaser), in its capacity as Purchaser and in connection with its use of the Project (as defined therein) financed with the proceeds of the Bond (collectively, the “Bond Documents”); and
WHEREAS, Assignee wishes to assume certain of Assignor’s obligations under the Bond Documents arising from and after the date of this Agreement.
Exhibit P-2-1 |
A G R E E M E N T:
NOW, THEREFORE, for and in consideration of the covenants and agreements herein contained, the parties hereby agree as follows:
1. Defined Terms. Capitalized terms not defined herein shall have the meanings ascribed thereto in the Bond Documents.
2. Transfer of Rights and Assumption of Obligations.
(a) Assignor does hereby absolutely and unconditionally grant, set over, deliver, sell, assign, transfer, and convey to Assignee (1) all of the right, title, interest, remedies, powers, options, benefits, and privileges of the “Company”, the “Guarantor”, the “Purchaser”, and the “Bondholder” or “Holder”, and all, if any, other right, title, interest, remedies, powers, options, benefits, and privileges of Assignor, in, to and under the Bond Documents.
(b) Assignee hereby assumes all duties and obligations of the “Company”, the “Guarantor”, the “Purchaser”, and the “Bondholder” or “Holder” under the Bond Documents arising from and after the date of this Agreement, but only for so long as Assignee is the owner and holder of the right, title and interest assigned to Assignee hereunder.
3. Miscellaneous. This Agreement and the rights and obligations of Assignor and Assignee hereunder shall be binding upon and inure to the benefit of Assignor and Assignee and their respective successors, assigns, heirs, executors, administrators, and personal representatives, shall be governed by and construed in accordance with the laws of the State of Georgia, and may not be modified or amended in any manner other than by a written agreement signed by all parties hereto.
[Remainder of this page is blank; signatures and seals follow]
Exhibit P-2-2 |
IN WITNESS WHEREOF, each of the parties hereto has caused this instrument to be executed, sealed and delivered by its duly authorized representative, all effective as of the day and year first written above.
ASSIGNOR: | |||
WATERTON TENSIDE OWNER, L.L.C., | |||
a Delaware limited liability company | |||
By: | (SEAL) | ||
Name: | |||
Its: | |||
ASSIGNEE: | |||
, a | |||
By: | (SEAL) | ||
Name: | |||
Title: |
Exhibit P-2-3 |
Exhibit 10.6
assignment AND ASSUMPTION of PURCHASE AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION OF PURCHASE AGREEMENT (this “Assignment”) is entered into as of July 14, 2016 by and between CARROLL ACQUISITIONS, LLC, a Georgia limited liability company (“Assignor”), and BR CARROLL TENSIDE, LLC, a Delaware limited liability company (“Assignee”).
W I T N E S S E T H:
WHEREAS, Assignor and WATERTON TENSIDE OWNER, L.L.C., a Delaware limited liability company (“Seller”), entered into that certain Agreement of Purchase and Sale dated May 25, 2016 (the “Agreement”), with respect to that certain real property and related appurtenances commonly known as Tenside Apartments, and located in Atlanta, Georgia, all as more particularly described in the Agreement (the “Property”); and
WHEREAS, Assignor desires to assign all of Assignor’s right, title and interest in and to the Agreement to Assignee so that Assignee may acquire the Property;
NOW THEREFORE, in consideration of the foregoing recitals and other good and valuable consideration, the parties agree as follows:
1. Assignment. Effective as of the date hereof, Assignor hereby assigns, conveys, transfers and sets over to Assignee all of Assignor’s right, title and interest in, to and under the Agreement and Assignee shall succeed to all of Assignor's right, title and interests in, to and under the Agreement effective as of the date hereof, including, without limitation, the Earnest Money (as such term is defined in the Agreement) deposited by Assignor pursuant to the Agreement.
2. Assumption. Assignee hereby accepts the foregoing assignment and assumes all of the rights, duties, obligations and liabilities of Assignor in, to and under the Agreement, relating to, with respect to or in connection with the Agreement, whenever arising or accruing. Notwithstanding such assignment, Assignor is not released from and shall also remain fully liable for all liabilities, and the timely performance of all duties and obligations of the Buyer (as such term is defined in the Agreement) under the Agreement. Seller is an intended third party beneficiary of this Agreement.
3. Governing Law. This Assignment shall be governed by and construed in accordance with the substantive internal laws of the State of Georgia without regard to the principles of conflicts of laws.
4. Binding Effect. This Assignment shall be binding upon and inure to the benefit of Assignor, Assignee and their respective successors and assigns. The parties shall execute and deliver such further and additional instruments, agreements, and other documents as may be necessary to evidence or carry out the provisions of this Assignment.
5. Counterparts. This Assignment may be executed by the parties in counterparts, in which event the signature pages thereof shall be combined in order to constitute a single original document. Signatures to this Assignment transmitted by facsimile or email shall be binding on the party transmitting such signatures and such party shall not use as a defense against the enforceability of this Assignment the fact that such signature so transmitted is not an original.
IN WITNESS WHEREOF, the parties have executed this Assignment as their free and voluntary act and deed, on the date indicated above.
ASSIGNOR: | |||
CARROLL ACQUISITIONS, LLC, a Georgia limited liability company | |||
By: | /s/ Josh Champion | ||
Name: Josh Champion Title: Authorized Signatory |
ASSIGNEE: | |||
BR CARROLL TENSIDE, LLC, a Delaware limited liability company | |||
By: | /s/ Jordan Ruddy | ||
Name: Jordan
Ruddy Title: Authorized Signatory |
Exhibit 10.7
MULTIFAMILY LOAN AND SECURITY AGREEMENT
(NON-RECOURSE)
BY AND BETWEEN
BR CARROLL TENSIDE, LLC, a Delaware limited liability company
AND
WALKER & DUNLOP, LLC, a Delaware limited liability company
DATED AS OF
July 14, 2016
TABLE OF CONTENTS
ARTICLE 1 - DEFINITIONS; SUMMARY OF MORTGAGE LOAN TERMS | 1 | ||
Section 1.01 | Defined Terms. | 1 | |
Section 1.02 | Schedules, Exhibits, and Attachments Incorporated. | 1 | |
ARTICLE 2 - GENERAL MORTGAGE LOAN TERMS | 2 | ||
Section 2.01 | Mortgage Loan Origination and Security. | 2 | |
(a) | Making of Mortgage Loan. | 2 | |
(b) | Security for Mortgage Loan. | 2 | |
(c) | Protective Advances. | 2 | |
Section 2.02 | Payments on Mortgage Loan. | 2 | |
(a) | Debt Service Payments. | 2 | |
(b) | Capitalization of Accrued But Unpaid Interest. | 3 | |
(c) | Late Charges. | 3 | |
(d) | Default Rate. | 4 | |
(e) | Address for Payments. | 5 | |
(f) | Application of Payments. | 5 | |
Section 2.03 | Lockout/Prepayment. | 5 | |
(a) | Prepayment; Prepayment Lockout; Prepayment Premium. | 5 | |
(b) | Voluntary Prepayment in Full. | 6 | |
(c) | Acceleration of Mortgage Loan. | 6 | |
(d) | Application of Collateral. | 7 | |
(e) | Casualty and Condemnation. | 7 | |
(f) | No Effect on Payment Obligations. | 7 | |
(g) | Loss Resulting from Prepayment. | 7 | |
ARTICLE 3 - PERSONAL LIABILITY | 8 | ||
Section 3.01 | Non-Recourse Mortgage Loan; Exceptions. | 8 | |
Section 3.02 | Personal Liability of Borrower (Exceptions to Non-Recourse Provision). | 8 | |
(a) | Personal Liability Based on Lender’s Loss. | 8 | |
(b) | Full Personal Liability for Mortgage Loan. | 9 | |
Section 3.03 | Personal Liability for Indemnity Obligations. | 10 | |
Section 3.04 | Lender’s Right to Forego Rights Against Mortgaged Property. | 10 | |
ARTICLE 4 - BORROWER STATUS | 10 | ||
Section 4.01 | Representations and Warranties. | 10 | |
(a) | Due Organization and Qualification. | 10 | |
(b) | Location. | 10 | |
(c) | Power and Authority. | 11 | |
(d) | Due Authorization. | 11 | |
(e) | Valid and Binding Obligations. | 11 | |
(f) | Effect of Mortgage Loan on Borrower’s Financial Condition. | 11 | |
(g) | Economic Sanctions, Anti-Money Laundering, and Anti-Corruption. | 11 | |
(h) | Borrower Single Asset Status. | 12 | |
(i) | No Bankruptcies or Judgments. | 13 | |
(j) | No Actions or Litigation. | 14 | |
(k) | Payment of Taxes, Assessments, and Other Charges. | 14 |
Multifamily Loan and Security Agreement (Non-Recourse) |
Form 6001.NR | Page i |
Fannie Mae | 01-16 | © 2016 Fannie Mae |
(l) | Not a Foreign Person. | 14 | |
(m) | ERISA. | 14 | |
(n) | Default Under Other Obligations. | 15 | |
(o) | Prohibited Person. | 15 | |
(p) | No Contravention. | 15 | |
(q) | Lockbox Arrangement. | 15 | |
Section 4.02 | Covenants. | 15 | |
(a) | Maintenance of Existence; Organizational Documents. | 15 | |
(b) | Economic Sanctions, Anti-Money Laundering, and Anti-Corruption. | 16 | |
(c) | Payment of Taxes, Assessments, and Other Charges. | 16 | |
(d) | Borrower Single Asset Status. | 17 | |
(e) | ERISA. | 18 | |
(f) | Notice of Litigation or Insolvency. | 18 | |
(g) | Payment of Costs, Fees, and Expenses. | 18 | |
(h) | Restrictions on Distributions. | 19 | |
(i) | Lockbox Arrangement. | 19 | |
ARTICLE 5 - THE MORTGAGE LOAN | 19 | ||
Section 5.01 | Representations and Warranties. | 19 | |
(a) | Receipt and Review of Loan Documents. | 19 | |
(b) | No Default. | 19 | |
(c) | No Defenses. | 19 | |
(d) | Loan Document Taxes. | 20 | |
Section 5.02 | Covenants. | 20 | |
(a) | Ratification of Covenants; Estoppels; Certifications. | 20 | |
(b) | Further Assurances. | 20 | |
(c) | Sale of Mortgage Loan. | 21 | |
(d) | Limitations on Further Acts of Borrower. | 21 | |
(e) | Financing Statements; Record Searches. | 22 | |
(f) | Loan Document Taxes. | 22 | |
ARTICLE 6 - PROPERTY USE, PRESERVATION, AND MAINTENANCE | 22 | ||
Section 6.01 | Representations and Warranties. | 22 | |
(a) | Compliance with Law; Permits and Licenses. | 22 | |
(b) | Property Characteristics. | 23 | |
(c) | Property Ownership. | 23 | |
(d) | Condition of the Mortgaged Property. | 23 | |
(e) | Personal Property. | 23 | |
Section 6.02 | Covenants | 24 | |
(a) | Use of Property. | 24 | |
(b) | Property Maintenance. | 24 | |
(c) | Property Preservation. | 26 | |
(d) | Property Inspections. | 26 | |
(e) | Compliance with Laws. | 27 | |
Section 6.03 | Mortgage Loan Administration Matters Regarding the Property. | 27 | |
(a) | Property Management. | 27 | |
(b) | Subordination of Fees to Affiliated Property Managers. | 27 | |
(c) | Property Condition Assessment. | 28 |
Multifamily Loan and Security Agreement (Non-Recourse) |
Form 6001.NR | Page ii |
Fannie Mae | 01-16 | © 2016 Fannie Mae |
ARTICLE 7 - LEASES AND RENTS | 28 | ||
Section 7.01 | Representations and Warranties. | 28 | |
(a) | Prior Assignment of Rents. | 28 | |
(b) | Prepaid Rents. | 28 | |
Section 7.02 | Covenants. | 28 | |
(a) | Leases. | 28 | |
(b) | Commercial Leases. | 29 | |
(c) | Payment of Rents. | 30 | |
(d) | Assignment of Rents. | 30 | |
(e) | Further Assignments of Leases and Rents. | 30 | |
(f) | Options to Purchase by Tenants. | 30 | |
Section 7.03 | Mortgage Loan Administration Regarding Leases and Rents. | 30 | |
(a) | Material Commercial Lease Requirements. | 30 | |
(b) | Residential Lease Form. | 31 | |
ARTICLE 8 - BOOKS AND RECORDS; FINANCIAL REPORTING | 31 | ||
Section 8.01 | Representations and Warranties. | 31 | |
(a) | Financial Information. | 31 | |
(b) | No Change in Facts or Circumstances. | 31 | |
Section 8.02 | Covenants. | 32 | |
(a) | Obligation to Maintain Accurate Books and Records. | 32 | |
(b) | Items to Furnish to Lender. | 32 | |
(c) | Audited Financials. | 34 | |
(d) | Delivery of Books and Records. | 34 | |
Section 8.03 | Mortgage Loan Administration Matters Regarding Books and Records and Financial Reporting. | 35 | |
(a) | Lender’s Right to Obtain Audited Books and Records. | 35 | |
(b) | Credit Reports; Credit Score. | 35 | |
ARTICLE 9 - INSURANCE | 35 | ||
Section 9.01 | Representations and Warranties. | 35 | |
(a) | Compliance with Insurance Requirements. | 35 | |
(b) | Property Condition. | 36 | |
Section 9.02 | Covenants. | 36 | |
(a) | Insurance Requirements. | 36 | |
(b) | Delivery of Policies, Renewals, Notices, and Proceeds. | 36 | |
Section 9.03 | Mortgage Loan Administration Matters Regarding Insurance | 37 | |
(a) | Lender’s Ongoing Insurance Requirements. | 37 | |
(b) | Application of Proceeds on Event of Loss. | 38 | |
(c) | Payment Obligations Unaffected. | 39 | |
(d) | Foreclosure Sale. | 40 | |
(e) | Appointment of Lender as Attorney-In-Fact. | 40 | |
ARTICLE 10 - CONDEMNATION | 40 | ||
Section 10.01 | Representations and Warranties. | 40 | |
(a) | Prior Condemnation Action. | 40 | |
(b) | Pending Condemnation Actions. | 40 |
Multifamily Loan and Security Agreement (Non-Recourse) |
Form 6001.NR | Page iii |
Fannie Mae | 01-16 | © 2016 Fannie Mae |
Section 10.02 | Covenants. | 40 | |
(a) | Notice of Condemnation. | 40 | |
(b) | Condemnation Proceeds. | 41 | |
Section 10.03 | Mortgage Loan Administration Matters Regarding Condemnation. | 41 | |
(a) | Application of Condemnation Awards. | 41 | |
(b) | Payment Obligations Unaffected. | 41 | |
(c) | Appointment of Lender as Attorney-In-Fact. | 41 | |
(d) | Preservation of Mortgaged Property. | 41 | |
ARTICLE 11 - LIENS, TRANSFERS, AND ASSUMPTIONS | 42 | ||
Section 11.01 | Representations and Warranties. | 42 | |
(a) | No Labor or Materialmen’s Claims. | 42 | |
(b) | No Other Interests. | 42 | |
Section 11.02 | Covenants. | 42 | |
(a) | Liens; Encumbrances. | 42 | |
(b) | Transfers. | 43 | |
(c) | No Other Indebtedness. | 46 | |
Section 11.03 | Mortgage Loan Administration Matters Regarding Liens, Transfers, and Assumptions | 46 | |
(a) | Assumption of Mortgage Loan. | 46 | |
(b) | Transfers to Key Principal-Owned Affiliates or Guarantor-Owned Affiliates. | 47 | |
(c) | Estate Planning. | 48 | |
(d) | Termination or Revocation of Trust. | 48 | |
(e) | Death of Key Principal or Guarantor; Transfer Due to Death. | 49 | |
(f) | Bankruptcy of Guarantor. | 50 | |
(g) | Further Conditions to Transfers and Assumption. | 51 | |
ARTICLE 12 - IMPOSITIONS | 54 | ||
Section 12.01 | Representations and Warranties. | 54 | |
(a) | Payment of Taxes, Assessments, and Other Charges. | 54 | |
Section 12.02 | Covenants. | 55 | |
(a) | Imposition Deposits, Taxes, and Other Charges. | 55 | |
Section 12.03 | Mortgage Loan Administration Matters Regarding Impositions. | 55 | |
(a) | Maintenance of Records by Lender. | 55 | |
(b) | Imposition Accounts. | 55 | |
(c) | Payment of Impositions; Sufficiency of Imposition Deposits. | 56 | |
(d) | Imposition Deposits Upon Event of Default. | 56 | |
(e) | Contesting Impositions. | 56 | |
(f) | Release to Borrower. | 57 | |
ARTICLE 13 - REPLACEMENT RESERVE AND REPAIRS | 57 | ||
Section 13.01 | Covenants. | 57 | |
(a) | Initial Deposits to Replacement Reserve Account and Repairs Escrow Account. | 57 | |
(b) | Monthly Replacement Reserve Deposits. | 57 | |
(c) | Payment for Replacements and Repairs. | 57 | |
(d) | Assignment of Contracts for Replacements and Repairs. | 57 | |
(e) | Indemnification. | 58 | |
(f) | Amendments to Loan Documents. | 58 | |
(g) | Administrative Fees and Expenses. | 58 |
Multifamily Loan and Security Agreement (Non-Recourse) |
Form 6001.NR | Page iv |
Fannie Mae | 01-16 | © 2016 Fannie Mae |
Section 13.02 | Mortgage Loan Administration Matters Regarding Reserves. | 59 | |
(a) | Accounts, Deposits, and Disbursements. | 59 | |
(b) | Approvals of Contracts; Assignment of Claims. | 65 | |
(c) | Delays and Workmanship. | 65 | |
(d) | Appointment of Lender as Attorney-In-Fact. | 65 | |
(e) | No Lender Obligation. | 65 | |
(f) | No Lender Warranty. | 66 | |
ARTICLE 14 - DEFAULTS/REMEDIES | 66 | ||
Section 14.01 | Events of Default. | 66 | |
(a) | Automatic Events of Default. | 66 | |
(b) | Events of Default Subject to a Specified Cure Period. | 67 | |
(c) | Events of Default Subject to Extended Cure Period. | 67 | |
Section 14.02 | Remedies. | 68 | |
(a) | Acceleration; Foreclosure. | 68 | |
(b) | Loss of Right to Disbursements from Collateral Accounts. | 68 | |
(c) | Remedies Cumulative. | 69 | |
Section 14.03 | Additional Lender Rights; Forbearance. | 69 | |
(a) | No Effect Upon Obligations. | 69 | |
(b) | No Waiver of Rights or Remedies. | 70 | |
(c) | Appointment of Lender as Attorney-In-Fact. | 70 | |
(d) | Borrower Waivers. | 71 | |
Section 14.04 | Waiver of Marshaling. | 72 | |
ARTICLE 15 - MISCELLANEOUS | 72 | ||
Section 15.01 | Governing Law; Consent to Jurisdiction and Venue. | 72 | |
(a) | Governing Law. | 72 | |
(b) | Venue. | 72 | |
Section 15.02 | Notice. | 73 | |
(a) | Process of Serving Notice. | 73 | |
(b) | Change of Address. | 73 | |
(c) | Default Method of Notice. | 73 | |
(d) | Receipt of Notices. | 73 | |
Section 15.03 | Successors and Assigns Bound; Sale of Mortgage Loan. | 74 | |
(a) | Binding Agreement. | 74 | |
(b) | Sale of Mortgage Loan; Change of Servicer. | 74 | |
Section 15.04 | Counterparts. | 74 | |
Section 15.05 | Joint and Several (or Solidary) Liability. | 74 | |
Section 15.06 | Relationship of Parties; No Third Party Beneficiary. | 74 | |
(a) | Solely Creditor and Debtor. | 74 | |
(b) | No Third Party Beneficiaries. | 74 |
Multifamily Loan and Security Agreement (Non-Recourse) |
Form 6001.NR | Page v |
Fannie Mae | 01-16 | © 2016 Fannie Mae |
Section 15.07 | Severability; Entire Agreement; Amendments. | 75 |
Section 15.08 | Construction. | 75 |
Section 15.09 | Mortgage Loan Servicing. | 76 |
Section 15.10 | Disclosure of Information. | 76 |
Section 15.11 | Waiver; Conflict. | 76 |
Section 15.12 | No Reliance. | 76 |
Section 15.13 | Subrogation. | 77 |
Section 15.14 | Counting of Days. | 77 |
Section 15.15 | Revival and Reinstatement of Indebtedness. | 77 |
Section 15.16 | Time is of the Essence. | 77 |
Section 15.17 | Final Agreement. | 77 |
Section 15.18 | WAIVER OF TRIAL BY JURY. | 78 |
Multifamily Loan and Security Agreement (Non-Recourse) |
Form 6001.NR | Page vi |
Fannie Mae | 01-16 | © 2016 Fannie Mae |
SCHEDULES & EXHIBITS
Schedules
Schedule 1 | Definitions Schedule (required) | Form 6101.FR | ||
Schedule 2 | Summary of Loan Terms (required) | Form 6102.FR | ||
Schedule 3 | Interest Rate Type Provisions (required) | Form 6103.FR | ||
Schedule 4 | Prepayment Premium Schedule (required) | Form 6104.01 | ||
Schedule 5 | Required Replacement Schedule (required) | Form 6001.NR | ||
Schedule 6 | Required Repair Schedule (required) | Form 6001.NR | ||
Schedule 7 | Exceptions to Representations and Warranties Schedule (required) | Form 6001.NR |
Exhibits
Exhibit 1 | Modifications to Loan Agreement (Ground Lease Defaults) | Form 6206 | ||
Exhibit 2 | Modifications to Loan Agreement (Waiver of Imposition Deposits) | Form 6228 |
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Tenside
MULTIFAMILY LOAN AND SECURITY AGREEMENT
(Non-Recourse)
This MULTIFAMILY LOAN AND SECURITY AGREEMENT (as amended, restated, replaced, supplemented, or otherwise modified from time to time, the “Loan Agreement”) is made as of the Effective Date (as hereinafter defined) by and between BR CARROLL TENSIDE, LLC, a Delaware limited liability company (“Borrower”), and WALKER & DUNLOP, LLC, a Delaware limited liability company (“Lender”).
RECITALS:
WHEREAS, Borrower desires to obtain the Mortgage Loan (as hereinafter defined) from Lender to be secured by the Mortgaged Property (as hereinafter defined); and
WHEREAS, Lender is willing to make the Mortgage Loan on the terms and conditions contained in this Loan Agreement and in the other Loan Documents (as hereinafter defined);
NOW, THEREFORE, in consideration of the making of the Mortgage Loan by Lender and other good and valuable consideration, the receipt and adequacy of which are hereby conclusively acknowledged, the parties hereby covenant, agree, represent, and warrant as follows:
AGREEMENTS:
ARTICLE
1 - DEFINITIONS; SUMMARY OF MORTGAGE
LOAN TERMS
Section 1.01 Defined Terms.
Capitalized terms not otherwise defined in the body of this Loan Agreement shall have the meanings set forth in the Definitions Schedule attached as Schedule 1 to this Loan Agreement.
Section 1.02 Schedules, Exhibits, and Attachments Incorporated.
The schedules, exhibits, and any other addenda or attachments are incorporated fully into this Loan Agreement by this reference and each constitutes a substantive part of this Loan Agreement.
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ARTICLE 2 - GENERAL MORTGAGE LOAN TERMS
Section 2.01 Mortgage Loan Origination and Security.
(a) Making of Mortgage Loan.
Subject to the terms and conditions of this Loan Agreement and the other Loan Documents, Lender hereby makes the Mortgage Loan to Borrower, and Borrower hereby accepts the Mortgage Loan from Lender. Borrower covenants and agrees that it shall:
(1) pay the Indebtedness, including the Prepayment Premium, if any (whether in connection with any voluntary prepayment or in connection with an acceleration by Lender of the Indebtedness), in accordance with the terms of this Loan Agreement and the other Loan Documents; and
(2) perform, observe, and comply with this Loan Agreement and all other provisions of the other Loan Documents.
(b) Security for Mortgage Loan.
The Mortgage Loan is made pursuant to this Loan Agreement, is evidenced by the Note, and is secured by the Security Instrument, this Loan Agreement, and the other Loan Documents that are expressly stated to be security for the Mortgage Loan.
(c) Protective Advances.
As provided in the Security Instrument, Lender may take such actions or disburse such funds as Lender reasonably deems necessary to perform the obligations of Borrower under this Loan Agreement and the other Loan Documents and to protect Lender’s interest in the Mortgaged Property.
Section 2.02 Payments on Mortgage Loan.
(a) Debt Service Payments.
(1) Short Month Interest.
If the date the Mortgage Loan proceeds are disbursed is any day other than the first day of the month, interest for the period beginning on the disbursement date and ending on and including the last day of the month in which the disbursement occurs shall be payable by Borrower on the date the Mortgage Loan proceeds are disbursed. In the event that the disbursement date is not the same as the Effective Date, then:
(A) the disbursement date and the Effective Date must be in the same month, and
(B) the Effective Date shall not be the first day of the month.
(2) Interest Accrual and Computation.
Except as provided in Section 2.02(a)(1), interest shall be paid in arrears. Interest shall accrue as provided in the Schedule of Interest Rate Type Provisions and shall be computed in accordance with the Interest Accrual Method. If the Interest Accrual Method is “Actual/360,” Borrower acknowledges and agrees that the amount allocated to interest for each month will vary depending on the actual number of calendar days during such month.
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(3) Monthly Debt Service Payments.
Consecutive monthly debt service installments (comprised of either interest only or principal and interest, depending on the Amortization Type), each in the amount of the applicable Monthly Debt Service Payment, shall be due and payable on the First Payment Date, and on each Payment Date thereafter until the Maturity Date, at which time all Indebtedness shall be due. Any regularly scheduled Monthly Debt Service Payment that is received by Lender before the applicable Payment Date shall be deemed to have been received on such Payment Date solely for the purpose of calculating interest due. All payments made by Borrower under this Loan Agreement shall be made without set-off, counterclaim, or other defense.
(4) Payment at Maturity.
The unpaid principal balance of the Mortgage Loan, any Accrued Interest thereon and all other Indebtedness shall be due and payable on the Maturity Date.
(5) Interest Rate Type.
See the Schedule of Interest Rate Type Provisions for additional provisions, if any, specific to the Interest Rate Type.
(b) Capitalization of Accrued But Unpaid Interest.
Any accrued and unpaid interest on the Mortgage Loan remaining past due for thirty (30) days or more may, at Lender’s election, be added to and become part of the unpaid principal balance of the Mortgage Loan.
(c) Late Charges.
(1) If any Monthly Debt Service Payment due hereunder is not received by Lender within ten (10) days (or fifteen (15) days for any Mortgaged Property located in Mississippi or North Carolina to comply with applicable law) after the applicable Payment Date, or any amount payable under this Loan Agreement (other than the payment due on the Maturity Date for repayment of the Mortgage Loan in full) or any other Loan Document is not received by Lender within ten (10) days (or fifteen (15) days for any Mortgaged Property located in Mississippi or North Carolina to comply with applicable law) after the date such amount is due, inclusive of the date on which such amount is due, Borrower shall pay to Lender, immediately without demand by Lender, the Late Charge.
The Late Charge is payable in addition to, and not in lieu of, any interest payable at the Default Rate pursuant to Section 2.02(d).
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(2) Borrower acknowledges and agrees that:
(A) its failure to make timely payments will cause Lender to incur additional expenses in servicing and processing the Mortgage Loan;
(B) it is extremely difficult and impractical to determine those additional expenses;
(C) Lender is entitled to be compensated for such additional expenses; and
(D) the Late Charge represents a fair and reasonable estimate, taking into account all circumstances existing on the date hereof, of the additional expenses Lender will incur by reason of any such late payment.
(d) Default Rate.
(1) Default interest shall be paid as follows:
(A) If any amount due in respect of the Mortgage Loan (other than amounts due on the Maturity Date) remains past due for thirty (30) days or more, interest on such unpaid amount(s) shall accrue from the date payment is due at the Default Rate and shall be payable upon demand by Lender.
(B) If any Indebtedness due is not paid in full on the Maturity Date, then interest shall accrue at the Default Rate on all such unpaid amounts from the Maturity Date until fully paid and shall be payable upon demand by Lender.
Absent a demand by Lender, any such amounts shall be payable by Borrower in the same manner as provided for the payment of Monthly Debt Service Payments. To the extent permitted by applicable law, interest shall also accrue at the Default Rate on any judgment obtained by Lender against Borrower in connection with the Mortgage Loan. To the extent Borrower or any other Person is vested with a right of redemption, interest shall continue to accrue at the Default Rate during any redemption period until such time as the Mortgaged Property has been redeemed.
(2) Borrower acknowledges and agrees that:
(A) its failure to make timely payments will cause Lender to incur additional expenses in servicing and processing the Mortgage Loan; and
(B) in connection with any failure to timely pay all amounts due in respect of the Mortgage Loan on the Maturity Date, or during the time that any amount due in respect of the Mortgage Loan is delinquent for more than thirty (30) days:
(i) Lender’s risk of nonpayment of the Mortgage Loan will be materially increased;
(ii) Lender’s ability to meet its other obligations and to take advantage of other investment opportunities will be adversely impacted;
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(iii) Lender will incur additional costs and expenses arising from its loss of the use of the amounts due;
(iv) it is extremely difficult and impractical to determine such additional costs and expenses;
(v) Lender is entitled to be compensated for such additional risks, costs, and expenses; and
(vi) the increase from the Interest Rate to the Default Rate represents a fair and reasonable estimate of the additional risks, costs, and expenses Lender will incur by reason of Borrower’s delinquent payment and the additional compensation Lender is entitled to receive for the increased risks of nonpayment associated with a delinquency on the Mortgage Loan (taking into account all circumstances existing on the Effective Date).
(e) Address for Payments.
All payments due pursuant to the Loan Documents shall be payable at Lender’s Payment Address, or such other place and in such manner as may be designated from time to time by written notice to Borrower by Lender.
(f) Application of Payments.
If at any time Lender receives, from Borrower or otherwise, any payment in respect of the Indebtedness that is less than all amounts due and payable at such time, then Lender may apply such payment to amounts then due and payable in any manner and in any order determined by Lender or hold in suspense and not apply such payment at Lender’s election. Neither Lender’s acceptance of a payment that is less than all amounts then due and payable, nor Lender’s application of, or suspension of the application of, such payment, shall constitute or be deemed to constitute either a waiver of the unpaid amounts or an accord and satisfaction. Notwithstanding the application of any such payment to the Indebtedness, Borrower’s obligations under this Loan Agreement and the other Loan Documents shall remain unchanged.
Section 2.03 Lockout/Prepayment.
(a) Prepayment; Prepayment Lockout; Prepayment Premium.
(1) Borrower shall not make a voluntary full or partial prepayment on the Mortgage Loan during any Prepayment Lockout Period nor shall Borrower make a voluntary partial prepayment at any time. Except as expressly provided in this Loan Agreement (including as provided in the Prepayment Premium Schedule), a Prepayment Premium calculated in accordance with the Prepayment Premium Schedule shall be payable in connection with any prepayment of the Mortgage Loan.
(2) If a Prepayment Lockout Period applies to the Mortgage Loan, and during such Prepayment Lockout Period Lender accelerates the unpaid principal balance of the Mortgage Loan or otherwise applies collateral held by Lender to the repayment of any portion of the unpaid principal balance of the Mortgage Loan, the Prepayment Premium shall be due and payable and equal to the amount obtained by multiplying the percentage indicated (if at all) in the Prepayment Premium Schedule by the amount of principal being prepaid at the time of such acceleration or application.
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(b) Voluntary Prepayment in Full.
At any time after the expiration of any Prepayment Lockout Period, Borrower may voluntarily prepay the Mortgage Loan in full on a Permitted Prepayment Date so long as:
(1) Borrower delivers to Lender a Prepayment Notice specifying the Intended Prepayment Date not more than sixty (60) days, but not less than thirty (30) days (if given via U.S. Postal Service) or twenty (20) days (if given via facsimile, e-mail, or overnight courier) prior to such Intended Prepayment Date; and
(2) Borrower pays to Lender an amount equal to the sum of:
(A) the entire unpaid principal balance of the Mortgage Loan; plus
(B) all Accrued Interest (calculated through the last day of the month in which the prepayment occurs); plus
(C) the Prepayment Premium; plus
(D) all other Indebtedness.
In connection with any such voluntary prepayment, Borrower acknowledges and agrees that interest shall always be calculated and paid through the last day of the month in which the prepayment occurs (even if the Permitted Prepayment Date for such month is not the last day of such month, or if Lender approves prepayment on an Intended Prepayment Date that is not a Permitted Prepayment Date). Borrower further acknowledges that Lender is not required to accept a voluntary prepayment of the Mortgage Loan on any day other than a Permitted Prepayment Date. However, if Lender does approve an Intended Prepayment Date that is not a Permitted Prepayment Date and accepts a prepayment on such Intended Prepayment Date, such prepayment shall be deemed to be received on the immediately following Permitted Prepayment Date. If Borrower fails to prepay the Mortgage Loan on the Intended Prepayment Date for any reason (including on any Intended Prepayment Date that is approved by Lender) and such failure either continues for five (5) Business Days, or into the following month, Lender shall have the right to recalculate the payoff amount. If Borrower prepays the Mortgage Loan either in the following month or more than five (5) Business Days after the Intended Prepayment Date that was approved by Lender, Lender shall also have the right to recalculate the payoff amount based upon the amount of such payment and the date such payment was received by Lender. Borrower shall immediately pay to Lender any additional amounts required by any such recalculation.
(c) Acceleration of Mortgage Loan.
Upon acceleration of the Mortgage Loan, Borrower shall pay to Lender:
(1) the entire unpaid principal balance of the Mortgage Loan;
(2) all Accrued Interest (calculated through the last day of the month in which the acceleration occurs);
(3) the Prepayment Premium; and
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(4) all other Indebtedness.
(d) Application of Collateral.
Any application by Lender of any collateral or other security to the repayment of all or any portion of the unpaid principal balance of the Mortgage Loan prior to the Maturity Date in accordance with the Loan Documents shall be deemed to be a prepayment by Borrower. Any such prepayment shall require the payment to Lender by Borrower of the Prepayment Premium calculated on the amount being prepaid in accordance with this Loan Agreement.
(e) Casualty and Condemnation.
Notwithstanding any provision of this Loan Agreement to the contrary, no Prepayment Premium shall be payable with respect to any prepayment occurring as a result of the application of any insurance proceeds or amounts received in connection with a Condemnation Action in accordance with this Loan Agreement.
(f) No Effect on Payment Obligations.
Unless otherwise expressly provided in this Loan Agreement, any prepayment required by any Loan Document of less than the entire unpaid principal balance of the Mortgage Loan shall not extend or postpone the due date of any subsequent Monthly Debt Service Payments, Monthly Replacement Reserve Deposit, or other payment, or change the amount of any such payments or deposits.
(g) Loss Resulting from Prepayment.
In any circumstance in which a Prepayment Premium is due under this Loan Agreement, Borrower acknowledges that:
(1) any prepayment of the unpaid principal balance of the Mortgage Loan, whether voluntary or involuntary, or following the occurrence of an Event of Default by Borrower, will result in Lender’s incurring loss, including reinvestment loss, additional risk, expense, and frustration or impairment of Lender’s ability to meet its commitments to third parties;
(2) it is extremely difficult and impractical to ascertain the extent of such losses, risks, and damages;
(3) the formula for calculating the Prepayment Premium represents a reasonable estimate of the losses, risks, and damages Lender will incur as a result of a prepayment; and
(4) the provisions regarding the Prepayment Premium contained in this Loan Agreement are a material part of the consideration for the Mortgage Loan, and that the terms of the Mortgage Loan are in other respects more favorable to Borrower as a result of Borrower’s voluntary agreement to such prepayment provisions.
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ARTICLE 3 - PERSONAL LIABILITY
Section 3.01 Non-Recourse Mortgage Loan; Exceptions.
Except as otherwise provided in this Article 3 or in any other Loan Document, none of Borrower, or any director, officer, manager, member, partner, shareholder, trustee, trust beneficiary, or employee of Borrower, shall have personal liability under this Loan Agreement or any other Loan Document for the repayment of the Indebtedness or for the performance of any other obligations of Borrower under the Loan Documents, and Lender’s only recourse for the satisfaction of such Indebtedness and the performance of such obligations shall be Lender’s exercise of its rights and remedies with respect to the Mortgaged Property and any other collateral held by Lender as security for the Indebtedness. This limitation on Borrower’s liability shall not limit or impair Lender’s enforcement of its rights against Guarantor under any Loan Document.
Section 3.02 Personal Liability of Borrower (Exceptions to Non-Recourse Provision).
(a) Personal Liability Based on Lender’s Loss.
Borrower shall be personally liable to Lender for the repayment of the portion of the Indebtedness equal to any loss or damage suffered by Lender as a result of, subject to any notice and cure period, if any:
(1) failure to pay as directed by Lender upon demand after an Event of Default (to the extent actually received by Borrower):
(A) all Rents to which Lender is entitled under the Loan Documents; and
(B) the amount of all security deposits then held or thereafter collected by Borrower from tenants and not properly applied pursuant to the applicable Leases;
(2) failure to maintain all insurance policies required by the Loan Documents, except to the extent Lender has the obligation to pay the premiums pursuant to Section 12.03(c);
(3) failure to apply all insurance proceeds received by Borrower or any amounts received by Borrower in connection with a Condemnation Action, as required by the Loan Documents;
(4) failure to comply with any provision of this Loan Agreement or any other Loan Document relating to the delivery of books and records, statements, schedules, and reports;
(5) except to the extent directed otherwise by Lender pursuant to Section 3.02(a)(1), failure to apply Rents to the ordinary and necessary expenses of owning and operating the Mortgaged Property and Debt Service Amounts, as and when each is due and payable, except that Borrower will not be personally liable with respect to Rents that are distributed by Borrower in any calendar year if Borrower has paid all ordinary and necessary expenses of owning and operating the Mortgaged Property and Debt Service Amounts for such calendar year;
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(6) waste or abandonment of the Mortgaged Property; or
(7) grossly negligent or reckless unintentional material misrepresentation or omission by Borrower, Guarantor, Key Principal, or any officer, director, partner, manager, member, shareholder, or trustee of Borrower, or any officer, director, or manager of, or any Person having a Restricted Ownership Interest in, Guarantor, or Key Principal in connection with on-going financial or other reporting required by the Loan Documents, or any request for action or consent by Lender.
Notwithstanding the foregoing, Borrower shall not have personal liability under clauses (1), (3), or (5) above to the extent that Borrower lacks the legal right to direct the disbursement of the applicable funds due to an involuntary Bankruptcy Event that occurs without the consent, encouragement, or active participation of (A) Borrower, Guarantor, or Key Principal, (B) any Person Controlling Borrower, Guarantor, or Key Principal or (C) any Person Controlled by or under common Control with Borrower, Guarantor, or Key Principal.
(b) Full Personal Liability for Mortgage Loan.
Borrower shall be personally liable to Lender for the repayment of all of the Indebtedness, and the Mortgage Loan shall be fully recourse to Borrower, upon the occurrence of any of the following:
(1) failure by Borrower to comply with the single-asset entity requirements of Section 4.02(d) of this Loan Agreement;
(2) a Transfer (other than a conveyance of the Mortgaged Property at a Foreclosure Event pursuant to the Security Instrument and this Loan Agreement) that is not permitted under this Loan Agreement or any other Loan Document;
(3) the occurrence of any Bankruptcy Event (other than an acknowledgement in writing as described in clause (b) of the definition of “Bankruptcy Event”); provided, however, in the event of an involuntary Bankruptcy Event, Borrower shall only be personally liable if such involuntary Bankruptcy Event occurs with the consent, encouragement, or active participation of (A) Borrower, Guarantor, or Key Principal, (B) any Person Controlling Borrower, Guarantor, or Key Principal, or (C) any Person Controlled by or under common Control with Borrower, Guarantor, or Key Principal;
(4) fraud, written material misrepresentation, or material omission by Borrower, Guarantor, Key Principal, or any officer, director, partner, manager, member, shareholder, or trustee of Borrower, Guarantor, or Key Principal in connection with any application for or creation of the Indebtedness; or
(5) fraud, written intentional material misrepresentation, or intentional material omission by Borrower, Guarantor, Key Principal, or any officer, director, partner, manager, member, shareholder, or trustee of Borrower, or any officer, director, or manager of, or any Person having a Restricted Ownership Interest in, Guarantor, or Key Principal in connection with on-going financial or other reporting required by the Loan Documents, or any request for action or consent by Lender.
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Section 3.03 Personal Liability for Indemnity Obligations.
Borrower shall be personally and fully liable to Lender for Borrower’s indemnity obligations under Section 13.01(e) of this Loan Agreement, the Environmental Indemnity Agreement, and any other express indemnity obligations provided by Borrower under any Loan Document. Borrower’s liability for such indemnity obligations shall not be limited by the amount of the Indebtedness, the repayment of the Indebtedness, or otherwise, provided that Borrower’s liability for such indemnities shall not include any loss caused by the gross negligence or willful misconduct of Lender as determined by a court of competent jurisdiction pursuant to a final non-appealable court order.
Section 3.04 Lender’s Right to Forego Rights Against Mortgaged Property.
To the extent that Borrower has personal liability under this Loan Agreement or any other Loan Document, Lender may exercise its rights against Borrower personally to the fullest extent permitted by applicable law without regard to whether Lender has exercised any rights against the Mortgaged Property, the UCC Collateral, or any other security, or pursued any rights against Guarantor, or pursued any other rights available to Lender under this Loan Agreement, any other Loan Document, or applicable law. For purposes of this Section 3.04 only, the term “Mortgaged Property” shall not include any funds that have been applied by Borrower as required or permitted by this Loan Agreement prior to the occurrence of an Event of Default, or that Borrower was unable to apply as required or permitted by this Loan Agreement because of a Bankruptcy Event. To the fullest extent permitted by applicable law, in any action to enforce Borrower’s personal liability under this Article 3, Borrower waives any right to set off the value of the Mortgaged Property against such personal liability.
ARTICLE 4 - BORROWER STATUS
Section 4.01 Representations and Warranties.
The representations and warranties made by Borrower to Lender in this Section 4.01 are made as of the Effective Date and are true and correct except as disclosed on the Exceptions to Representations and Warranties Schedule.
(a) Due Organization and Qualification.
Borrower is validly existing and qualified to transact business and is in good standing in the state in which it is formed or organized, the Property Jurisdiction, and in each other jurisdiction that qualification or good standing is required according to applicable law to conduct its business with respect to the Mortgaged Property and where the failure to be so qualified or in good standing would adversely affect Borrower’s operation of the Mortgaged Property or the validity, enforceability or the ability of Borrower to perform its obligations under this Loan Agreement or any other Loan Document.
(b) Location.
Borrower’s General Business Address is Borrower’s principal place of business and principal office.
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(c) Power and Authority.
Borrower has the requisite power and authority:
(1) to own the Mortgaged Property and to carry on its business as now conducted and as contemplated to be conducted in connection with the performance of its obligations under this Loan Agreement and under the other Loan Documents to which it is a party; and
(2) to execute and deliver this Loan Agreement and the other Loan Documents to which it is a party, and to carry out the transactions contemplated by this Loan Agreement and the other Loan Documents to which it is a party.
(d) Due Authorization.
The execution, delivery, and performance of this Loan Agreement and the other Loan Documents to which it is a party have been duly authorized by all necessary action and proceedings by or on behalf of Borrower, and no further approvals or filings of any kind, including any approval of or filing with any Governmental Authority, are required by or on behalf of Borrower as a condition to the valid execution, delivery, and performance by Borrower of this Loan Agreement or any of the other Loan Documents to which it is a party, except filings required to perfect and maintain the liens to be granted under the Loan Documents and routine filings to maintain good standing and its existence.
(e) Valid and Binding Obligations.
This Loan Agreement and the other Loan Documents to which it is a party have been duly executed and delivered by Borrower and constitute the legal, valid, and binding obligations of Borrower, enforceable against Borrower in accordance with their respective terms, except as such enforceability may be limited by applicable Insolvency Laws or by the exercise of discretion by any court.
(f) Effect of Mortgage Loan on Borrower’s Financial Condition.
The Mortgage Loan will not render Borrower Insolvent. Borrower has sufficient working capital, including proceeds from the Mortgage Loan, cash flow from the Mortgaged Property, or other sources, not only to adequately maintain the Mortgaged Property, but also to pay all of Borrower’s outstanding debts as they come due, including all Debt Service Amounts, exclusive of Borrower’s ability to refinance or pay in full the Mortgage Loan on the Maturity Date. In connection with the execution and delivery of this Loan Agreement and the other Loan Documents (and the delivery to, or for the benefit of, Lender of any collateral contemplated thereunder), and the incurrence by Borrower of the obligations under this Loan Agreement and the other Loan Documents, Borrower did not receive less than reasonably equivalent value in exchange for the incurrence of the obligations of Borrower under this Loan Agreement and the other Loan Documents.
(g) Economic Sanctions, Anti-Money Laundering, and Anti-Corruption.
(1) None of Borrower, Guarantor, or Key Principal, nor to Borrower’s knowledge, any Person Controlling Borrower, Guarantor, or Key Principal, nor any Person Controlled by Borrower, Guarantor, or Key Principal that also has a direct or indirect ownership interest in Borrower, Guarantor, or Key Principal, is in violation of any applicable civil or criminal laws or regulations, including those requiring internal controls, intended to prohibit, prevent, or regulate money laundering, drug trafficking, terrorism, or corruption, of the United States and the jurisdiction where the Mortgaged Property is located or where the Person resides, is domiciled, or has its principal place of business.
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(2) None of Borrower, Guarantor, or Key Principal, nor to Borrower’s knowledge, any Person Controlling Borrower, Guarantor, or Key Principal, nor any Person Controlled by Borrower, Guarantor, or Key Principal that also has a direct or indirect ownership interest in Borrower, Guarantor, or Key Principal, is a Person:
(A) against whom proceedings are pending for any alleged violation of any laws described in Section 4.01(g)(1);
(B) that has been convicted of any violation of, has been subject to civil penalties or Economic Sanctions pursuant to, or had any of its property seized or forfeited under, any laws described in Section 4.01(g)(1); or
(C) with whom any United States Person, any entity organized under the laws of the United States or its constituent states or territories, or any entity, regardless of where organized, having its principal place of business within the United States or any of its territories, is a Sanctioned Person or is otherwise prohibited from transacting business of the type contemplated by this Loan Agreement and the other Loan Documents under any other applicable law.
(3) Borrower, Guarantor, and Key Principal are in compliance with all applicable Economic Sanctions laws and regulations.
(h) Borrower Single Asset Status.
Borrower:
(1) does not own or lease any real property, personal property, or assets other than the Mortgaged Property;
(2) does not own, operate, or participate in any business other than the leasing, ownership, management, operation, and maintenance of the Mortgaged Property;
(3) has no material financial obligation under or secured by any indenture, mortgage, deed of trust, deed to secure debt, loan agreement, or other agreement or instrument to which Borrower is a party, or by which Borrower is otherwise bound, or to which the Mortgaged Property is subject or by which it is otherwise encumbered, other than:
(A) unsecured trade payables incurred in the ordinary course of the operation of the Mortgaged Property (exclusive of amounts for rehabilitation, restoration, repairs, or replacements of the Mortgaged Property) that (i) are not evidenced by a promissory note, (ii) are payable within sixty (60) days of the date incurred, and (iii) as of the Effective Date, do not exceed, in the aggregate, four percent (4%) of the original principal balance of the Mortgage Loan;
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(B) if the Security Instrument grants a lien on a leasehold estate, Borrower’s obligations as lessee under the ground lease creating such leasehold estate; and
(C) obligations under the Loan Documents and obligations secured by the Mortgaged Property to the extent permitted by the Loan Documents;
(4) has maintained its financial statements, accounting records, and other partnership, real estate investment trust, limited liability company, or corporate documents, as the case may be, separate from those of any other Person (unless Borrower’s assets have been included in a consolidated financial statement prepared in accordance with generally accepted accounting principles);
(5) has not commingled its assets or funds with those of any other Person, unless such assets or funds can easily be segregated and identified in the ordinary course of business from those of any other Person;
(6) has been adequately capitalized in light of its contemplated business operations;
(7) has not assumed, guaranteed, or pledged its assets to secure the liabilities or obligations of any other Person (except in connection with the Mortgage Loan or other mortgage loans that have been paid in full or collaterally assigned to Lender, including in connection with any Consolidation, Extension and Modification Agreement or similar instrument), or held out its credit as being available to satisfy the obligations of any other Person;
(8) has not made loans or advances to any other Person; and
(9) has not entered into, and is not a party to, any transaction with any Borrower Affiliate, except in the ordinary course of business and on terms which are no more favorable to any such Borrower Affiliate than would be obtained in a comparable arm’s length transaction with an unrelated third party.
(i) No Bankruptcies or Judgments.
None of Borrower, Guarantor, or Key Principal, nor to Borrower’s knowledge, any Person Controlling Borrower, Guarantor, or Key Principal, nor any Person Controlled by Borrower, Guarantor, or Key Principal that also has a direct or indirect ownership interest in Borrower, Guarantor, or Key Principal, is currently:
(1) the subject of or a party to any completed or pending bankruptcy, reorganization, including any receivership or other insolvency proceeding (other than as a creditor);
(2) preparing or intending to be the subject of a Bankruptcy Event; or
(3) the subject of any judgment unsatisfied of record or docketed in any court; or
(4) Insolvent.
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(j) No Actions or Litigation.
(1) There are no claims, actions, suits, or proceedings at law or in equity by or before any Governmental Authority now pending against or, to Borrower’s knowledge, threatened against or affecting Borrower or the Mortgaged Property not otherwise covered by insurance (except claims, actions, suits, or proceedings regarding fair housing, anti-discrimination, or equal opportunity, which shall always be disclosed); and
(2) there are no claims, actions, suits, or proceedings at law or in equity by or before any Governmental Authority now pending or, to Borrower’s knowledge, threatened against or affecting Guarantor or Key Principal, which claims, actions, suits, or proceedings, if adversely determined (individually or in the aggregate) reasonably would be expected to materially adversely affect the financial condition or business of Borrower, Guarantor, or Key Principal or the condition, operation, or ownership of the Mortgaged Property (except claims, actions, suits, or proceedings regarding fair housing, anti-discrimination, or equal opportunity, which shall always be deemed material).
(k) Payment of Taxes, Assessments, and Other Charges.
Borrower confirms that:
(1) it has filed all federal, state, county, and municipal tax returns and reports required to have been filed by Borrower;
(2) it has paid, before any fine, penalty, interest, lien, or costs may be added thereto, all taxes, governmental charges, and assessments due and payable with respect to such returns and reports;
(3) there is no controversy or objection pending, or to the knowledge of Borrower, threatened in respect of any tax returns of Borrower; and
(4) it has made adequate reserves on its books and records for all taxes that have accrued but which are not yet due and payable.
(l) Not a Foreign Person.
Borrower is not a “foreign person” within the meaning of Section 1445(f)(3) of the Internal Revenue Code.
(m) ERISA.
Borrower represents and warrants that:
(1) Borrower is not an Employee Benefit Plan;
(2) no asset of Borrower constitutes “plan assets” (within the meaning of Section 3(42) of ERISA and Department of Labor Regulation Section 2510.3-101) of an Employee Benefit Plan;
(3) no asset of Borrower is subject to any laws of any Governmental Authority governing the assets of an Employee Benefit Plan; and
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(4) neither Borrower nor any ERISA Affiliate is subject to any obligation or liability with respect to any ERISA Plan.
(n) Default Under Other Obligations.
(1) The execution, delivery, and performance of the obligations imposed on Borrower under this Loan Agreement and the Loan Documents to which it is a party will not cause Borrower to be in default under the provisions of any agreement, judgment, or order to which Borrower is a party or by which Borrower is bound.
(2) None of Borrower, Guarantor, or Key Principal is in default under any obligation to Lender.
(o) Prohibited Person.
None of Borrower, Guarantor, or Key Principal is a Prohibited Person, nor to Borrower’s knowledge, is any Person:
(1) Controlling Borrower, Guarantor, or Key Principal a Prohibited Person; or
(2) Controlled by and having a direct or indirect ownership interest in Borrower, Guarantor, or Key Principal a Prohibited Person.
(p) No Contravention.
Neither the execution and delivery of this Loan Agreement and the other Loan Documents to which Borrower is a party, nor the fulfillment of or compliance with the terms and conditions of this Loan Agreement and the other Loan Documents to which Borrower is a party, nor the performance of the obligations of Borrower under this Loan Agreement and the other Loan Documents does or will conflict with or result in any breach or violation of, or constitute a default under, any of the terms, conditions, or provisions of Borrower’s organizational documents, or any indenture, existing agreement, or other instrument to which Borrower is a party or to which Borrower, the Mortgaged Property, or other assets of Borrower are subject.
(q) Lockbox Arrangement.
Borrower is not party to any type of lockbox agreement or similar cash management arrangement that has not been approved by Lender in writing, and no direct or indirect owner of Borrower is party to any type of lockbox agreement or similar cash management arrangement with respect to Rents or other income from the Mortgaged Property that has not been approved by Lender in writing.
Section 4.02 Covenants.
(a) Maintenance of Existence; Organizational Documents.
Borrower shall maintain its existence, its entity status, franchises, rights, and privileges under the laws of the state of its formation or organization (as applicable). Borrower shall continue to be duly qualified and in good standing to transact business in each jurisdiction in which qualification or standing is required according to applicable law to conduct its business with respect to the Mortgaged Property and where the failure to do so would adversely affect Borrower’s operation of the Mortgaged Property or the validity, enforceability, or the ability of Borrower to perform its obligations under this Loan Agreement or any other Loan Document. Neither Borrower nor any partner, member, manager, officer, or director of Borrower shall:
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(1) make or allow any material change to the organizational documents or organizational structure of Borrower, including changes relating to the Control of Borrower, or
(2) file any action, complaint, petition, or other claim to:
(A) divide, partition, or otherwise compel the sale of the Mortgaged Property, or
(B) otherwise change the Control of Borrower.
(b) Economic Sanctions, Anti-Money Laundering, and Anti-Corruption.
(1) Borrower, Guarantor, Key Principal, and any Person Controlling Borrower, Guarantor, or Key Principal, or any Person Controlled by Borrower, Guarantor, or Key Principal that also has a direct or indirect ownership interest in Borrower, Guarantor, or Key Principal shall remain in compliance with any applicable civil or criminal laws or regulations (including those requiring internal controls) intended to prohibit, prevent, or regulate money laundering, drug trafficking, terrorism, or corruption, of the United States and the jurisdiction where the Mortgaged Property is located or where the Person resides, is domiciled, or has its principal place of business.
(2) At no time shall Borrower, Guarantor, or Key Principal, or any Person Controlling Borrower, Guarantor, or Key Principal, or any Person Controlled by Borrower, Guarantor, or Key Principal that also has a direct or indirect ownership interest in Borrower, Guarantor, or Key Principal, be a Person:
(A) against whom proceedings are pending for any alleged violation of any laws described in Section 4.02(b)(1);
(B) that has been convicted of any violation of, has been subject to civil penalties or Economic Sanctions pursuant to, or had any of its property seized or forfeited under, any laws described in Section 4.02(b)(1); or
(C) with whom any United States Person, any entity organized under the laws of the United States or its constituent states or territories, or any entity, regardless of where organized, having its principal place of business within the United States or any of its territories, is a Sanctioned Person or is otherwise prohibited from transacting business of the type contemplated by this Loan Agreement and the other Loan Documents under any other applicable law.
(3) Borrower, Guarantor, and Key Principal shall at all times remain in compliance with any applicable Economic Sanctions laws and regulations.
(c) Payment of Taxes, Assessments, and Other Charges.
Borrower shall file all federal, state, county, and municipal tax returns and reports required to be filed by Borrower and shall pay, before any fine, penalty, interest, or cost may be added thereto, all taxes payable with respect to such returns and reports.
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(d) Borrower Single Asset Status.
Until the Indebtedness is fully paid, Borrower:
(1) shall not acquire or lease any real property, personal property, or assets other than the Mortgaged Property;
(2) shall not acquire, own, operate, or participate in any business other than the leasing, ownership, management, operation, and maintenance of the Mortgaged Property;
(3) shall not commingle its assets or funds with those of any other Person, unless such assets or funds can easily be segregated and identified in the ordinary course of business from those of any other Person;
(4) shall maintain its financial statements, accounting records, and other partnership, real estate investment trust, limited liability company, or corporate documents, as the case may be, separate from those of any other Person (unless Borrower’s assets are included in a consolidated financial statement prepared in accordance with generally accepted accounting principles);
(5) shall have no material financial obligation under any indenture, mortgage, deed of trust, deed to secure debt, loan agreement, or other agreement or instrument to which Borrower is a party or by which Borrower is otherwise bound, or to which the Mortgaged Property is subject or by which it is otherwise encumbered, other than:
(A) unsecured trade payables incurred in the ordinary course of the operation of the Mortgaged Property (exclusive of amounts (i) to be paid out of the Replacement Reserve Account or Repairs Escrow Account, or (ii) for rehabilitation, restoration, repairs, or replacements of the Mortgaged Property or otherwise approved by Lender) so long as such trade payables (1) are not evidenced by a promissory note, (2) are payable within sixty (60) days of the date incurred, and (3) as of any date, do not exceed, in the aggregate, two percent (2%) of the original principal balance of the Mortgage Loan; provided, however, that otherwise compliant outstanding trade payables may exceed two percent (2%) up to an aggregate amount of four percent (4%) of the original principal balance of the Mortgage Loan for a period (beginning on or after the Effective Date) not to exceed ninety (90) consecutive days;
(B) if the Security Instrument grants a lien on a leasehold estate, Borrower’s obligations as lessee under the ground lease creating such leasehold estate; and
(C) obligations under the Loan Documents and obligations secured by the Mortgaged Property to the extent permitted by the Loan Documents;
(6) shall not assume, guaranty, or pledge its assets to secure the liabilities or obligations of any other Person (except in connection with the Mortgage Loan or other mortgage loans that have been paid in full or collaterally assigned to Lender, including in connection with any Consolidation, Extension and Modification Agreement or similar instrument) or hold out its credit as being available to satisfy the obligations of any other Person;
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(7) shall not make loans or advances to any other Person; or
(8) shall not enter into, or become a party to, any transaction with any Borrower Affiliate, except in the ordinary course of business and on terms which are no more favorable to any such Borrower Affiliate than would be obtained in a comparable arm’s-length transaction with an unrelated third party.
(e) ERISA.
Borrower covenants that:
(1) no asset of Borrower shall constitute “plan assets” (within the meaning of Section 3(42) of ERISA and Department of Labor Regulation Section 2510.3-101) of an Employee Benefit Plan;
(2) no asset of Borrower shall be subject to the laws of any Governmental Authority governing the assets of an Employee Benefit Plan; and
(3) neither Borrower nor any ERISA Affiliate shall incur any obligation or liability with respect to any ERISA Plan.
(f) Notice of Litigation or Insolvency.
Borrower shall give immediate written notice to Lender of any claims, actions, suits, or proceedings at law or in equity (including any insolvency, bankruptcy, or receivership proceeding) by or before any Governmental Authority pending or, to Borrower’s knowledge, threatened against or affecting Borrower, Guarantor, Key Principal, or the Mortgaged Property, which claims, actions, suits, or proceedings, if adversely determined reasonably would be expected to materially adversely affect the financial condition or business of Borrower, Guarantor, or Key Principal, or the condition, operation, or ownership of the Mortgaged Property (including any claims, actions, suits, or proceedings regarding fair housing, anti-discrimination, or equal opportunity, which shall always be deemed material).
(g) Payment of Costs, Fees, and Expenses.
In addition to the payments specified in this Loan Agreement, Borrower shall pay, on demand, all of Lender’s out-of-pocket fees, costs, charges, or expenses (including the reasonable fees and expenses of attorneys, accountants, and other experts) incurred by Lender in connection with:
(1) any amendment to, or consent, or waiver required under, this Loan Agreement or any of the Loan Documents (whether or not any such amendments, consents, or waivers are entered into);
(2) defending or participating in any litigation arising from actions by third parties and brought against or involving Lender with respect to:
(A) the Mortgaged Property;
(B) any event, act, condition, or circumstance in connection with the Mortgaged Property; or
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(C) the relationship between or among Lender, Borrower, Key Principal, and Guarantor in connection with this Loan Agreement or any of the transactions contemplated by this Loan Agreement;
(3) the administration or enforcement of, or preservation of rights or remedies under, this Loan Agreement or any other Loan Documents including or in connection with any litigation or appeals, any Foreclosure Event or other disposition of any collateral granted pursuant to the Loan Documents; and
(4) any Bankruptcy Event or Guarantor Bankruptcy Event.
(h) Restrictions on Distributions.
No distributions or dividends of any nature with respect to Rents or other income from the Mortgaged Property shall be made to any Person having a direct ownership interest in Borrower if an Event of Default has occurred and is continuing.
(i) Lockbox Arrangement.
Borrower shall not enter into any type of lockbox agreement or similar cash management arrangement that has not been approved by Lender in writing, and no direct or indirect owner of Borrower shall enter into any type of lockbox agreement or similar cash management arrangement with respect to Rents or other income from the Mortgaged Property that has not been approved by Lender in writing. Lender’s approval of any such cash management arrangement may be conditioned upon requiring Borrower to enter into a lockbox agreement or similar cash management arrangement with Lender in form and substance acceptable to Lender with regard to Rents and other income from the Mortgaged Property.
ARTICLE 5 - THE MORTGAGE LOAN
Section 5.01 Representations and Warranties.
The representations and warranties made by Borrower to Lender in this Section 5.01are made as of the Effective Date and are true and correct except as disclosed on the Exceptions to Representations and Warranties Schedule.
(a) Receipt and Review of Loan Documents.
Borrower has received and reviewed this Loan Agreement and all of the other Loan Documents.
(b) No Default.
No default exists under any of the Loan Documents.
(c) No Defenses.
The Loan Documents are not currently subject to any right of rescission, set-off, counterclaim, or defense by either Borrower or Guarantor, including the defense of usury, and neither Borrower nor Guarantor has asserted any right of rescission, set-off, counterclaim, or defense with respect thereto.
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(d) Loan Document Taxes.
All mortgage, mortgage recording, stamp, intangible, or any other similar taxes required to be paid by any Person under applicable law currently in effect in connection with the execution, delivery, recordation, filing, registration, perfection, or enforcement of any of the Loan Documents, including the Security Instrument, have been paid or will be paid in the ordinary course of the closing of the Mortgage Loan.
Section 5.02 Covenants.
(a) Ratification of Covenants; Estoppels; Certifications.
Borrower shall:
(1) promptly notify Lender in writing upon any violation of any covenant set forth in any Loan Document of which Borrower has notice or knowledge; provided, however, any such written notice by Borrower to Lender shall not relieve Borrower of, or result in a waiver of, any obligation under this Loan Agreement or any other Loan Document; and
(2) within ten (10) days after a request from Lender, provide a written statement, signed and acknowledged by Borrower, certifying to Lender or any person designated by Lender, as of the date of such statement:
(A) that the Loan Documents are unmodified and in full force and effect (or, if there have been modifications, that the Loan Documents are in full force and effect as modified and setting forth such modifications);
(B) the unpaid principal balance of the Mortgage Loan;
(C) the date to which interest on the Mortgage Loan has been paid;
(D) that Borrower is not in default in paying the Indebtedness or in performing or observing any of the covenants or agreements contained in this Loan Agreement or any of the other Loan Documents (or, if Borrower is in default, describing such default in reasonable detail);
(E) whether or not there are then-existing any setoffs or defenses known to Borrower against the enforcement of any right or remedy of Lender under the Loan Documents; and
(F) any additional facts reasonably requested in writing by Lender.
(b) Further Assurances.
(1) Other Documents As Lender May Require.
Within ten (10) days after request by Lender, Borrower shall, subject to Section 5.02(d) below, execute, acknowledge, and deliver, at its cost and expense, all further acts, deeds, conveyances, assignments, financing statements, transfers, documents, agreements, assurances, and such other instruments as Lender may reasonably require from time to time in order to better assure, grant, and convey to Lender the rights intended to be granted, now or in the future, to Lender under this Loan Agreement and the other Loan Documents.
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(2) Corrective Actions.
Within ten (10) days after request by Lender, Borrower shall provide, or cause to be provided, to Lender, at Borrower’s cost and expense, such further documentation or information reasonably deemed necessary or appropriate by Lender in the exercise of its rights under the related commitment letter between Borrower and Lender or to correct patent mistakes in the Loan Documents, the Title Policy, or the funding of the Mortgage Loan.
(c) Sale of Mortgage Loan.
Borrower shall, subject to Section 5.02(d) below:
(1) comply with the reasonable requirements of Lender or any Investor of the Mortgage Loan or provide, or cause to be provided, to Lender or any Investor of the Mortgage Loan within ten (10) days of the request, at Borrower’s cost and expense, such further documentation or information as Lender or Investor may reasonably require, in order to enable:
(A) Lender to sell the Mortgage Loan to such Investor;
(B) Lender to obtain a refund of any commitment fee from any such Investor; or
(C) any such Investor to further sell or securitize the Mortgage Loan;
(2) ratify and affirm in writing the representations and warranties set forth in any Loan Document as of such date specified by Lender modified as necessary to reflect changes that have occurred subsequent to the Effective Date;
(3) confirm that Borrower is not in default in paying the Indebtedness or in performing or observing any of the covenants or agreements contained in this Loan Agreement or any of the other Loan Documents (or, if Borrower is in default, describing such default in reasonable detail); and
(4) execute and deliver to Lender and/or any Investor such other documentation, including any amendments, corrections, deletions, or additions to this Loan Agreement or other Loan Document(s) as is reasonably required by Lender or such Investor.
(d) Limitations on Further Acts of Borrower.
Nothing in Section 5.02(b) and Section 5.02(c) shall require Borrower to do any further act that has the effect of:
(1) changing the economic terms of the Mortgage Loan set forth in the related commitment letter between Borrower and Lender;
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(2) imposing on Borrower or Guarantor greater personal liability under the Loan Documents than that set forth in the related commitment letter between Borrower and Lender; or
(3) materially changing the rights and obligations of Borrower or Guarantor under the commitment letter.
(e) Financing Statements; Record Searches.
(1) Borrower shall pay all costs and expenses associated with:
(A) any filing or recording of any financing statements, including all continuation statements, termination statements, and amendments or any other filings related to security interests in or liens on collateral; and
(B) any record searches for financing statements that Lender may require.
(2) Borrower hereby authorizes Lender to file any financing statements, continuation statements, termination statements, and amendments (including an “all assets” or “all personal property” collateral description or words of similar import) in form and substance as Lender may require in order to protect and preserve Lender’s lien priority and security interest in the Mortgaged Property (and to the extent Lender has filed any such financing statements, continuation statements, or amendments prior to the Effective Date, such filings by Lender are hereby authorized and ratified by Borrower).
(f) Loan Document Taxes.
Borrower shall pay, on demand, any transfer taxes, documentary taxes, assessments, or charges made by any Governmental Authority in connection with the execution, delivery, recordation, filing, registration, perfection, or enforcement of any of the Loan Documents or the Mortgage Loan.
ARTICLE 6 - PROPERTY USE, PRESERVATION, AND MAINTENANCE
Section 6.01 Representations and Warranties.
The representations and warranties made by Borrower to Lender in this Section 6.01 are made as of the Effective Date and are true and correct except as disclosed on the Exceptions to Representations and Warranties Schedule.
(a) Compliance with Law; Permits and Licenses.
(1) To Borrower’s knowledge, all improvements to the Land and the use of the Mortgaged Property comply with all applicable laws, ordinances, statutes, rules, and regulations, including all applicable statutes, rules, and regulations pertaining to requirements for equal opportunity, anti-discrimination, fair housing, and rent control, and Borrower has no knowledge of any action or proceeding (or threatened action or proceeding) regarding noncompliance or nonconformity with any of the foregoing.
(2) To Borrower’s knowledge, there is no evidence of any illegal activities on the Mortgaged Property.
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(3) To Borrower’s knowledge, no permits or approvals from any Governmental Authority, other than those previously obtained and furnished to Lender, are necessary for the commencement and completion of the Repairs or Replacements, as applicable, other than those permits or approvals which will be timely obtained in the ordinary course of business.
(4) All required permits, licenses, and certificates to comply with all zoning and land use statutes, laws, ordinances, rules, and regulations, and all applicable health, fire, safety, and building codes, and for the lawful use and operation of the Mortgaged Property, including certificates of occupancy, apartment licenses, or the equivalent, have been obtained and are in full force and effect.
(5) No portion of the Mortgaged Property has been purchased with the proceeds of any illegal activity.
(b) Property Characteristics.
(1) The Mortgaged Property contains at least:
(A) the Property Square Footage;
(B) the Total Parking Spaces; and
(C) the Total Residential Units.
(2) No part of the Land is included or assessed under or as part of another tax lot or parcel, and no part of any other property is included or assessed under or as part of the tax lot or parcels for the Land.
(c) Property Ownership.
Borrower is sole owner or ground lessee of the Mortgaged Property.
(d) Condition of the Mortgaged Property.
(1) Borrower has not made any claims, and to Borrower’s knowledge, no claims have been made, against any contractor, engineer, architect, or other party with respect to the construction or condition of the Mortgaged Property or the existence of any structural or other material defect therein; and
(2) neither the Land nor the Improvements has sustained any damage other than damage which has been fully repaired, or is fully insured and is being repaired in the ordinary course of business.
(e) Personal Property.
Borrower owns (or, to the extent disclosed on the Exceptions to Representations and Warranties Schedule, leases) all of the Personal Property that is material to and is used in connection with the management, ownership, and operation of the Mortgaged Property.
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Section 6.02 Covenants
(a) Use of Property.
From and after the Effective Date, Borrower shall not, unless required by applicable law or Governmental Authority:
(1) change the use of all or any part of the Mortgaged Property;
(2) convert any individual dwelling units or common areas to commercial use, or convert any common area or commercial use to individual dwelling units without Lender’s prior written consent;
(3) initiate or acquiesce in a change in the zoning classification of the Land;
(4) establish any condominium or cooperative regime with respect to the Mortgaged Property;
(5) subdivide the Land; or
(6) suffer, permit, or initiate the joint assessment of any Mortgaged Property with any other real property constituting a tax lot separate from such Mortgaged Property which could cause the part of the Land to be included or assessed under or as part of another tax lot or parcel, or any part of any other property to be included or assessed under or as part of the tax lot or parcels for the Land.
(b) Property Maintenance.
Borrower shall:
(1) pay the expenses of operating, managing, maintaining, and repairing the Mortgaged Property (including insurance premiums, utilities, Repairs, and Replacements) before the last date upon which each such payment may be made without any penalty or interest charge being added;
(2) keep the Mortgaged Property in good repair and marketable condition (ordinary wear and tear excepted) (including the replacement of Personalty and Fixtures with items of equal or better function and quality) and subject to Section 9.03(b)(3) and Section 10.03(d) restore or repair promptly, in a good and workmanlike manner, any damaged part of the Mortgaged Property to the equivalent of its original condition or condition immediately prior to the damage (if improved after the Effective Date), whether or not any insurance proceeds or amounts received in connection with a Condemnation Action are available to cover any costs of such restoration or repair;
(3) commence all Required Repairs, Additional Lender Repairs, and Additional Lender Replacements as follows:
(A) with respect to any Required Repairs, promptly following the Effective Date (subject to Force Majeure, if applicable), in accordance with the timelines set forth on the Required Repair Schedule, or if no timelines are provided, as soon as practical following the Effective Date;
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(B) with respect to Additional Lender Repairs, in the event that Lender determines that Additional Lender Repairs are necessary from time to time or pursuant to Section 6.03(c), promptly following Lender’s written notice of such Additional Lender Repairs (subject to Force Majeure, if applicable), commence any such Additional Lender Repairs in accordance with Lender’s timelines, or if no timelines are provided, as soon as practical;
(C) with respect to Additional Lender Replacements, in the event that Lender determines that Additional Lender Replacements are necessary from time to time or pursuant to Section 6.03(c), promptly following Lender’s written notice of such Additional Lender Replacements (subject to Force Majeure, if applicable), commence any such Additional Lender Replacements in accordance with Lender’s timelines, or if no timelines are provided, as soon as practical;
(4) make, construct, install, diligently perform, and complete all Replacements and Repairs:
(A) in a good and workmanlike manner as soon as practicable following the commencement thereof, free and clear of any Liens, including mechanics’ or materialmen’s liens and encumbrances (except Permitted Encumbrances and mechanics’ or materialmen’s liens which attach automatically under the laws of any Governmental Authority upon the commencement of any work upon, or delivery of any materials to, the Mortgaged Property and for which Borrower is not delinquent in the payment for any such work or materials);
(B) in accordance with all applicable laws, ordinances, rules, and regulations of any Governmental Authority, including applicable building codes, special use permits, and environmental regulations;
(C) in accordance with all applicable insurance and bonding requirements; and
(D) within all timeframes required by Lender, and Borrower acknowledges that it shall be an Event of Default if Borrower abandons or ceases work on any Repair at any time prior to the completion of the Repairs for a period of longer than twenty (20) days (except when Force Majeure exists and Borrower is diligently pursuing the reinstitution of such work, provided, however, any such abandonment or cessation shall not in any event allow the Repair to be completed after the Completion Period, subject to Force Majeure); and
(5) subject to the terms of Section 6.03(a) provide for professional management of the Mortgaged Property by a residential rental property manager satisfactory to Lender under a contract approved by Lender in writing;
(6) give written notice to Lender of, and, unless otherwise directed in writing by Lender, appear in and defend any action or proceeding purporting to affect the Mortgaged Property, Lender’s security for the Mortgage Loan, or Lender’s rights under this Loan Agreement; and
(7) upon Lender’s written request, submit to Lender any contracts or work orders described in Section 13.02(b).
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(c) Property Preservation.
Borrower shall:
(1) not commit waste or abandon or (ordinary wear and tear excepted) permit impairment or deterioration of the Mortgaged Property;
(2) except as otherwise permitted herein in connection with Repairs and Replacements, not remove, demolish, or alter the Mortgaged Property or any part of the Mortgaged Property (or permit any tenant or any other person to do the same) except in connection with the replacement of tangible Personalty or Fixtures (provided such Personalty and Fixtures are replaced with items of equal or better function and quality);
(3) not engage in or knowingly permit, and shall take appropriate measures to prevent and abate or cease and desist, any illegal activities at the Mortgaged Property that could endanger tenants or visitors, result in damage to the Mortgaged Property, result in forfeiture of the Land or otherwise materially impair the lien created by the Security Instrument or Lender’s interest in the Mortgaged Property;
(4) not permit any condition to exist on the Mortgaged Property that would invalidate any part of any insurance coverage required by this Loan Agreement; or
(5) not subject the Mortgaged Property to any voluntary, elective, or non-compulsory tax lien or assessment (or opt in to any voluntary, elective, or non-compulsory special tax district or similar regime).
(d) Property Inspections.
Borrower shall:
(1) permit Lender, its agents, representatives, and designees to enter upon and inspect the Mortgaged Property (including in connection with any Replacement or Repair, or to conduct any Environmental Inspection pursuant to the Environmental Indemnity Agreement), and shall cooperate and provide access to all areas of the Mortgaged Property (subject to the rights of tenants under the Leases):
(A) during normal business hours;
(B) at such other reasonable time upon reasonable notice of not less than one (1) Business Day;
(C) at any time when exigent circumstances exist; or
(D) at any time after an Event of Default has occurred and is continuing; and
(2) pay for reasonable costs or expenses incurred by Lender or its agents in connection with any such inspections.
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(e) Compliance with Laws.
Borrower shall:
(1) comply with all laws, ordinances, statutes, rules, and regulations of any Governmental Authority and all recorded lawful covenants and agreements relating to or affecting the Mortgaged Property, including all laws, ordinances, statutes, rules and regulations, and covenants pertaining to construction of improvements on the Land, fair housing, and requirements for equal opportunity, anti-discrimination, and Leases;
(2) procure and maintain all required permits, licenses, charters, registrations, and certificates necessary to comply with all zoning and land use statutes, laws, ordinances, rules and regulations, and all applicable health, fire, safety, and building codes and for the lawful use and operation of the Mortgaged Property, including certificates of occupancy, apartment licenses, or the equivalent;
(3) comply with all applicable laws that pertain to the maintenance and disposition of tenant security deposits;
(4) at all times maintain records sufficient to demonstrate compliance with the provisions of this Section 6.02(e); and
(5) promptly after receipt or notification thereof, provide Lender copies of any building code or zoning violation from any Governmental Authority with respect to the Mortgaged Property.
Section 6.03 Mortgage Loan Administration Matters Regarding the Property.
(a) Property Management.
From and after the Effective Date, each property manager and each property management agreement must be approved by Lender. If, in connection with the making of the Mortgage Loan, or at any later date, Lender waives in writing the requirement that Borrower enter into a written contract for management of the Mortgaged Property, and Borrower later elects to enter into a written contract or change the management of the Mortgaged Property, such new property manager or the property management agreement must be approved by Lender. As a condition to any approval by Lender, Lender may require that Borrower and such new property manager enter into a collateral assignment of the property management agreement on a form approved by Lender.
(b) Subordination of Fees to Affiliated Property Managers.
Any property manager that is a Borrower Affiliate to whom fees are payable for the management of the Mortgaged Property must enter into an assignment of management agreement or other agreement with Lender, in a form approved by Lender, providing for subordination of those fees and such other provisions as Lender may require.
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(c) Property Condition Assessment.
If, in connection with any inspection of the Mortgaged Property, Lender determines that the condition of the Mortgaged Property has deteriorated (ordinary wear and tear excepted) since the Effective Date, Lender may obtain, at Borrower’s expense, a property condition assessment of the Mortgaged Property. Lender’s right to obtain a property condition assessment pursuant to this Section 6.03(c) shall be in addition to any other rights available to Lender under this Loan Agreement in connection with any such deterioration. Any such inspection or property condition assessment may result in Lender requiring Additional Lender Repairs or Additional Lender Replacements as further described in Section 13.02(a)(9)(B).
ARTICLE 7 - LEASES AND RENTS
Section 7.01 Representations and Warranties.
The representations and warranties made by Borrower to Lender in this Section 7.01 are made as of the Effective Date and are true and correct except as disclosed on the Exceptions to Representations and Warranties Schedule.
(a) Prior Assignment of Rents.
Borrower has not executed any:
(1) prior assignment of Rents (other than an assignment of Rents securing prior indebtedness that has been paid off and discharged or will be paid off and discharged with the proceeds of the Mortgage Loan); or
(2) instrument which would prevent Lender from exercising its rights under this Loan Agreement or the Security Instrument.
(b) Prepaid Rents.
Borrower has not accepted, and does not expect to receive prepayment of, any Rents for more than two (2) months prior to the due dates of such Rents.
Section 7.02 Covenants.
(a) Leases.
Borrower shall:
(1) comply with and observe Borrower’s obligations under all Leases, including Borrower’s obligations pertaining to the maintenance and disposition of tenant security deposits;
(2) surrender possession of the Mortgaged Property, including all Leases and all security deposits and prepaid Rents, immediately upon appointment of a receiver or Lender’s entry upon and taking of possession and control of the Mortgaged Property, as applicable;
(3) require that all Residential Leases have initial lease terms of not less than six (6) months and not more than twenty-four (24) months (notwithstanding the foregoing, Residential Leases with initial terms of less than six (6) months, but not less than one (1) month, shall be permitted for up to ten percent (10%) of the units at the Mortgaged Property without Lender’s consent; however, if customary in the applicable market for properties comparable to the Mortgaged Property, more than ten percent (10%) of the Residential Leases with terms of less than six (6) months (but in no case less than one (1) month) may be permitted with Lender’s prior written consent); and
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(4) promptly provide Lender a copy of any non-Residential Lease at the time such Lease is executed (subject to Lender’s consent rights for Material Commercial Leases in Section 7.02(b)) and, upon Lender’s written request, promptly provide Lender a copy of any Residential Lease then in effect.
(b) Commercial Leases.
(1) With respect to Material Commercial Leases, Borrower shall not:
(A) enter into any Material Commercial Lease except with the prior written consent of Lender; or
(B) modify the terms of, extend, or terminate any Material Commercial Lease (including any Material Commercial Lease in existence on the Effective Date) without the prior written consent of Lender.
(2) With respect to any non-Material Commercial Lease, Borrower shall not:
(A) enter into any non-Material Commercial Lease that materially alters the use and type of operation of the premises subject to the Lease in effect as of the Effective Date or reduces the number or size of residential units at the Mortgaged Property; or
(B) modify the terms of any non-Material Commercial Lease (including any non-Material Commercial Lease in existence on the Effective Date) in any way that materially alters the use and type of operation of the premises subject to such non-Material Commercial Lease in effect as of the Effective Date, reduces the number or size of residential units at the Mortgaged Property, or results in such non-Material Commercial Lease being deemed a Material Commercial Lease.
(3) With respect to any Material Commercial Lease or non-Material Commercial Lease, Borrower shall cause the applicable tenant to provide within ten (10) days after a request by Borrower, a certificate of estoppel, or if not provided by tenant within such ten (10) day period, Borrower shall provide such certificate of estoppel, certifying:
(A) that such Material Commercial Lease or non-Material Commercial Lease is unmodified and in full force and effect (or if there have been modifications, that such Material Commercial Lease or non-Material Commercial Lease is in full force and effect as modified and stating the modifications);
(B) the term of the Lease including any extensions thereto;
(C) the dates to which the Rent and any other charges hereunder have been paid by tenant;
(D) the amount of any security deposit delivered to Borrower as landlord;
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(E) whether or not Borrower is in default (or whether any event or condition exists which, with the passage of time, would constitute an event of default) under such Lease;
(F) the address to which notices to tenant should be sent; and
(G) any other information as may be reasonably required by Lender.
(c) Payment of Rents.
Borrower shall:
(1) pay to Lender upon demand all Rents after an Event of Default has occurred and is continuing;
(2) cooperate with Lender’s efforts in connection with the assignment of Rents set forth in the Security Instrument; and
(3) not accept Rent under any Lease (whether a Residential Lease or a non-Residential Lease) for more than two (2) months in advance.
(d) Assignment of Rents.
Borrower shall not:
(1) perform any acts nor execute any instrument that would prevent Lender from exercising its rights under the assignment of Rents granted in the Security Instrument or in any other Loan Document; nor
(2) interfere with Lender’s collection of such Rents.
(e) Further Assignments of Leases and Rents.
Borrower shall execute and deliver any further assignments of Leases and Rents as Lender may reasonably require.
(f) Options to Purchase by Tenants.
No Lease (whether a Residential Lease or a non-Residential Lease) shall contain an option to purchase, right of first refusal to purchase or right of first offer to purchase, except as required by applicable law.
Section 7.03 Mortgage Loan Administration Regarding Leases and Rents.
(a) Material Commercial Lease Requirements.
Each Material Commercial Lease, including any renewal or extension of any Material Commercial Lease in existence as of the Effective Date, shall provide, directly or pursuant to a subordination, non-disturbance and attornment agreement approved by Lender, that:
(1) the tenant shall, upon written notice from Lender after the occurrence of an Event of Default, pay all Rents payable under such Lease to Lender;
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(2) such Lease and all rights of the tenant thereunder are expressly subordinate to the lien of the Security Instrument;
(3) the tenant shall attorn to Lender and any purchaser at a Foreclosure Event (such attornment to be self-executing and effective upon acquisition of title to the Mortgaged Property by any purchaser at a Foreclosure Event or by Lender in any manner);
(4) the tenant agrees to execute such further evidences of attornment as Lender or any purchaser at a Foreclosure Event may from time to time request; and
(5) such Lease shall not terminate as a result of a Foreclosure Event unless Lender or any other purchaser at such Foreclosure Event affirmatively elects to terminate such Lease pursuant to the terms of the subordination, non-disturbance and attornment agreement.
(b) Residential Lease Form.
All Residential Leases entered into from and after the Effective Date shall be on forms approved by Lender.
ARTICLE 8 - BOOKS AND RECORDS; FINANCIAL REPORTING
Section 8.01 Representations and Warranties.
The representations and warranties made by Borrower to Lender in this Section 8.01 are made as of the Effective Date and are true and correct except as disclosed on the Exceptions to Representations and Warranties Schedule.
(a) Financial Information.
All financial statements and data, including statements of cash flow and income and operating expenses, that have been delivered to Lender in respect of the Mortgaged Property:
(1) are true, complete, and correct in all material respects; and
(2) accurately represent the financial condition of the Mortgaged Property as of such date.
(b) No Change in Facts or Circumstances.
All information in the Loan Application and in all financial statements, rent rolls, reports, certificates, and other documents submitted in connection with the Loan Application are complete and accurate in all material respects. There has been no material adverse change in any fact or circumstance that would make any such information incomplete or inaccurate.
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Section 8.02 Covenants.
(a) Obligation to Maintain Accurate Books and Records.
Borrower shall keep and maintain at all times at the Mortgaged Property or the property management agent’s offices or Borrower’s General Business Address and, upon Lender’s written request, shall make available at the Land:
(1) complete and accurate books of account and records (including copies of supporting bills and invoices) adequate to reflect correctly the operation of the Mortgaged Property; and
(2) copies of all written contracts, Leases, and other instruments that affect Borrower or the Mortgaged Property.
(b) Items to Furnish to Lender.
Borrower shall furnish to Lender the following, certified as true, complete, and accurate in all material respects, by an individual having authority to bind Borrower (or Guarantor, as applicable), in such form and with such detail as Lender reasonably requires:
(1) within forty-five (45) days after the end of each first, second, and third calendar quarter, a statement of income and expenses for Borrower on a year-to-date basis as of the end of each calendar quarter;
(2) within one hundred twenty (120) days after the end of each calendar year:
(A) for any Borrower and any Guarantor that is an entity, a statement of income and expenses and a statement of cash flows for such calendar year;
(B) for any Borrower and any Guarantor that is an individual, or a trust established for estate-planning purposes, a personal financial statement for such calendar year;
(C) when requested in writing by Lender, balance sheet(s) showing all assets and liabilities of Borrower and Guarantor and a statement of all contingent liabilities as of the end of such calendar year;
(D) if an energy consumption metric for the Mortgaged Property is required to be reported to any Governmental Authority, the Fannie Mae Energy Performance Metrics report, as generated by ENERGY STAR® Portfolio Manager, for the Mortgaged Property for such calendar year, which report must include the ENERGY STAR score, the Source Energy Use Intensity (EUI), the month and year ending period for such ENERGY STAR score and such Source Energy Use Intensity, and the ENERGY STAR Portfolio Manager Property Identification Number; provided that, if the Governmental Authority does not require the use of ENERGY STAR Portfolio Manager for the reporting of the energy consumption metric and Borrower does not use ENERGY STAR Portfolio Manager, then Borrower shall furnish to Lender the Source Energy Use Intensity for the Mortgaged Property for such calendar year;
(E) a written certification ratifying and affirming that:
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(i) Borrower has taken no action in violation of Section 4.02(d) regarding its single asset status;
(ii) Borrower has received no notice of any building code violation, or if Borrower has received such notice, evidence of remediation;
(iii) Borrower has made no application for rezoning nor received any notice that the Mortgaged Property has been or is being rezoned; and
(iv) Borrower has taken no action and has no knowledge of any action that would violate the provisions of Section 11.02(b)(1)(F) regarding liens encumbering the Mortgaged Property;
(F) an accounting of all security deposits held pursuant to all Leases, including the name of the institution (if any) and the names and identification numbers of the accounts (if any) in which such security deposits are held and the name of the person to contact at such financial institution, along with any authority or release necessary for Lender to access information regarding such accounts; and
(G) written confirmation of:
(i) any changes occurring since the Effective Date (or that no such changes have occurred since the Effective Date) in (1) the direct owners of Borrower, (2) the indirect owners (and any non-member managers) of Borrower that Control Borrower (excluding any Publicly-Held Corporations or Publicly-Held Trusts), or (3) the indirect owners of Borrower that hold twenty-five percent (25%) or more of the ownership interests in Borrower (excluding any Publicly-Held Corporations or Publicly-Held Trusts), and their respective interests;
(ii) the names of all officers and directors of (1) any Borrower which is a corporation, (2) any corporation which is a general partner of any Borrower which is a partnership, or (3) any corporation which is the managing member or non-member manager of any Borrower which is a limited liability company; and
(iii) the names of all managers who are not members of (1) any Borrower which is a limited liability company, (2) any limited liability company which is a general partner of any Borrower which is a partnership, or (3) any limited liability company which is the managing member or non-member manager of any Borrower which is a limited liability company; and
(H) if not already provided pursuant to Section 8.02(b)(2)(A) above, a statement of income and expenses for Borrower’s operation of the Mortgaged Property on a year-to-date basis as of the end of each calendar year;
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(3) within forty-five (45) days after the end of each first, second, and third calendar quarter and within one hundred twenty (120) days after the end of each calendar year, and at any other time upon Lender’s written request, a rent schedule for the Mortgaged Property showing the name of each tenant and for each tenant, the space occupied, the lease expiration date, the rent payable for the current month, the date through which rent has been paid, and any related information requested by Lender; and
(4) upon Lender’s written request (but, absent an Event of Default, no more frequently than once in any six (6) month period):
(A) any item described in Section 8.02(b)(1) or Section 8.02(b)(2) for Borrower, certified as true, complete, and accurate by an individual having authority to bind Borrower;
(B) a property management or leasing report for the Mortgaged Property, showing the number of rental applications received from tenants or prospective tenants and deposits received from tenants or prospective tenants, and any other information requested by Lender;
(C) a statement of income and expenses for Borrower’s operation of the Mortgaged Property on a year-to-date basis as of the end of each month for such period as requested by Lender, which statement shall be delivered within thirty (30) days after the end of such month requested by Lender;
(D) a statement of real estate owned directly or indirectly by Borrower and Guarantor for such period as requested by Lender, which statement(s) shall be delivered within thirty (30) days after the end of such month requested by Lender; and
(E) a statement that identifies:
(i) the direct owners of Borrower and their respective interests;
(ii) the indirect owners (and any non-member managers) of Borrower that Control Borrower (excluding any Publicly-Held Corporations or Publicly-Held Trusts) and their respective interests; and
(iii) the indirect owners of Borrower that hold twenty-five percent (25%) or more of the ownership interests in Borrower (excluding any Publicly-Held Corporations or Publicly-Held Trusts) and their respective interests.
(c) Audited Financials.
In the event Borrower or Guarantor receives or obtains any audited financial statements and such financial statements are required to be delivered to Lender under Section 8.02(b), Borrower shall deliver or cause to be delivered to Lender the audited versions of such financial statements.
(d) Delivery of Books and Records.
If an Event of Default has occurred and is continuing, Borrower shall deliver to Lender, upon written demand, all books and records relating to the Mortgaged Property or its operation.
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Section 8.03 Mortgage Loan Administration Matters Regarding Books and Records and Financial Reporting.
(a) Lender’s Right to Obtain Audited Books and Records.
Lender may require that Borrower’s or Guarantor’s books and records be audited, at Borrower’s expense, by an independent certified public accountant selected by Lender in order to produce or audit any statements, schedules, and reports of Borrower, Guarantor, or the Mortgaged Property required by Section 8.02, if:
(1) Borrower or Guarantor fails to provide in a timely manner the statements, schedules, and reports required by Section 8.02 and, thereafter, Borrower or Guarantor fails to provide such statements, schedules, and reports within the cure period provided in Section 14.01(c);
(2) the statements, schedules, and reports submitted to Lender pursuant to Section 8.02 are not full, complete, and accurate in all material respects as determined by Lender and, thereafter, Borrower or Guarantor fails to provide such statements, schedules, and reports within the cure period provided in Section 14.01(c); or
(3) an Event of Default has occurred and is continuing.
Notwithstanding the foregoing, the ability of Lender to require the delivery of audited financial statements shall be limited to not more than once per Borrower’s fiscal year so long as no Event of Default has occurred during such fiscal year (or any event which, with the giving of written notice or the passage of time, or both, would constitute an Event of Default has occurred and is continuing). Borrower shall cooperate with Lender in order to satisfy the provisions of this Section 8.03(a). All related costs and expenses of Lender shall become immediately due and payable by Borrower within ten (10) Business Days after demand therefor.
(b) Credit Reports; Credit Score.
No more often than once in any twelve (12) month period, Lender is authorized to obtain a credit report (if applicable) on Borrower or Guarantor, the cost of which report shall be paid by Borrower. Lender is authorized to obtain a Credit Score (if applicable) for Borrower or Guarantor at any time at Lender’s expense.
ARTICLE 9 - INSURANCE
Section 9.01 Representations and Warranties.
The representations and warranties made by Borrower to Lender in this Section 9.01 are made as of the Effective Date and are true and correct except as disclosed on the Exceptions to Representations and Warranties Schedule.
(a) Compliance with Insurance Requirements.
Borrower is in compliance with Lender’s insurance requirements (or has obtained a written waiver from Lender for any non-compliant coverage) and has timely paid all premiums on all required insurance policies.
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(b) Property Condition.
(1) The Mortgaged Property has not been damaged by fire, water, wind, or other cause of loss; or
(2) if previously damaged, any previous damage to the Mortgaged Property has been repaired and the Mortgaged Property has been fully restored.
Section 9.02 Covenants.
(a) Insurance Requirements.
(1) As required by Lender and applicable law, and as may be modified from time to time, Borrower shall:
(A) keep the Improvements insured at all times against any hazards, which insurance shall include coverage against loss by fire and all other perils insured by the “special causes of loss” coverage form, general boiler and machinery coverage, business income coverage, and flood (if any of the Improvements are located in an area identified by the Federal Emergency Management Agency (or any successor) as an area having special flood hazards and to the extent flood insurance is available in that area), and may include sinkhole insurance, mine subsidence insurance, earthquake insurance, terrorism insurance, windstorm insurance and, if the Mortgaged Property does not conform to applicable building, zoning, or land use laws, ordinance, and law coverage;
(B) maintain at all times commercial general liability insurance, workmen’s compensation insurance, and such other liability, errors and omissions, and fidelity insurance coverage; and
(C) maintain builder’s risk and public liability insurance, and other insurance in connection with completing the Repairs or Replacements, as applicable.
(b) Delivery of Policies, Renewals, Notices, and Proceeds.
Borrower shall:
(1) cause all insurance policies (including any policies not otherwise required by Lender) which can be endorsed with standard non-contributing, non-reporting mortgagee clauses making loss payable to Lender (or Lender’s assigns) to be so endorsed;
(2) promptly deliver to Lender a copy of all renewal and other notices received by Borrower with respect to the policies and all receipts for paid premiums;
(3) deliver evidence, in form and content acceptable to Lender, that each required insurance policy under this Article 9 has been renewed not less than fifteen (15) days prior to the applicable expiration date, and (if such evidence is other than an original or duplicate original of a renewal policy) deliver the original or duplicate original of each renewal policy (or such other evidence of insurance as may be required by or acceptable to Lender) in form and content acceptable to Lender within ninety (90) days after the applicable expiration date of the original insurance policy;
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(4) provide immediate written notice to the insurance company and to Lender of any event of loss;
(5) execute such further evidence of assignment of any insurance proceeds as Lender may require; and
(6) provide immediate written notice to Lender of Borrower’s receipt of any insurance proceeds under any insurance policy required by Section 9.02(a)(1) above and, if requested by Lender, deliver to Lender all of such proceeds received by Borrower to be applied by Lender in accordance with this Article 9.
Section 9.03 Mortgage Loan Administration Matters Regarding Insurance
(a) Lender’s Ongoing Insurance Requirements.
Borrower acknowledges that Lender’s insurance requirements may change from time to time. All insurance policies and renewals of insurance policies required by this Loan Agreement shall be:
(1) in the form and with the terms required by Lender;
(2) in such amounts, with such maximum deductibles and for such periods required by Lender; and
(3) issued by insurance companies satisfactory to Lender.
Borrower acknowledges that any failure OF BORROWER to comply with THE REQUIREMENTS SET FORTH IN SECTION 9.02(a) or SECTION 9.02(b)(3) above shall permit lender to purchase the applicable insurance at Borrower’s cost. Such insurance may, but need not, protect Borrower’s interests. The coverage that Lender purchases may not pay any claim that Borrower makes or any claim that is made against Borrower in connection with the Mortgaged Property. If Lender purchases insurance for the Mortgaged Property as permitted hereunder, Borrower will be responsible for the costs of that insurance, including interest at the Default Rate and any other charges Lender may impose in connection with the placement of the insurance until the effective date of the cancellation or the expiration of the insurance. The costs of the insurance shall be added to Borrower’s total outstanding balance or obligation and shall constitute additional Indebtedness. The costs of the insurance may be more than the cost of insurance Borrower may be able to obtain on its own. Borrower may later cancel any insurance purchased by Lender, but only after providing evidence that Borrower has obtained insurance as required by this Loan Agreement and the other Loan Documents.
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(b) Application of Proceeds on Event of Loss.
(1) Upon an event of loss, Lender may, at Lender’s option:
(A) hold such proceeds to be applied to reimburse Borrower for the cost of Restoration (in accordance with Lender’s then-current policies relating to the restoration of casualty damage on similar multifamily residential properties); or
(B) apply such proceeds to the payment of the Indebtedness, whether or not then due; provided, however, Lender shall not apply insurance proceeds to the payment of the Indebtedness and shall permit Restoration pursuant to Section 9.03(b)(1)(A) if all of the following conditions are met:
(i) no Event of Default has occurred and is continuing (or any event which, with the giving of written notice or the passage of time, or both, would constitute an Event of Default has occurred and is continuing);
(ii) Lender determines that the combination of insurance proceeds and amounts provided by Borrower will be sufficient funds to complete the Restoration;
(iii) Lender determines that the net operating income generated by the Mortgaged Property after completion of the Restoration will be sufficient to support a debt service coverage ratio not less than the debt service coverage ratio immediately prior to the event of loss, but in no event less than 1.0x (the debt service coverage ratio shall be calculated on a thirty (30) year amortizing basis (if applicable, on a proforma basis approved by Lender) in all events and shall include all operating costs and other expenses, Imposition Deposits, deposits to Collateral Accounts, and Mortgage Loan repayment obligations);
(iv) Lender determines that the Restoration will be completed before the earlier of (1) one year before the stated Maturity Date, or (2) one year after the date of the loss or casualty; and
(v) Borrower provides Lender, upon written request, evidence of the availability during and after the Restoration of the insurance required to be maintained by Borrower pursuant to this Loan Agreement.
After the completion of Restoration in accordance with the above requirements, as determined by Lender, the balance, if any, of such proceeds shall be returned to Borrower.
(2) Notwithstanding the foregoing, if any loss is estimated to be in an amount equal to or less than $50,000, Lender shall not exercise its rights and remedies as power-of-attorney herein and shall allow Borrower to make proof of loss, to adjust and compromise any claims under policies of property damage insurance, to appear in and prosecute any action arising from such policies of property damage insurance, and to collect and receive the proceeds of property damage insurance; provided that each of the following conditions shall be satisfied:
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(A) Borrower shall immediately notify Lender of the casualty giving rise to the claim;
(B) no Event of Default has occurred and is continuing (or any event which, with the giving of written notice or the passage of time, or both, would constitute an Event of Default has occurred and is continuing);
(C) the Restoration will be completed before the earlier of (i) one year before the stated Maturity Date, or (ii) one year after the date of the loss or casualty;
(D) Lender determines that the combination of insurance proceeds and amounts provided by Borrower will be sufficient funds to complete the Restoration;
(E) all proceeds of property damage insurance shall be issued in the form of joint checks to Borrower and Lender;
(F) all proceeds of property damage insurance shall be applied to the Restoration;
(G) Borrower shall deliver to Lender evidence satisfactory to Lender of completion of the Restoration and obtainment of all lien releases;
(H) Borrower shall have complied to Lender’s satisfaction with the foregoing requirements on any prior claims subject to this provision, if any; and
(I) Lender shall have the right to inspect the Mortgaged Property (subject to the rights of tenants under the Leases).
(3) If Lender elects to apply insurance proceeds to the Indebtedness in accordance with the terms of this Loan Agreement, Borrower shall not be obligated to restore or repair the Mortgaged Property. Rather, Borrower shall restrict access to the damaged portion of the Mortgaged Property and, at its expense and regardless of whether such costs are covered by insurance, clean up any debris resulting from the casualty event, and, if required or otherwise permitted by Lender, demolish or raze any remaining part of the damaged Mortgaged Property to the extent necessary to keep and maintain the Mortgaged Property in a safe, habitable, and marketable condition. Nothing in this Section 9.03(b) shall affect any of Lender’s remedial rights against Borrower in connection with a breach by Borrower of any of its obligations under this Loan Agreement or under any Loan Document, including any failure to timely pay Monthly Debt Service Payments or maintain the insurance coverage(s) required by this Loan Agreement.
(c) Payment Obligations Unaffected.
The application of any insurance proceeds to the Indebtedness shall not extend or postpone the Maturity Date, or the due date or the full payment of any Monthly Debt Service Payment, Monthly Replacement Reserve Deposit, or any other installments referred to in this Loan Agreement or in any other Loan Document. Notwithstanding the foregoing, if Lender applies insurance proceeds to the Indebtedness in connection with a casualty of less than the entire Mortgaged Property, and after such application of proceeds the debt service coverage ratio (as determined by Lender) is less than 1.25x based on the then-applicable Monthly Debt Service Payment and the anticipated on-going net operating income of the Mortgaged Property after such casualty event, then Lender may, at its discretion, permit an adjustment to the Monthly Debt Service Payments that become due and owing thereafter, based on Lender’s then-current underwriting requirements. In no event shall the preceding sentence obligate Lender to make any adjustment to the Monthly Debt Service Payments.
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(d) Foreclosure Sale.
If the Mortgaged Property is transferred pursuant to a Foreclosure Event or Lender otherwise acquires title to the Mortgaged Property, Borrower acknowledges that Lender shall automatically succeed to all rights of Borrower in and to any insurance policies and unearned insurance premiums applicable to the Mortgaged Property and in and to the proceeds resulting from any damage to the Mortgaged Property prior to such Foreclosure Event or such acquisition.
(e) Appointment of Lender as Attorney-In-Fact.
Borrower hereby authorizes and appoints Lender as attorney-in-fact pursuant to Section 14.03(c).
ARTICLE 10 - CONDEMNATION
Section 10.01 Representations and Warranties.
The representations and warranties made by Borrower to Lender in this Section 10.01 are made as of the Effective Date and are true and correct except as disclosed on the Exceptions to Representations and Warranties Schedule.
(a) Prior Condemnation Action.
No part of the Mortgaged Property has been taken in connection with a Condemnation Action.
(b) Pending Condemnation Actions.
No Condemnation Action is pending nor, to Borrower’s knowledge, is threatened for the partial or total condemnation or taking of the Mortgaged Property.
Section 10.02 Covenants.
(a) Notice of Condemnation.
Borrower shall:
(1) promptly notify Lender of any Condemnation Action of which Borrower has knowledge;
(2) appear in and prosecute or defend, at its own cost and expense, any action or proceeding relating to any Condemnation Action, including any defense of Lender’s interest in the Mortgaged Property tendered to Borrower by Lender, unless otherwise directed by Lender in writing; and
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(3) execute such further evidence of assignment of any condemnation award in connection with a Condemnation Action as Lender may require.
(b) Condemnation Proceeds.
Borrower shall pay to Lender all awards or proceeds of a Condemnation Action promptly upon receipt.
Section 10.03 Mortgage Loan Administration Matters Regarding Condemnation.
(a) Application of Condemnation Awards.
Lender may apply any awards or proceeds of a Condemnation Action, after the deduction of Lender’s expenses incurred in the collection of such amounts, to:
(1) the restoration or repair of the Mortgaged Property, if applicable;
(2) the payment of the Indebtedness, with the balance, if any, paid to Borrower; or
(3) Borrower.
(b) Payment Obligations Unaffected.
The application of any awards or proceeds of a Condemnation Action to the Indebtedness shall not extend or postpone the Maturity Date, or the due date or the full payment of any Monthly Debt Service Payment, Monthly Replacement Reserve Deposit, or any other installments referred to in this Loan Agreement or in any other Loan Document.
(c) Appointment of Lender as Attorney-In-Fact.
Borrower hereby authorizes and appoints Lender as attorney-in-fact pursuant to Section 14.03(c).
(d) Preservation of Mortgaged Property.
If a Condemnation Action results in or from damage to the Mortgaged Property and Lender elects to apply the proceeds or awards from such Condemnation Action to the Indebtedness in accordance with the terms of this Loan Agreement, Borrower shall not be obligated to restore or repair the Mortgaged Property. Rather, Borrower shall restrict access to any portion of the Mortgaged Property which has been damaged or destroyed in connection with such Condemnation Action and, at Borrower’s expense and regardless of whether such costs are covered by insurance, clean up any debris resulting in or from the Condemnation Action, and, if required by any Governmental Authority or otherwise permitted by Lender, demolish or raze any remaining part of the damaged Mortgaged Property to the extent necessary to keep and maintain the Mortgaged Property in a safe, habitable, and marketable condition. Nothing in this Section 10.03(d) shall affect any of Lender’s remedial rights against Borrower in connection with a breach by Borrower of any of its obligations under this Loan Agreement or under any Loan Document, including any failure to timely pay Monthly Debt Service Payments or maintain the insurance coverage(s) required by this Loan Agreement.
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ARTICLE 11 - LIENS, TRANSFERS, AND ASSUMPTIONS
Section 11.01 Representations and Warranties.
The representations and warranties made by Borrower to Lender in this Section 11.01 are made as of the Effective Date and are true and correct except as disclosed on the Exceptions to Representations and Warranties Schedule.
(a) No Labor or Materialmen’s Claims.
All parties furnishing labor and materials on behalf of Borrower have been paid in full. There are no mechanics’ or materialmen’s liens (whether filed or unfiled) outstanding for work, labor, or materials (and no claims or work outstanding that under applicable law could give rise to any such mechanics’ or materialmen’s liens) affecting the Mortgaged Property, whether prior to, equal with, or subordinate to the lien of the Security Instrument.
(b) No Other Interests.
No Person:
(1) other than Borrower has any possessory ownership or interest in the Mortgaged Property or right to occupy the same except under and pursuant to the provisions of existing Leases, the material terms of all such Leases having been previously disclosed in writing to Lender; nor
(2) has an option, right of first refusal, or right of first offer (except as required by applicable law) to purchase the Mortgaged Property, or any interest in the Mortgaged Property.
Section 11.02 Covenants.
(a) Liens; Encumbrances.
Borrower shall not permit the grant, creation, or existence of any Lien, whether voluntary, involuntary, or by operation of law, on all or any portion of the Mortgaged Property (including any voluntary, elective, or non-compulsory tax lien or assessment pursuant to a voluntary, elective, or non-compulsory special tax district or similar regime) other than:
(1) Permitted Encumbrances;
(2) the creation of:
(A) any tax lien, municipal lien, utility lien, mechanics’ lien, materialmen’s lien, or judgment lien against the Mortgaged Property if bonded off, released of record, or otherwise remedied to Lender’s satisfaction within sixty (60) days after the earlier of the date Borrower has actual notice or constructive notice of the existence of such lien; or
(B) any mechanics’ or materialmen’s liens which attach automatically under the laws of any Governmental Authority upon the commencement of any work upon, or delivery of any materials to, the Mortgaged Property and for which Borrower is not delinquent in the payment for any such work or materials; and
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(3) the lien created by the Loan Documents.
(b) Transfers.
(1) Mortgaged Property.
Borrower shall not Transfer, or cause or permit a Transfer of, all or any part of the Mortgaged Property (including any interest in the Mortgaged Property) other than:
(A) a Transfer to which Lender has consented in writing;
(B) Leases permitted pursuant to the Loan Documents;
(C) [reserved];
(D) a Transfer of obsolete or worn out Personalty or Fixtures that are contemporaneously replaced by items of equal or better function and quality which are free of Liens (other than those created by the Loan Documents);
(E) the grant of an easement, servitude, or restrictive covenant to which Lender has consented, and Borrower has paid to Lender, upon demand, all costs and expenses incurred by Lender in connection with reviewing Borrower’s request. Notwithstanding the foregoing, Borrower shall be permitted to grant an easement over the Mortgaged Property to a publicly operated or private franchise utility where (a) such easement is between Borrower and the utility, (b) the granting of such easement does not affect Borrower’s access to the Mortgaged Property or the use of any easements or amenities which benefit the Mortgaged Property, (c) the granting of such easement does not result in the loss of the use of any units, (d) the granting of such easement does not result in an effect on the Mortgaged Property’s value or marketability, or on the health or safety of the tenants under any Residential Leases, that is adverse in any meaningful way, and (e) the consideration paid to Borrower (which consideration may be retained by Borrower as provided in the following sentence), after deducting Borrower’s costs and expenses incurred in connection with the granting of such easement, is less than $250 per individual dwelling unit. Prior to the granting of an easement described in the immediately preceding sentence, Borrower shall (x) provide Lender with copies of the utility easement, for Lender’s review and approval, which approval shall not be unreasonably withheld, conditioned or delayed, and, (y) deliver evidence reasonably satisfactory to Lender that the conditions in subsections (a) through (e) have been met. So long as no Event of Default exists, any compensation received from the easement holder shall be paid: first, to cover the expenses of recording the easement; second, to reimburse or pay Lender’s out of pocket expenses incurred by Lender in connection with its review of the easement in accordance with this Section 11.02(b)(1)(E); third, if applicable, to pay the cost to repair or restore any portion of the Mortgaged Property damaged as a result of the exercise of the rights granted by easement holder, to the extent not paid directly by such easement holder, and fourth, to Borrower for its own account; provided, that in the event any compensation to be retained by the Borrower in accordance with this provision exceeds $250 per dwelling unit (after deducting Borrower’s costs and expenses incurred in connection with the granting of such easement), such amounts shall be deposited in the Replacement Reserve Account;
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(F) a lien permitted pursuant to Section 11.02(a) of this Loan Agreement; or
(G) the conveyance of the Mortgaged Property following a Foreclosure Event.
(2) Interests in Borrower, Key Principal, or Guarantor.
Other than a Transfer to which Lender has consented in writing, Borrower shall not Transfer, or cause or permit to be Transferred:
(A) any direct or indirect ownership interest in Borrower, Key Principal, or Guarantor (if applicable) if such Transfer would cause a change in Control;
(B) a direct or indirect Restricted Ownership Interest in Borrower, Key Principal, or Guarantor (if applicable);
(C) fifty percent (50%) or more of Key Principal’s or Guarantor’s direct or indirect ownership interests in Borrower that existed on the Effective Date (individually or on an aggregate basis);
(D) the economic benefits or rights to cash flows attributable to any ownership interests in Borrower, Key Principal, or Guarantor (if applicable) separate from the Transfer of the underlying ownership interests if the Transfer of the underlying ownership interest is prohibited by this Loan Agreement; or
(E) a Transfer to a new key principal or new guarantor (if such new key principal or guarantor is an entity), which entity has an organizational existence termination date that ends before the Maturity Date.
Notwithstanding the foregoing or anything in Section 11.02(d) to the contrary, if a Publicly-Held Corporation or a Publicly-Held Trust Controls Borrower, Key Principal, or Guarantor (or is the Key Principal or Guarantor), or owns a direct or indirect Restricted Ownership Interest in Borrower, Key Principal, or Guarantor, a Transfer of any ownership interests in such Publicly-Held Corporation or Publicly-Held Trust (including, but not limited to, the issuance of preferred stock by such Publicly-Held Corporation or Publicly Held Trust that entitles the holder to a dividend and a liquidation preference that takes priority over the common stock of such Publicly-Held Corporation or Publicly Held Trust (and the commensurate issuance of preferred limited partnership interests in any operating partnership of such Publicly-Held Corporation or Publicly Held Trust), so long as Control of such Publicly-Held Corporation or Publicly-Held Trust remains the same after such issuance and at the time of such issuance no Person owns ten percent (10%) or more of such issuance) shall not be prohibited under this Loan Agreement as long as (i) such Transfer does not result in a conversion of such Publicly-Held Corporation or Publicly-Held Trust to a privately held entity, and (ii) Borrower provides written notice to Lender not later than thirty (30) days thereafter of any such Transfer that results in any Person owning ten percent (10%) or more of the ownership interests in such Publicly-Held Corporation or Publicly-Held Trust.
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(3) Name Change or Entity Conversion.
Lender shall consent to Borrower changing its name, changing its jurisdiction of organization, or converting from one type of legal entity into another type of legal entity for any lawful purpose, provided that:
(A) Lender receives written notice at least thirty (30) days prior to such change or conversion, which notice shall include organizational charts that reflect the structure of Borrower both prior to and subsequent to such name change or entity conversion;
(B) such Transfer is not otherwise prohibited under the provisions of Section 11.02(b)(2);
(C) Borrower executes an amendment to this Loan Agreement and any other Loan Documents required by Lender documenting the name change or entity conversion;
(D) Borrower agrees and acknowledges, at Borrower’s expense, that (i) Borrower will execute and record in the land records any instrument required by the Property Jurisdiction to be recorded to evidence such name change or entity conversion (or provide Lender with written confirmation from the title company (via electronic mail or letter) that no such instrument is required), (ii) Borrower will execute any additional documents required by Lender, including the amendment to this Loan Agreement, and allow such documents to be recorded or filed in the land records of the Property Jurisdiction, (iii) Lender will obtain a “date down” endorsement to the Lender’s Title Policy (or obtain a new Title Policy if a “date down” endorsement is not available in the Property Jurisdiction), evidencing title to the Mortgaged Property being in the name of the successor entity and the Lien of the Security Instrument against the Mortgaged Property, and (iv) Lender will file any required UCC-3 financing statement and make any other filing deemed necessary to maintain the priority of its Liens on the Mortgaged Property; and
(E) no later than ten (10) days subsequent to such name change or entity conversion, Borrower shall provide Lender (i) the documentation filed with the appropriate office in Borrower’s state of formation evidencing such name change or entity conversion, (ii) copies of the organizational documents of Borrower, including any amendments, filed with the appropriate office in Borrower’s state of formation reflecting the post-conversion Borrower name, form of organization, and structure, and (iii) if available, new certificates of good standing or valid formation for Borrower.
(4) No Delaware Statutory Trust or Series LLC Conversion.
Notwithstanding any provisions herein to the contrary, no Borrower, Guarantor, or Key Principal shall convert to a Delaware Statutory Trust or a series limited liability company.
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(c) No Other Indebtedness.
Other than the Mortgage Loan, Borrower shall not incur or be obligated at any time with respect to any loan or other indebtedness (except trade payables as otherwise permitted in this Loan Agreement), including any indebtedness secured by a Lien on, or the cash flows from, the Mortgaged Property.
(d) No Mezzanine Financing or Preferred Equity.
Neither Borrower nor any direct or indirect owner of Borrower shall: (1) incur any Mezzanine Debt other than Permitted Mezzanine Debt; (2) issue any Preferred Equity other than Permitted Preferred Equity; or (3) incur any similar indebtedness or issue any similar equity.
Section 11.03 Mortgage Loan Administration Matters Regarding Liens, Transfers, and Assumptions
(a) Assumption of Mortgage Loan.
Lender shall consent to a Transfer of the Mortgaged Property to and an assumption of the Mortgage Loan by a new borrower if each of the following conditions is satisfied prior to the Transfer:
(1) Borrower has submitted to Lender all information required by Lender to make the determination required by this Section 11.03(a);
(2) no Event of Default has occurred and is continuing, and no event which, with the giving of written notice or the passage of time, or both, would constitute an Event of Default has occurred and is continuing;
(3) Lender determines that:
(A) the proposed new borrower, new key principal, and any other new guarantor fully satisfy all of Lender’s then-applicable borrower, key principal, or guarantor eligibility, credit, management, and other loan underwriting standards, which shall include an analysis of (i) the previous relationships between Lender and the proposed new borrower, new key principal, new guarantor, and any Person in Control of them, and the organization of the new borrower, new key principal, and new guarantor (if applicable), and (ii) the operating and financial performance of the Mortgaged Property, including physical condition and occupancy;
(B) none of the proposed new borrower, new key principal, and any new guarantor, or any owners of the proposed new borrower, new key principal, and any new guarantor, are a Prohibited Person; and
(C) none of the proposed new borrower, new key principal, and any new guarantor (if any of such are entities) shall have an organizational existence termination date that ends before the Maturity Date;
(4) [reserved];
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(5) the proposed new borrower has:
(A) executed an assumption agreement acceptable to Lender that, among other things, requires the proposed new borrower to assume and perform all obligations of Borrower (or any other transferor), and that may require that the new borrower comply with any provisions of any Loan Document that previously may have been waived by Lender for Borrower, subject to the terms of Section 11.03(g);
(B) if required by Lender, delivered to the Title Company for filing and/or recording in all applicable jurisdictions, all applicable Loan Documents including the assumption agreement to correctly evidence the assumption and the confirmation, continuation, perfection, and priority of the Liens created hereunder and under the other Loan Documents; and
(C) delivered to Lender a “date-down” endorsement to the Title Policy acceptable to Lender (or a new title insurance policy if a “date-down” endorsement is not available);
(6) one or more individuals or entities acceptable to Lender as new guarantors have executed and delivered to Lender:
(A) an assumption agreement acceptable to Lender that requires the new guarantor to assume and perform all obligations of Guarantor under any Guaranty given in connection with the Mortgage Loan; or
(B) a substitute Non-Recourse Guaranty and other substitute guaranty in a form acceptable to Lender;
(7) Lender has reviewed and approved the Transfer documents; and
(8) Lender has received the fees described in Section 11.03(g).
(b) Transfers to Key Principal-Owned Affiliates or Guarantor-Owned Affiliates.
(1) Except as otherwise covered in Section 11.03(b)(2) below, Transfers of direct or indirect ownership interests in Borrower to Key Principal or Guarantor, or to a transferee through which Key Principal or Guarantor (as applicable) Controls Borrower with the same rights and abilities as Key Principal or Guarantor (as applicable) Controls Borrower immediately prior to the date of such Transfer, shall be consented to by Lender if:
(A) such Transfer satisfies the applicable requirements of Section 11.03(a), other than Section 11.03(a)(5); and
(B) after giving effect to any such Transfer, each Key Principal or Guarantor (as applicable) continues to own not less than fifty percent (50%) of such Key Principal’s or Guarantor’s (as applicable) direct or indirect ownership interests in Borrower that existed on the Effective Date.
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(2) Transfers of direct or indirect interests in Borrower held by a Key Principal or Guarantor to other Key Principals or Guarantors, as applicable, shall be consented to by Lender if such Transfer satisfies the following conditions:
(A) the Transfer does not cause a change in the Control of Borrower; and
(B) the transferor Key Principal or Guarantor maintains the same right and ability to Control Borrower as existed prior to the Transfer.
If the conditions set forth in this Section 11.03(b) are satisfied, the Transfer Fee shall be waived provided Borrower shall pay the Review Fee and out-of-pocket costs set forth in Section 11.03(g).
(c) Estate Planning.
Notwithstanding the provisions of Section 11.02(b)(2), so long as (1) the Transfer does not cause a change in the Control of Borrower, and (2) Key Principal and Guarantor, as applicable, maintain the same right and ability to Control Borrower as existed prior to the Transfer, Lender shall consent to Transfers of direct or indirect ownership interests in Borrower and Transfers of direct or indirect ownership interests in an entity Key Principal or entity Guarantor to:
(A) Immediate Family Members of such transferor, each of whom must have obtained the legal age of majority;
(B) United States domiciled trusts established for the benefit of the transferor or Immediate Family Members of the transferor; or
(C) partnerships or limited liability companies of which the partners or members, respectively, are comprised entirely of (i) such transferor and Immediate Family Members (each of whom must have obtained the legal age of majority) of such transferor, (ii) Immediate Family Members (each of whom must have obtained the legal age of majority) of such transferor, or (iii) United States domiciled trusts established for the benefit of the transferor or Immediate Family Members of the transferor.
If the conditions set forth in this Section 11.03(c) are satisfied, the Transfer Fee shall be waived provided Borrower shall pay the Review Fee and out-of-pocket costs set forth in Section 11.03(g).
(d) Termination or Revocation of Trust.
If any of Borrower, Guarantor, or Key Principal is a trust, or if Control of Borrower, Guarantor, or Key Principal is Transferred or if a Restricted Ownership Interest in Borrower, Guarantor, or Key Principal would be Transferred due to the termination or revocation of a trust, the termination or revocation of such trust is an unpermitted Transfer; provided that the termination or revocation of the trust due to the death of an individual trustor shall not be considered an unpermitted Transfer so long as:
(1) Lender is notified within thirty (30) days of the death; and
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(2) such Borrower, Guarantor, Key Principal, or other Person, as applicable, is replaced with an individual or entity acceptable to Lender, in accordance with the provisions of Section 11.03(a) within ninety (90) days of the date of the death causing the termination or revocation.
If the conditions set forth in this Section 11.03(d) are satisfied, the Transfer Fee shall be waived; provided Borrower shall pay the Review Fee and out-of-pocket costs set forth in Section 11.03(g).
(e) Death of Key Principal or Guarantor; Transfer Due to Death.
(1) If a Key Principal or Guarantor that is a natural person dies, or if Control of Borrower, Guarantor, or Key Principal is Transferred, or if a Restricted Ownership Interest in Borrower, Guarantor, or Key Principal would be Transferred as a result of the death of a Person (except in the case of trusts which is addressed in Section 11.03(d)), Borrower must notify Lender in writing within ninety (90) days in the event of such death. Unless waived in writing by Lender, the deceased shall be replaced by an individual or entity within one hundred eighty (180) days, subject to Borrower’s satisfaction of the following conditions:
(A) Borrower has submitted to Lender all information required by Lender to make the determination required by this Section 11.03(e);
(B) Lender determines that, if applicable:
(i) any proposed new key principal and any other new guarantor (or Person Controlling such new key principal or new guarantor) fully satisfies all of Lender’s then-applicable key principal or guarantor eligibility, credit, management, and other loan underwriting standards (including any standards with respect to previous relationships between Lender and the proposed new key principal and new guarantor (or Person Controlling such new key principal or new guarantor) and the organization of the new key principal and new guarantor);
(ii) none of any proposed new key principal or any new guarantor, or any owners of the proposed new key principal or any new guarantor, is a Prohibited Person; and
(iii) none of any proposed new key principal or any new guarantor (if any of such are entities) shall have an organizational existence termination date that ends before the Maturity Date; and
(C) if applicable, one or more individuals or entities acceptable to Lender as new guarantors have executed and delivered to Lender:
(i) an assumption agreement acceptable to Lender that requires the new guarantor to assume and perform all obligations of Guarantor under any Guaranty given in connection with the Mortgage Loan; or
(ii) a substitute Non-Recourse Guaranty and other substitute guaranty in a form acceptable to Lender.
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(2) In the event a replacement Key Principal, Guarantor, or other Person is required by Lender due to the death described in this Section 11.03(e), and such replacement has not occurred within such period, the period for replacement may be extended by Lender to a date not more than one year from the date of such death; however, Lender may require as a condition to any such extension that:
(A) the then-current property manager be replaced with a property manager reasonably acceptable to Lender (or if a property manager has not been previously engaged, a property manager reasonably acceptable to Lender be engaged); or
(B) a lockbox agreement or similar cash management arrangement (with the property manager) reasonably acceptable to Lender during such extended replacement period be instituted.
If the conditions set forth in this Section 11.03(e) are satisfied, the Transfer Fee shall be waived, provided Borrower shall pay the Review Fee and out-of-pocket costs set forth in Section 11.03(g).
(f) Bankruptcy of Guarantor.
(1) Upon the occurrence of any Guarantor Bankruptcy Event, unless waived in writing by Lender, the applicable Guarantor shall be replaced by an individual or entity within ninety (90) days of such Guarantor Bankruptcy Event, subject to Borrower’s satisfaction of the following conditions:
(A) Borrower has submitted to Lender all information required by Lender to make the determination required by this Section 11.03(f);
(B) Lender determines that:
(i) the proposed new guarantor fully satisfies all of Lender’s then-applicable guarantor eligibility, credit, management, and other loan underwriting standards (including any standards with respect to previous relationships between Lender and the proposed new guarantor and the organization of the new guarantor (if applicable));
(ii) no new guarantor is a Prohibited Person; and
(iii) no new guarantor (if any of such are entities) shall have an organizational existence termination date that ends before the Maturity Date; and
(C) one or more individuals or entities acceptable to Lender as new guarantors have executed and delivered to Lender:
(i) an assumption agreement acceptable to Lender that requires the new guarantor to assume and perform all obligations of Guarantor under any Guaranty given in connection with the Mortgage Loan; or
(ii) a substitute Non-Recourse Guaranty and other substitute guaranty in a form acceptable to Lender.
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(2) In the event a replacement Guarantor is required by Lender due to the Guarantor Bankruptcy Event described in this Section 11.03(f), and such replacement has not occurred within such period, the period for replacement may be extended by Lender in its discretion; however, Lender may require as a condition to any such extension that:
(A) the then-current property manager be replaced with a property manager reasonably acceptable to Lender (or if a property manager has not been previously engaged, a property manager reasonably acceptable to Lender be engaged); or
(B) a lockbox agreement or similar cash management arrangement (with the property manager) reasonably acceptable to Lender during such extended replacement period be instituted.
If the conditions set forth in this Section 11.03(f) are satisfied, the Transfer Fee shall be waived, provided Borrower shall pay the Review Fee and out-of-pocket costs set forth in Section 11.03(g).
(g) Further Conditions to Transfers and Assumption.
(1) In connection with any Transfer of the Mortgaged Property, or an ownership interest in Borrower, Key Principal, or Guarantor for which Lender’s approval is required under this Loan Agreement (including Section 11.03(a)), Lender may, as a condition to any such approval, require:
(A) additional collateral, guaranties, or other credit support to mitigate any risks concerning the proposed transferee or the performance or condition of the Mortgaged Property;
(B) amendment of the Loan Documents to delete or modify any specially negotiated terms or provisions previously granted for the exclusive benefit of original Borrower, Key Principal, or Guarantor and to restore the original provisions of the standard Fannie Mae form multifamily loan documents, to the extent such provisions were previously modified; or
(C) a modification to the amounts required to be deposited into the Reserve/Escrow Account pursuant to the terms of Section 13.02(a)(3)(B).
(2) In connection with any request by Borrower for consent to a Transfer, Borrower shall pay to Lender upon demand:
(A) the Transfer Fee (to the extent charged by Lender);
(B) the Review Fee (regardless of whether Lender approves or denies such request); and
(C) all of Lender’s out-of-pocket costs (including reasonable attorneys’ fees) incurred in reviewing the Transfer request, regardless of whether Lender approves or denies such request.
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(h) Additional Conditionally Permitted Transfers.
Notwithstanding anything in Section 11.02(b) of the Loan Agreement to the contrary and in addition to, and without limiting, any Transfer that would otherwise be permitted under Section 11.02(b) of the Loan Agreement, the occurrence of the following shall not constitute an Event of Default under the Loan Agreement and shall be permitted without payment of the Transfer Fee:
(1) a Transfer (a "BR to Carroll Transfer") of the membership interests in BR Carroll Tenside JV, LLC, a Delaware limited liability company ("Venture"), the sole member of Borrower by BR Tenside JV Member, LLC ("BR Member") to Carroll Co-Invest IV Tenside, LLC, a Georgia limited liability company ("Carroll Member"). The following provisions shall apply in connection with any BR to Carroll Transfer:
(A) following the BR to Carroll Transfer, Control of Borrower continues to be held, directly or indirectly, by Carroll Multifamily Real Estate Fund IV, LP (the “Carroll Guarantor”) and, ultimately, by M. Patrick Carroll, and Borrower shall provide Lender with written certification of the same within fifteen (15) days prior to such Transfer;
(B) no Event of Default has occurred, and no event which, with the giving of notice or the passage of time, or both, would constitute an Event of Default has occurred and is continuing and Borrower shall provide Lender with written certification of the same within fifteen (15) days prior to such Transfer; provided, however, if the BR to Carroll Transfer would cure the Event of Default, the Transfer must occur within 60 days after all conditions in this Section have been met to Lender's satisfaction;
(C) Lender has reviewed and approved the Transfer documents and received organizational charts reflecting the structure of Borrower prior to and after the Transfer and copies of the then-current organizational documents of Borrower, including any amendments;
(D) Borrower provides Lender with at least 15 days prior written notice of the proposed Transfer and pays the Review Fee in conjunction with the delivery of such prior written notice;
(E) Borrower pays or reimburses Lender, upon demand, for all of Lender's out-of-pocket costs (including reasonable attorneys' fees) incurred in reviewing the Transfer request, to the extent such costs exceed the Review Fee; and
(F) the Carroll Guarantor and M. Patrick Carroll, the Key Principal, shall reaffirm their respective statuses as a Guarantor and Key Principal, and Lender will release Bluerock Residential Growth REIT, Inc. (“BR Guarantor”) from all of its obligations under the Guaranty, provided, however, that
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(i) BR Guarantor is not released from any liability pursuant to the Guaranty relating to the Environmental Indemnity Agreement for any liability that relates to the period prior to the date of the Transfer, regardless of when such environmental hazard is discovered, and
(ii) Lender determines that the Carroll Guarantor satisfies all of Lender's then-applicable guarantor eligibility, credit management and other loan underwriting standards.
(2) a Transfer (a "Carroll to BR Transfer") of membership interests in Venture by the Carroll Member to the BR Member. The following provisions shall apply in connection with any Carroll to BR Transfer:
(A) following the Carroll to BR Transfer, Control of Borrower continues to be held, directly or indirectly, by BR Guarantor and Borrower shall provide Lender with written certification of the same within fifteen (15) days prior to such Transfer;
(B) no Event of Default has occurred, and no event which, with the giving of notice or the passage of time, or both, would constitute an Event of Default has occurred and is continuing and Borrower shall provide Lender with written certification of the same within fifteen (15) days prior to such Transfer; provided, however, if the Carroll to BR Transfer would cure the Event of Default, the Transfer must occur within 60 days after all conditions in this Section have been met to Lender's satisfaction;
(C) Lender has reviewed and approved the Transfer documents and received organizational charts reflecting the structure of Borrower prior to and after the Transfer and copies of the then-current organizational documents of Borrower, including any amendments;
(D) Borrower provides Lender with at least 15 days prior written notice of the proposed Transfer and pays the Review Fee in conjunction with the delivery of such prior written notice;
(E) Borrower pays or reimburses Lender, upon demand, for all of Lender's out-of-pocket costs (including reasonable attorneys' fees) incurred in reviewing the Transfer request, to the extent such costs exceed the Review Fee; and
(F) the BR Guarantor shall reaffirm its status as a Guarantor and Lender will release Carroll Guarantor from all of its obligations under the Guaranty, provided, however, that
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(i) Carroll Guarantor is not released from any liability pursuant to the Guaranty relating to the Environmental Indemnity Agreement for any liability that relates to the period prior to the date of the Transfer, regardless of when such environmental hazard is discovered, and
(ii) Lender determines that the BR Guarantor satisfies all of Lender's then-applicable guarantor eligibility, credit management and other loan underwriting standards.
For the avoidance of doubt, if any Transfers permitted under this Section 11.03(h) conflict with any provisions of Section 11.02 of this Loan Agreement, the provisions of this Section 11.03(h) shall be deemed to control.
ARTICLE 12 - IMPOSITIONS
Section 12.01 Representations and Warranties.
The representations and warranties made by Borrower to Lender in this Section 12.01 are made as of the Effective Date and are true and correct except as disclosed on the Exceptions to Representations and Warranties Schedule.
(a) Payment of Taxes, Assessments, and Other Charges.
Borrower has:
(1) paid (or with the approval of Lender, established an escrow fund sufficient to pay when due and payable) all amounts and charges relating to the Mortgaged Property that have become due and payable before any fine, penalty interest, lien, or costs may be added thereto, including Impositions, leasehold payments, and ground rents;
(2) paid all Taxes for the Mortgaged Property that have become due before any fine, penalty interest, lien, or costs may be added thereto pursuant to any notice of assessment received by Borrower and any and all taxes that have become due against Borrower before any fine, penalty interest, lien, or costs may be added thereto;
(3) no knowledge of any basis for any additional assessments;
(4) no knowledge of any presently pending special assessments against all or any part of the Mortgaged Property, or any presently pending special assessments against Borrower; and
(5) not received any written notice of any contemplated special assessment against the Mortgaged Property, or any contemplated special assessment against Borrower.
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Section 12.02 Covenants.
(a) Imposition Deposits, Taxes, and Other Charges.
Borrower shall:
(1) deposit the Imposition Deposits with Lender on each Payment Date (or on another day designated in writing by Lender) in amount sufficient, in Lender’s discretion, to enable Lender to pay each Imposition before the last date upon which such payment may be made without any penalty or interest charge being added, plus an amount equal to no more than one-sixth (1/6) (or the amount permitted by applicable law) of the Impositions for the trailing twelve (12) months (calculated based on the aggregate annual Imposition costs divided by twelve (12) and multiplied by two (2));
(2) deposit with Lender, within ten (10) days after written notice from Lender (subject to applicable law), such additional amounts estimated by Lender to be reasonably necessary to cure any deficiency in the amount of the Imposition Deposits held for payment of a specific Imposition;
(3) except as set forth in Section 12.03(c) below, pay all Impositions, leasehold payments, ground rents, and Taxes when due and before any fine, penalty, interest, lien, or costs may be added thereto;
(4) promptly deliver to Lender a copy of all notices of, and invoices for, Impositions, and, if Borrower pays any Imposition directly, Borrower shall promptly furnish to Lender receipts evidencing such payments; and
(5) promptly deliver to Lender a copy of all notices of any special assessments and contemplated special assessments against the Mortgaged Property or Borrower.
Section 12.03 Mortgage Loan Administration Matters Regarding Impositions.
(a) Maintenance of Records by Lender.
Lender shall maintain records of the monthly and aggregate Imposition Deposits held by Lender for the purpose of paying Taxes, insurance premiums, and each other obligation of Borrower for which Imposition Deposits are required.
(b) Imposition Accounts.
All Imposition Deposits shall be held in an institution (which may be Lender, if Lender is such an institution) whose deposits or accounts are insured or guaranteed by a federal agency and which accounts meet the standards for custodial accounts as required by Lender from time to time. Lender shall not be obligated to open additional accounts, or deposit Imposition Deposits in additional institutions, when the amount of the Imposition Deposits exceeds the maximum amount of the federal deposit insurance or guaranty. No interest, earnings, or profits on the Imposition Deposits shall be paid to Borrower unless applicable law so requires. Imposition Deposits shall not be trust funds, nor shall they operate to reduce the Indebtedness, unless applied by Lender for that purpose in accordance with this Loan Agreement. For the purposes of 9-104(a)(3) of the UCC, Lender is the owner of the Imposition Deposits and shall be deemed a “customer” with sole control of the account holding the Imposition Deposits.
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(c) Payment of Impositions; Sufficiency of Imposition Deposits.
Lender may pay an Imposition according to any bill, statement, or estimate from the appropriate public office or insurance company without inquiring into the accuracy of the bill, statement, or estimate or into the validity of the Imposition. Imposition Deposits shall be required to be used by Lender to pay Taxes, insurance premiums and any other individual Imposition only if:
(1) no Event of Default exists;
(2) Borrower has timely delivered to Lender all applicable bills or premium notices that it has received; and
(3) sufficient Imposition Deposits are held by Lender for each Imposition at the time such Imposition becomes due and payable.
Lender shall have no liability to Borrower or any other Person for failing to pay any Imposition if any of the conditions are not satisfied. If at any time the amount of the Imposition Deposits held for payment of a specific Imposition exceeds the amount reasonably deemed necessary by Lender to be held in connection with such Imposition, the excess may be credited against future installments of Imposition Deposits for such Imposition.
(d) Imposition Deposits Upon Event of Default.
If an Event of Default has occurred and is continuing, Lender may apply any Imposition Deposits, in such amount and in such order as Lender determines, to pay any Impositions or as a credit against the Indebtedness.
(e) Contesting Impositions.
Other than insurance premiums, Borrower may contest, at its expense, by appropriate legal proceedings, the amount or validity of any Imposition if:
(1) Borrower notifies Lender of the commencement or expected commencement of such proceedings;
(2) Lender determines that the Mortgaged Property is not in danger of being sold or forfeited;
(3) Borrower deposits with Lender (or the applicable Governmental Authority if required by applicable law) reserves sufficient to pay the contested Imposition, if required by Lender (or the applicable Governmental Authority);
(4) Borrower furnishes whatever additional security is required in the proceedings or is reasonably requested in writing by Lender; and
(5) Borrower commences, and at all times thereafter diligently prosecutes, such contest in good faith until a final determination is made by the applicable Governmental Authority.
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(f) Release to Borrower.
Upon payment in full of all sums secured by the Security Instrument and this Loan Agreement and release by Lender of the lien of the Security Instrument, Lender shall disburse to Borrower the balance of any Imposition Deposits then on deposit with Lender.
ARTICLE 13 - REPLACEMENT RESERVE AND REPAIRS
Section 13.01 Covenants.
(a) Initial Deposits to Replacement Reserve Account and Repairs Escrow Account.
On the Effective Date, Borrower shall pay to Lender:
(1) the Initial Replacement Reserve Deposit for deposit into the Replacement Reserve Account; and
(2) the Repairs Escrow Deposit for deposit into the Repairs Escrow Account.
(b) Monthly Replacement Reserve Deposits.
Borrower shall deposit the applicable Monthly Replacement Reserve Deposit into the Replacement Reserve Account on each Payment Date.
(c) Payment for Replacements and Repairs.
Borrower shall:
(1) pay all invoices for the Replacements and Repairs, regardless of whether funds on deposit in the Replacement Reserve Account or the Repairs Escrow Account, as applicable, are sufficient, prior to any request for disbursement from the Replacement Reserve Account or the Repairs Escrow Account, as applicable (unless Lender has agreed to issue joint checks in connection with a particular Replacement or Repair);
(2) pay all applicable fees and charges of any Governmental Authority on account of the Replacements and Repairs, as applicable; and
(3) provide evidence satisfactory to Lender of completion of the Replacements and any Required Repairs (within the Completion Period or within such other period or by such other date set forth in the Required Repair Schedule and any Borrower Requested Repairs and Additional Lender Repairs (by the date specified by Lender for any such Borrower Requested Repairs or Additional Lender Repairs)).
(d) Assignment of Contracts for Replacements and Repairs.
Borrower shall collaterally assign to Lender as additional security any contract or subcontract for Replacements or Repairs, upon Lender’s written request, on a form of assignment approved by Lender.
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(e) Indemnification.
If Lender elects to exercise its rights under Section 14.03 due to Borrower’s failure to timely commence or complete any Replacements or Repairs, Borrower shall indemnify and hold Lender harmless for, from and against any and all actions, suits, claims, demands, liabilities, losses, damages, obligations, and costs or expenses, including litigation costs and reasonable attorneys’ fees, arising from or in any way connected with the performance by Lender of the Replacements or Repairs or investment of the Reserve/Escrow Account Funds; provided that Borrower shall have no indemnity obligation for the actual cost of completing such Replacements or Repairs, or if such actions, suits, claims, demands, liabilities, losses, damages, obligations, and costs or expenses, including litigation costs and reasonable attorneys’ fees, arise as a result of the willful misconduct or gross negligence of Lender, Lender’s agents, employees, or representatives as determined by a court of competent jurisdiction pursuant to a final non-appealable court order.
(f) Amendments to Loan Documents.
Subject to Section 5.02, Borrower shall execute and deliver to Lender, upon written request, an amendment to this Loan Agreement, the Security Instrument, and any other Loan Document deemed necessary or desirable to perfect Lender’s lien upon any portion of the Mortgaged Property for which Reserve/Escrow Account Funds were expended.
(g) Administrative Fees and Expenses.
Borrower shall pay to Lender:
(1) by the date specified in the applicable invoice, the Repairs Escrow Account Administrative Fee and the Replacement Reserve Account Administration Fee for Lender’s services in administering the Repairs Escrow Account and Replacement Reserve Account and investing the funds on deposit in the Repairs Escrow Account and the Replacement Reserve Account, respectively;
(2) upon demand, a reasonable inspection fee, not exceeding the Maximum Inspection Fee, for each inspection of the Mortgaged Property by Lender in connection with a Repair or Replacement, plus all other reasonable costs and out-of-pocket expenses relating to such inspections; and
(3) upon demand, all reasonable fees charged by any engineer, architect, inspector or other person inspecting the Mortgaged Property on behalf of Lender for each inspection of the Mortgaged Property in connection with a Repair or Replacement, plus all other reasonable costs and out-of-pocket expenses relating to such inspections.
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Section 13.02 Mortgage Loan Administration Matters Regarding Reserves.
(a) Accounts, Deposits, and Disbursements.
(1) Custodial Accounts.
(A) The Replacement Reserve Account shall be an interest-bearing account that meets the standards for custodial accounts as required by Lender from time to time. Lender shall not be responsible for any losses resulting from the investment of the Replacement Reserve Deposits or for obtaining any specific level or percentage of earnings on such investment. All interest, if any, earned on the Replacement Reserve Deposits shall be added to and become part of the Replacement Reserve Account; provided, however, if applicable law requires, and so long as no Event of Default has occurred and is continuing under any of the Loan Documents, Lender shall pay to Borrower the interest earned on the Replacement Reserve Account not less frequently than the Replacement Reserve Account Interest Disbursement Frequency. In no event shall Lender be obligated to disburse funds from the Reserve/Escrow Account if an Event of Default has occurred and is continuing.
(B) Lender shall not be obligated to deposit the Repairs Escrow Deposits into an interest-bearing account.
(2) Disbursements by Lender Only.
Only Lender or a designated representative of Lender may make disbursements from the Replacement Reserve Account and the Repairs Escrow Account. Except as provided in Section 13.02(a)(8), disbursements shall only be made upon Borrower request and after satisfaction of all conditions for disbursement.
(3) Adjustment to Deposits.
(A) Mortgage Loan Terms Exceeding Ten (10) Years.
If the Loan Term exceeds ten (10) years (or five (5) years in the case of any Mortgaged Property that is an “affordable housing property” as indicated on the Summary of Loan Terms), a property condition assessment shall be ordered by Lender for the Mortgaged Property at the expense of Borrower (which expense may be paid out of the Replacement Reserve Account if excess funds are available). The property condition assessment shall be performed no earlier than the sixth (6th) month and no later than the ninth (9th) month of the tenth (10th) Loan Year and every tenth (10th) Loan Year thereafter if the Loan Term exceeds twenty (20) years (or the fifth (5th) Loan Year in the case of any Mortgaged Property that is an “affordable housing property” as indicated on the Summary of Loan Terms and every fifth (5th) Loan Year thereafter if the Loan Term exceeds ten (10) years). After review of the property condition assessment, the amount of the Monthly Replacement Reserve Deposit may be adjusted by Lender for the remaining Loan Term by written notice to Borrower so that the Monthly Replacement Reserve Deposits are sufficient to fund the Replacements as and when required and/or the amount to be held in the Repairs Escrow Account may be adjusted by Lender so that the Repairs Escrow Deposit is sufficient to fund the Repairs as and when required
(B) Transfers.
In connection with any Transfer of the Mortgaged Property, or any Transfer of an ownership interest in Borrower, Guarantor, or Key Principal that requires Lender’s consent, Lender may review the amounts on deposit, if any, in the Replacement Reserve Account or the Repairs Escrow Account, the amount of the Monthly Replacement Reserve Deposit and the likely repairs and replacements required by the Mortgaged Property, and the related contingencies which may arise during the remaining Loan Term. Based upon that review, Lender may require an additional deposit to the Replacement Reserve Account or the Repairs Escrow Account, or an increase in the amount of the Monthly Replacement Reserve Deposit as a condition to Lender’s consent to such Transfer.
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(4) Insufficient Funds.
Lender may, upon thirty (30) days’ prior written notice to Borrower, require an additional deposit(s) to the Replacement Reserve Account or Repairs Escrow Account, or an increase in the amount of the Monthly Replacement Reserve Deposit, if Lender determines that the amounts on deposit in either the Replacement Reserve Account or the Repairs Escrow Account are not sufficient to cover the costs for Required Repairs or Required Replacements or, pursuant to the terms of Section 13.02(a)(9), not sufficient to cover the costs for Borrower Requested Repairs, Additional Lender Repairs, Borrower Requested Replacements, or Additional Lender Replacements. Borrower’s agreement to complete the Replacements or Repairs as required by this Loan Agreement shall not be affected by the insufficiency of any balance in the Replacement Reserve Account or the Repairs Escrow Account, as applicable.
(5) Disbursements for Replacements and Repairs.
(A) Disbursement requests may only be made after completion of the applicable Replacements and only to reimburse Borrower for the actual approved costs of the Replacements. Lender shall not disburse from the Replacement Reserve Account the costs of routine maintenance to the Mortgaged Property or for costs which are to be reimbursed from the Repairs Escrow Account or any similar account. Disbursement from the Replacement Reserve Account shall not be made more frequently than the Maximum Replacement Reserve Disbursement Interval. Other than in connection with a final request for disbursement, disbursements from the Replacement Reserve Account shall not be less than the Minimum Replacement Reserve Disbursement Amount.
(B) Disbursement requests may only be made after completion of the applicable Repairs and only to reimburse Borrower for the actual cost of the Repairs, up to the Maximum Repair Cost. Lender shall not disburse any amounts which would cause the funds remaining in the Repairs Escrow Account after any disbursement (other than with respect to the final disbursement) to be less than the Maximum Repair Cost of the then-current estimated cost of completing all remaining Repairs. Lender shall not disburse from the Repairs Escrow Account the costs of routine maintenance to the Mortgaged Property or for costs which are to be reimbursed from the Replacement Reserve Account or any similar account. Disbursement from the Repairs Escrow Account shall not be made more frequently than the Maximum Repair Disbursement Interval. Other than in connection with a final request for disbursement, disbursements from the Repairs Escrow Account shall not be less than the Minimum Repairs Disbursement Amount.
(6) Disbursement Requests.
Each request by Borrower for disbursement from the Replacement Reserve Account or the Repairs Escrow Account must be in writing, must specify the Replacement or Repair for which reimbursement is requested (provided that for any Borrower Requested Replacements, Borrower Requested Repairs, Additional Lender Replacements, and Additional Lender Repairs, Lender shall have approved the use of the Reserve/Escrow Account Funds for such replacements or repairs pursuant to the terms of Section 13.02(a)(9)), and must:
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(A) if applicable, specify the quantity and price of the items or materials purchased, grouped by type or category;
(B) if applicable, specify the cost of all contracted labor or other services involved in the Replacement or Repair for which such request for disbursement is made;
(C) if applicable, include copies of invoices for all items or materials purchased and all contracted labor or services provided;
(D) include evidence of payment of such Replacement or Repair satisfactory to Lender (unless Lender has agreed to issue joint checks in connection with a particular Repair or Replacement as provided in this Loan Agreement); and
(E) contain a certification by Borrower that the Repair or Replacement has been completed lien free and in a good and workmanlike manner, in accordance with any plans and specifications previously approved by Lender (if applicable) and in compliance with all applicable laws, ordinances, rules, and regulations of any Governmental Authority having jurisdiction over the Mortgaged Property, and otherwise in accordance with the provisions of this Loan Agreement.
(7) Conditions to Disbursement.
Lender may require any or all of the following at the expense of Borrower as a condition to disbursement of funds from the Replacement Reserve Account or the Repairs Escrow Account (provided that for any Borrower Requested Replacements, Borrower Requested Repairs, Additional Lender Replacements, and Additional Lender Repairs, Lender shall have approved the use of the Reserve/Escrow Account Funds for such replacements or repairs pursuant to the terms of Section 13.02(a)(9)):
(A) an inspection by Lender of the Mortgaged Property and the applicable Replacement or Repair;
(B) an inspection or certificate of completion by an appropriate independent qualified professional (such as an architect, engineer or property inspector, depending on the nature of the Repair or Replacement) selected by Lender;
(C) either:
(i) a search of title to the Mortgaged Property effective to the date of disbursement; or
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(ii) a “date-down” endorsement to Lender’s Title Policy (or a new Lender’s Title Policy if a “date-down” is not available) extending the effective date of such policy to the date of disbursement, and showing no Liens other than (1) Permitted Encumbrances, (2) liens which Borrower is diligently contesting in good faith that have been bonded off to the satisfaction of Lender, or (3) mechanics’ or materialmen’s liens which attach automatically under the laws of any Governmental Authority upon the commencement of any work upon, or delivery of any materials to, the Mortgaged Property and for which Borrower is not delinquent in the payment for any such work or materials; and
(D) an acknowledgement of payment, waiver of claims, and release of lien for work performed and materials supplied from each contractor, subcontractor or materialman in accordance with the requirements of applicable law and covering all work performed and materials supplied (including equipment and fixtures) for the Mortgaged Property by that contractor, subcontractor, or materialman through the date covered by the disbursement request (or, in the event that payment to such contractor, subcontractor, or materialman is to be made by a joint check, the release of lien shall be effective through the date covered by the previous disbursement).
(8) Joint Checks for Periodic Disbursements.
Lender may, upon Borrower’s written request, issue joint checks, payable to Borrower and the applicable supplier, materialman, mechanic, contractor, subcontractor, or other similar party, if:
(A) the cost of the Replacement or Repair exceeds the Replacement Threshold or the Repair Threshold, as applicable, and the contractor performing such Replacement or Repair requires periodic payments pursuant to the terms of the applicable written contract;
(B) the contract for such Repair or Replacement requires payment upon completion of the applicable portion of the work;
(C) Borrower makes the disbursement request after completion of the applicable portion of the work required to be completed under such contract;
(D) the materials for which the request for disbursement has been made are on site at the Mortgaged Property and are properly secured or installed;
(E) Lender determines that the remaining funds in the Replacement Reserve Account designated for such Replacement, or in the Repairs Escrow Account designated for such Repair, as applicable, are sufficient to pay such costs and the then-current estimated cost of completing all remaining Required Replacements or Required Repairs (at the Maximum Repair Cost), as applicable, and any other Borrower Requested Replacements, Borrower Requested Repairs, Additional Lender Replacements, or Additional Lender Repairs that have been previously approved by Lender;
(F) each supplier, materialman, mechanic, contractor, subcontractor, or other similar party receiving payments shall have provided, if requested in writing by Lender, a waiver of liens with respect to amounts which have been previously paid to them; and
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(G) all other conditions for disbursement have been satisfied.
(9) Replacements and Repairs Other than Required Replacements or Required Repairs.
(A) Borrower Requested Replacements and Borrower Requested Repairs.
Borrower may submit a disbursement request from the Replacement Reserve Account or the Repairs Escrow Account to reimburse Borrower for any Borrower Requested Replacement or Borrower Requested Repair. The disbursement request must be in writing and include an explanation for such request. Lender shall make disbursements for Borrower Requested Replacements or Borrower Requested Repairs if:
(i) they are of the type intended to be covered by the Replacement Reserve Account or the Repairs Escrow Account, as applicable;
(ii) the costs are commercially reasonable;
(iii) the amount of funds in the Replacement Reserve Account or Repairs Escrow Account, as applicable, is sufficient to pay such costs and the then-current estimated cost of completing all remaining Required Replacements or Required Repairs (at the Maximum Repair Cost), as applicable, and any other Borrower Requested Replacements, Borrower Requested Repairs, Additional Lender Replacements or Additional Lender Repairs that have been previously approved by Lender; and
(iv) all conditions for disbursement from the Replacement Reserve Account or Repairs Escrow Account, as applicable, have been satisfied.
Nothing in this Loan Agreement shall limit Lender’s right to require an additional deposit to the Replacement Reserve Account or an increase to the Monthly Replacement Reserve Deposit in connection with any such Borrower Requested Replacements, or an additional deposit to the Repairs Escrow Account for any such Borrower Requested Repairs.
(B) Additional Lender Replacements and Additional Lender Repairs.
Lender may require, as set forth in Section 6.02(b), Section 6.03(c), or otherwise from time to time, upon written notice to Borrower, that Borrower make Additional Lender Replacements or Additional Lender Repairs. Lender shall make disbursements from the Replacement Reserve Account for Additional Lender Replacements or from the Repairs Escrow Account for Additional Lender Repairs, as applicable, if:
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(i) the costs are commercially reasonable;
(ii) the amount of funds in the Replacement Reserve Account or the Repairs Escrow Account, as applicable, is sufficient to pay such costs and the then-current estimated cost of completing all remaining Required Replacements or Required Repairs (at the Maximum Repair Cost), as applicable, and any other Borrower Requested Replacements, Borrower Requested Repairs, Additional Lender Replacements, or Additional Lender Repairs that have been previously approved by Lender; and
(iii) all conditions for disbursement from the Replacement Reserve Account or Repairs Escrow Account, as applicable, have been satisfied.
Nothing in this Loan Agreement shall limit Lender’s right to require an additional deposit to the Replacement Reserve Account or an increase to the Monthly Replacement Reserve Deposit for any such Additional Lender Replacements or an additional deposit to the Repairs Escrow Account for any such Additional Lender Repair.
(10) Excess Costs.
In the event any Replacement or Repair exceeds the approved cost set forth on the Required Replacement Schedule for Replacements, or the Maximum Repair Cost for Repairs, Borrower may submit a disbursement request to reimburse Borrower for such excess cost. The disbursement request must be in writing and include an explanation for such request. Lender shall make disbursements from the Replacement Reserve Account or the Repairs Escrow Account, as applicable, if:
(A) the excess cost is commercially reasonable;
(B) the amount of funds in the Replacement Reserve Account or the Repairs Escrow Account, as applicable, is sufficient to pay such costs and the then-current estimated cost of completing all remaining Required Replacements or Required Repairs (at the Maximum Repair Cost), as applicable, and any other Borrower Requested Replacements, Borrower Requested Repairs, Additional Lender Replacements, or Additional Lender Repairs that have been previously approved by Lender; and
(C) all conditions for disbursement from the Replacement Reserve Account or the Repairs Escrow Account have been satisfied.
(11) Final Disbursements.
Upon completion of all Repairs in accordance with this Loan Agreement and so long as no Event of Default has occurred and is continuing, Lender shall disburse to Borrower any amounts then remaining in the Repairs Escrow Account. Upon payment in full of the Indebtedness and release by Lender of the lien of the Security Instrument, Lender shall disburse to Borrower any and all amounts then remaining in the Replacement Reserve Account and the Repairs Escrow Account (if not previously released).
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(b) Approvals of Contracts; Assignment of Claims.
Lender retains the right to approve all contracts or work orders with materialmen, mechanics, suppliers, subcontractors, contractors, or other parties providing labor or materials in connection with the Replacements or Repairs. Notwithstanding Borrower’s assignment (in the Security Instrument) of its rights and claims against all Persons supplying labor or materials in connection with the Replacement or Repairs, Lender will not pursue any such right or claim unless an Event of Default has occurred and is continuing or as otherwise provided in Section 14.03(c).
(c) Delays and Workmanship.
If any work for any Replacement or Repair has not timely commenced, has not been timely performed in a workmanlike manner, or has not been timely completed in a workmanlike manner, Lender may, without notice to Borrower:
(1) withhold disbursements from the Replacement Reserve Account or Repairs Escrow Account for such unsatisfactory Replacement or Repair, as applicable;
(2) proceed under existing contracts or contract with third parties to make or complete such Replacement or Repair;
(3) apply the funds in the Replacement Reserve Account or Repairs Escrow Account toward the labor and materials necessary to make or complete such Replacement or Repair, as applicable; or
(4) exercise any and all other remedies available to Lender under this Loan Agreement or any other Loan Document, including any remedies otherwise available upon an Event of Default pursuant to the terms of Section 14.02.
To facilitate Lender’s completion or making of such Replacements or Repairs, Lender shall have the right to enter onto the Mortgaged Property and perform any and all work and labor necessary to make or complete the Replacements or Repairs and employ watchmen to protect the Mortgaged Property from damage. All funds so expended by Lender shall be deemed to have been advanced to Borrower, shall be part of the Indebtedness and shall be secured by the Security Instrument and this Loan Agreement.
(d) Appointment of Lender as Attorney-In-Fact.
Borrower hereby authorizes and appoints Lender as attorney-in-fact pursuant to Section 14.03(c).
(e) No Lender Obligation.
Nothing in this Loan Agreement shall:
(1) make Lender responsible for making or completing the Replacements or Repairs;
(2) require Lender to expend funds, whether from the Replacement Reserve Account, the Repairs Escrow Account, or otherwise, to make or complete any Replacement or Repair;
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(3) obligate Lender to proceed with the Replacements or Repairs; or
(4) obligate Lender to demand from Borrower additional sums to make or complete any Replacement or Repair.
(f) No Lender Warranty.
Lender’s approval of any plans for any Replacement or Repair, release of funds from the Replacement Reserve Account or Repairs Escrow Account, inspection of the Mortgaged Property by Lender or its agents, representatives, or designees, or other acknowledgment of completion of any Replacement or Repair in a manner satisfactory to Lender shall not be deemed an acknowledgment or warranty to any Person that the Replacement or Repair has been completed in accordance with applicable building, zoning, or other codes, ordinances, statutes, laws, regulations, or requirements of any Governmental Authority, such responsibility being at all times exclusively that of Borrower.
ARTICLE 14 - DEFAULTS/REMEDIES
Section 14.01 Events of Default.
The occurrence of any one or more of the following in this Section 14.01 shall constitute an Event of Default under this Loan Agreement.
(a) Automatic Events of Default.
Any of the following shall constitute an automatic Event of Default:
(1) any failure by Borrower to pay or deposit when due any amount required by the Note, this Loan Agreement or any other Loan Document;
(2) any failure by Borrower to maintain the insurance coverage required by any Loan Document;
(3) any failure by Borrower to comply with the provisions of Section 4.02(d) relating to its single asset status;
(4) if any warranty, representation, certification, or statement of Borrower, Guarantor, or Key Principal in this Loan Agreement or any of the other Loan Documents is false, inaccurate, or misleading in any material respect when made;
(5) fraud, gross negligence, willful misconduct, or material misrepresentation or material omission by or on behalf of Borrower, Guarantor, or Key Principal or any of their officers, directors, trustees, partners, members, or managers in connection with:
(A) the application for, or creation of, the Indebtedness;
(B) any financial statement, rent roll, or other report or information provided to Lender during the term of the Mortgage Loan; or
(C) any request for Lender’s consent to any proposed action, including a request for disbursement of Reserve/Escrow Account Funds or Collateral Account Funds;
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(6) the occurrence of any Transfer not permitted by the Loan Documents;
(7) the occurrence of a Bankruptcy Event;
(8) the commencement of a forfeiture action or other similar proceeding, whether civil or criminal, which, in Lender’s reasonable judgment, could result in a forfeiture of the Mortgaged Property or otherwise materially impair the lien created by this Loan Agreement or the Security Instrument or Lender’s interest in the Mortgaged Property;
(9) if Borrower, Guarantor, or Key Principal is a trust, or if Control of Borrower, Guarantor, or Key Principal is Transferred or if a Restricted Ownership Interest in Borrower, Guarantor, or Key Principal would be Transferred due to the termination or revocation of a trust, the termination or revocation of such trust, except as set forth in Section 11.03(d);
(10) any failure by Borrower to complete any Repair related to fire, life, or safety issues in accordance with the terms of this Loan Agreement within the Completion Period (or such other date set forth on the Required Repair Schedule or otherwise required by Lender in writing for such Repair); or
(11) any exercise by the holder of any other debt instrument secured by a mortgage, deed of trust, or deed to secure debt on the Mortgaged Property of a right to declare all amounts due under that debt instrument immediately due and payable.
(b) Events of Default Subject to a Specified Cure Period.
Any of the following shall constitute an Event of Default subject to the cure period set forth in the Loan Documents:
(1) if Key Principal or Guarantor is a natural person, the death of such individual, unless all requirements of Section 11.03(e) are met;
(2) the occurrence of a Guarantor Bankruptcy Event, unless requirements of Section 11.03(f) are met;
(3) any failure by Borrower, Key Principal, or Guarantor to comply with the provisions of Section 5.02(b) and Section 5.02(c); or
(4) any failure by Borrower to perform any obligation under this Loan Agreement or any Loan Document that is subject to a specified written notice and cure period, which failure continues beyond such specified written notice and cure period as set forth herein or in the applicable Loan Document.
(c) Events of Default Subject to Extended Cure Period.
The following shall constitute an Event of Default if the existence of such condition or event, or such failure to perform or default in performance continues for a period of thirty (30) days after written notice by Lender to Borrower of the existence of such condition or event, or of such failure to perform or default in performance, provided, however, such period may be extended for up to an additional thirty (30) days if Borrower, in the discretion of Lender, is diligently pursuing a cure of such; provided, further, however, no such written notice, grace period, or extension shall apply if, in Lender’s discretion, immediate exercise by Lender of a right or remedy under this Loan Agreement or any Loan Document is required to avoid harm to Lender or impairment of the Mortgage Loan (including the Loan Documents), the Mortgaged Property or any other security given for the Mortgage Loan:
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(1) any failure by Borrower to perform any of its obligations under this Loan Agreement or any Loan Document (other than those specified in Section 14.01(a) or Section 14.01(b) above) as and when required.
Section 14.02 Remedies.
(a) Acceleration; Foreclosure.
If an Event of Default has occurred and is continuing, the entire unpaid principal balance of the Mortgage Loan, any Accrued Interest, interest accruing at the Default Rate, the Prepayment Premium (if applicable), and all other Indebtedness, at the option of Lender, shall immediately become due and payable, without any prior written notice to Borrower, unless applicable law requires otherwise (and in such case, after any required written notice has been given). Lender may exercise this option to accelerate regardless of any prior forbearance. In addition, Lender shall have all rights and remedies afforded to Lender hereunder and under the other Loan Documents, including, foreclosure on and/or the power of sale of the Mortgaged Property, as provided in the Security Instrument, and any rights and remedies available to Lender at law or in equity (subject to Borrower’s statutory rights of reinstatement, if any). Any proceeds of a Foreclosure Event may be held and applied by Lender as additional collateral for the Indebtedness pursuant to this Loan Agreement. Notwithstanding the foregoing, the occurrence of any Bankruptcy Event shall automatically accelerate the Mortgage Loan and all obligations and Indebtedness shall be immediately due and payable without written notice or further action by Lender.
(b) Loss of Right to Disbursements from Collateral Accounts.
If an Event of Default has occurred and is continuing, Borrower shall immediately lose all of its rights to receive disbursements from the Reserve/Escrow Accounts and any Collateral Accounts. During the continuance of any such Event of Default, Lender may use the Reserve/Escrow Account Funds and any Collateral Account Funds (or any portion thereof) for any purpose, including:
(1) repayment of the Indebtedness, including principal prepayments and the Prepayment Premium applicable to such full or partial prepayment, as applicable (however, such application of funds shall not cure or be deemed to cure any Event of Default);
(2) reimbursement of Lender for all losses and expenses (including reasonable legal fees) suffered or incurred by Lender as a result of such Event of Default;
(3) completion of the Replacement or Repair or for any other replacement or repair to the Mortgaged Property; and
(4) payment of any amount expended in exercising (and the exercise of) all rights and remedies available to Lender at law or in equity or under this Loan Agreement or under any of the other Loan Documents.
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Nothing in this Loan Agreement shall obligate Lender to apply all or any portion of the Reserve/Escrow Account Funds or Collateral Account Funds on account of any Event of Default by Borrower or to repayment of the Indebtedness or in any specific order of priority.
(c) Remedies Cumulative.
Each right and remedy provided in this Loan Agreement is distinct from all other rights or remedies under this Loan Agreement or any other Loan Document or afforded by applicable law, and each shall be cumulative and may be exercised concurrently, independently, or successively, in any order. Lender shall not be required to demonstrate any actual impairment of its security or any increased risk of additional default by Borrower in order to exercise any of its remedies with respect to an Event of Default.
Section 14.03 Additional Lender Rights; Forbearance.
(a) No Effect Upon Obligations.
Lender may, but shall not be obligated to, agree with Borrower, from time to time, and without giving notice to, or obtaining the consent of, or having any effect upon the obligations of, Guarantor, Key Principal, or other third party obligor, to take any of the following actions:
(1) the time for payment of the principal of or interest on the Indebtedness may be extended, or the Indebtedness may be renewed in whole or in part;
(2) the rate of interest on or period of amortization of the Mortgage Loan or the amount of the Monthly Debt Service Payments payable under the Loan Documents may be modified;
(3) the time for Borrower’s performance of or compliance with any covenant or agreement contained in any Loan Document, whether presently existing or hereinafter entered into, may be extended or such performance or compliance may be waived;
(4) any or all payments due under this Loan Agreement or any other Loan Document may be reduced;
(5) any Loan Document may be modified or amended by Lender and Borrower in any respect, including an increase in the principal amount of the Mortgage Loan;
(6) any amounts under this Loan Agreement or any other Loan Document may be released;
(7) any security for the Indebtedness may be modified, exchanged, released, surrendered, or otherwise dealt with, or additional security may be pledged or mortgaged for the Indebtedness;
(8) the payment of the Indebtedness or any security for the Indebtedness, or both, may be subordinated to the right to payment or the security, or both, of any other present or future creditor of Borrower; or
(9) any other terms of the Loan Documents may be modified.
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(b) No Waiver of Rights or Remedies.
Any waiver of an Event of Default or forbearance by Lender in exercising any right or remedy under this Loan Agreement or any other Loan Document or otherwise afforded by applicable law, shall not be a waiver of any other Event of Default or preclude the exercise or failure to exercise of any other right or remedy. The acceptance by Lender of payment of all or any part of the Indebtedness after the due date of such payment, or in an amount which is less than the required payment, shall not be a waiver of Lender’s right to require prompt payment when due of all other payments on account of the Indebtedness or to exercise any remedies for any failure to make prompt payment. Enforcement by Lender of any security for the Indebtedness shall not constitute an election by Lender of remedies so as to preclude the exercise or failure to exercise of any other right available to Lender. Lender’s receipt of any insurance proceeds or amounts in connection with a Condemnation Action shall not operate to cure or waive any Event of Default.
(c) Appointment of Lender as Attorney-In-Fact.
Borrower hereby irrevocably makes, constitutes, and appoints Lender (and any officer of Lender or any Person designated by Lender for that purpose) as Borrower’s true and lawful proxy and attorney-in-fact (and agent-in-fact) in Borrower’s name, place, and stead, with full power of substitution, to:
(1) use any of the funds in the Replacement Reserve Account or Repairs Escrow Account for the purpose of making or completing the Replacements or Repairs;
(2) make such additions, changes, and corrections to the Replacements or Repairs as shall be necessary or desirable to complete the Replacements or Repairs;
(3) employ such contractors, subcontractors, agents, architects, and inspectors as shall be required for such purposes;
(4) pay, settle, or compromise all bills and claims for materials and work performed in connection with the Replacements or Repairs, or as may be necessary or desirable for the completion of the Replacements or Repairs, or for clearance of title;
(5) adjust and compromise any claims under any and all policies of insurance required pursuant to this Loan Agreement and any other Loan Document, subject only to Borrower’s rights under this Loan Agreement;
(6) appear in and prosecute any action arising from any insurance policies;
(7) collect and receive the proceeds of insurance, and to deduct from such proceeds Lender’s expenses incurred in the collection of such proceeds;
(8) commence, appear in, and prosecute, in Lender’s or Borrower’s name, any Condemnation Action;
(9) settle or compromise any claim in connection with any Condemnation Action;
(10) execute all applications and certificates in the name of Borrower which may be required by any of the contract documents;
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(11) prosecute and defend all actions or proceedings in connection with the Mortgaged Property or the rehabilitation and repair of the Mortgaged Property;
(12) take such actions as are permitted in this Loan Agreement and any other Loan Documents;
(13) execute such financing statements and other documents and to do such other acts as Lender may require to perfect and preserve Lender’s security interest in, and to enforce such interests in, the collateral; and
(14) carry out any remedy provided for in this Loan Agreement and any other Loan Documents, including endorsing Borrower’s name to checks, drafts, instruments and other items of payment and proceeds of the collateral, executing change of address forms with the postmaster of the United States Post Office serving the address of Borrower, changing the address of Borrower to that of Lender, opening all envelopes addressed to Borrower, and applying any payments contained therein to the Indebtedness.
Borrower hereby acknowledges that the constitution and appointment of such proxy and attorney-in-fact are coupled with an interest and are irrevocable and shall not be affected by the disability or incompetence of Borrower. Borrower specifically acknowledges and agrees that this power of attorney granted to Lender may be assigned by Lender to Lender’s successors or assigns as holder of the Note (and the other Loan Documents). The foregoing powers conferred on Lender under this Section 14.03(c) shall not impose any duty upon Lender to exercise any such powers and shall not require Lender to incur any expense or take any action. Borrower hereby ratifies and confirms all that such attorney-in-fact may do or cause to be done by virtue of any provision of this Loan Agreement and any other Loan Documents.
Notwithstanding the foregoing provisions, Lender shall not exercise its rights as set forth in this Section 14.03(c) unless: (A) an Event of Default has occurred and is continuing, or (B) Lender determines, in its discretion, that exigent circumstances exist or that such exercise is necessary or prudent in order to protect and preserve the Mortgaged Property, or Lender’s lien priority and security interest in the Mortgaged Property.
(d) Borrower Waivers.
If more than one Person signs this Loan Agreement as Borrower, each Borrower, with respect to any other Borrower, hereby agrees that Lender, in its discretion, may:
(1) bring suit against Borrower, or any one or more of Borrower, jointly and severally, or against any one or more of them;
(2) compromise or settle with any one or more of the persons constituting Borrower, for such consideration as Lender may deem proper;
(3) release one or more of the persons constituting Borrower, from liability; or
(4) otherwise deal with Borrower, or any one or more of them, in any manner, and no such action shall impair the rights of Lender to collect from any Borrower the full amount of the Indebtedness.
Multifamily Loan and Security Agreement (Non-Recourse) |
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Section 14.04 Waiver of Marshaling.
Notwithstanding the existence of any other security interests in the Mortgaged Property held by Lender or by any other party, Lender shall have the right to determine the order in which any or all of the Mortgaged Property shall be subjected to the remedies provided in this Loan Agreement, any other Loan Document or applicable law. Lender shall have the right to determine the order in which all or any part of the Indebtedness is satisfied from the proceeds realized upon the exercise of such remedies. Borrower and any party who now or in the future acquires a security interest in the Mortgaged Property and who has actual or constructive notice of this Loan Agreement waives any and all right to require the marshaling of assets or to require that any of the Mortgaged Property be sold in the inverse order of alienation or that any of the Mortgaged Property be sold in parcels or as an entirety in connection with the exercise of any of the remedies permitted by applicable law or provided in this Loan Agreement or any other Loan Documents.
Lender shall account for any moneys received by Lender in respect of any foreclosure on or disposition of collateral hereunder and under the other Loan Documents provided that Lender shall not have any duty as to any collateral, and Lender shall be accountable only for amounts that it actually receives as a result of the exercise of such powers. NONE OF LENDER OR ITS AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, OR REPRESENTATIVES SHALL BE RESPONSIBLE TO BORROWER (A) FOR ANY ACT OR FAILURE TO ACT UNDER ANY POWER OF ATTORNEY OR OTHERWISE, EXCEPT IN RESPECT OF DAMAGES ATTRIBUTABLE SOLELY TO THEIR OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT AS FINALLY DETERMINED PURSUANT TO A FINAL, NON-APPEALABLE COURT ORDER BY A COURT OF COMPETENT JURISDICTION, NOR (B) FOR ANY PUNITIVE, EXEMPLARY, INDIRECT OR CONSEQUENTIAL DAMAGES.
ARTICLE 15 - MISCELLANEOUS
Section 15.01 Governing Law; Consent to Jurisdiction and Venue.
(a) Governing Law.
This Loan Agreement and any other Loan Document which does not itself expressly identify the law that is to apply to it, shall be governed by the laws of the Property Jurisdiction without regard to the application of choice of law principles.
(b) Venue.
Any controversy arising under or in relation to this Loan Agreement or any other Loan Document shall be litigated exclusively in the Property Jurisdiction without regard to conflicts of laws principles. The state and federal courts and authorities with jurisdiction in the Property Jurisdiction shall have exclusive jurisdiction over all controversies which shall arise under or in relation to this Loan Agreement or any other Loan Document. Borrower irrevocably consents to service, jurisdiction, and venue of such courts for any such litigation and waives any other venue to which it might be entitled by virtue of domicile, habitual residence, or otherwise.
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Section 15.02 Notice.
(a) Process of Serving Notice.
Except as otherwise set forth herein or in any other Loan Document, all notices under this Loan Agreement and any other Loan Document shall be:
(1) in writing and shall be:
(A) delivered, in person;
(B) mailed, postage prepaid, either by registered or certified delivery, return receipt requested;
(C) sent by overnight courier; or
(D) sent by electronic mail with originals to follow by overnight courier;
(2) addressed to the intended recipient at Borrower’s Notice Address and Lender’s Notice Address, as applicable; and
(3) deemed given on the earlier to occur of:
(A) the date when the notice is received by the addressee; or
(B) if the recipient refuses or rejects delivery, the date on which the notice is so refused or rejected, as conclusively established by the records of the United States Postal Service or such express courier service.
(b) Change of Address.
Any party to this Loan Agreement may change the address to which notices intended for it are to be directed by means of notice given to the other parties identified on the Summary of Loan Terms in accordance with this Section 15.02.
(c) Default Method of Notice.
Any required notice under this Loan Agreement or any other Loan Document which does not specify how notices are to be given shall be given in accordance with this Section 15.02.
(d) Receipt of Notices.
Neither Borrower nor Lender shall refuse or reject delivery of any notice given in accordance with this Loan Agreement. Each party is required to acknowledge, in writing, the receipt of any notice upon request by the other party.
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Section 15.03 Successors and Assigns Bound; Sale of Mortgage Loan.
(a) Binding Agreement.
This Loan Agreement shall bind, and the rights granted by this Loan Agreement shall inure to, the successors and assigns of Lender and the permitted successors and assigns of Borrower. However, a Transfer not permitted by this Loan Agreement shall be an Event of Default and shall be void ab initio.
(b) Sale of Mortgage Loan; Change of Servicer.
Nothing in this Loan Agreement shall limit Lender’s (including its successors and assigns) right to sell or transfer the Mortgage Loan or any interest in the Mortgage Loan. The Mortgage Loan or a partial interest in the Mortgage Loan (together with this Loan Agreement and the other Loan Documents) may be sold one or more times without prior written notice to Borrower. A sale may result in a change of the Loan Servicer.
Section 15.04 Counterparts.
This Loan Agreement may be executed in any number of counterparts with the same effect as if the parties hereto had signed the same document and all such counterparts shall be construed together and shall constitute one instrument.
Section 15.05 Joint and Several (or Solidary) Liability.
If more than one Person signs this Loan Agreement as Borrower, the obligations of such Persons shall be joint and several (solidary instead for purposes of Louisiana law).
Section 15.06 Relationship of Parties; No Third Party Beneficiary.
(a) Solely Creditor and Debtor.
The relationship between Lender and Borrower shall be solely that of creditor and debtor, respectively, and nothing contained in this Loan Agreement shall create any other relationship between Lender and Borrower. Nothing contained in this Loan Agreement shall constitute Lender as a joint venturer, partner, or agent of Borrower, or render Lender liable for any debts, obligations, acts, omissions, representations, or contracts of Borrower.
(b) No Third Party Beneficiaries.
No creditor of any party to this Loan Agreement and no other Person shall be a third party beneficiary of this Loan Agreement or any other Loan Document or any account created or contemplated under this Loan Agreement or any other Loan Document. Nothing contained in this Loan Agreement shall be deemed or construed to create an obligation on the part of Lender to any third party nor shall any third party have a right to enforce against Lender any right that Borrower may have under this Loan Agreement. Without limiting the foregoing:
(1) any Servicing Arrangement between Lender and any Loan Servicer shall constitute a contractual obligation of such Loan Servicer that is independent of the obligation of Borrower for the payment of the Indebtedness;
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(2) Borrower shall not be a third party beneficiary of any Servicing Arrangement; and
(3) no payment by the Loan Servicer under any Servicing Arrangement will reduce the amount of the Indebtedness.
Section 15.07 Severability; Entire Agreement; Amendments.
The invalidity or unenforceability of any provision of this Loan Agreement or any other Loan Document shall not affect the validity or enforceability of any other provision of this Loan Agreement or of any other Loan Document, all of which shall remain in full force and effect, including the Guaranty. This Loan Agreement contains the complete and entire agreement among the parties as to the matters covered, rights granted, and the obligations assumed in this Loan Agreement. This Loan Agreement may not be amended or modified except by written agreement signed by the parties hereto.
Section 15.08 Construction.
(a) The captions and headings of the sections of this Loan Agreement and the Loan Documents are for convenience only and shall be disregarded in construing this Loan Agreement and the Loan Documents.
(b) Any reference in this Loan Agreement to an “Exhibit” or “Schedule” or a “Section” or an “Article” shall, unless otherwise explicitly provided, be construed as referring, respectively, to an Exhibit or Schedule attached to this Loan Agreement or to a Section or Article of this Loan Agreement.
(c) Any reference in this Loan Agreement to a statute or regulation shall be construed as referring to that statute or regulation as amended from time to time.
(d) Use of the singular in this Loan Agreement includes the plural and use of the plural includes the singular.
(e) As used in this Loan Agreement, the term “including” means “including, but not limited to” or “including, without limitation,” and is for example only and not a limitation.
(f) Whenever Borrower’s knowledge is implicated in this Loan Agreement or the phrase “to Borrower’s knowledge” or a similar phrase is used in this Loan Agreement, Borrower’s knowledge or such phrase(s) shall be interpreted to mean to the best of Borrower’s knowledge after reasonable and diligent inquiry and investigation.
(g) Unless otherwise provided in this Loan Agreement, if Lender’s approval, designation, determination, selection, estimate, action, or decision is required, permitted, or contemplated hereunder, such approval, designation, determination, selection, estimate, action, or decision shall be made in Lender’s sole and absolute discretion.
(h) All references in this Loan Agreement to a separate instrument or agreement shall include such instrument or agreement as the same may be amended or supplemented from time to time pursuant to the applicable provisions thereof.
(i) “Lender may” shall mean at Lender’s discretion, but shall not be an obligation.
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(j) If the Mortgage Loan proceeds are disbursed on a date that is later than the Effective Date, as described in Section 2.02(a)(1), the representations and warranties in the Loan Documents with respect to the ownership and operation of the Mortgaged Property shall be deemed to be made as of the disbursement date.
Section 15.09 Mortgage Loan Servicing.
All actions regarding the servicing of the Mortgage Loan, including the collection of payments, the giving and receipt of notice, inspections of the Mortgaged Property, inspections of books and records, and the granting of consents and approvals, may be taken by the Loan Servicer unless Borrower receives notice to the contrary. If Borrower receives conflicting notices regarding the identity of the Loan Servicer or any other subject, any such written notice from Lender shall govern. The Loan Servicer may change from time to time (whether related or unrelated to a sale of the Mortgage Loan). If there is a change of the Loan Servicer, Borrower will be given written notice of the change.
Section 15.10 Disclosure of Information.
Lender may furnish information regarding Borrower, Key Principal, or Guarantor, or the Mortgaged Property to third parties with an existing or prospective interest in the servicing, enforcement, evaluation, performance, purchase, or securitization of the Mortgage Loan, including trustees, master servicers, special servicers, rating agencies, and organizations maintaining databases on the underwriting and performance of multifamily mortgage loans. Borrower irrevocably waives any and all rights it may have under applicable law to prohibit such disclosure, including any right of privacy.
Section 15.11 Waiver; Conflict.
No specific waiver of any of the terms of this Loan Agreement shall be considered as a general waiver. If any provision of this Loan Agreement is in conflict with any provision of any other Loan Document, the provision contained in this Loan Agreement shall control.
Section 15.12 No Reliance.
Borrower acknowledges, represents, and warrants that:
(a) it understands the nature and structure of the transactions contemplated by this Loan Agreement and the other Loan Documents;
(b) it is familiar with the provisions of all of the documents and instruments relating to such transactions;
(c) it understands the risks inherent in such transactions, including the risk of loss of all or any part of the Mortgaged Property;
(d) it has had the opportunity to consult counsel; and
(e) it has not relied on Lender for any guidance or expertise in analyzing the financial or other consequences of the transactions contemplated by this Loan Agreement or any other Loan Document or otherwise relied on Lender in any manner in connection with interpreting, entering into, or otherwise in connection with this Loan Agreement, any other Loan Document, or any of the matters contemplated hereby or thereby.
Multifamily Loan and Security Agreement (Non-Recourse) |
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Section 15.13 Subrogation.
If, and to the extent that, the proceeds of the Mortgage Loan are used to pay, satisfy, or discharge any obligation of Borrower for the payment of money that is secured by a pre-existing mortgage, deed of trust, or other lien encumbering the Mortgaged Property, such Mortgage Loan proceeds shall be deemed to have been advanced by Lender at Borrower’s request, and Lender shall automatically, and without further action on its part, be subrogated to the rights, including lien priority, of the owner or holder of the obligation secured by such prior lien, whether or not such prior lien is released.
Section 15.14 Counting of Days.
Except where otherwise specifically provided, any reference in this Loan Agreement to a period of “days” means calendar days, not Business Days. If the date on which Borrower is required to perform an obligation under this Loan Agreement is not a Business Day, Borrower shall be required to perform such obligation by the Business Day immediately preceding such date; provided, however, in respect of any Payment Date, or if the Maturity Date is other than a Business Day, Borrower shall be obligated to make such payment by the Business Day immediately following such date.
Section 15.15 Revival and Reinstatement of Indebtedness.
If the payment of all or any part of the Indebtedness by Borrower, Guarantor, or any other Person, or the transfer to Lender of any collateral or other property should for any reason subsequently be declared to be void or voidable under any state or federal law relating to creditors’ rights, including provisions of the Insolvency Laws relating to a Voidable Transfer, and if Lender is required to repay or restore, in whole or in part, any such Voidable Transfer, or elects to do so upon the advice of its counsel, then the amount of such Voidable Transfer or the amount of such Voidable Transfer that Lender is required or elects to repay or restore, including all reasonable costs, expenses, and attorneys’ fees incurred by Lender in connection therewith, and the Indebtedness shall be automatically revived, reinstated, and restored by such amount and shall exist as though such Voidable Transfer had never been made.
Section 15.16 Time is of the Essence.
Borrower agrees that, with respect to each and every obligation and covenant contained in this Loan Agreement and the other Loan Documents, time is of the essence.
Section 15.17 Final Agreement.
THIS LOAN AGREEMENT ALONG WITH ALL OF THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. All prior or contemporaneous agreements, understandings, representations, and statements, oral or written, are merged into this Loan Agreement and the other Loan Documents. This Loan Agreement, the other Loan Documents, and any of their provisions may not be waived, modified, amended, discharged, or terminated except by an agreement in writing signed by the party against which the enforcement of the waiver, modification, amendment, discharge, or termination is sought, and then only to the extent set forth in that agreement.
Multifamily Loan and Security Agreement (Non-Recourse) |
Form 6001.NR | Page 77 |
Article 15 | 01-16 | © 2016 Fannie Mae |
Section 15.18 WAIVER OF TRIAL BY JURY.
TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, EACH OF BORROWER AND LENDER (a) COVENANTS AND AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS LOAN AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR THE RELATIONSHIP BETWEEN THE PARTIES AS BORROWER AND LENDER, THAT IS TRIABLE OF RIGHT BY A JURY, AND (b) WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL.
IN WITNESS WHEREOF, Borrower and Lender have signed and delivered this Loan Agreement under seal (where applicable) or have caused this Loan Agreement to be signed and delivered under seal (where applicable) by their duly authorized representatives. Where applicable law so provides, Borrower and Lender intend that this Loan Agreement shall be deemed to be signed and delivered as a sealed instrument.
[Remainder of Page Intentionally Blank]
Multifamily Loan and Security Agreement (Non-Recourse) |
Form 6001.NR | Page 78 |
Article 15 | 01-16 | © 2016 Fannie Mae |
BORROWER: | |
BR CARROLL TENSIDE, LLC, a Delaware limited liability company |
By: | /s/ Jordan Ruddy | |
Jordan Ruddy | ||
Authorized Signatory |
Multifamily Loan and Security Agreement (Non-Recourse) |
Form 6001.NR | Page S-1 |
Signature Page | 01-16 | © 2016 Fannie Mae |
LENDER: | ||
WALKER & DUNLOP, LLC, a Delaware limited liability company | ||
By: | /s/ Holly Shonosky | |
Holly Shonosky | ||
Senior Closing Officer |
Multifamily Loan and Security Agreement (Non-Recourse) |
Form 6001.NR | Page S-2 |
Signature Page | 01-16 | © 2016 Fannie Mae |
SCHEDULE 1
TO MULTIFAMILY LOAN AND SECURITY AGREEMENT
Definitions Schedule
(Interest Rate Type – Fixed Rate)
Capitalized terms used in the Loan Agreement have the meanings given to such terms in this Definitions Schedule.
“Accrued Interest” means unpaid interest, if any, on the Mortgage Loan that has not been added to the unpaid principal balance of the Mortgage Loan pursuant to Section 2.02(b) (Capitalization of Accrued But Unpaid Interest) of the Loan Agreement.
“Additional Lender Repairs” means repairs of the type listed on the Required Repair Schedule but not otherwise identified thereon that are determined advisable by Lender to keep the Mortgaged Property in good order and repair (ordinary wear and tear excepted) and in good marketable condition or to prevent deterioration of the Mortgaged Property.
“Additional Lender Replacements” means replacements of the type listed on the Required Replacement Schedule but not otherwise identified thereon that are determined advisable by Lender to keep the Mortgaged Property in good order and repair (ordinary wear and tear excepted) and in good marketable condition or to prevent deterioration of the Mortgaged Property.
“Amortization Period” has the meaning set forth in the Summary of Loan Terms.
“Amortization Type” has the meaning set forth in the Summary of Loan Terms.
“Bank Secrecy Act” means the Bank Secrecy Act of 1970, as amended (e.g., 31 U.S.C. Sections 5311-5330).
“Bankruptcy Event” means any one or more of the following:
(a) the commencement, filing or continuation of a voluntary case or proceeding under one or more of the Insolvency Laws by Borrower;
(b) the acknowledgment in writing by Borrower (other than to Lender in connection with a workout) that it is unable to pay its debts generally as they mature;
(c) the making of a general assignment for the benefit of creditors by Borrower;
(d) the commencement, filing or continuation of an involuntary case or proceeding under one or more Insolvency Laws against Borrower; or
(e) the appointment of a receiver (other than a receiver appointed at the direction or request of Lender under the terms of the Loan Documents), liquidator, custodian, sequestrator, trustee or other similar officer who exercises control over Borrower or any substantial part of the assets of Borrower;
Schedule 1 to Multifamily Loan and Security Agreement - Definitions Schedule (Interest Rate Type - Fixed Rate) |
Form 6101.FR | Page 1 |
Fannie Mae | 01-16 | © 2016 Fannie Mae |
provided, however, that any proceeding or case under (d) or (e) above shall not be a Bankruptcy Event until the ninetieth (90th) day after filing (if not earlier dismissed) so long as such proceeding or case occurred without the consent, encouragement or active participation of (1) Borrower, Guarantor, or Key Principal, (2) any Person Controlling Borrower, Guarantor, or Key Principal, or (3) any Person Controlled by or under common Control with Borrower, Guarantor, or Key Principal (in which event such case or proceeding shall be a Bankruptcy Event immediately).
“Borrower” means, individually (and jointly and severally (solidarily instead for purposes of Louisiana law) if more than one), the entity (or entities) identified as “Borrower” in the first paragraph of the Loan Agreement.
“Borrower Affiliate” means, as to Borrower, Guarantor or Key Principal:
(a) any Person that owns any direct ownership interest in Borrower, Guarantor or Key Principal; except that if Guarantor or Key Principal is a Publicly-Held Corporation or a Publicly-Held Trust, then only the shareholders or beneficial owners of such Publicly-Held Corporation or a Publicly-Held Trust with the power to vote twenty percent (20%) or more of the ownership interests in Guarantor or Key Principal;
(b) any Person that indirectly owns, with the power to vote, twenty percent (20%) or more of the ownership interests in Borrower, Guarantor or Key Principal;
(c) any Person Controlled by, under common Control with, or which Controls, Borrower, Guarantor or Key Principal;
(d) any entity in which Borrower, Guarantor or Key Principal directly or indirectly owns, with the power to vote, twenty percent (20%) or more of the ownership interests in such entity; or
(e) any other individual that is related (to the third degree of consanguinity) by blood or marriage to Borrower, Guarantor or Key Principal.
“Borrower Requested Repairs” means repairs not listed on the Required Repair Schedule requested by Borrower to be reimbursed from the Repairs Escrow Account and determined advisable by Lender to keep the Mortgaged Property in good order and repair and in a good marketable condition or to prevent deterioration of the Mortgaged Property.
“Borrower Requested Replacements” means replacements not listed on the Required Replacement Schedule requested by Borrower to be reimbursed from the Replacement Reserve Account and determined advisable by Lender to keep the Mortgaged Property in good order and repair and in a good marketable condition or to prevent deterioration of the Mortgaged Property.
“Borrower’s General Business Address” has the meaning set forth in the Summary of Loan Terms.
“Borrower’s Notice Address” has the meaning set forth in the Summary of Loan Terms.
“Business Day” means any day other than (a) a Saturday, (b) a Sunday, (c) a day on which Lender is not open for business, or (d) a day on which the Federal Reserve Bank of New York is not open for business.
Schedule 1 to Multifamily Loan and Security Agreement - Definitions Schedule (Interest Rate Type - Fixed Rate) |
Form 6101.FR | Page 2 |
Fannie Mae | 01-16 | © 2016 Fannie Mae |
“Collateral Account Funds” means, collectively, the funds on deposit in any or all of the Collateral Accounts, including the Reserve/Escrow Account Funds.
“Collateral Accounts” means any account designated as such by Lender pursuant to a Collateral Agreement or as established pursuant to this Loan Agreement, including the Reserve/Escrow Account.
“Collateral Agreement” means any separate agreement between Borrower and Lender for the establishment of any other fund, reserve or account.
“Completion Period” has the meaning set forth in the Summary of Loan Terms.
“Condemnation Action” has the meaning set forth in the Security Instrument.
“Control” (including with correlative meanings, such as “Controlling,” “Controlled by” and “under common Control with”) means, as applied to any entity, the possession, directly or indirectly, of the power to direct or cause the direction of the management and operations of such entity (including, by way of illustration and not limitation, the power to (1) elect the majority of the directors of such entity; (2) make management decisions on behalf of or independently select the manager of a limited liability company or the managing partner of a partnership; (3) independently remove and then select a majority of those individuals exercising managerial authority over any entity; (4) limit or otherwise modify the extent of control over the management and operations of an entity by any Person exercising managerial authority over such entity), whether through the ownership of voting securities or other ownership interests, by contract or otherwise.
“Credit Score” means a numerical value or a categorization derived from a statistical tool or modeling system used to measure credit risk and predict the likelihood of certain credit behaviors, including default.
“Debt Service Amounts” means the Monthly Debt Service Payments and all other amounts payable under the Loan Agreement, the Note, the Security Instrument or any other Loan Document.
“Default Rate” means an interest rate equal to the lesser of:
(a) the sum of the Interest Rate plus four (4) percentage points; or
(b) the maximum interest rate which may be collected from Borrower under applicable law.
“Definitions Schedule” means this Schedule 1 (Definitions Schedule) to the Loan Agreement.
“Economic Sanctions” means any economic or financial sanction administered or enforced by the United States Government (including, without limitation, those administered by OFAC at http://www.treasury.gov/about/organizational-structure/offices/Pages/Office-of-Foreign-Assets-Control.aspx), the U.S. Department of Commerce, or the U.S. Department of State.
“Effective Date” has the meaning set forth in the Summary of Loan Terms.
Schedule 1 to Multifamily Loan and Security Agreement - Definitions Schedule (Interest Rate Type - Fixed Rate) |
Form 6101.FR | Page 3 |
Fannie Mae | 01-16 | © 2016 Fannie Mae |
“Employee Benefit Plan” means a plan described in Section 3(3) of ERISA, regardless of whether the plan is subject to ERISA.
“Enforcement Costs” has the meaning set forth in the Security Instrument.
“Environmental Indemnity Agreement” means that certain Environmental Indemnity Agreement dated as of the Effective Date made by Borrower to and for the benefit of Lender, as the same may be amended, restated, replaced, supplemented, or otherwise modified from time to time.
“Environmental Inspections” has the meaning set forth in the Environmental Indemnity Agreement.
“Environmental Laws” has the meaning set forth in the Environmental Indemnity Agreement.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
“ERISA Affiliate” shall mean, with respect to Borrower, any entity that, together with Borrower, would be treated as a single employer under Section 414(b) or (c) of the Internal Revenue Code, or Section 4001(a)(14) of ERISA, or the regulations thereunder.
“ERISA Plan” means any employee pension benefit plan within the meaning of Section 3(2) of ERISA (or related trust) that is subject to the requirements of Title IV of ERISA, Sections 430 or 431 of the Internal Revenue Code, or Sections 302, 303, or 304 of ERISA, which is maintained or contributed to by Borrower or its ERISA Affiliates.
“Event of Default” means the occurrence of any event listed in Section 14.01 (Events of Default) of the Loan Agreement.
“Exceptions to Representations and Warranties Schedule” means that certain Schedule 7 (Exceptions to Representations and Warranties Schedule) to the Loan Agreement.
“First Payment Date” has the meaning set forth in the Summary of Loan Terms.
“First Principal and Interest Payment Date” has the meaning set forth in the Summary of Loan Terms, if applicable.
“Fixed Rate” has the meaning set forth in the Summary of Loan Terms.
“Fixtures” has the meaning set forth in the Security Instrument.
“Force Majeure” shall mean acts of God, acts of war, civil disturbance, governmental action (including the revocation or refusal to grant licenses or permits, where such revocation or refusal is not due to the fault of Borrower), strikes, lockouts, fire, unavoidable casualties or any other causes beyond the reasonable control of Borrower (other than lack of financing), and of which Borrower shall have notified Lender in writing within ten (10) days after its occurrence.
“Foreclosure Event” means:
(a) foreclosure under the Security Instrument;
Schedule 1 to Multifamily Loan and Security Agreement - Definitions Schedule (Interest Rate Type - Fixed Rate) |
Form 6101.FR | Page 4 |
Fannie Mae | 01-16 | © 2016 Fannie Mae |
(b) any other exercise by Lender of rights and remedies (whether under the Security Instrument or under applicable law, including Insolvency Laws) as holder of the Mortgage Loan and/or the Security Instrument, as a result of which Lender (or its designee or nominee) or a third party purchaser becomes owner of the Mortgaged Property;
(c) delivery by Borrower to Lender (or its designee or nominee) of a deed or other conveyance of Borrower’s interest in the Mortgaged Property in lieu of any of the foregoing; or
(d) in Louisiana, any dation en paiement.
“Goods” has the meaning set forth in the Security Instrument.
“Governmental Authority” means any court, board, commission, department or body of any municipal, county, state or federal governmental unit, or any subdivision of any of them, that has or acquires jurisdiction over Borrower or the Mortgaged Property or the use, operation or improvement of the Mortgaged Property.
“Guarantor” means, individually and collectively, any guarantor of the Indebtedness or any other obligation of Borrower under any Loan Document.
“Guarantor Bankruptcy Event” means any one or more of the following:
(a) the commencement, filing or continuation of a voluntary case or proceeding under one or more of the Insolvency Laws by Guarantor;
(b) the acknowledgment in writing by Guarantor (other than to Lender in connection with a workout) that it is unable to pay its debts generally as they mature;
(c) the making of a general assignment for the benefit of creditors by Guarantor;
(d) the commencement, filing or continuation of an involuntary case or proceeding under one or more Insolvency Laws against Guarantor; or
(e) the appointment of a receiver, liquidator, custodian, sequestrator, trustee or other similar officer who exercises control over Guarantor or any substantial part of the assets of Guarantor, as applicable;
provided, however, that any proceeding or case under (d) or (e) above shall not be a Guarantor Bankruptcy Event until the ninetieth (90th) day after filing (if not earlier dismissed) so long as such proceeding or case occurred without the consent, encouragement or active participation of (1) Borrower, Guarantor or Key Principal, (2) any Person Controlling Borrower, Guarantor or Key Principal, or (3) any Person Controlled by or under common Control with Borrower, Guarantor or Key Principal (in which event such case or proceeding shall be a Guarantor Bankruptcy Event immediately).
“Guarantor’s General Business Address” has the meaning set forth in the Summary of Loan Terms.
“Guarantor’s Notice Address” has the meaning set forth in the Summary of Loan Terms.
Schedule 1 to Multifamily Loan and Security Agreement - Definitions Schedule (Interest Rate Type - Fixed Rate) |
Form 6101.FR | Page 5 |
Fannie Mae | 01-16 | © 2016 Fannie Mae |
“Guaranty” means, individually and collectively, any Payment Guaranty, Non-Recourse Guaranty or other guaranty executed by Guarantor in connection with the Mortgage Loan.
“Immediate Family Members” means a child, stepchild, grandchild, spouse, sibling, or parent, each of whom is not a Prohibited Person.
“Imposition Deposits” has the meaning set forth in the Security Instrument.
“Impositions” has the meaning set forth in the Security Instrument.
“Improvements” has the meaning set forth in the Security Instrument.
“Indebtedness” has the meaning set forth in the Security Instrument.
“Initial Replacement Reserve Deposit” has the meaning set forth in the Summary of Loan Terms.
“Insolvency Laws” means the United States Bankruptcy Code, 11 U.S.C. Section 101, et seq., together with any other federal or state law affecting debtor and creditor rights or relating to the bankruptcy, insolvency, reorganization, arrangement, moratorium, readjustment of debt, dissolution, liquidation or similar laws, proceedings, or equitable principles affecting the enforcement of creditors’ rights, as amended from time to time.
“Insolvent” means:
(a) that the sum total of all of a specified Person’s liabilities (whether secured or unsecured, contingent or fixed, or liquidated or unliquidated) is in excess of the value of such Person’s non-exempt assets, i.e., all of the assets of such Person that are available to satisfy claims of creditors; or
(b) such Person’s inability to pay its debts as they become due.
“Intended Prepayment Date” means the date upon which Borrower intends to make a prepayment on the Mortgage Loan, as set forth in the Prepayment Notice.
“Interest Accrual Method” has the meaning set forth in the Summary of Loan Terms.
“Interest Only Term” has the meaning set forth in the Summary of Loan Terms.
“Interest Rate” means the Fixed Rate.
“Interest Rate Type” has the meaning set forth in the Summary of Loan Terms.
“Internal Revenue Code” means the Internal Revenue Code of 1986, as amended.
“Investor” means any Person to whom Lender intends to (a) sell, transfer, deliver or assign the Mortgage Loan in the secondary mortgage market, or (b) sell an MBS backed by the Mortgage Loan.
Schedule 1 to Multifamily Loan and Security Agreement - Definitions Schedule (Interest Rate Type - Fixed Rate) |
Form 6101.FR | Page 6 |
Fannie Mae | 01-16 | © 2016 Fannie Mae |
“Key Principal” means, collectively:
(a) the natural person(s) or entity that Controls Borrower that Lender determines is critical to the successful operation and management of Borrower and the Mortgaged Property, as identified as such in the Summary of Loan Terms; or
(b) any natural person or entity who becomes a Key Principal after the date of the Loan Agreement and is identified as such in an assumption agreement, or another amendment or supplement to the Loan Agreement.
“Key Principal’s General Business Address” has the meaning set forth in the Summary of Loan Terms.
“Key Principal’s Notice Address” has the meaning set forth in the Summary of Loan Terms.
“Land” means the land described in Exhibit A to the Security Instrument.
“Last Interest Only Payment Date” has the meaning set forth in the Summary of Loan Terms, if applicable.
“Late Charge” means an amount equal to the delinquent amount then due under the Loan Documents multiplied by five percent (5%).
“Leases” has the meaning set forth in the Security Instrument.
“Lender” means the entity identified as “Lender” in the first paragraph of the Loan Agreement and its transferees, successors and assigns, or any subsequent holder of the Note.
“Lender’s General Business Address” has the meaning set forth in the Summary of Loan Terms.
“Lender’s Notice Address” has the meaning set forth in the Summary of Loan Terms.
“Lender’s Payment Address” has the meaning set forth in the Summary of Loan Terms.
“Lien” has the meaning set forth in the Security Instrument.
“Loan Agreement” means the Multifamily Loan and Security Agreement dated as of the Effective Date executed by and between Borrower and Lender to which this Definitions Schedule is attached, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.
“Loan Amount” has the meaning set forth in the Summary of Loan Terms.
“Loan Application” means the application for the Mortgage Loan submitted by Borrower to Lender.
“Loan Documents” means the Note, the Loan Agreement, the Security Instrument, the Environmental Indemnity Agreement, the Guaranty, all guaranties, all indemnity agreements, all Collateral Agreements, all O&M Plans, and any other documents now or in the future executed by Borrower, Guarantor, Key Principal, any other guarantor or any other Person in connection with the Mortgage Loan, as such documents may be amended, restated, replaced, supplemented or otherwise modified from time to time.
Schedule 1 to Multifamily Loan and Security Agreement - Definitions Schedule (Interest Rate Type - Fixed Rate) |
Form 6101.FR | Page 7 |
Fannie Mae | 01-16 | © 2016 Fannie Mae |
“Loan Servicer” means the entity that from time to time is designated by Lender to collect payments and deposits and receive notices under the Note, the Loan Agreement, the Security Instrument and any other Loan Document, and otherwise to service the Mortgage Loan for the benefit of Lender. Unless Borrower receives notice to the contrary, the Loan Servicer shall be the Lender originally named on the Summary of Loan Terms.
“Loan Term” has the meaning set forth in the Summary of Loan Terms.
“Loan Year” has the meaning set forth in the Summary of Loan Terms.
“Material Commercial Lease” means any Lease that is not a Residential Lease, and which is:
(a) a Lease comprising five percent (5%) or more of total gross income of the Mortgaged Property on an annualized basis;
(b) a master Lease (which term “master Lease” shall include any master Lease to a single corporate tenant);
(c) a cell tower Lease;
(d) a solar (power) Lease;
(e) a solar power purchase agreement; or
(f) a Lease of oil, gas, or mineral rights.
Notwithstanding the foregoing, no leases for retail space undertaken in connection with the 40,000 square feet of designated retail space at the Mortgaged Property shall be considered a Material Commercial Lease as long as any such lease does not cover in excess of 7,000 square feet of retail space or comprise 5% or more of the total gross income of the Mortgaged Property on an annualized basis.
“Maturity Date” has the meaning set forth in the Summary of Loan Terms.
“Maximum Inspection Fee” has the meaning set forth in the Summary of Loan Terms.
“Maximum Repair Cost” shall be the amount(s) set forth in the Required Repair Schedule, if any.
“Maximum Repair Disbursement Interval” has the meaning set forth in the Summary of Loan Terms.
“Maximum Replacement Reserve Disbursement Interval” has the meaning set forth in the Summary of Loan Terms.
“MBS” means an investment security that represents an undivided beneficial interest in a pool of mortgage loans or participation interests in mortgage loans held in trust pursuant to the terms of a governing trust document.
Schedule 1 to Multifamily Loan and Security Agreement - Definitions Schedule (Interest Rate Type - Fixed Rate) |
Form 6101.FR | Page 8 |
Fannie Mae | 01-16 | © 2016 Fannie Mae |
“Mezzanine Debt” means a loan to a direct or indirect owner of Borrower secured by a pledge of such owner’s interest in an entity owning a direct or indirect interest in Borrower.
“Minimum Repairs Disbursement Amount” has the meaning set forth in the Summary of Loan Terms.
“Minimum Replacement Reserve Disbursement Amount” has the meaning set forth in the Summary of Loan Terms.
“Monthly Debt Service Payment” has the meaning set forth in the Summary of Loan Terms.
“Monthly Replacement Reserve Deposit” has the meaning set forth in the Summary of Loan Terms.
“Mortgage Loan” means the mortgage loan made by Lender to Borrower in the principal amount of the Note made pursuant to the Loan Agreement, evidenced by the Note and secured by the Loan Documents that are expressly stated to be security for the Mortgage Loan.
“Mortgaged Property” has the meaning set forth in the Security Instrument.
“Multifamily Project” has the meaning set forth in the Summary of Loan Terms.
“Multifamily Project Address” has the meaning set forth in the Summary of Loan Terms.
“Non-Recourse Guaranty” means, if applicable, that certain Guaranty of Non-Recourse Obligations of even date herewith executed by Guarantor to and for the benefit of Lender, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.
“Note” means that certain Multifamily Note of even date herewith in the original principal amount of the stated Loan Amount made by Borrower in favor of Lender, and all schedules, riders, allonges and addenda attached thereto, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.
“O&M Plan” has the meaning set forth in the Environmental Indemnity Agreement.
“OFAC” means the United States Treasury Department, Office of Foreign Assets Control, and any successor thereto.
“Payment Date” means the First Payment Date and the first day of each month thereafter until the Mortgage Loan is fully paid.
“Payment Guaranty” means, if applicable, that certain Guaranty (Payment) of even date herewith executed by Guarantor to and for the benefit of Lender, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.
“Permitted Encumbrance” has the meaning set forth in the Security Instrument.
“Permitted Mezzanine Debt” means Mezzanine Debt incurred by a direct or indirect owner or owners of Borrower where the exercise of any of the rights and remedies by the holder or holders of the Mezzanine Debt would not in any circumstance cause (a) a change in Control in Borrower, Key Principal, or Guarantor, or (b) a Transfer of a direct or indirect Restricted Ownership Interest in Borrower, Key Principal, or Guarantor.
Schedule 1 to Multifamily Loan and Security Agreement - Definitions Schedule (Interest Rate Type - Fixed Rate) |
Form 6101.FR | Page 9 |
Fannie Mae | 01-16 | © 2016 Fannie Mae |
“Permitted Preferred Equity” means Preferred Equity that does not (a) require mandatory dividends, distributions, payments or returns (including at maturity or in connection with a redemption), or (b) provide the Preferred Equity owner with rights or remedies on account of a failure to receive any preferred dividends, distributions, payments or returns (or, if such rights are provided, the exercise of such rights do not violate the Loan Documents or are otherwise exercised with the prior written consent of Lender in accordance with Article 11 (Liens, Transfers and Assumptions) of the Loan Agreement and the payment of all applicable fees and expenses as set forth in Section 11.03(g) (Further Conditions to Transfers and Assumption)).
“Permitted Prepayment Date” means the last Business Day of a calendar month.
“Person” means an individual, an estate, a trust, a corporation, a partnership, a limited liability company or any other organization or entity (whether governmental or private).
“Personal Property” means the Goods, accounts, choses of action, chattel paper, documents, general intangibles (including Software), payment intangibles, instruments, investment property, letter of credit rights, supporting obligations, computer information, source codes, object codes, records and data, all telephone numbers or listings, claims (including claims for indemnity or breach of warranty), deposit accounts and other property or assets of any kind or nature related to the Land or the Improvements, including operating agreements, surveys, plans and specifications and contracts for architectural, engineering and construction services relating to the Land or the Improvements, and all other intangible property and rights relating to the operation of, or used in connection with, the Land or the Improvements, including all governmental permits relating to any activities on the Land.
“Personalty” has the meaning set forth in the Security Instrument.
“Preferred Equity” means a direct or indirect equity ownership interest in, economic interests in, or rights with respect to, Borrower that provide an equity owner preferred dividend, distribution, payment, or return treatment relative to other equity owners.
“Prepayment Lockout Period” has the meaning set forth in the Summary of Loan Terms.
“Prepayment Notice” means the written notice that Borrower is required to provide to Lender in accordance with Section 2.03 (Lockout/Prepayment) of the Loan Agreement in order to make a prepayment on the Mortgage Loan, which shall include, at a minimum, the Intended Prepayment Date.
“Prepayment Premium” means the amount payable by Borrower in connection with a prepayment of the Mortgage Loan, as provided in Section 2.03 (Lockout/Prepayment) of the Loan Agreement and calculated in accordance with the Prepayment Premium Schedule.
“Prepayment Premium Period End Date” or “Yield Maintenance Period End Date” has the meaning set forth in the Summary of Loan Terms.
“Prepayment Premium Period Term” or “Yield Maintenance Period Term” has the meaning set forth in the Summary of Loan Terms.
Schedule 1 to Multifamily Loan and Security Agreement - Definitions Schedule (Interest Rate Type - Fixed Rate) |
Form 6101.FR | Page 10 |
Fannie Mae | 01-16 | © 2016 Fannie Mae |
“Prepayment Premium Schedule” means that certain Schedule 4 (Prepayment Premium Schedule) to the Loan Agreement.
“Prohibited Person” means:
(a) any Person with whom Lender or Fannie Mae is prohibited from doing business pursuant to any law, rule, regulation, judicial proceeding or administrative directive; or
(b) any Person identified on the United States Department of Housing and Urban Development’s “Limited Denial of Participation, HUD Funding Disqualifications and Voluntary Abstentions List,” or on the General Services Administration’s “System for Award Management (SAM)” exclusion list, each of which may be amended from time to time, and any successor or replacement thereof; or
(c) any Person that is determined by Fannie Mae to pose an unacceptable credit risk due to the aggregate amount of debt of such Person owned or held by Fannie Mae; or
(d) any Person that has caused any unsatisfactory experience of a material nature with Fannie Mae or Lender, such as a default, fraud, intentional misrepresentation, litigation, arbitration or other similar act.
“Property Jurisdiction” has the meaning set forth in the Security Instrument.
“Property Square Footage” has the meaning set forth in the Summary of Loan Terms.
“Publicly-Held Corporation” means a corporation, the outstanding voting stock of which is registered under Sections 12(b) or 12(g) of the Securities Exchange Act of 1934, as amended.
“Publicly-Held Trust” means a real estate investment trust, the outstanding voting shares or beneficial interests of which are registered under Sections 12(b) or 12(g) of the Securities Exchange Act of 1934, as amended.
“Rents” has the meaning set forth in the Security Instrument.
“Repair Threshold” has the meaning set forth in the Summary of Loan Terms.
“Repairs” means, individually and collectively, the Required Repairs, Borrower Requested Repairs, and Additional Lender Repairs.
“Repairs Escrow Account” means the account established by Lender into which the Repairs Escrow Deposit is deposited to fund the Repairs.
“Repairs Escrow Account Administrative Fee” has the meaning set forth in the Summary of Loan Terms.
“Repairs Escrow Deposit” has the meaning set forth in the Summary of Loan Terms.
“Replacement Reserve Account” means the account established by Lender into which the Replacement Reserve Deposits are deposited to fund the Replacements.
Schedule 1 to Multifamily Loan and Security Agreement - Definitions Schedule (Interest Rate Type - Fixed Rate) |
Form 6101.FR | Page 11 |
Fannie Mae | 01-16 | © 2016 Fannie Mae |
“Replacement Reserve Account Administration Fee” has the meaning set forth in the Summary of Loan Terms.
“Replacement Reserve Account Interest Disbursement Frequency” has the meaning set forth in the Summary of Loan Terms.
“Replacement Reserve Deposits” means the Initial Replacement Reserve Deposit, Monthly Replacement Reserve Deposits and any other deposits to the Replacement Reserve Account required by the Loan Agreement.
“Replacement Threshold” has the meaning set forth in the Summary of Loan Terms.
“Replacements” means, individually and collectively, the Required Replacements, Borrower Requested Replacements and Additional Lender Replacements.
“Required Repair Schedule” means that certain Schedule 6 (Required Repair Schedule) to the Loan Agreement.
“Required Repairs” means those items listed on the Required Repair Schedule.
“Required Replacement Schedule” means that certain Schedule 5 (Required Replacement Schedule) to the Loan Agreement.
“Required Replacements” means those items listed on the Required Replacement Schedule.
“Reserve/Escrow Account Funds” means, collectively, the funds on deposit in the Reserve/Escrow Accounts.
“Reserve/Escrow Accounts” means, together, the Replacement Reserve Account and the Repairs Escrow Account.
“Residential Lease” means a Lease of an individual dwelling unit and shall not include any master Lease (which term “master Lease” includes any master Lease to a single corporate tenant).
“Restoration” means restoring and repairing the Mortgaged Property to the equivalent of its physical condition immediately prior to the casualty or to a condition approved by Lender following a casualty.
“Restricted Ownership Interest” means, with respect to any entity, the following:
(a) if such entity is a general partnership or a joint venture, fifty percent (50%) or more of all general partnership or joint venture interests in such entity;
(b) if such entity is a limited partnership:
(1) the interest of any general partner; or
(2) fifty percent (50%) or more of all limited partnership interests in such entity;
Schedule 1 to Multifamily Loan and Security Agreement - Definitions Schedule (Interest Rate Type - Fixed Rate) |
Form 6101.FR | Page 12 |
Fannie Mae | 01-16 | © 2016 Fannie Mae |
(c) if such entity is a limited liability company or a limited liability partnership:
(1) the interest of any managing member or the contractual rights of any non-member manager; or
(2) fifty percent (50%) or more of all membership or other ownership interests in such entity;
(d) if such entity is a corporation (other than a Publicly-Held Corporation) with only one class of voting stock, fifty percent (50%) or more of voting stock in such corporation;
(e) if such entity is a corporation (other than a Publicly-Held Corporation) with more than one class of voting stock, the amount of shares of voting stock sufficient to have the power to elect the majority of directors of such corporation; or
(f) if such entity is a trust (other than a land trust or a Publicly-Held Trust), the power to Control such trust vested in the trustee of such trust or the ability to remove, appoint or substitute the trustee of such trust (unless the trustee of such trust after such removal, appointment or substitution is a trustee identified in the trust agreement approved by Lender).
“Review Fee” means the non-refundable fee of Three Thousand Dollars ($3,000) payable to Lender.
“Sanctioned Country” means a country subject to a comprehensive country-wide sanctions program administered and enforced by OFAC, which list is updated from time to time.
“Sanctioned Person” means (a) a Person named on the list of “Specially Designated Nationals and Blocked Persons” maintained by OFAC, available at http://www.treasury.gov/resource-center/sanctions/SDN-List/Pages/default.aspx, or as otherwise published from time to time; (b) (1) an agency of the government of a Sanctioned Country, (2) an organization controlled by a Sanctioned Country, or (3) a Person resident in a Sanctioned Country, to the extent any Person described in clauses (1), (2) or (3) is the subject of a sanctions program administered by OFAC; and, (c) a Person whose property and interests in property are blocked pursuant to an Executive Order or regulations administered by OFAC consistent with the guidance issued by OFAC.
“Schedule of Interest Rate Type Provisions” means that certain Schedule 3 (Schedule of Interest Rate Type Provisions) to the Loan Agreement.
“Security Instrument” means that certain multifamily mortgage, deed to secure debt or deed of trust executed and delivered by Borrower as security for the Mortgage Loan and encumbering the Mortgaged Property, including all riders or schedules attached thereto, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.
“Servicing Arrangement” means any arrangement between Lender and the Loan Servicer for loss sharing or interim advancement of funds.
“Summary of Loan Terms” means that certain Schedule 2 (Summary of Loan Terms) to the Loan Agreement.
“Taxes” has the meaning set forth in the Security Instrument.
Schedule 1 to Multifamily Loan and Security Agreement - Definitions Schedule (Interest Rate Type - Fixed Rate) |
Form 6101.FR | Page 13 |
Fannie Mae | 01-16 | © 2016 Fannie Mae |
“Title Policy” means the mortgagee’s loan policy of title insurance issued in connection with the Mortgage Loan and insuring the lien of the Security Instrument as set forth therein, as approved by Lender.
“Total Parking Spaces” has the meaning set forth in the Summary of Loan Terms.
“Total Residential Units” has the meaning set forth in the Summary of Loan Terms.
“Transfer” means:
(a) a sale, assignment, transfer or other disposition (whether voluntary, involuntary, or by operation of law), other than Residential Leases, Material Commercial Leases or non-Material Commercial Leases permitted by this Loan Agreement;
(b) a granting, pledging, creating or attachment of a lien, encumbrance or security interest (whether voluntary, involuntary, or by operation of law);
(c) an issuance or other creation of a direct or indirect ownership interest;
(d) a withdrawal, retirement, removal or involuntary resignation of any owner or manager of a legal entity; or
(e) a merger, consolidation, dissolution or liquidation of a legal entity.
“Transfer Fee” means a fee equal to one percent (1%) of the unpaid principal balance of the Mortgage Loan payable to Lender.
“UCC” has the meaning set forth in the Security Instrument.
“UCC Collateral” has the meaning set forth in the Security Instrument.
“Voidable Transfer” means any fraudulent conveyance, preference or other voidable or recoverable payment of money or transfer of property.
“Yield Maintenance Period End Date” or “Prepayment Premium Period End Date” has the meaning set forth in the Summary of Loan Terms.
“Yield Maintenance Period Term” or “Prepayment Premium Period Term” has the meaning set forth in the Summary of Loan Terms.
Schedule 1 to Multifamily Loan and Security Agreement - Definitions Schedule (Interest Rate Type - Fixed Rate) |
Form 6101.FR | Page 14 |
Fannie Mae | 01-16 | © 2016 Fannie Mae |
/s/ JR | ||
Borrower Initials |
Schedule 1 to Multifamily Loan and Security Agreement - Definitions Schedule (Interest Rate Type - Fixed Rate) |
Form 6101.FR | Page 15 |
Fannie Mae | 01-16 | © 2016 Fannie Mae |
SCHEDULE 2
TO MULTIFAMILY LOAN AND SECURITY AGREEMENT
Summary of Loan Terms
(Interest Rate Type - Fixed Rate)
I. GENERAL PARTY AND MULTIFAMILY PROJECT INFORMATION | |
Borrower | BR CARROLL TENSIDE, LLC, a Delaware limited liability company |
Lender | WALKER & DUNLOP, LLC, a Delaware limited liability company |
Key Principal | M. Patrick Carroll Bluerock Residential Growth REIT, Inc. Carroll Multifamily Real Estate Fund IV, LP |
Guarantor | Bluerock Residential Growth REIT, Inc. Carroll Multifamily Real Estate Fund IV, LP |
Multifamily Project | Tenside |
ADDRESSES | |
Borrower’s General Business Address | c/o Bluerock Real Estate, L.L.C. 712 Fifth Avenue, 9th Floor New York, New York 10019 |
Borrower’s Notice Address |
c/o Bluerock Real Estate, L.L.C. Attn: Michael Konig, Esq. and Jordan Ruddy jruddy@bluerockre.com |
Multifamily Project Address | 1000 Northside Drive NW Atlanta, Georgia 30318 |
Multifamily Project County | Fulton County |
Key Principal’s General Business Address | M.
Patrick Carroll c/o Carroll Organization 3340 Peachtree Road NE, Suite 2250 Atlanta, Georgia 30326 Bluerock Residential Growth REIT, Inc. c/o Bluerock Residential Holdings, L.P. 712 Fifth Avenue, 9th Floor New York, New York 10019 Attention: Michael Konig, Esq. and Jordan Ruddy Carroll Multifamily Real Estate Fund IV, LP c/o Carroll Organization 3340 Peachtree Road NE, Suite 2250 Atlanta, Georgia 30326 |
Schedule 2 to Multifamily Loan and Security Agreement - Summary of Loan Terms (Interest Rate Type - Fixed Rate) |
Form 6102.FR | Page 1 |
Fannie Mae | 08-13 | © 2013 Fannie Mae |
Key Principal’s Notice Address |
M. Patrick Carroll jruddy@bluerockre.com
|
Guarantor’s General Business Address | Bluerock
Residential Growth REIT, Inc. c/o Bluerock Residential Holdings, L.P. 712 Fifth Avenue, 9th Floor New York, New York 10019 Attention: Michael Konig, Esq. and Jordan Ruddy Carroll Multifamily Real Estate Fund IV, LP c/o Carroll Organization 3340 Peachtree Road NE, Suite 2250 Atlanta, Georgia 30326 |
Guarantor’s Notice Address |
Bluerock Residential Growth REIT, Inc. jruddy@bluerockre.com
|
Schedule 2 to Multifamily Loan and Security Agreement - Summary of Loan Terms (Interest Rate Type - Fixed Rate) |
Form 6102.FR | Page 2 |
Fannie Mae | 08-13 | © 2013 Fannie Mae |
Lender’s General Business Address | 7501 Wisconsin Avenue, Suite 1200E Bethesda, Maryland 20814 |
Lender’s Notice Address | 7501 Wisconsin Avenue, Suite 1200E Bethesda, Maryland 20814 servicing@walkerdunlop.com |
Lender’s Payment Address | 7501 Wisconsin Avenue, Suite 1200E Bethesda, Maryland 20814-6531 |
II. MULTIFAMILY PROJECT INFORMATION | |
Property Square Footage | 170,537.4 |
Total Parking Spaces | 590 |
Total Residential Units | 336 |
Affordable Housing Property |
¨ Yes x No |
III. MORTGAGE LOAN INFORMATION | |
Amortization Period | 360 months |
Amortization Type |
¨ Amortizing ¨ Full Term Interest Only x Partial Interest Only |
Effective Date | As of July 14, 2016 |
First Payment Date | September 1, 2016 |
First Principal and Interest Payment Date | September 1, 2021 |
Fixed Rate | 3.68% |
Schedule 2 to Multifamily Loan and Security Agreement - Summary of Loan Terms (Interest Rate Type - Fixed Rate) |
Form 6102.FR | Page 3 |
Fannie Mae | 08-13 | © 2013 Fannie Mae |
Interest Accrual Method |
¨ 30/360 (computed on the basis of a three hundred sixty (360) day year consisting of twelve (12) thirty (30) day months).
or
x Actual/360 (computed on the basis of a three hundred sixty (360) day year and the actual number of calendar days during the applicable month, calculated by multiplying the unpaid principal balance of the Mortgage Loan by the Interest Rate, dividing the product by three hundred sixty (360), and multiplying the quotient obtained by the actual number of days elapsed in the applicable month). |
Interest Only Term | 60 months |
Interest Rate | The Fixed Rate |
Interest Rate Type | Fixed Rate |
Last Interest Only Payment Date | August 1, 2021 |
Loan Amount | $52,150,000.00 |
Loan Term | 84 months |
Loan Year | The period beginning on the Effective Date and ending on the last day of July, 2017, and each successive twelve (12) month period thereafter. |
Maturity Date | August 1, 2023, or any earlier date on which the unpaid principal balance of the Mortgage Loan becomes due and payable by acceleration or otherwise. |
Schedule 2 to Multifamily Loan and Security Agreement - Summary of Loan Terms (Interest Rate Type - Fixed Rate) |
Form 6102.FR | Page 4 |
Fannie Mae | 08-13 | © 2013 Fannie Mae |
Monthly Debt Service Payment |
(i) $165,257.56 for the First Payment Date; (ii) for each Payment Date thereafter through and including the Last Interest Only Payment Date: (a) $149,264.89 if the prior month was a 28-day month; (b) $154,595.78 if the prior month was a 29-day month; (c) $159,926.67 if the prior month was a 30-day month; and (d) $165,257.56 if the prior month was a 31-day month; and (iii) $239,448.03 for the First Principal and Interest Payment Date and each Payment Date thereafter until the Mortgage Loan is fully paid. |
Prepayment Lockout Period | 0 year(s) from the Effective Date |
IV. YIELD MAINTENANCE/PREPAYMENT PREMIUM INFORMATION | |
Yield Maintenance Period End Date or Prepayment Premium Period End Date |
The last day of July, 2021 |
Yield Maintenance Period Term or Prepayment Premium Period Term |
60 months |
V. RESERVE INFORMATION | |
Completion Period | Within [See Schedule 6] months after the Effective Date or as otherwise shown on the Required Repair Schedule. |
Initial Replacement Reserve Deposit | $0.00 |
Maximum Inspection Fee | $750.00 |
Schedule 2 to Multifamily Loan and Security Agreement - Summary of Loan Terms (Interest Rate Type - Fixed Rate) |
Form 6102.FR | Page 5 |
Fannie Mae | 08-13 | © 2013 Fannie Mae |
Maximum Repair Disbursement Interval | One time per calendar month |
Maximum Replacement Reserve Disbursement Interval | One time per calendar quarter |
Minimum Repairs Disbursement Amount | $5,000.00 |
Minimum Replacement Reserve Disbursement Amount | $5,000.00 |
Monthly Replacement Reserve Deposit | $7,000.00 |
Repair Threshold | $10,000.00 |
Repairs Escrow Account Administrative Fee | $250.00, payable one time |
Repairs Escrow Deposit | $725,000.00 |
Replacement Reserve Account Administration Fee | $250.00, payable annually |
Replacement Reserve Account Interest Disbursement Frequency | Annually |
Replacement Threshold | $5,000.00 |
Schedule 2 to Multifamily Loan and Security Agreement - Summary of Loan Terms (Interest Rate Type - Fixed Rate) |
Form 6102.FR | Page 6 |
Fannie Mae | 08-13 | © 2013 Fannie Mae |
/s/ JR | ||
Borrower Initials |
Schedule 2 to Multifamily Loan and Security Agreement - Summary of Loan Terms (Interest Rate Type - Fixed Rate) |
Form 6102.FR | Page 7 |
Fannie Mae | 08-13 | © 2013 Fannie Mae |
SCHEDULE 3
TO MULTIFAMILY LOAN AND SECURITY AGREEMENT
Schedule of Interest Rate Type Provisions
(Fixed Rate)
1. | Defined Terms. |
Capitalized terms not otherwise defined in this Schedule have the meanings given to such terms in the Definitions Schedule to the Loan Agreement.
2. | Interest Accrual. |
Except as otherwise provided in the Loan Agreement, interest shall accrue at the Interest Rate until fully paid.
Schedule 3 to Multifamily Loan and Security Agreement - Interest Rate Type Provisions (Fixed Rate) |
Form 6103.FR | Page 1 |
Fannie Mae | 01-11 | © 2011 Fannie Mae |
/s/ JR | ||
Borrower Initials |
Schedule 3 to Multifamily Loan and Security Agreement - Interest Rate Type Provisions (Fixed Rate) |
Form 6103.FR | Page 2 |
Fannie Mae | 01-11 | © 2011 Fannie Mae |
SCHEDULE 4
TO MULTIFAMILY LOAN AND SECURITY AGREEMENT
Prepayment Premium Schedule
(Standard Yield Maintenance – Fixed Rate)
1. | Defined Terms. |
All capitalized terms used but not defined in this Prepayment Premium Schedule shall have the meanings assigned to them in the Loan Agreement.
2. | Prepayment Premium. |
Any Prepayment Premium payable under Section 2.03 (Lockout/Prepayment) of the Loan Agreement shall be computed as follows:
(a) If the prepayment is made at any time after the Effective Date and before the Yield Maintenance Period End Date, the Prepayment Premium shall be the greater of:
(1) one percent (1%) of the amount of principal being prepaid; or
(2) the product obtained by multiplying:
(i) the amount of principal being prepaid,
by
(ii) the difference obtained by subtracting from the Fixed Rate on the Mortgage Loan, the Yield Rate (as defined below) on the twenty-fifth (25th) Business Day preceding (i) the Intended Prepayment Date, or (ii) the date Lender accelerates the Mortgage Loan or otherwise accepts a prepayment pursuant to Section 2.03(d) (Application of Collateral) of the Loan Agreement,
by
(iii) the present value factor calculated using the following formula:
[r | = Yield Rate |
n | = the number of months remaining between (i) either of the following: (x) in the case of a voluntary prepayment, the last day of the month in which the prepayment is made, or (y) in any other case, the date on which Lender accelerates the unpaid principal balance of the Mortgage Loan and (ii) the Yield Maintenance Period End Date. |
Schedule 4 to Multifamily Loan and Security Agreement (Prepayment Premium Schedule – Standard Yield Maintenance – Fixed Rate) |
Form 6104.01 | Page 1 |
Fannie Mae | 08-13 | © 2013 Fannie Mae |
For purposes of this clause (2), the “Yield Rate” means the yield calculated by interpolating the yields for the immediately shorter and longer term U.S. “Treasury constant maturities” (as reported in the Federal Reserve Statistical Release H.15 Selected Interest Rates (the “Fed Release”) under the heading “U.S. government securities”) closest to the remaining term of the Yield Maintenance Period Term, as follows (rounded to three (3) decimal places):
a | = the yield for the longer U.S. Treasury constant maturity |
b | = the yield for the shorter U.S. Treasury constant maturity |
x | = the term of the longer U.S. Treasury constant maturity |
y | = the term of the shorter U.S. Treasury constant maturity |
z | = “n” (as defined in the present value factor calculation above) divided by twelve (12). |
Notwithstanding any provision to the contrary, if “z” equals a term reported under the U.S. “Treasury constant maturities” subheading in the Fed Release, the yield for such term shall be used, and interpolation shall not be necessary. If publication of the Fed Release is discontinued by the Federal Reserve Board, Lender shall determine the Yield Rate from another source selected by Lender. Any determination of the Yield Rate by Lender will be binding absent manifest error.]
(b) If the prepayment is made on or after the Yield Maintenance Period End Date but before the last calendar day of the fourth (4th) month prior to the month in which the Maturity Date occurs, the Prepayment Premium shall be one percent (1%) of the amount of principal being prepaid.
(c) Notwithstanding the provisions of Section 2.03 (Lockout/Prepayment) of the Loan Agreement, no Prepayment Premium shall be payable with respect to any prepayment made on or after the last calendar day of the fourth (4th) month prior to the month in which the Maturity Date occurs.
Schedule 4 to Multifamily Loan and Security Agreement (Prepayment Premium Schedule – Standard Yield Maintenance – Fixed Rate) |
Form 6104.01 | Page 2 |
Fannie Mae | 08-13 | © 2013 Fannie Mae |
/s/ JR | ||
Borrower Initials |
Schedule 4 to Multifamily Loan and Security Agreement (Prepayment Premium Schedule – Standard Yield Maintenance – Fixed Rate) |
Form 6104.01 | Page 3 |
Fannie Mae | 08-13 | © 2013 Fannie Mae |
SCHEDULE 5 TO
MULTIFAMILY LOAN AND SECURITY AGREEMENT
Required Replacement Schedule
Multifamily Loan and Security Agreement (Non-Recourse) |
Form 6001.NR | Page 1 |
Schedule 5 | 01-16 | © 2016 Fannie Mae |
/s/ JR | ||
Borrower Initials |
Multifamily Loan and Security Agreement (Non-Recourse) |
Form 6001.NR | Page 2 |
Schedule 5 | 01-16 | © 2016 Fannie Mae |
SCHEDULE 6 TO
MULTIFAMILY LOAN AND SECURITY AGREEMENT
Required Repair Schedule
Immediate Repairs:
Capital Improvements to be completed within twenty-four (24) months:
· Interior improvements
o Bath faucets
o Granite countertops in bathrooms
o Chrome hardware
o Ceiling fans with light kits
o 2” faux wood blinds
o Kenmore side-by-side washer/dryer set
o Tile backsplash in all kitchens
o Bathroom mirror frames
· Exterior improvements
o Pool furniture
o Pavers
o Screen over deck
o Clubhouse
o Flooring
o Paint
o Fitness center
o Glass doors
o Fitness equipment
o Framing/Mirrors/TV
o Retail Build-Out
Multifamily Loan and Security Agreement (Non-Recourse) |
Form 6001.NR | Page 1 |
Schedule 6 | 01-16 | © 2016 Fannie Mae |
o IT equipment
o Utility deposits
o Exterior painting
o Model
o Signage
Lender has waived the $3,000 escrow for the above-listed Immediate Repairs, as noted on the chart above.
Notwithstanding the foregoing, and as noted on Schedule 2 of this Loan Agreement, Borrower shall escrow $725,000.00 with the Lender for the above-listed Capital Improvements. Each dollar held in the Repair Escrow Account will be disbursed to Borrower after evidence that an equal amount has been spent by the Borrower on such Capital Improvements at the Mortgaged Property. If the Borrower has not spent the full $725,000.00 within twenty-four months after the Effective Date, the remaining funds in the Repair Escrow Account will be transferred to the Replacement Reserve Account to be used for the replacement items detailed on Schedule 5 of this Loan Agreement.
Multifamily Loan and Security Agreement (Non-Recourse) |
Form 6001.NR | Page 2 |
Schedule 6 | 01-16 | © 2016 Fannie Mae |
/s/ JR | ||
Borrower Initials |
Multifamily Loan and Security Agreement (Non-Recourse) |
Form 6001.NR | Page 3 |
Schedule 6 | 01-16 | © 2016 Fannie Mae |
SCHEDULE 7 TO
MULTIFAMILY LOAN AND SECURITY AGREEMENT
Exceptions to Representations and Warranties Schedule
1. Section 4.01(h) is hereby revised to read as follows, to reflect the Borrower’s ownership of those certain Bonds as defined in the Security Instrument:
(1) does not own or lease any real property, personal property, or assets other than the Mortgaged Property and the Bonds (as defined in the Security Instrument);
Multifamily Loan and Security Agreement (Non-Recourse) |
Form 6001.NR | Page 1 |
Schedule 7 | 01-16 | © 2016 Fannie Mae |
/s/ JR | ||
Borrower Initials |
Multifamily Loan and Security Agreement (Non-Recourse) |
Form 6001.NR | Page 2 |
Schedule 7 | 01-16 | © 2016 Fannie Mae |
EXHIBIT 1
MODIFICATIONS TO MULTIFAMILY LOAN AND SECURITY AGREEMENT
(Ground Lease Defaults)
The foregoing Loan Agreement is hereby modified as follows:
1. Capitalized terms used and not specifically defined herein have the meanings given to such terms in the Loan Agreement.
2. Section 3.02(b) (Personal Liability of Borrower (Exceptions to Non-Recourse Provision – Full Personal Liability for Mortgage Loan) of the Loan Agreement is amended by adding the following provision to the end thereof:
(6) any failure by Borrower to comply with the provisions of Section 16(c) (Ground Lease Provisions – Negative Covenants Regarding Ground Lease), Section 16(d) (Ground Lease Provisions – Ground Lessee’s Bankruptcy Event), Section 16(e)(1) (Ground Lease Provisions – Ground Lessor’s Bankruptcy Event) or Section 16(g) (Ground Lease Provisions – Option to Renew or Extend Ground Lease) of the Security Instrument.
3. Section 14.01(a) (Events of Default – Automatic Events of Default) of the Loan Agreement is amended by adding the following provision at the end thereof:
(12) any failure by Borrower to comply with the provisions of Section 16(b) (Ground Lease Provisions – Affirmative Covenants Regarding Ground Lease) and Section 16(c) (Ground Lease Provisions – Negative Covenants Regarding Ground Lease) of the Security Instrument.
Modifications to Multifamily Loan and Security Agreement (Ground Lease Defaults) |
Form 6206 | Page 1 |
Fannie Mae | 07-11 | © 2011 Fannie Mae |
/s/ JR | ||
Borrower’s Initials |
Modifications to Multifamily Loan and Security Agreement (Ground Lease Defaults) |
Form 6206 | Page 2 |
Fannie Mae | 07-11 | © 2011 Fannie Mae |
EXHIBIT 2
MODIFICATIONS TO MULTIFAMILY LOAN AND SECURITY AGREEMENT
(Waiver of Imposition Deposits)
The foregoing Loan Agreement is hereby modified as follows:
1. Capitalized terms used and not specifically defined herein have the meanings given to such terms in the Loan Agreement.
2. The Definitions Schedule is hereby amended by adding the following new definitions in the appropriate alphabetical order:
“Insurance Impositions” means the premiums for maintaining all Required Insurance Coverage.
“Required Insurance Coverage” means the insurance coverage required pursuant to Article 9 (Insurance) of the Loan Agreement and under any other Loan Document.
3. Section 12.02 (Imposition Deposits, Taxes, and Other Charges – Covenants) of the Loan Agreement is hereby amended by adding the following provisions to the end thereof:
(b) Conditional Waiver of Collection of Imposition Deposits.
(1) Notwithstanding anything contained in this Section 12.02 (Imposition Deposits, Taxes, and Other Charges – Covenants) to the contrary, Lender hereby agrees to waive the collection of Imposition Deposits for Insurance Impositions, provided, that:
(A) Borrower shall pay such Insurance Impositions directly to the carrier or agent ten (10) days prior to expiration or as necessary to prevent the Required Insurance Coverage from lapsing due to non-payment of premiums;
(B) Borrower shall provide Lender with proof of payment acceptable to Lender of all Insurance Impositions within five (5) days after the date such Insurance Impositions are paid; and
(C) Borrower shall cause its insurance agent to provide Lender with such certifications regarding the Required Insurance Coverage as Lender may request from time to time evidencing that the Insurance Impositions have been paid in a timely manner and that all of the Required Insurance Coverage is in full force and effect.
(2) Lender reserves the right to require Borrower to deposit the Imposition Deposits with Lender on each Payment Date for Insurance Impositions in accordance with this Section 12.02 (Imposition Deposits, Taxes, and Other Charges – Covenants) upon:
(A) Borrower’s failure to pay Insurance Impositions or to provide Lender with proof of payment of Insurance Impositions as required in this Section 12.02(b) (Conditional Waiver of Collection of Imposition Deposits);
Modifications to Multifamily Loan and Security Agreement (Waiver of Imposition Deposits) |
Form 6228 | Page 1 |
Fannie Mae | 04-12 | © 2012 Fannie Mae |
(B) Borrower’s failure to maintain insurance coverage in accordance with the requirements of Article 9 (Insurance);
(C) the occurrence of any Transfer which is not permitted by the Loan Documents, or any Transfer which requires Lender’s consent; or
(D) the occurrence of a default under any of the other terms, conditions and covenants set forth in this Loan Agreement or any of the other Loan Documents.
(3) Except as specifically provided in this Section 12.02(b) (Conditional Waiver of Collection of Imposition Deposits), the provisions of Article 9 (Insurance) shall remain in full force and effect.
Modifications to Multifamily Loan and Security Agreement (Waiver of Imposition Deposits) |
Form 6228 | Page 2 |
Fannie Mae | 04-12 | © 2012 Fannie Mae |
/s/ JR | ||
Borrower Initials |
Modifications to Multifamily Loan and Security Agreement (Waiver of Imposition Deposits) |
Form 6228 | Page 3 |
Fannie Mae | 04-12 | © 2012 Fannie Mae |
Exhibit 10.8
Tenside
MULTIFAMILY NOTE
US $52,150,000.00 | As of July 14, 2016 |
FOR VALUE RECEIVED, the undersigned (“Borrower”) promises to pay to the order of WALKER & DUNLOP, LLC, a Delaware limited liability company (“Lender”), the principal amount of Fifty-Two Million One Hundred Fifty Thousand and 00/100 Dollars (US $52,150,000.00) (the “Mortgage Loan”), together with interest thereon accruing at the Interest Rate on the unpaid principal balance from the date the Mortgage Loan proceeds are disbursed until fully paid in accordance with the terms hereof and of that certain Multifamily Loan and Security Agreement dated as of the date hereof, by and between Borrower and Lender (as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time, the “Loan Agreement”).
1. Defined Terms.
Capitalized terms used and not specifically defined in this Multifamily Note (this “Note”) have the meanings given to such terms in the Loan Agreement.
2. Repayment.
Borrower agrees to pay the principal amount of the Mortgage Loan and interest on the principal amount of the Mortgage Loan from time to time outstanding at the Interest Rate or such other rate or rates and at the times specified in the Loan Agreement, together with all other amounts due to Lender under the Loan Documents. The outstanding balance of the Mortgage Loan and all accrued and unpaid interest thereon shall be due and payable on the Maturity Date, together with all other amounts due to Lender under the Loan Documents.
3. Security.
The Mortgage Loan evidenced by this Note, together with all other Indebtedness is secured by, among other things, the Security Instrument, the Loan Agreement and the other Loan Documents. All of the terms, covenants and conditions contained in the Loan Agreement, the Security Instrument and the other Loan Documents are hereby made part of this Note to the same extent and with the same force as if they were fully set forth herein. In the event of a conflict or inconsistency between the terms of this Note and the Loan Agreement, the terms and provisions of the Loan Agreement shall govern.
4. Acceleration.
In accordance with the Loan Agreement, if an Event of Default has occurred and is continuing, the entire unpaid principal balance of the Mortgage Loan, any accrued and unpaid interest, including interest accruing at the Default Rate, the Prepayment Premium (if applicable), and all other amounts payable under this Note, the Loan Agreement and any other Loan Document shall at once become due and payable, at the option of Lender, without any prior notice to Borrower, unless applicable law requires otherwise (and in such case, after satisfactory notice has been given).
Multifamily Note – Multistate | Form 6010 | Page 1 |
Fannie Mae | 01-16 | © 2016 Fannie Mae |
5. Personal Liability.
The provisions of Article 3 (Personal Liability) of the Loan Agreement are hereby incorporated by reference into this Note to the same extent and with the same force as if fully set forth herein.
6. Governing Law.
This Note shall be governed in accordance with the terms and provisions of Section 15.01 (Governing Law; Consent to Jurisdiction and Venue) of the Loan Agreement.
7. Waivers.
Presentment, demand for payment, notice of nonpayment and dishonor, protest and notice of protest, notice of acceleration, notice of intent to demand or accelerate payment or maturity, presentment for payment, notice of nonpayment, and grace and diligence in collecting the Indebtedness are waived by Borrower, for and on behalf of itself, Guarantor and Key Principal, and all endorsers and guarantors of this Note and all other third party obligors or others who may become liable for the payment of all or any part of the Indebtedness.
8. Commercial Purpose.
Borrower represents that the Indebtedness is being incurred by Borrower solely for the purpose of carrying on a business or commercial enterprise or activity, and not for agricultural, personal, family or household purposes.
9. Construction; Joint and Several (or Solidary, as applicable) Liability.
(a) Section 15.08 (Construction) of the Loan Agreement is hereby incorporated herein as if fully set forth in the body of this Note.
(b) If more than one Person executes this Note as Borrower, the obligations of such Person shall be joint and several (solidary instead for purposes of Louisiana law).
10. Notices.
All Notices required or permitted to be given by Lender to Borrower pursuant to this Note shall be given in accordance with Section 15.02 (Notice) of the Loan Agreement.
11. Time is of the Essence.
Borrower agrees that, with respect to each and every obligation and covenant contained in this Note, time is of the essence.
Multifamily Note – Multistate | Form 6010 | Page 2 |
Fannie Mae | 01-16 | © 2016 Fannie Mae |
12. Loan Charges Savings Clause.
Borrower agrees to pay an effective rate of interest equal to the sum of the Interest Rate and any additional rate of interest resulting from any other charges of interest or in the nature of interest paid or to be paid in connection with the Mortgage Loan and any other fees or amounts to be paid by Borrower pursuant to any of the other Loan Documents. Neither this Note, the Loan Agreement nor any of the other Loan Documents shall be construed to create a contract for the use, forbearance or detention of money requiring payment of interest at a rate greater than the maximum interest rate permitted to be charged under applicable law. It is expressly stipulated and agreed to be the intent of Borrower and Lender at all times to comply with all applicable laws governing the maximum rate or amount of interest payable on the Indebtedness evidenced by this Note and the other Loan Documents. If any applicable law limiting the amount of interest or other charges permitted to be collected from Borrower is interpreted so that any interest or other charge or amount provided for in any Loan Document, whether considered separately or together with other charges or amounts provided for in any other Loan Document, or otherwise charged, taken, reserved or received in connection with the Mortgage Loan, or on acceleration of the maturity of the Mortgage Loan or as a result of any prepayment by Borrower or otherwise, violates that law, and Borrower is entitled to the benefit of that law, that interest or charge is hereby reduced to the extent necessary to eliminate any such violation. Amounts, if any, previously paid to Lender in excess of the permitted amounts shall be applied by Lender to reduce the unpaid principal balance of the Mortgage Loan without the payment of any prepayment premium (or, if the Mortgage Loan has been or would thereby be paid in full, shall be refunded to Borrower), and the provisions of the Loan Agreement and any other Loan Documents immediately shall be deemed reformed and the amounts thereafter collectible under the Loan Agreement and any other Loan Documents reduced, without the necessity of the execution of any new documents, so as to comply with any applicable law, but so as to permit the recovery of the fullest amount otherwise payable under the Loan Documents. For the purpose of determining whether any applicable law limiting the amount of interest or other charges permitted to be collected from Borrower has been violated, all Indebtedness that constitutes interest, as well as all other charges made in connection with the Indebtedness that constitute interest, and any amount paid or agreed to be paid to Lender for the use, forbearance or detention of the Indebtedness, shall be deemed to be allocated and spread ratably over the stated term of the Mortgage Loan. Unless otherwise required by applicable law, such allocation and spreading shall be effected in such a manner that the rate of interest so computed is uniform throughout the stated term of the Mortgage Loan.
13. WAIVER OF TRIAL BY JURY.
TO THE MAXIMUM EXTENT PERMITTED BY LAW, EACH OF BORROWER AND LENDER (A) AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS NOTE OR THE RELATIONSHIP BETWEEN THE PARTIES AS LENDER AND BORROWER THAT IS TRIABLE OF RIGHT BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL.
14. Receipt of Loan Documents.
Borrower acknowledges receipt of a copy of each of the Loan Documents.
15. Incorporation of Schedules.
The schedules, if any, attached to this Note are incorporated fully into this Note by this reference and each constitutes a substantive part of this Note.
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ATTACHED SCHEDULE. The following Schedule is attached to this Note:
¨ | Schedule 1 | Modifications to Note |
IN WITNESS WHEREOF, Borrower has signed and delivered this Note under seal (where applicable) or has caused this Note to be signed and delivered under seal (where applicable) by its duly authorized representative. Where applicable law so provides, Borrower intends that this Note shall be deemed to be signed and delivered as a sealed instrument.
[Remainder of Page Intentionally Blank]
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BORROWER: | ||||
BR CARROLL TENSIDE, LLC, a Delaware limited liability company | ||||
By: | /s/ Jordan Ruddy | (SEAL) | ||
Jordan Ruddy | ||||
Authorized Signatory |
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PAY TO THE ORDER OF ___________________ _________________________, WITHOUT RECOURSE. | ||||
WALKER & DUNLOP, LLC, a Delaware limited liability company | ||||
By: | /s/ Holly Shonosky | (SEAL) | ||
Holly Shonosky | ||||
Senior Closing Officer |
Fannie Mae Commitment Number: 880619
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Exhibit 10.9
Prepared by, and after recording
return to:
Ashanté L. Smith, Esquire
Troutman Sanders LLP
P.O. Box 1122
Richmond, VA 23218
MULTIFAMILY DEED TO SECURE DEBT,
ASSIGNMENT OF LEASES AND RENTS,
SECURITY AGREEMENT AND FIXTURE FILING
(GEORGIA)
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Tenside
MULTIFAMILY DEED TO SECURE DEBT,
ASSIGNMENT OF LEASES AND RENTS,
SECURITY AGREEMENT AND FIXTURE FILING
This MULTIFAMILY DEED TO SECURE DEBT, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND FIXTURE FILING (as amended, restated, replaced, supplemented, or otherwise modified from time to time, the “Security Instrument”) dated as of the 14th day of July, 2016, is executed by BR CARROLL TENSIDE, LLC, a limited liability company organized and existing under the laws of Delaware, as grantor (“Borrower”), to and for the benefit of WALKER & DUNLOP, LLC, a limited liability company organized and existing under the laws of Delaware, as grantee (“Lender”).
Borrower, in consideration of (i) the loan in the original principal amount of Fifty-Two Million One Hundred Fifty Thousand and 00/100 Dollars ($52,150,000.00) (the “Mortgage Loan”) evidenced by that certain Multifamily Note dated as of the date of this Security Instrument, executed by Borrower and made payable to the order of Lender maturing on August 1, 2023 (as amended, restated, replaced, supplemented, or otherwise modified from time to time, the “Note”), (ii) that certain Multifamily Loan and Security Agreement dated as of the date of this Security Instrument, executed by and between Borrower and Lender (as amended, restated, replaced, supplemented or otherwise modified from time to time, the “Loan Agreement”), and (iii) the security title created and transferred to Lender by this Security Instrument, and to secure to Lender the repayment of the Indebtedness (as defined in this Security Instrument), and all renewals, extensions and modifications thereof, and the performance of the covenants and agreements of Borrower contained in the Loan Documents (as defined in the Loan Agreement), excluding the Environmental Indemnity Agreement (as defined in this Security Instrument), and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, irrevocably and unconditionally grants, warrants, conveys, bargains, sells, and assigns to and for the benefit of Lender, with power of sale and right of entry and possession, the Mortgaged Property (as defined in this Security Instrument), including the real property located in Fulton County, State of Georgia, and described in Exhibit A attached to this Security Instrument and incorporated herein by reference (the “Land”), to have and to hold such Mortgaged Property unto Lender and Lender’s successors and assigns, forever; Borrower hereby releasing, relinquishing and waiving, to the fullest extent allowed by law, all rights and benefits, if any, under and by virtue of the homestead exemption laws of the Property Jurisdiction (as defined in this Security Instrument), if applicable.
Borrower represents and warrants that Borrower is lawfully seized of the Mortgaged Property and has the right, power and authority to grant, warrant, convey, bargain, sell, and assign the Mortgaged Property, and that the Mortgaged Property is not encumbered by any Lien (as defined in this Security Instrument) other than Permitted Encumbrances (as defined in this Security Instrument). Borrower covenants that Borrower will warrant and defend the title to the Mortgaged Property against all claims and demands other than Permitted Encumbrances.
Borrower and (by its acceptance hereof) Lender covenants and agrees as follows:
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1. | Defined Terms. |
Capitalized terms used and not specifically defined herein have the meanings given to such terms in the Loan Agreement. All terms used and not specifically defined herein, but which are otherwise defined by the UCC, shall have the meanings assigned to them by the UCC. The following terms, when used in this Security Instrument, shall have the following meanings:
“Condemnation Action” means any action or proceeding, however characterized or named, relating to any condemnation or other taking, or conveyance in lieu thereof, of all or any part of the Mortgaged Property, whether direct or indirect.
“Enforcement Costs” means all expenses and costs, including reasonable attorneys’ fees and expenses, fees and out-of-pocket expenses of expert witnesses and costs of investigation, incurred by Lender as a result of any Event of Default under the Loan Agreement or in connection with efforts to collect any amount due under the Loan Documents, or to enforce the provisions of the Loan Agreement or any of the other Loan Documents, including those incurred in post-judgment collection efforts and in any bankruptcy or insolvency proceeding (including any action for relief from the automatic stay of any bankruptcy proceeding or Foreclosure Event) or judicial or non-judicial foreclosure proceeding, to the extent permitted by law.
“Environmental Indemnity Agreement” means that certain Environmental Indemnity Agreement dated as of the date of this Security Instrument, executed by Borrower to and for the benefit of Lender, as the same may be amended, restated, replaced, supplemented, or otherwise modified from time to time.
“Environmental Laws” has the meaning set forth in the Environmental Indemnity Agreement.
“Event of Default” has the meaning set forth in the Loan Agreement.
“Fixtures” means all Goods that are so attached or affixed to the Land or the Improvements as to constitute a fixture under the laws of the Property Jurisdiction.
“Goods” means all of Borrower’s present and hereafter acquired right, title and interest in all goods which are used now or in the future in connection with the ownership, management, or operation of the Land or the Improvements or are located on the Land or in the Improvements, including inventory; furniture; furnishings; machinery, equipment, engines, boilers, incinerators, and installed building materials; systems and equipment for the purpose of supplying or distributing heating, cooling, electricity, gas, water, air, or light; antennas, cable, wiring, and conduits used in connection with radio, television, security, fire prevention, or fire detection, or otherwise used to carry electronic signals; telephone systems and equipment; elevators and related machinery and equipment; fire detection, prevention and extinguishing systems and apparatus; security and access control systems and apparatus; plumbing systems; water heaters, ranges, stoves, microwave ovens, refrigerators, dishwashers, garbage disposers, washers, dryers, and other appliances; light fixtures, awnings, storm windows, and storm doors; pictures, screens, blinds, shades, curtains, and curtain rods; mirrors, cabinets, paneling, rugs, and floor and wall coverings; fences, trees, and plants; swimming pools; exercise equipment; supplies; tools; books and records (whether in written or electronic form); websites, URLs, blogs, and social network pages; computer equipment (hardware and software); and other tangible personal property which is used now or in the future in connection with the ownership, management, or operation of the Land or the Improvements or are located on the Land or in the Improvements.
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“Imposition Deposits” means deposits in an amount sufficient to accumulate with Lender the entire sum required to pay the Impositions when due.
“Impositions” means
(a) any water and sewer charges which, if not paid, may result in a lien on all or any part of the Mortgaged Property;
(b) the premiums for fire and other casualty insurance, liability insurance, rent loss insurance and such other insurance as Lender may require under the Loan Agreement;
(c) Taxes; and
(d) amounts for other charges and expenses assessed against the Mortgaged Property which Lender at any time reasonably deems necessary to protect the Mortgaged Property, to prevent the imposition of liens on the Mortgaged Property, or otherwise to protect Lender’s interests, all as reasonably determined from time to time by Lender.
“Improvements” means the buildings, structures, improvements, and alterations now constructed or at any time in the future constructed or placed upon the Land, including any future replacements, facilities, and additions and other construction on the Land.
“Indebtedness” means the principal of, interest on, and all other amounts due at any time under the Note, the Loan Agreement, this Security Instrument or any other Loan Document (other than the Environmental Indemnity Agreement and Guaranty), including Prepayment Premiums, late charges, interest charged at the Default Rate, and accrued interest as provided in the Loan Agreement and this Security Instrument, advances, costs and expenses to perform the obligations of Borrower or to protect the Mortgaged Property or the security of this Security Instrument, all other monetary obligations of Borrower under the Loan Documents (other than the Environmental Indemnity Agreement), including amounts due as a result of any indemnification obligations, and any Enforcement Costs.
“Land” means the real property described in Exhibit A.
“Leases” means all present and future leases, subleases, licenses, concessions or grants or other possessory interests now or hereafter in force, whether oral or written, covering or affecting the Mortgaged Property, or any portion of the Mortgaged Property (including proprietary leases or occupancy agreements if Borrower is a cooperative housing corporation), and all modifications, extensions or renewals thereof.
“Lien” means any claim or charge against property for payment of a debt or an amount owed for services rendered, including any mortgage, deed of trust, deed to secure debt, security interest, tax lien, any materialman’s or mechanic’s lien, or any lien of a Governmental Authority, including any lien in connection with the payment of utilities, or any other encumbrance.
“Mortgaged Property” means all of Borrower’s present and hereafter acquired right, title and interest, if any, in and to all of the following:
(a) the Land;
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(b) the Improvements;
(c) the Personalty;
(d) current and future rights, including air rights, development rights, zoning rights and other similar rights or interests, easements, tenements, rights-of-way, strips and gores of land, streets, alleys, roads, sewer rights, waters, watercourses, and appurtenances related to or benefitting the Land or the Improvements, or both, and all rights-of-way, streets, alleys and roads which may have been or may in the future be vacated;
(e) insurance policies relating to the Mortgaged Property (and any unearned premiums) and all proceeds paid or to be paid by any insurer of the Land, the Improvements, the Personalty, or any other part of the Mortgaged Property, whether or not Borrower obtained the insurance pursuant to Lender’s requirements;
(f) awards, payments and other compensation made or to be made by any municipal, state or federal authority with respect to the Land, the Improvements, the Personalty, or any other part of the Mortgaged Property, including any awards or settlements resulting from (1) Condemnation Actions, (2) any damage to the Mortgaged Property caused by governmental action that does not result in a Condemnation Action, or (3) the total or partial taking of the Land, the Improvements, the Personalty, or any other part of the Mortgaged Property under the power of eminent domain or otherwise and including any conveyance in lieu thereof;
(g) contracts, options and other agreements for the sale of the Land, the Improvements, the Personalty, or any other part of the Mortgaged Property entered into by Borrower now or in the future, including cash or securities deposited to secure performance by parties of their obligations;
(h) Leases and Lease guaranties, letters of credit and any other supporting obligation for any of the Leases given in connection with any of the Leases, and all Rents;
(i) earnings, royalties, accounts receivable, issues and profits from the Land, the Improvements or any other part of the Mortgaged Property, and all undisbursed proceeds of the Mortgage Loan and, if Borrower is a cooperative housing corporation, maintenance charges or assessments payable by shareholders or residents;
(j) Imposition Deposits;
(k) refunds or rebates of Impositions by any municipal, state or federal authority or insurance company (other than refunds applicable to periods before the real property tax year in which this Security Instrument is dated);
(l) tenant security deposits;
(m) names under or by which any of the above Mortgaged Property may be operated or known, and all trademarks, trade names, and goodwill relating to any of the Mortgaged Property;
(n) Collateral Accounts and all Collateral Account Funds;
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(o) products, and all cash and non-cash proceeds from the conversion, voluntary or involuntary, of any of the above into cash or liquidated claims, and the right to collect such proceeds; and
(p) all of Borrower’s right, title and interest in the oil, gas, minerals, mineral interests, royalties, overriding royalties, production payments, net profit interests and other interests and estates in, under and on the Mortgaged Property and other oil, gas and mineral interests with which any of the foregoing interests or estates are pooled or unitized.
“Permitted Encumbrance” means only the easements, restrictions and other matters listed in a schedule of exceptions to coverage in the Title Policy and Taxes for the current tax year that are not yet due and payable.
“Personalty” means all of Borrower’s present and hereafter acquired right, title and interest in all Goods, accounts, choses of action, chattel paper, documents, general intangibles (including Software), payment intangibles, instruments, investment property, letter of credit rights, supporting obligations, computer information, source codes, object codes, records and data, all telephone numbers or listings, claims (including claims for indemnity or breach of warranty), deposit accounts and other property or assets of any kind or nature related to the Land or the Improvements now or in the future, including operating agreements, surveys, plans and specifications and contracts for architectural, engineering and construction services relating to the Land or the Improvements, and all other intangible property and rights relating to the operation of, or used in connection with, the Land or the Improvements, including all governmental permits relating to any activities on the Land.
“Prepayment Premium” has the meaning set forth in the Loan Agreement.
“Property Jurisdiction” means the jurisdiction in which the Land is located.
“Rents” means all rents (whether from residential or non-residential space), revenues and other income from the Land or the Improvements, including subsidy payments received from any sources, including payments under any “Housing Assistance Payments Contract” or other rental subsidy agreement (if any), parking fees, laundry and vending machine income and fees and charges for food, health care and other services provided at the Mortgaged Property, whether now due, past due, or to become due, and tenant security deposits.
“Software” means a computer program and any supporting information provided in connection with a transaction relating to the program. The term does not include any computer program that is included in the definition of Goods.
“Taxes” means all taxes, assessments, vault rentals and other charges, if any, general, special or otherwise, including assessments for schools, public betterments and general or local improvements, which are levied, assessed or imposed by any public authority or quasi-public authority, and which, if not paid, may become a lien, on the Land or the Improvements or any taxes upon any Loan Document.
“Title Policy” has the meaning set forth in the Loan Agreement.
“UCC” means the Uniform Commercial Code in effect in the Property Jurisdiction, as amended from time to time.
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“UCC Collateral” means any or all of that portion of the Mortgaged Property in which a security interest may be granted under the UCC and in which Borrower has any present or hereafter acquired right, title or interest.
2. | Security Agreement; Fixture Filing. |
(a) To secure to Lender, the repayment of the Indebtedness, and all renewals, extensions and modifications thereof, and the performance of the covenants and agreements of Borrower contained in the Loan Documents, Borrower hereby pledges, assigns, and grants to Lender a continuing security interest in the UCC Collateral. This Security Instrument constitutes a security agreement and a financing statement under the UCC. This Security Instrument also constitutes a financing statement pursuant to the terms of the UCC with respect to any part of the Mortgaged Property that is or may become a Fixture under applicable law, and will be recorded as a “fixture filing” in accordance with the UCC. Borrower hereby authorizes Lender to file financing statements, continuation statements and financing statement amendments in such form as Lender may require to perfect or continue the perfection of this security interest without the signature of Borrower. If an Event of Default has occurred and is continuing, Lender shall have the remedies of a secured party under the UCC or otherwise provided at law or in equity, in addition to all remedies provided by this Security Instrument and in any Loan Document. Lender may exercise any or all of its remedies against the UCC Collateral separately or together, and in any order, without in any way affecting the availability or validity of Lender’s other remedies. For purposes of the UCC, the debtor is Borrower and the secured party is Lender. The name and address of the debtor and secured party are set forth after Borrower’s signature below which are the addresses from which information on the security interest may be obtained.
(b) Borrower represents and warrants that: (1) Borrower maintains its chief executive office at the location set forth after Borrower’s signature below, and Borrower will notify Lender in writing of any change in its chief executive office within five (5) days of such change; (2) Borrower is the record owner of the Mortgaged Property; (3) Borrower’s state of incorporation, organization, or formation, if applicable, is as set forth on Page 1 of this Security Instrument; (4) Borrower’s exact legal name is as set forth on Page 1 of this Security Instrument; (5) Borrower’s organizational identification number, if applicable, is as set forth after Borrower’s signature below; (6) Borrower is the owner of the UCC Collateral subject to no liens, charges or encumbrances other than the lien hereof; (7) except as expressly provided in the Loan Agreement, the UCC Collateral will not be removed from the Mortgaged Property without the consent of Lender; and (8) no financing statement covering any of the UCC Collateral or any proceeds thereof is on file in any public office except pursuant hereto.
(c) All property of every kind acquired by Borrower after the date of this Security Instrument which by the terms of this Security Instrument shall be subject to the lien and the security interest created hereby, shall immediately upon the acquisition thereof by Borrower and without further conveyance or assignment become subject to the lien and security interest created by this Security Instrument. Nevertheless, Borrower shall execute, acknowledge, deliver and record or file, as appropriate, all and every such further deeds of trust, deeds to secure debt, security agreements, financing statements, assignments and assurances as Lender shall require for accomplishing the purposes of this Security Instrument and to comply with the rerecording requirements of the UCC.
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3. | Assignment of Leases and Rents; Appointment of Receiver; Lender in Possession. |
(a) As part of the consideration for the Indebtedness, Borrower absolutely and unconditionally assigns and transfers to Lender all Leases and Rents. It is the intention of Borrower to establish present, absolute and irrevocable transfers and assignments to Lender of all Leases and Rents and to authorize and empower Lender to collect and receive all Rents without the necessity of further action on the part of Borrower. Borrower and Lender intend the assignments of Leases and Rents to be effective immediately and to constitute absolute present assignments, and not assignments for additional security only. Only for purposes of giving effect to these absolute assignments of Leases and Rents, and for no other purpose, the Leases and Rents shall not be deemed to be a part of the Mortgaged Property. However, if these present, absolute and unconditional assignments of Leases and Rents are not enforceable by their terms under the laws of the Property Jurisdiction, then each of the Leases and Rents shall be included as part of the Mortgaged Property, and it is the intention of Borrower, in such circumstance, that this Security Instrument create and perfect a lien on each of the Leases and Rents in favor of Lender, which liens shall be effective as of the date of this Security Instrument.
(b) Until an Event of Default has occurred and is continuing, but subject to the limitations set forth in the Loan Documents, Borrower shall have a revocable license to exercise all rights, power and authority granted to Borrower under the Leases (including the right, power and authority to modify the terms of any Lease, extend or terminate any Lease, or enter into new Leases, subject to the limitations set forth in the Loan Documents), and to collect and receive all Rents, to hold all Rents in trust for the benefit of Lender, and to apply all Rents to pay the Monthly Debt Service Payments and the other amounts then due and payable under the other Loan Documents, including Imposition Deposits, and to pay the current costs and expenses of managing, operating and maintaining the Mortgaged Property, including utilities and Impositions (to the extent not included in Imposition Deposits), tenant improvements and other capital expenditures. So long as no Event of Default has occurred and is continuing (and no event which, with the giving of notice or the passage of time, or both, would constitute an Event of Default has occurred and is continuing), the Rents remaining after application pursuant to the preceding sentence may be retained and distributed by Borrower free and clear of, and released from, Lender’s rights with respect to Rents under this Security Instrument.
(c) If an Event of Default has occurred and is continuing, without the necessity of Lender entering upon and taking and maintaining control of the Mortgaged Property directly, by a receiver, or by any other manner or proceeding permitted by the laws of the Property Jurisdiction, the revocable license granted to Borrower pursuant to Section 3(b) shall automatically terminate, and Lender shall immediately have all rights, powers and authority granted to Borrower under any Lease (including the right, power and authority to modify the terms of any such Lease, or extend or terminate any such Lease) and, without notice, Lender shall be entitled to all Rents as they become due and payable, including Rents then due and unpaid. During the continuance of an Event of Default, Borrower authorizes Lender to collect, sue for and compromise Rents and directs each tenant of the Mortgaged Property to pay all Rents to, or as directed by, Lender, and Borrower shall, upon Borrower’s receipt of any Rents from any sources, pay the total amount of such receipts to Lender. Although the foregoing rights of Lender are self-effecting, at any time during the continuance of an Event of Default, Lender may make demand for all Rents, and Lender may give, and Borrower hereby irrevocably authorizes Lender to give, notice to all tenants of the Mortgaged Property instructing them to pay all Rents to Lender. No tenant shall be obligated to inquire further as to the occurrence or continuance of an Event of Default, and no tenant shall be obligated to pay to Borrower any amounts that are actually paid to Lender in response to such a notice. Any such notice by Lender shall be delivered to each tenant personally, by mail or by delivering such demand to each rental unit.
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(d) If an Event of Default has occurred and is continuing, Lender may, regardless of the adequacy of Lender’s security or the solvency of Borrower, and even in the absence of waste, enter upon, take and maintain full control of the Mortgaged Property, and may exclude Borrower and its agents and employees therefrom, in order to perform all acts that Lender, in its discretion, determines to be necessary or desirable for the operation and maintenance of the Mortgaged Property, including the execution, cancellation or modification of Leases, the collection of all Rents (including through use of a lockbox, at Lender’s election), the making of repairs to the Mortgaged Property and the execution or termination of contracts providing for the management, operation or maintenance of the Mortgaged Property, for the purposes of enforcing this assignment of Rents, protecting the Mortgaged Property or the security of this Security Instrument and the Mortgage Loan, or for such other purposes as Lender in its discretion may deem necessary or desirable.
(e) Notwithstanding any other right provided Lender under this Security Instrument or any other Loan Document, if an Event of Default has occurred and is continuing, and regardless of the adequacy of Lender’s security or Borrower’s solvency, and without the necessity of giving prior notice (oral or written) to Borrower, Lender may apply to any court having jurisdiction for the appointment of a receiver for the Mortgaged Property to take any or all of the actions set forth in Section 3. If Lender elects to seek the appointment of a receiver for the Mortgaged Property at any time after an Event of Default has occurred and is continuing, Borrower, by its execution of this Security Instrument, expressly consents to the appointment of such receiver, including the appointment of a receiver ex parte, if permitted by applicable law. Borrower consents to shortened time consideration of a motion to appoint a receiver. Lender or the receiver, as applicable, shall be entitled to receive a reasonable fee for managing the Mortgaged Property and such fee shall become an additional part of the Indebtedness. Immediately upon appointment of a receiver or Lender’s entry upon and taking possession and control of the Mortgaged Property, possession of the Mortgaged Property and all documents, records (including records on electronic or magnetic media), accounts, surveys, plans, and specifications relating to the Mortgaged Property, and all security deposits and prepaid Rents, shall be surrendered to Lender or the receiver, as applicable. If Lender or receiver takes possession and control of the Mortgaged Property, Lender or receiver may exclude Borrower and its representatives from the Mortgaged Property.
(f) The acceptance by Lender of the assignments of the Leases and Rents pursuant to this Section 3 shall not at any time or in any event obligate Lender to take any action under any Loan Document or to expend any money or to incur any expense. Lender shall not be liable in any way for any injury or damage to person or property sustained by any Person in, on or about the Mortgaged Property. Prior to Lender’s actual entry upon and taking possession and control of the Land and Improvements, Lender shall not be:
(1) obligated to perform any of the terms, covenants and conditions contained in any Lease (or otherwise have any obligation with respect to any Lease);
(2) obligated to appear in or defend any action or proceeding relating to any Lease or the Mortgaged Property; or
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(3) responsible for the operation, control, care, management or repair of the Mortgaged Property or any portion of the Mortgaged Property.
The execution of this Security Instrument shall constitute conclusive evidence that all responsibility for the operation, control, care, management and repair of the Mortgaged Property is and shall be that of Borrower, prior to such actual entry and taking possession and control by Lender of the Land and Improvements.
(g) Lender shall be liable to account only to Borrower and only for Rents actually received by Lender. Lender shall not be liable to Borrower, anyone claiming under or through Borrower or anyone having an interest in the Mortgaged Property by reason of any act or omission of Lender under this Section 3, and Borrower hereby releases and discharges Lender from any such liability to the fullest extent permitted by law, provided that Lender shall not be released from liability that occurs as a result of Lender’s gross negligence or willful misconduct as determined by a court of competent jurisdiction pursuant to a final, non-appealable court order. If the Rents are not sufficient to meet the costs of taking control of and managing the Mortgaged Property and collecting the Rents, any funds expended by Lender for such purposes shall be added to, and become a part of, the principal balance of the Indebtedness, be immediately due and payable, and bear interest at the Default Rate from the date of disbursement until fully paid. Any entering upon and taking control of the Mortgaged Property by Lender or the receiver, and any application of Rents as provided in this Security Instrument, shall not cure or waive any Event of Default or invalidate any other right or remedy of Lender under applicable law or provided for in this Security Instrument or any Loan Document.
4. | Protection of Lender’s Security. |
If Borrower fails to perform any of its obligations under this Security Instrument or any other Loan Document, or any action or proceeding is commenced that purports to affect the Mortgaged Property, Lender’s security, rights or interests under this Security Instrument or any Loan Document (including eminent domain, insolvency, code enforcement, civil or criminal forfeiture, enforcement of Environmental Laws, fraudulent conveyance or reorganizations or proceedings involving a debtor or decedent), Lender may, at its option, make such appearances, disburse or pay such sums and take such actions, whether before or after an Event of Default or whether directly or to any receiver for the Mortgaged Property, as Lender reasonably deems necessary to perform such obligations of Borrower and to protect the Mortgaged Property or Lender’s security, rights or interests in the Mortgaged Property or the Mortgage Loan, including:
(a) paying fees and out-of-pocket expenses of attorneys, accountants, inspectors and consultants;
(b) entering upon the Mortgaged Property to make repairs or secure the Mortgaged Property;
(c) obtaining (or force-placing) the insurance required by the Loan Documents; and
(d) paying any amounts required under any of the Loan Documents that Borrower has failed to pay.
Fannie Mae Multifamily Security Instrument | Form 6025.GA | Page 9 |
Georgia | 01-16 | © 2016 Fannie Mae |
Any amounts so disbursed or paid by Lender shall be added to, and become part of, the principal balance of the Indebtedness, be immediately due and payable and bear interest at the Default Rate from the date of disbursement until fully paid. The provisions of this Section 4 shall not be deemed to obligate or require Lender to incur any expense or take any action.
5. | Default; Acceleration; Remedies. |
(a) If an Event of Default has occurred and is continuing, Lender, at its option, may declare the Indebtedness to be immediately due and payable without further demand, and may either with or without entry or taking possession as herein provided or otherwise, proceed by suit or suits at law or in equity or any other appropriate proceeding or remedy (1) to enforce payment of the Mortgage Loan; (2) to foreclose this Security Instrument judicially or non-judicially by the power of sale granted herein; (3) to enforce or exercise any right under any Loan Document; and (4) to pursue any one (1)or more other remedies provided in this Security Instrument or in any other Loan Document or otherwise afforded by applicable law. Each right and remedy provided in this Security Instrument or any other Loan Document is distinct from all other rights or remedies under this Security Instrument or any other Loan Document or otherwise afforded by applicable law, and each shall be cumulative and may be exercised concurrently, independently, or successively, in any order. Borrower has the right to bring an action to assert the nonexistence of an Event of Default or any other defense of Borrower to acceleration and sale.
(b) Borrower acknowledges that the power of sale granted in this Security Instrument may be exercised or directed by Lender without prior judicial hearing and hereby appoints Lender as Borrower’s agent and attorney-in-fact to exercise such power of sale in the name and on behalf of Borrower. In the event Lender invokes the power of sale:
(1) Borrower hereby authorizes and empowers Lender to take possession of the Mortgaged Property, or any part thereof, and hereby grants to Lender a power of sale and authorizes and empowers Lender to sell (or, in the case of the default of any purchaser, to resell) the Mortgaged Property or any part thereof, in compliance with applicable law, including compliance with any and all notice and timing requirements for such sale;
(2) Lender may sell and dispose of the Mortgaged Property at public auction, at the usual place for conducting sales at the courthouse in the county where all or any part of the Mortgaged Property is located, to the highest bidder for cash, first advertising the time, terms and place of such sale by publishing a notice of sale once a week for four (4) consecutive weeks (without regard to the actual number of days) in a newspaper in which serves as the official publication of legal notices and advertisements in such county, all other notice being waived by Borrower; and Lender may thereupon execute and deliver to the purchaser a sufficient instrument of conveyance of the Mortgaged Property, which may contain recitals as to the happening of the Event of Default upon which the execution of the power of sale granted by this Section 5 depends. The recitals in the instrument of conveyance shall be presumptive evidence that Lender duly complied with all preliminary acts prerequisite to the sale and instrument of conveyance. Borrower constitutes and appoints Lender as Borrower’s agent and attorney-in-fact to make such recitals, sale and conveyance;
Fannie Mae Multifamily Security Instrument | Form 6025.GA | Page 10 |
Georgia | 01-16 | © 2016 Fannie Mae |
(3) the power and agency granted in this Section 5 are coupled with an interest, are irrevocable by death or otherwise, and are in addition to the remedies for collection of the Indebtedness as provided by law. Borrower ratifies all of Lender’s acts, as such attorney-in-fact, and Borrower agrees that such recitals shall be binding and conclusive upon Borrower and that the conveyance to be made by Lender (and in the event of a deed in lieu of foreclosure, then as to such conveyance) shall be effectual to bar all right, title and interest, equity of redemption, including all statutory redemption, homestead, dower, curtsey, and all other exemptions of Borrower, or its successors in interest, in and to the Mortgaged Property; and
(4) the Mortgaged Property may be sold in one (1) parcel and as an entirety, or in such parcels, manner or order as Lender, in its discretion, may elect, and one (1) or more exercises of the powers granted in this Section 5 shall not extinguish or exhaust the power unless the entire Mortgaged Property is sold or the Indebtedness is paid in full, and Lender shall collect the proceeds of such sale, applying such proceeds as provided in this Section 5. In the event of a deficiency, Borrower shall immediately on demand from Lender pay such deficiency to Lender, subject to the provisions of the Note limiting Borrower’s personal liability for payment of the Indebtedness. Borrower waives all rights, claims, and defenses with respect to Lender’s ability to obtain a deficiency judgment. Borrower acknowledges that Lender may bid for and purchase the Mortgaged Property at any foreclosure sale and shall be entitled to apply all or any part of the Indebtedness as a credit to the purchase price.
(c) If the Mortgaged Property is sold pursuant to this Section 5, Borrower, or any person holding possession of the Mortgaged Property through Borrower, shall surrender possession of the Mortgaged Property to the purchaser at such sale on demand. If possession is not surrendered on demand, Borrower or such person shall be a tenant holding over and may be dispossessed in accordance with Georgia law.
(d) Borrower covenants and agrees that Lender shall apply the proceeds of any sale in the following order:
(1) to all reasonable costs and expenses of the sale, including reasonable attorneys’ fees and costs associated with title evidence and the reasonable cost of such other professionals who provided services in connection with the sale or establishing a deficiency, if any;
(2) to the Indebtedness in such order as Lender, in Lender’s discretion, directs; and
(3) the excess, if any, to the person or persons legally entitled to the excess.
Fannie Mae Multifamily Security Instrument | Form 6025.GA | Page 11 |
Georgia | 01-16 | © 2016 Fannie Mae |
(e) In connection with the exercise of Lender’s rights and remedies under this Security Instrument and any other Loan Document, there shall be allowed and included as Indebtedness: (1) all expenditures and expenses authorized by applicable law and all other expenditures and expenses which may be paid or incurred by or on behalf of Lender for reasonable legal fees, appraisal fees, outlays for documentary and expert evidence, stenographic charges and publication costs; (2) all expenses of any environmental site assessments, environmental audits, environmental remediation costs, appraisals, surveys, engineering studies, wetlands delineations, flood plain studies, and any other similar testing or investigation deemed necessary or advisable by Lender incurred in preparation for, contemplation of or in connection with the exercise of Lender’s rights and remedies under the Loan Documents; and (3) costs (which may be reasonably estimated as to items to be expended in connection with the exercise of Lender’s rights and remedies under the Loan Documents) of procuring all abstracts of title, title searches and examinations, title insurance policies, and similar data and assurance with respect to title as Lender may deem reasonably necessary either to prosecute any suit or to evidence the true conditions of the title to or the value of the Mortgaged Property to bidders at any sale which may be held in connection with the exercise of Lender’s rights and remedies under the Loan Documents. All expenditures and expenses of the nature mentioned in this Section 5 and such other expenses and fees as may be incurred in the protection of the Mortgaged Property and rents and income therefrom and the maintenance of the lien of this Security Instrument, including the fees of any attorney employed by Lender in any litigation or proceedings affecting this Security Instrument, the Note, the other Loan Documents, or the Mortgaged Property, including bankruptcy proceedings, any Foreclosure Event, or in preparation of the commencement or defense of any proceedings or threatened suit or proceeding, or otherwise in dealing specifically therewith, shall be so much additional Indebtedness and shall be immediately due and payable by Borrower, with interest thereon at the Default Rate until paid.
(f) Any action taken by Lender pursuant to the provisions of this Section 5 shall comply with the laws of the Property Jurisdiction. Such applicable laws shall take precedence over the provisions of this Section 5, but shall not invalidate or render unenforceable any other provision of any Loan Document that can be construed in a manner consistent with any applicable law. If any provision of this Security Instrument shall grant to Lender (including Lender acting as a mortgagee-in-possession) or a receiver appointed pursuant to the provisions of this Security Instrument any powers, rights or remedies prior to, upon, during the continuance of or following an Event of Default that are more limited than the powers, rights, or remedies that would otherwise be vested in such party under any applicable law in the absence of said provision, such party shall be vested with the powers, rights, and remedies granted in such applicable law to the full extent permitted by law.
6. | Waiver of Statute of Limitations and Marshaling. |
Borrower hereby waives the right to assert any statute of limitations as a bar to the enforcement of the lien of this Security Instrument or to any action brought to enforce any Loan Document. Notwithstanding the existence of any other security interests in the Mortgaged Property held by Lender or by any other party, Lender shall have the right to determine the order in which any or all of the Mortgaged Property shall be subjected to the remedies provided in this Security Instrument and/or any other Loan Document or by applicable law. Lender shall have the right to determine the order in which any or all portions of the Indebtedness are satisfied from the proceeds realized upon the exercise of such remedies. Borrower, for itself and all who may claim by, through, or under it, and any party who now or in the future acquires a security interest in the Mortgaged Property and who has actual or constructive notice of this Security Instrument waives any and all right to require the marshaling of assets or to require that any of the Mortgaged Property be sold in the inverse order of alienation or that any of the Mortgaged Property be sold in parcels (at the same time or different times) in connection with the exercise of any of the remedies provided in this Security Instrument or any other Loan Document, or afforded by applicable law.
7. | Waiver of Redemption; Rights of Tenants. |
(a) Subject, in any event, to Section 11(c) hereof, Borrower hereby covenants and agrees that it will not at any time apply for, insist upon, plead, avail itself, or in any manner claim or take any advantage of, any appraisement, stay, exemption or extension law or any so-called “Moratorium Law” now or at any time hereafter enacted or in force in order to prevent or hinder the enforcement or foreclosure of this Security Instrument. Without limiting the foregoing:
Fannie Mae Multifamily Security Instrument | Form 6025.GA | Page 12 |
Georgia | 01-16 | © 2016 Fannie Mae |
(1) Borrower for itself and all Persons who may claim by, through, or under Borrower, hereby expressly waives any so-called “Moratorium Law” and any and all rights of reinstatement and redemption, if any, under any order or decree of foreclosure of this Security Instrument, it being the intent hereof that any and all such “Moratorium Laws,” and all rights of reinstatement and redemption of Borrower and of all other Persons claiming by, through, or under Borrower are and shall be deemed to be hereby waived to the fullest extent permitted by applicable law;
(2) Borrower shall not invoke or utilize any such law or laws or otherwise hinder, delay or impede the execution of any right, power remedy herein or otherwise granted or delegated to Lender but will suffer and permit the execution of every such right, power and remedy as though no such law or laws had been made or enacted; and
(3) if Borrower is a trust, Borrower represents that the provisions of this Section 7 (including the waiver of reinstatement and redemption rights) were made at the express direction of Borrower’s beneficiaries and the persons having the power of direction over Borrower, and are made on behalf of the trust estate of Borrower and all beneficiaries of Borrower, as well as all other persons mentioned above.
(b) Lender shall have the right to foreclose subject to the rights of any tenant or tenants of the Mortgaged Property having an interest in the Mortgaged Property prior to that of Lender. The failure to join any such tenant or tenants of the Mortgaged Property as party defendant or defendants in any such civil action or the failure of any decree of foreclosure and sale to foreclose their rights shall not be asserted by Borrower as a defense in any civil action instituted to collect the Indebtedness, or any part thereof or any deficiency remaining unpaid after foreclosure and sale of the Mortgaged Property, any statute or rule of law at any time existing to the contrary notwithstanding.
8. | Notice. |
(a) All notices under this Security Instrument shall be:
(1) in writing, and shall be (A) delivered, in person, (B) mailed, postage prepaid, either by registered or certified delivery, return receipt requested, or (C) sent by overnight express courier;
(2) addressed to the intended recipient at its respective address set forth at the end of this Security Instrument; and
(3) deemed given on the earlier to occur of:
(A) the date when the notice is received by the addressee; or
(B) if the recipient refuses or rejects delivery, the date on which the notice is so refused or rejected, as conclusively established by the records of the United States Postal Service or such express courier service.
Fannie Mae Multifamily Security Instrument | Form 6025.GA | Page 13 |
Georgia | 01-16 | © 2016 Fannie Mae |
(b) Any party to this Security Instrument may change the address to which notices intended for it are to be directed by means of notice given to the other party in accordance with this Section 8.
(c) Any required notice under this Security Instrument which does not specify how notices are to be given shall be given in accordance with this Section 8.
9. | Mortgagee-in-Possession. |
Borrower acknowledges and agrees that the exercise by Lender of any of the rights conferred in this Security Instrument shall not be construed to make Lender a mortgagee-in-possession of the Mortgaged Property so long as Lender has not itself entered into actual possession of the Land and Improvements.
10. | Release and Reconveyance. |
Upon payment in full of the Indebtedness, Lender shall cause the release of this Security Instrument and the reconveyance of the Mortgaged Property to Borrower, and Borrower shall pay Lender’s costs incurred in connection with such release and reconveyance.
11. | Georgia State Specific Provisions. |
(a) To the fullest extent permitted by law, Borrower agrees that Borrower will not at any time insist upon, plead, claim or take the benefit or advantage of any present or future law providing for any appraisement, valuation, stay, extension or redemption, homestead, moratorium, reinstatement, marshaling or forbearance, and Borrower, for Borrower, Borrower’s heirs, devisees, representatives, successors and assigns, and for any and all persons ever claiming any interest in the Mortgaged Property, to the fullest extent permitted by law, waives and releases all rights of redemption, valuation, appraisement, stay of execution, reinstatement (including all rights under O.C.G.A. Section 44-14--85), notice of intention to mature or declare due the whole of the Indebtedness, and all rights to a marshaling of assets of Borrower, including the Mortgaged Property.
(b) This Security Instrument secures future advances.
(c) This conveyance is intended to and shall constitute and be construed as (1) a deed passing Borrower’s leasehold interest in the Mortgaged Property to Lender, and is made under those provisions of the existing laws of the State of Georgia (O.C.G.A. Section 44-14-60 et seq.) relating to conveyances and deeds to secure debt (a/k/a “security deed”), and not a mortgage, and is given to secure the payment and performance of the Indebtedness, and (2) a security agreement pursuant to the provisions of the Uniform Commercial Code of Georgia, Title 11 of the Official Code of Georgia. Moreover, use of the terms “Mortgaged Property” or “Mortgage Loan,” whether in this Security Instrument or in any other Loan Document, shall not be construed to mean that this Security Instrument is a mortgage.
(d) Lender’s acceptance, if any, of an assumption of the obligations of this Security Instrument and the Note, and the release of Borrower pursuant to the Loan Agreement, shall not constitute a novation and shall not affect the priority of the lien created by this Security Instrument.
Fannie Mae Multifamily Security Instrument | Form 6025.GA | Page 14 |
Georgia | 01-16 | © 2016 Fannie Mae |
(e) The interest of Lender under this Security Instrument and the liability and obligation of Borrower for the Indebtedness arise from a “commercial transaction” within the meaning of O.C.G.A. Section 44-14-260(1). Accordingly, pursuant to O.C.G.A. Section 44-14-263, Borrower waives any and all rights which Borrower may have to notice (other than as may be expressly provided for herein) prior to seizure by Lender of any interest in personal property of Borrower which constitutes part of the Mortgaged Property, whether such seizure is by writ of possession or otherwise.
(f) In all events where Borrower may be obligated to pay all reasonable costs, expenses and attorneys’ fees incurred by Lender in connection with the Loan Documents, “reasonable attorneys’ fees” or words of similar import shall in all events mean reasonable attorneys’ fees, actually incurred, without the application of the statutory presumption established by the O.C.G.A. Section 13-1-11.
(g) Pursuant to O.C.G.A. Section 44-14-80, the parties to this Security Instrument intend to establish and do hereby establish a perpetual or indefinite security interest in the Mortgaged Property.
(h) Wherever the word “lien” is used with respect to the encumbrance effected by this Security Instrument, such as in the phrase “the lien of this Security Instrument,” or words of similar import, such word shall mean and be a reference to the “lien and security title” of this Security Instrument.
12. | Governing Law; Consent to Jurisdiction and Venue. |
This Security Instrument shall be governed by the laws of the Property Jurisdiction without giving effect to any choice of law provisions thereof that would result in the application of the laws of another jurisdiction. Borrower agrees that any controversy arising under or in relation to this Security Instrument shall be litigated exclusively in the Property Jurisdiction. The state and federal courts and authorities with jurisdiction in the Property Jurisdiction shall have exclusive jurisdiction over all controversies that arise under or in relation to any security for the Indebtedness. Borrower irrevocably consents to service, jurisdiction, and venue of such courts for any such litigation and waives any other venue to which it might be entitled by virtue of domicile, habitual residence or otherwise.
13. | Miscellaneous Provisions. |
(a) This Security Instrument shall bind, and the rights granted by this Security Instrument shall benefit, the successors and assigns of Lender. This Security Instrument shall bind, and the obligations granted by this Security Instrument shall inure to, any permitted successors and assigns of Borrower under the Loan Agreement. If more than one (1) person or entity signs this Security Instrument as Borrower, the obligations of such persons and entities shall be joint and several. The relationship between Lender and Borrower shall be solely that of creditor and debtor, respectively, and nothing contained in this Security Instrument shall create any other relationship between Lender and Borrower. No creditor of any party to this Security Instrument and no other person shall be a third party beneficiary of this Security Instrument or any other Loan Document.
Fannie Mae Multifamily Security Instrument | Form 6025.GA | Page 15 |
Georgia | 01-16 | © 2016 Fannie Mae |
(b) The invalidity or unenforceability of any provision of this Security Instrument or any other Loan Document shall not affect the validity or enforceability of any other provision of this Security Instrument or of any other Loan Document, all of which shall remain in full force and effect. This Security Instrument contains the complete and entire agreement among the parties as to the matters covered, rights granted and the obligations assumed in this Security Instrument. This Security Instrument may not be amended or modified except by written agreement signed by the parties hereto.
(c) The following rules of construction shall apply to this Security Instrument:
(1) The captions and headings of the sections of this Security Instrument are for convenience only and shall be disregarded in construing this Security Instrument.
(2) Any reference in this Security Instrument to an “Exhibit” or “Schedule” or a “Section” or an “Article” shall, unless otherwise explicitly provided, be construed as referring, respectively, to an exhibit or schedule attached to this Security Instrument or to a Section or Article of this Security Instrument.
(3) Any reference in this Security Instrument to a statute or regulation shall be construed as referring to that statute or regulation as amended from time to time.
(4) Use of the singular in this Security Instrument includes the plural and use of the plural includes the singular.
(5) As used in this Security Instrument, the term “including” means “including, but not limited to” or “including, without limitation,” and is for example only, and not a limitation.
(6) Whenever Borrower’s knowledge is implicated in this Security Instrument or the phrase “to Borrower’s knowledge” or a similar phrase is used in this Security Instrument, Borrower’s knowledge or such phrase(s) shall be interpreted to mean to the best of Borrower’s knowledge after reasonable and diligent inquiry and investigation.
(7) Unless otherwise provided in this Security Instrument, if Lender’s approval, designation, determination, selection, estimate, action or decision is required, permitted or contemplated hereunder, such approval, designation, determination, selection, estimate, action or decision shall be made in Lender’s sole and absolute discretion.
(8) All references in this Security Instrument to a separate instrument or agreement shall include such instrument or agreement as the same may be amended or supplemented from time to time pursuant to the applicable provisions thereof.
(9) “Lender may” shall mean at Lender’s discretion, but shall not be an obligation.
14. | Time is of the Essence. |
Borrower agrees that, with respect to each and every obligation and covenant contained in this Security Instrument and the other Loan Documents, time is of the essence.
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Georgia | 01-16 | © 2016 Fannie Mae |
15. | WAIVER OF TRIAL BY JURY. |
TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, EACH OF BORROWER AND LENDER (BY ITS ACCEPTANCE HEREOF) (A) COVENANTS AND AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS SECURITY INSTRUMENT OR THE RELATIONSHIP BETWEEN THE PARTIES AS BORROWER AND LENDER THAT IS TRIABLE OF RIGHT BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY EACH OF BORROWER AND LENDER, KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL.
ATTACHED EXHIBITS. The following Exhibits are attached to this Security Instrument and incorporated fully herein by reference:
x | Exhibit A | Description of the Land (required) | |
x | Exhibit B | Modifications to Security Instrument | |
(Ground Lease Provisions) |
IN WITNESS WHEREOF, Borrower has signed and delivered this Security Instrument under seal (where applicable) or has caused this Security Instrument to be signed and delivered by its duly authorized representative under seal (where applicable). Where applicable law so provides, Borrower intends that this Security Instrument shall be deemed to be signed and delivered as a sealed instrument.
[Remainder of Page Intentionally Blank]
Fannie Mae Multifamily Security Instrument | Form 6025.GA | Page 17 |
Georgia | 01-16 | © 2016 Fannie Mae |
BORROWER: | |||
BR CARROLL TENSIDE, LLC, a Delaware limited liability company | |||
By: | /s/ Jordan Ruddy | (SEAL) | |
Jordan Ruddy | |||
Authorized Signatory |
Signed, sealed and delivered in the presence of: | |
/s/ Molly Brown | |
Print Name: Molly Brown, Unofficial Witness | |
/s/ Lisa Hedden | |
Notary Public, Lisa Hedden | |
County, New York | |
[SEAL] | |
Date: June 24, 2016 | |
My commission expires: June 24, 2017 |
Fannie Mae Multifamily Security Instrument | Form 6025.GA | Page S-1 |
Georgia | 01-16 | © 2016 Fannie Mae |
The name, chief executive office and organizational identification number of Borrower (as Debtor under any applicable Uniform Commercial Code) are:
§ | Debtor Name/Record Owner: BR Carroll Tenside, LLC |
§ | Debtor Chief Executive Office Address: |
c/o Bluerock Real Estate, L.L.C.
712 Fifth Avenue, 9th Floor
New York, New York 10019
§ | Debtor Organizational ID Number: 6058627 |
The name and chief executive office of Lender (as Secured Party) are:
§ | Secured Party Name: Walker & Dunlop, LLC |
§ | Secured Party Chief Executive Office Address: |
7501 Wisconsin Avenue, Suite 1200E
Bethesda, Maryland 20814
Record Fee Owner of Real Estate: The Atlanta Development Authority
Fannie Mae Multifamily Security Instrument | Form 6025.GA | Page S-2 |
Georgia | 01-16 | © 2016 Fannie Mae |
EXHIBIT A
DESCRIPTION OF THE LAND
ALL THAT TRACT OR PARCEL OF LAND lying and being in Land Lot(s) 149 & 150 of the 17TH District, Fulton County, Georgia and being more particularly described as follows:
Beginning at a pk nail set at the southwest end of the mitered intersection of the westerly right-of-way line of Northside Drive (90' R/W) and the northerly right-of-way line of Tenth Street (60' R/W) said point being the POINT OF BEGINNING; thence along the northerly right-of-way line of Tenth Street (60' R/W the following courses and distances: North 89 degrees 35 minutes 01 seconds West a distance of 27.90 feet to a point; thence, North 89 degrees 34 minutes 09 seconds West a distance of 243.08 feet to a point; thence North 89 degrees 31 minutes 07 seconds West a distance of 149.89 feet to a pk nail set at the intersection of said right-of-way line and the easterly right-of-way line of Watkins street (R/W Varies); thence along the easterly right-of-way line of Watkins Street (R/W Varies) North 02 degrees 59 minutes 27 seconds East a distance of 245.14 feet to a pk nail set at the intersection of said right-of-way line and the southerly right-of-way line of Edgehill Avenue (40' R/W); thence along the southerly right-of-way line of Edgehill Avenue (40' R/W) South 84 degrees 28 minutes 25 seconds East a distance of 149.84 feet to a point; thence leaving said right-of-way line North 00 degrees 03 minutes 05 seconds West a distance of 40.33 feet to a point; thence North 00 degrees 05 minutes 47 seconds East, a distance of 107.91 feet to a pk nail set; thence South 89 degrees 42 minutes 31 seconds East a distance of 39.73 feet to a pk nail set; thence North 00 degrees 22 minutes 13 seconds East a distance of 100.06 feet to a pk nail set on the southerly right-of-way line of Eleventh Street (40' R/W); thence along said right-of-way line the following courses and distances: North 89 degrees 56 minutes 42 seconds East a distance of 142.12 feet to a point; thence South 89 degrees 58 minutes 43 seconds East a distance of 105.45 feet to a pk nail set of the intersection of said right-of-way line and the westerly right-of-way line of Northside Drive (90' R/W); thence along the westerly right-of-way line of Northside Drive (90' R/W) the following courses and distances: South 00 degrees 19 minutes 26 seconds West a distance of 147.18 feet to a point; thence South 00 degrees 26 minutes 51 seconds West a distance of 69.53 feet to a point; thence South 00 degrees 32 minutes 10 seconds West a distance of 242.59 feet to a pk nail set; thence South 48 degrees 31 minutes 09 seconds West a distance of 34.07 feet to a pk nail set and the TRUE POINT OF BEGINNING.
Fannie Mae Multifamily Security Instrument | Form 6025.GA | Page A-1 |
Georgia | 01-16 | © 2016 Fannie Mae |
EXHIBIT B
MODIFICATIONS TO SECURITY INSTRUMENT
(Ground Lease Provisions)
The foregoing Security Instrument is hereby modified as follows:
1. Capitalized terms used and not specifically defined herein have the meanings given to such terms in the Security Instrument.
2. Section 1 of the Security Instrument (Defined Terms) is hereby amended by adding the following new definitions in the appropriate alphabetical order:
“Bonds” means The Atlanta Development Authority Taxable Lease Purchase Revenue Bonds (Tivoli Tenside Project) Series 2009 issued in the amount of $70,000,000 pursuant to the Indenture of Trust between Atlanta Development Authority, as issuer, and The Bank of New York Mellon Trust Co., Inc., as trustee, dated December 1, 2009.
“Fee Estate” means the fee estate of Ground Lessor under the Ground Lease.
“Ground Lease” means the lease described in Schedule A attached hereto pursuant to which Borrower, as lessee, leases the Land and Improvements from the Ground Lessor, as such lease may from time to time be amended, modified, supplemented, renewed and extended.
“Ground Lessee Default” means (a) a default by Borrower in making any payment of rent, additional rent or other sum of money payable by Borrower to Ground Lessor under the Ground Lease on the date such payment is due and payable, or (b) a default by Borrower in performing or observing any of the terms, covenants or conditions of the Ground Lease (other than the payments referred to in clause (a)) required to be performed or observed by Borrower.
“Ground Lessor” means the lessor from time to time under the Ground Lease.
“Ground Lessor Bankruptcy Event” means any one or more of the following:
(a) the commencement of a voluntary case under one or more of the Insolvency Laws by Ground Lessor;
(b) the acknowledgment in writing by Ground Lessor that it is unable to pay its debts generally as they mature;
(c) the making of a general assignment for the benefit of creditors by Ground Lessor;
(d) the filing of an involuntary case under one or more Insolvency Laws against Ground Lessor; or
(e) the appointment of a receiver, liquidator, custodian, sequestrator, trustee or other similar officer who exercises control over Ground Lessor or any substantial part of the assets of Ground Lessor;
Modifications to Security Instrument (Ground Lease Provisions) |
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provided, however, that any proceeding or case under (d) or (e) above shall not be a Ground Lessor Bankruptcy Event until the ninetieth (90th) day after filing (if not earlier dismissed) so long as such proceeding or case occurred without the consent, encouragement or active participation of (1) Ground Lessor, (2) any Person Controlling Ground Lessor or (3) any Person Controlled by or under common Control with Ground Lessor (in which event such case or proceeding shall be a Ground Lessor Bankruptcy Event immediately).
“Ground Lessor Default” means a default by Ground Lessor in performing or observing any of the terms, covenants or conditions of the Ground Lease required to be performed or observed by Ground Lessor.
“Ground Rent” means the base or minimum rent payable in fixed monthly or other periodic installments under the Ground Lease.
“Leasehold Estate” means Borrower’s interest in the Land and Improvements pursuant to the Ground Lease, including (a) all rights of Borrower to renew or extend the term of the Ground Lease, (b) all amounts deposited by Borrower with Ground Lessor under the Ground Lease, (c) Borrower’s right or privilege to terminate, cancel, surrender, modify or amend the Ground Lease, and (d) all other options, privileges and rights granted and demised to Borrower under the Ground Lease and all appurtenances with respect to the Ground Lease.
“Lender’s Assumption Notice” means a notice from Lender to Borrower in which (a) Lender demands that Borrower assume the Ground Lease and assign the Ground Lease to Lender, or its designee, in accordance with the applicable Insolvency Laws, and (b) Lender agrees to cure or provide adequate assurance of prompt cure of all Ground Lessee Defaults reasonably susceptible of being cured by Lender and of future performance under the Ground Lease.
3. The definition of “Mortgaged Property” set forth in Section 1 of the Security Instrument (Defined Terms) is hereby deleted and restated in their entirety to read as follows:
“Mortgaged Property” means all of Borrower’s present and hereafter acquired right, title and interest, if any, in and to all of the following:
(a) the Leasehold Estate;
(b) the Personalty;
(c) current and future rights, including air rights, development rights, zoning rights and other similar rights or interests, easements, tenements, rights-of-way, strips and gores of land, streets, alleys, roads, sewer rights, waters, watercourses, and appurtenances related to or benefitting the Land or the Improvements, or both, and all rights-of-way, streets, alleys and roads which may have been or may in the future be vacated;
(d) insurance policies relating to the Mortgaged Property (and any unearned premiums) and all proceeds paid or to be paid by any insurer of the Land, the Improvements, the Personalty or any other part of the Mortgaged Property, whether or not Borrower obtained the insurance pursuant to Lender’s requirements;
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(e) awards, payments and other compensation made or to be made by any municipal, state or federal authority with respect to the Land, the Improvements, the Personalty or any other part of the Mortgaged Property, including any awards or settlements resulting from (1) Condemnation Actions, (2) any damage to the Mortgaged Property caused by governmental action that does not result in a Condemnation Action, or (3) the total or partial taking of the Land, the Improvements, the Personalty or any other part of the Mortgaged Property under the power of eminent domain or otherwise and including any conveyance in lieu thereof;
(f) contracts, options and other agreements for the sale of the Land, the Improvements, the Personalty or any other part of the Mortgaged Property entered into by Borrower now or in the future, including cash or securities deposited to secure performance by parties of their obligations;
(g) Leases and Lease guaranties, letters of credit and any other supporting obligation for any of the Leases given in connection with any of the Leases, and all Rents;
(h) earnings, royalties, accounts receivable, issues and profits from the Land, the Improvements or any other part of the Mortgaged Property, and all undisbursed proceeds of the Mortgage Loan and, if Borrower is a cooperative housing corporation, maintenance charges or assessments payable by shareholders or residents;
(i) Imposition Deposits;
(j) refunds or rebates of Impositions by any municipal, state or federal authority or insurance company (other than refunds applicable to periods before the real property tax year in which this Security Instrument is dated);
(k) tenant security deposits;
(l) names under or by which any of the above Mortgaged Property may be operated or known, and all trademarks, trade names and goodwill relating to any of the Mortgaged Property;
(m) Collateral Accounts and all Collateral Account Funds;
(n) products, and all cash and non-cash proceeds from the conversion, voluntary or involuntary, of any of the above into cash or liquidated claims, and the right to collect such proceeds; and
(o) all of Borrower’s right, title and interest in the oil, gas, minerals, mineral interests, royalties, overriding royalties, production payments, net profit interests and other interests and estates in, under and on the Mortgaged Property and other oil, gas and mineral interests with which any of the foregoing interests or estates are pooled or unitized.
4. The following section is hereby added to the Security Instrument as Section 16 (Ground Lease Provisions):
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16. Ground Lease Provisions.
(a) Representations and Warranties Regarding Ground Lease.
Borrower warrants and represents to Lender that, as of the Effective Date:
(1) the Ground Lease is in full force and effect in accordance with its terms, unmodified by any writing or otherwise, except as previously disclosed to Lender in writing;
(2) Borrower has not waived, canceled or surrendered any of its rights under the Ground Lease;
(3) Borrower is the sole owner of, and has good and marketable title to, the Leasehold Estate;
(4) Borrower enjoys the quiet and peaceful possession of the Leasehold Estate, and there are, as of the date hereof, no defenses to Borrower’s enforcement of its rights under the Ground Lease;
(5) the Leasehold Estate is free and clear of all liens, encumbrances and other matters affecting title, other than the lien of the Security Instrument and the easements and restrictions listed in a schedule of exceptions to coverage in the title insurance policy issued to Lender contemporaneously with the execution and recordation of the Security Instrument and insuring Lender’s interest in the Mortgaged Property, including the Leasehold Estate;
(6) there is no existing Ground Lessee Default and no event has occurred which, with the passage of time or the giving of notice, or both, would constitute a Ground Lessee Default; and
(7) to the best of Borrower’s knowledge, there is no existing Ground Lessor Default and no event has occurred which, with the passage of time or the giving of notice, or both, would constitute a Ground Lessor Default.
(b) Affirmative Covenants Regarding Ground Lease.
Borrower shall:
(1) pay the Ground Rent and all other sums of money due and payable at any time and from time to time under the Ground Lease as and when such sums become due and payable, but in any event before the expiration of any grace period provided in the Ground Lease for the payment of any such sum, and
(2) at all times promptly and fully perform, observe and comply with all other terms, covenants and conditions of the Ground Lease to be performed, observed or complied with by Borrower as lessee under the Ground Lease, at the times for performance set forth therein, with allowance for grace periods, if any, and will enforce the obligations of Ground Lessor under the Ground Lease to the end that Borrower may enjoy all of the material rights granted it under the Ground Lease.
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If the Ground Lease does not provide for a grace period for the payment of a sum of money, Borrower shall make the payment on or before the date on which the payment becomes due and payable. Borrower shall deliver evidence of the payment to Lender within ten (10) days after receipt of a written request from Lender for evidence of the payment.
Notwithstanding the foregoing or anything else in this Agreement to the contrary, so long as Borrower is the holder of the Bonds, Lender acknowledges and agrees that Ground Rent will be paid and administered in accordance with the “Home Office Payment Agreement” under the Ground Lease, and Borrower shall not be obligated to make any monthly deposits with Lender to cover required Ground Rent payments pursuant hereto. Borrower will not transfer its interest in the Bonds without Lender’s prior written consent.
(c) Negative Covenants Regarding Ground Lease.
Borrower shall not, without the written consent of Lender (which may be given or withheld by Lender in its sole and absolute discretion):
(1) surrender the Leasehold Estate to Ground Lessor or terminate or cancel the Ground Lease;
(2) amend, modify or change the Ground Lease, either orally or in writing, or waive any of Borrower’s rights under the Ground Lease;
(3) subordinate the Ground Lease or the Leasehold Estate to any mortgage, deed of trust or other lien on the Fee Estate;
(4) except as otherwise provided in Section 16(d) (Ground Lease Provisions – Ground Lessee’s Bankruptcy Event) of this Security Instrument, reject or assume the Ground Lease or assign the Leasehold Estate pursuant to any Insolvency Laws. Borrower absolutely and unconditionally transfers and assigns to Lender all of Borrower’s rights to surrender, terminate, cancel, modify and change the Ground Lease, and any such surrender, termination, cancellation, modification or change made without the prior written consent of Lender shall be void and have no legal effect; or
(5) acquire the Fee Estate.
Notwithstanding the foregoing or anything else in this Agreement to the contrary, on or after the later of January 1, 2021 or the termination of the tax benefits that the Mortgaged Property receives in connection with Ground Lease, and provided that Borrower complies with subsection (h) below, Lender shall not unreasonably withhold, condition or delay its approval of Borrower’s (1) termination or cancellation of the Ground Lease or (2) acquisition of the Fee Estate.
(d) Ground Lessee’s Bankruptcy Event.
(1) Borrower assigns to Lender, as additional security for the Indebtedness, Borrower’s right to reject the Ground Lease under the Insolvency Laws after the occurrence of a Bankruptcy Event, subject to Section 16(d)(2) (Ground Lease Provisions – Ground Lessee’s Bankruptcy Event) of this Security Instrument.
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(2) If, after the occurrence of a Bankruptcy Event, Borrower decides to reject the Ground Lease, Borrower shall give Lender written notice, at least ten (10) Business Days in advance, of the date on which Borrower intends to apply to any bankruptcy court for authority and permission to reject the Ground Lease. Lender shall have the right, but not the obligation, within ten (10) days after receipt of Borrower’s notice, to deliver a Lender’s Assumption Notice. If Lender timely delivers Lender’s Assumption Notice to Borrower, Borrower shall not reject the Ground Lease and shall, within fifteen (15) days after receipt of Lender’s notice, comply with the demand contained in Lender’s Assumption Notice. If Lender does not timely deliver Lender’s Assumption Notice to Borrower, Borrower shall have the right to reject the Ground Lease.
(e) Ground Lessor’s Bankruptcy Event.
(1) If, after the occurrence of a Ground Lessor Bankruptcy Event, Ground Lessor rejects the Ground Lease pursuant to the Insolvency Laws, (A) Borrower, immediately after obtaining notice of the rejection, shall deliver a copy of the notice to Lender, (B) Borrower shall not, without Lender’s prior written consent (which may be given or withheld in Lender’s discretion), elect to treat the Ground Lease as terminated pursuant to the applicable Insolvency Laws, and (C) this Security Instrument and the lien created by this Security Instrument shall extend to and encumber Borrower’s retained rights under the Ground Lease that are appurtenant to the Leasehold Estate for the balance of the term of the Ground Lease and for any renewal or extension of those rights under the Ground Lease. Borrower transfers and assigns to Lender, as additional security for the Indebtedness, Borrower’s rights, after Ground Lessor’s rejection of the Ground Lease, to treat the Ground Lease as terminated, and any termination of the Ground Lease made by Borrower without Lender’s prior written consent shall be void and have no legal effect.
(2) Borrower transfers and assigns to Lender, as additional security for the Indebtedness, all of Borrower’s rights to damages caused by Ground Lessor’s rejection of the Ground Lease after the occurrence of a Ground Lessor Bankruptcy Event and all of Borrower’s rights to offset such damages against rent payable under the Ground Lease. As long as no Event of Default has occurred and is continuing, Lender agrees that it will not enforce its rights under the preceding sentence, but will permit Borrower to exercise such rights with Lender’s prior written consent. Any amounts received by Lender as damages arising out of Ground Lessor’s rejection of the Ground Lease shall be applied in the manner set forth in Section 2.02(f) of the Loan Agreement (Application of Payments).
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(f) Lender’s Right to Cure Ground Lessee Defaults.
At any time after Lender receives notice of a Ground Lessee Default, (1) Lender may (but shall not be obligated to do so), make any payment, perform any obligation, and take any other action Borrower would have the right to pay, perform or take under the Ground Lease which Lender deems necessary or desirable to cure the Ground Lessee Default, and (2) Lender and its authorized agents shall have the right at any time or from time to time to enter the Mortgaged Property, or any part thereof, including the Leasehold Estate, to such extent and as often as Lender, in its discretion, deems necessary or desirable in order to cure the Ground Lessee Default, subject to the rights of the tenants and occupants of the Mortgaged Property. Lender may exercise its rights hereunder immediately after receipt of notice of a Ground Lessee Default and without regard to any grace period provided to Borrower in the Ground Lease to cure the Ground Lessee Default. For purposes of exercising its rights hereunder, Lender shall be fully protected for any action taken or omitted to be taken by Lender, in good faith, in reliance on any written notice from Ground Lessor stating that a Ground Lessee Default has occurred and is continuing even though Borrower may question or deny the existence or nature of the Ground Lessee Default. All expenditures made by Lender hereunder to cure a Ground Lessee Default shall become an additional part of the Indebtedness.
(g) Option To Renew Or Extend Ground Lease.
Borrower shall give Lender written notice of Borrower’s intention to exercise each option to renew or extend the term of the Ground Lease at least ninety (90) days, but not more than one hundred fifty (150) days, before the last day on which the option may be timely exercised. If Borrower intends to renew or extend the term of the Ground Lease, it shall deliver to Lender, together with the notice of such decision, a copy of the notice of renewal or extension it delivers to Ground Lessor. If Borrower does not intend to renew or extend the term of the Ground Lease or, if Borrower fails to deliver its written notice of exercise of its option to renew or extend the term of the Ground Lease at least ninety (90) days before the last day on which the option may be timely exercised, Lender shall have the right, but shall not be obligated, to renew or extend the term of the Ground Lease for and on behalf of Borrower.
(h) No Merger of Estates.
If Borrower acquires the Fee Estate, (1) there shall be no merger between the Fee Estate and the Leasehold Estate unless all persons, including Lender, having an interest in the Ground Lease consent in writing to the merger, and (2) simultaneously with Borrower’s acquisition of the Fee Estate, the lien of this Security Instrument shall automatically, without the necessity of any further conveyance, be spread to cover the Fee Estate and as so spread shall be prior to the lien of any mortgage, deed of trust or other lien placed on the Fee Estate after the date of this Security Instrument. Promptly after Borrower’s acquisition of the Fee Estate, Borrower, at its sole cost and expense, including payment of Lender’s attorneys’ fees and out-of-pocket disbursements, shall execute and deliver all documents and instruments necessary to subject the Fee Estate to the lien of this Security Instrument, and shall provide to Lender a title insurance policy insuring the lien of this Security Instrument as a first lien on the Fee Estate and the Leasehold Estate. If Lender acquires the Fee Estate and the Leasehold Estate (whether pursuant to the provisions of the Ground Lease, by foreclosure of this Security Instrument, or otherwise), the Fee Estate and the Leasehold Estate shall not merge as a result of such acquisition and shall remain separate and distinct for all purposes after such acquisition unless and until Lender shall elect to merge the Fee Estate and the Leasehold Estate.
(i) New Lease.
If (1) the Ground Lease is canceled or terminated for any reason before the natural expiration of its term, and (2) Lender (or its designee) obtains from Ground Lessor a new lease in accordance with the term of the Ground Lease, Borrower shall have no right, title or interest in and to the new lease or the leasehold estate created by the new lease.
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(j) Notices Under Ground Lease.
Borrower shall deliver to Lender, within (1) ten (10) days after Borrower’s receipt, a true and correct copy of each notice, demand, complaint or request from Ground Lessor under, or with respect to, the Ground Lease; and (2) within ten (10) days after Borrower’s receipt of request from Lender, such other information and evidence as Lender may reasonably request concerning Borrower’s due observance, performance and compliance with the terms, covenants and provisions of the Ground Lease.
(k) Appointment of Lender as Borrower’s Attorney-In-Fact.
Borrower makes, constitutes and appoints Lender as Borrower’s attorney-in-fact, in Borrower’s name, place and stead, with full power of substitution, to take all actions and to sign all documents and instruments which Lender, in its discretion, considers to be necessary or desirable to (1) prevent or cure a Ground Lessee Default pursuant to Section 16(f) (Ground Lease Provisions – Lender’s Right To Cure Ground Lessee Defaults) of this Security Instrument, (2) perform or carry out any of Borrower’s covenants under Section 16(d) (Ground Lease Provisions – Ground Lessee’s Bankruptcy Event) of this Security Instrument, (3) renew or extend the term of the Ground Lease pursuant to Section 16(g) (Ground Lease Provisions – Option to Renew or Extend Ground Lease) of this Security Instrument, (4) appoint arbitrators and conduct arbitration proceedings pursuant to the Ground Lease, and (5) request and obtain estoppel certificates from Ground Lessor pursuant to the Ground Lease. Borrower gives and grants to Lender, as Borrower’s attorney-in-fact, full power and authority to do and perform every act and sign every document and instrument necessary and proper to be done in the exercise of the foregoing power as fully as Borrower might or could do, and Borrower hereby ratifies and confirms all acts that Lender, as Borrower’s attorney-in-fact, shall lawfully do or cause to be done by virtue of this power of attorney. This power of attorney, being coupled with an interest, shall be irrevocable as long as any of the Indebtedness remains unpaid
(l) No Lender Obligation Under Ground Lease.
Lender shall have no liability or obligation under the Ground Lease by reason of its acceptance of this Security Instrument.
(m) Schedule A.
Schedule A (Description of Ground Lease) is hereby attached to and made a part of this Security Instrument.
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Borrower Initials |
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SCHEDULE A
Lease Agreement dated December 1, 2009, between The Atlanta Development Authority, as lessor, and Ten Side Holdings, LLC, as lessee and predecessor –in–interest to BR Carroll Tenside, LLC.
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Exhibit 10.10
Tenside
ASSIGNMENT OF MANAGEMENT AGREEMENT
This ASSIGNMENT OF MANAGEMENT AGREEMENT (this “Assignment”) dated as of July 14, 2016 is executed by and among (i) BR CARROLL TENSIDE, LLC, a Delaware limited liability company (“Borrower”), (ii) WALKER & DUNLOP, LLC, a Delaware limited liability company (“Lender”), and (iii) CARROLL MANAGEMENT GROUP, LLC, a Georgia limited liability company (“Manager”).
RECITALS:
A. Borrower is the owner of the Leasehold Estate (as defined in the Security Instrument) in a multifamily residential apartment project located in Atlanta (Fulton County), Georgia (the “Mortgaged Property”).
B. Manager is the managing agent of the Mortgaged Property pursuant to a Management Agreement dated as of July 14, 2016, between Borrower and Manager (the “Management Agreement”).
C. Pursuant to that certain Multifamily Loan and Security Agreement dated as of the date hereof, executed by and between Borrower and Lender (as amended, restated, replaced, supplemented or otherwise modified from time to time, the “Loan Agreement”), Lender has agreed to make a loan to Borrower in the original principal amount of $52,150,000.00 (the “Mortgage Loan”), as evidenced by that certain Multifamily Note dated as of the date hereof, executed by Borrower and made payable to the order of Lender in the amount of the Mortgage Loan (as amended, restated, replaced, supplemented or otherwise modified from time to time, the “Note”).
D. In addition to the Loan Agreement, the Mortgage Loan and the Note are also secured by, among other things, a certain Multifamily Mortgage, Deed of Trust or Deed to Secure Debt dated as of the date hereof, which encumbers the Mortgaged Property (as amended, restated, replaced, supplemented or otherwise modified from time to time, the “Security Instrument”; the Loan Agreement, the Note, the Security Instrument, and all other documents evidencing or securing the Mortgage Loan, the “Loan Documents”).
E. Borrower is willing to assign its rights under the Management Agreement to Lender as additional security for the Mortgage Loan.
F. Manager is willing to consent to this Assignment and to attorn to Lender upon receipt of notice of the occurrence of an Event of Default (as hereinafter defined) by Borrower under the Loan Documents, and perform its obligations under the Management Agreement for Lender, or its successors in interest, or to permit Lender to terminate the Management Agreement without liability.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, Borrower, Lender and Manager agree as follows:
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AGREEMENTS:
Section 1. Recitals.
The recitals set forth above are incorporated herein by reference as if fully set forth in the body of this Assignment.
Section 2. Assignment.
Borrower hereby transfers, assigns and sets over to Lender, its successors and assigns, all right, title and interest of Borrower in and to the Management Agreement. Manager hereby consents to the foregoing assignment. The foregoing assignment is being made by Borrower to Lender as collateral security for the full payment and performance by Borrower of all of its obligations under the Loan Documents. Although it is the intention of the parties that the assignment hereunder is a present assignment, until the occurrence of any default or failure to perform or observe any obligation, condition, covenant, term, agreement or provision required to be performed or observed by Borrower or any other party under any of the Loan Documents beyond any applicable grace or cure period provided for therein (an “Event of Default”), Borrower may exercise all rights as owner of the Mortgaged Property under the Management Agreement, except as otherwise provided in this Assignment. The foregoing assignment shall remain in effect as long as the Mortgage Loan, or any part thereof, remains unpaid, but shall automatically terminate upon the release of the Security Instrument as a lien on the Mortgaged Property.
Section 3. Representations and Warranties.
Borrower and Manager represent and warrant to Lender that (a) the Management Agreement is unmodified and is in full force and effect, (b) the Management Agreement is a valid and binding agreement enforceable against the parties in accordance with its terms, and (c) neither party is in default in performing any of its obligations under the Management Agreement. Borrower further represents and warrants to Lender that it has not executed any prior assignment of the Management Agreement, nor has it performed any acts or executed any other instrument which might prevent Lender from operating under any of the terms and conditions of this Assignment, or which would limit Lender in such operation. Manager further represents and warrants to Lender that (1) Manager has not assigned its interest in the Management Agreement, (2) Manager has no notice of any prior assignment, hypothecation or pledge of Borrower’s interest under the Management Agreement, (3) as of the date hereof, Manager has no counterclaim, right of set-off, defense or like right against Borrower, and (4) as of the date hereof, Manager has been paid all amounts due under the Management Agreement.
Section 4. Lender’s Right to Cure.
In the event of any default by Borrower under the Management Agreement, Lender shall have the right, but not the obligation, upon notice to Borrower and Manager and until such default is cured, to cure any default and take any action under the Management Agreement to preserve the same. Borrower hereby grants to Lender the right of access to the Mortgaged Property for this purpose, if such action is necessary. Borrower hereby authorizes Manager to accept the performance of Lender in such event, without question. Any advances made by Lender to cure a default by Borrower under the Management Agreement shall become part of the indebtedness and shall bear interest at the Default Rate under the Loan Agreement and shall be secured by the Security Instrument.
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Section 5. Covenants.
(a) Borrower Covenants.
Borrower hereby covenants with Lender that, during the term of this Assignment:
(1) Borrower shall not assign Borrower’s interest in the Management Agreement or any portion thereof, or transfer the responsibility for management of the Mortgaged Property from Manager to any other person or entity without the prior written consent of Lender;
(2) Borrower shall not cancel, terminate, surrender, modify or amend any of the terms or provisions of the Management Agreement without the prior written consent of Lender;
(3) Borrower shall not forgive any material obligation of the Manager or any other party under the Management Agreement, without the prior written consent of Lender;
(4) Borrower shall perform all obligations of Borrower under the Management Agreement in accordance with the provisions thereof, any failure of which would constitute a default under the Management Agreement; and
(5) Borrower shall give Lender written notice of any notice or information that Borrower receives which indicates that Manager is terminating the Management Agreement or that Manager is otherwise discontinuing its management of the Mortgaged Property.
Any of the foregoing acts done or suffered to be done without Lender’s prior written consent shall constitute an Event of Default.
(b) Affiliated Manager Subordination.
Manager agrees that:
(1) (A) any fees payable to Manager pursuant to the Management Agreement are and shall be subordinated in right of payment, to the extent and in the manner provided in this Assignment, to the prior payment in full of the indebtedness described in the Loan Agreement, and (B) the Management Agreement is and shall be subject and subordinate in all respects to the liens, terms, covenants and conditions of the Security Instrument and the other Loan Documents and to all advances heretofore made or which may hereafter be made pursuant to the Loan Documents (including all sums advanced for the purposes of (i) protecting or further securing the lien of the Security Instrument, curing Events of Default by Borrower under the Loan Documents or for any other purposes expressly permitted by the Loan Documents, or (ii) constructing, renovating, repairing, furnishing, fixturing or equipping the Mortgaged Property);
(2) if, by reason of its exercise of any other right or remedy under the Management Agreement, Manager acquires by right of subrogation or otherwise a lien on the Mortgaged Property which (but for this Section 5(b)) would be senior to the lien of the Security Instrument, then, in that event, such lien shall be subject and subordinate to the lien of the Security Instrument;
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(3) until Manager receives notice (or otherwise acquires actual knowledge) of an Event of Default, Manager shall be entitled to retain for its own account all payments made under or pursuant to the Management Agreement;
(4) after Manager receives notice (or otherwise acquires actual knowledge) of an Event of Default, it will not accept any payment of fees under or pursuant to the Management Agreement without Lender’s prior written consent;
(5) if, after Manager receives notice (or otherwise acquires actual knowledge) of an Event of Default, Manager receives any payment of fees under the Management Agreement, or if Manager receives any other payment or distribution of any kind from Borrower or from any other person or entity in connection with the Management Agreement which Manager is not permitted by this Assignment to retain for its own account, such payment or other distribution will be received and held in trust for Lender and unless Lender otherwise notifies Manager, will be promptly remitted, in cash or readily available funds, to Lender, properly endorsed to Lender, to be applied to the principal of, interest on and other amounts due under the Loan Documents evidencing and securing the Mortgage Loan in such order and in such manner as Lender shall determine in its sole and absolute discretion. Manager hereby irrevocably designates, makes, constitutes and appoints Lender (and all persons or entities designated by Lender) as Manager’s true and lawful attorney in fact with power to endorse the name of Manager upon any checks representing payments referred to in this Section 5(b), which power of attorney is coupled with an interest and cannot be revoked, modified or amended without the written consent of Lender;
(6) Manager shall notify (via telephone or email, followed by written notice) Lender of Manager’s receipt from any person or entity other than Borrower of a payment with respect to Borrower’s obligations under the Loan Documents, promptly after Manager obtains knowledge of such payment; and
(7) during the term of this Assignment, Manager will not commence or join with any other creditor in commencing any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings with respect to Borrower, without Lender’s prior written consent.
Section 6. Lender’s Rights Upon an Event of Default.
(a) Upon receipt by Manager of written notice from Lender that an Event of Default has occurred and is continuing, Lender shall have the right to exercise all rights as owner of the Mortgaged Property under the Management Agreement.
(b) Borrower agrees that after Borrower receives notice (or otherwise has actual knowledge) of an Event of Default, it will not make any payment of fees under or pursuant to the Management Agreement without Lender’s prior written consent.
Section 7. Termination of Management Agreement.
After the occurrence and during the continuance of an Event of Default, Lender (or its nominee) shall have the right any time thereafter to terminate the Management Agreement, without cause and without liability, by giving written notice to Manager of its election to do so. Lender’s notice shall specify the date of termination, which shall not be less than thirty (30) days after the date of such notice.
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Section 8. Books and Records.
On the effective date of termination of the Management Agreement, Manager shall turn over to Lender all books and records relating to the Mortgaged Property (copies of which may be retained by Manager, at Manager’s expense), together with such authorizations and letters of direction addressed to tenants, suppliers, employees, banks and other parties as Lender may reasonably require. Manager shall cooperate with Lender in the transfer of management responsibilities to Lender or its designee. A final accounting of unpaid fees (if any) due to Manager under the Management Agreement shall be made within sixty (60) days after the effective date of termination, but Lender shall not have any liability or obligation to Manager for unpaid fees or other amounts payable under the Management Agreement which accrue before Lender (or its nominee) acquires title to the Mortgaged Property, or Lender becomes a mortgagee in possession.
Section 9. Notice.
(a) Process of Serving Notice.
All notices under this Assignment shall be:
(1) in writing and shall be:
(A) delivered, in person;
(B) mailed, postage prepaid, either by registered or certified delivery, return receipt requested;
(C) sent by overnight courier; or
(D) sent by electronic mail with originals to follow by overnight courier;
(2) addressed to the intended recipient at its respective address set forth at the end of this Assignment; and
(3) deemed given on the earlier to occur of:
(A) the date when the notice is received by the addressee; or
(B) if the recipient refuses or rejects delivery, the date on which the notice is so refused or rejected, as conclusively established by the records of the United States Postal Service or any express courier service.
(b) Change of Address.
Any party to this Assignment may change the address to which notices intended for it are to be directed by means of notice given to the other parties to this Assignment in accordance with this Section 9.
(c) Default Method of Notice.
Any required notice under this Assignment which does not specify how notices are to be given shall be given in accordance with this Section 9.
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(d) Receipt of Notices.
Borrower, Manager and Lender shall not refuse or reject delivery of any notice given in accordance with this Assignment. Each party is required to acknowledge, in writing, the receipt of any notice upon request by the other party.
Section 10. Counterparts.
This Assignment may be executed in any number of counterparts, each of which shall be considered an original for all purposes; provided, however, that all such counterparts shall constitute one and the same instrument.
Section 11. Governing Law; Venue and Consent to Jurisdiction; Waiver of Jury Trial.
(a) Governing Law.
This Assignment shall be governed by the laws of the jurisdiction in which the Mortgaged Property is located (the “Property Jurisdiction”), without regard to the application of choice of law principles.
(b) Venue; Consent to Jurisdiction.
Any controversy arising under or in relation to this Assignment shall be litigated exclusively in the Property Jurisdiction without regard to conflicts of laws principles. The state and federal courts and authorities with jurisdiction in the Property Jurisdiction shall have exclusive jurisdiction over all controversies which shall arise under or in relation to this Assignment. Borrower irrevocably consents to service, jurisdiction and venue of such courts for any such litigation and waives any other venue to which it might be entitled by virtue of domicile, habitual residence or otherwise.
(c) WAIVER OF TRIAL BY JURY.
TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, EACH OF BORROWER, LENDER, AND MANAGER (i) COVENANTS AND AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS ASSIGNMENT, OR THE RELATIONSHIP BETWEEN THE PARTIES AS BORROWER, LENDER, AND MANAGER, THAT IS TRIABLE OF RIGHT BY A JURY, AND (ii) WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY AND VOLUNTARILY, WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL.
Section 12. Severability; Amendments.
The invalidity or unenforceability of any provision of this Assignment shall not affect the validity or enforceability of any other provision of this Assignment, all of which shall remain in full force and effect. This Assignment contains the complete and entire agreement among the parties as to the matters covered, rights granted and the obligations assumed in this Assignment. This Assignment may not be amended or modified except by written agreement signed by the parties hereto.
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Section 13. Construction.
(a) The captions and headings of the sections of this Assignment are for convenience only and shall be disregarded in construing this Assignment.
(b) Any reference in this Assignment to an “Exhibit” or “Schedule” or a “Section” or an “Article” shall, unless otherwise explicitly provided, be construed as referring, respectively, to an exhibit or schedule attached to this Assignment or to a Section or Article of this Assignment. All exhibits and schedules attached to or referred to in this Assignment, if any, are incorporated by reference into this Assignment.
(c) Any reference in this Assignment to a statute or regulation shall be construed as referring to that statute or regulation as amended from time to time.
(d) Use of the singular in this Assignment includes the plural and use of the plural includes the singular.
(e) As used in this Assignment, the term “including” means “including, but not limited to” or “including, without limitation,” and is for example only and not a limitation.
(f) Whenever Borrower’s knowledge is implicated in this Assignment or the phrase “to Borrower’s knowledge” or a similar phrase is used in this Assignment, Borrower’s knowledge or such phrase(s) shall be interpreted to mean to the best of Borrower’s knowledge after reasonable and diligent inquiry and investigation.
(g) Unless otherwise provided in this Assignment, if Lender’s approval, designation, determination, selection, estimate, action or decision is required, permitted or contemplated hereunder, such approval, designation, determination, selection, estimate, action or decision shall be made in Lender’s sole and absolute discretion.
(h) All references in this Assignment to a separate instrument or agreement shall include such instrument or agreement as the same may be amended or supplemented from time to time pursuant to the applicable provisions thereof.
(i) “Lender may” shall mean at Lender’s discretion, but shall not be an obligation.
IN WITNESS WHEREOF, Borrower, Lender and Manager have signed and delivered this Assignment under seal (where applicable) or have caused this Assignment to be signed and delivered under seal (where applicable), each by its duly authorized representative. Where applicable law so provides, Borrower, Lender and Manager intend that this Assignment shall be deemed to be signed and delivered as a sealed instrument.
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BORROWER: | ||
BR CARROLL TENSIDE, LLC, a Delaware limited liability company | ||
By: | /s/ Jordan Ruddy | |
Jordan Ruddy | ||
Authorized Signatory |
Address: | c/o Bluerock Real Estate, L.L.C. | |
712 Fifth Avenue, 9th Floor | ||
New York, New York 10019 |
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LENDER: | ||
WALKER & DUNLOP, LLC, a Delaware limited liability company | ||
By: | /s/ Holly Shonosky | |
Holly Shonosky | ||
Senior Closing Officer |
Address: | 7501 Wisconsin Avenue, Suite 1200E | |
Bethesda, Maryland 20814 |
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MANAGER: | ||
CARROLL MANAGEMENT GROUP, LLC, a Georgia limited liability company | ||
By: | /s/ Josh Champion | |
Josh Champion | ||
President |
Address: | c/o Carroll Organization, LLC | |
3340 Peachtree Road NE, Suite 2250 | ||
Atlanta, Georgia 30326 |
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Exhibit 10.11
Tenside
GUARANTY OF NON-RECOURSE OBLIGATIONS
This GUARANTY OF NON-RECOURSE OBLIGATIONS (this “Guaranty”), dated as of July 14, 2016, is executed by the undersigned (“Guarantor”), to and for the benefit of WALKER & DUNLOP, LLC, a Delaware limited liability company (“Lender”).
RECITALS:
A. Pursuant to that certain Multifamily Loan and Security Agreement dated as of the date hereof, by and between BR Carroll Tenside, LLC, a Delaware limited liability company (“Borrower”) and Lender (as amended, restated, replaced, supplemented or otherwise modified from time to time, the “Loan Agreement”), Lender is making a loan to Borrower in the original principal amount of Fifty-Two Million One Hundred Fifty Thousand and 00/100 Dollars ($52,150,000.00) (the “Mortgage Loan”), as evidenced by that certain Multifamily Note dated as of the date hereof, executed by Borrower and made payable to the order of Lender in the amount of the Mortgage Loan (as amended, restated, replaced, supplemented or otherwise modified from time to time, the “Note”).
B. The Note will be secured by, among other things, a Security Instrument (as defined in the Loan Agreement) encumbering the real property described in the Security Instrument (the “Property”).
C. Guarantor has an economic interest in Borrower or will otherwise obtain a material financial benefit from the Mortgage Loan.
D. As a condition to making the Mortgage Loan to Borrower, Lender requires that Guarantor execute this Guaranty.
NOW, THEREFORE, in order to induce Lender to make the Mortgage Loan to Borrower, and in consideration thereof, Guarantor agrees as follows:
AGREEMENTS:
1. Recitals.
The recitals set forth above are incorporated herein by reference as if fully set forth in the body of this Guaranty.
2. Defined Terms.
Capitalized terms used and not specifically defined herein have the meanings given to such terms in the Loan Agreement.
3. Guaranteed Obligations.
Guarantor hereby absolutely, unconditionally and irrevocably guarantees to Lender the full and prompt payment and performance when due, whether at maturity or earlier, by reason of acceleration or otherwise, and at all times thereafter, of:
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(a) all amounts, obligations and liabilities owed to Lender under Article 3 (Personal Liability) of the Loan Agreement (including the payment and performance of all indemnity obligations of Borrower described in Section 3.03 (Personal Liability for Indemnity Obligations) of the Loan Agreement and including all of Borrower’s obligations under the Environmental Indemnity Agreement); and
(b) all costs and expenses, including reasonable fees and out-of-pocket expenses of attorneys and expert witnesses, incurred by Lender in enforcing its rights under this Guaranty.
4. Survival of Guaranteed Obligations.
The obligations of Guarantor under this Guaranty shall survive any Foreclosure Event, and any recorded release or reconveyance of the Security Instrument or any release of any other security for any of the Indebtedness.
5. Guaranty of Payment; Community Property.
Guarantor’s obligations under this Guaranty constitute a present and unconditional guaranty of payment and not merely a guaranty of collection. If Guarantor (or any Guarantor, if more than one) is a married person, and the state of residence of Guarantor or Guarantor’s spouse is a community property jurisdiction, Guarantor (or each such married Guarantor, if more than one) agrees that Lender may satisfy Guarantor’s obligations under this Guaranty to the extent of all Guarantor’s separate property and Guarantor’s interest in any community property.
6. Obligations Unsecured; Cross-Default.
The obligations of Guarantor under this Guaranty shall not be secured by the Security Instrument or the Loan Agreement. However, a default under this Guaranty shall be an Event of Default under the Loan Agreement, and a default under this Guaranty shall entitle Lender to be able to exercise all of its rights and remedies under the Loan Agreement and the other Loan Documents.
7. Continuing Guaranty.
The obligations of Guarantor under this Guaranty shall be unconditional irrespective of the genuineness, validity, regularity or enforceability of any provision of this Guaranty, the Note, the Loan Agreement, the Security Instrument or any other Loan Document. Guarantor agrees that performance of the obligations hereunder shall be a primary obligation, shall not be subject to any counterclaim, set-off, recoupment, abatement, deferment or defense based upon any claim that Guarantor may have against Lender, Borrower, any other guarantor of the obligations hereunder or any other Person, and shall remain in full force and effect without regard to, and shall not be released, discharged or affected in any way by any circumstance or condition (whether or not Guarantor shall have any knowledge thereof), including:
(a) any furnishing, exchange, substitution or release of any collateral securing repayment of the Mortgage Loan, or any failure to perfect any lien in such collateral;
(b) any failure, omission or delay on the part of Borrower, Guarantor, any other guarantor of the obligations hereunder or Lender to conform or comply with any term of any of the Loan Documents or failure of Lender to give notice of any Event of Default;
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(c) any action or inaction by Lender under or in respect of any of the Loan Documents, any failure, lack of diligence, omission or delay on the part of Lender to perfect, enforce, assert or exercise any lien, security interest, right, power or remedy conferred upon it in any of the Loan Documents, or any other action or inaction on the part of Lender;
(d) any Bankruptcy Event, or any voluntary or involuntary bankruptcy, insolvency, reorganization, arrangement, readjustment, assignment for the benefit of creditors, composition, receivership, liquidation, marshaling of assets and liabilities or similar events or proceedings with respect to Guarantor or any other guarantor of the obligations hereunder, or any of their respective property or creditors or any action taken by any trustee or receiver or by any court in such proceeding;
(e) any merger or consolidation of Borrower into or with any entity or any sale, lease or Transfer of any asset of Borrower, Guarantor or any other guarantor of the obligations hereunder to any other Person;
(f) any change in the ownership of Borrower or any change in the relationship between Borrower, Guarantor or any other guarantor of the obligations hereunder, or any termination of such relationship;
(g) any release or discharge by operation of law of Borrower, Guarantor or any other guarantor of the obligations hereunder, or any obligation or agreement contained in any of the Loan Documents; or
(h) any other occurrence, circumstance, happening or event, whether similar or dissimilar to the foregoing, and whether seen or unforeseen, which otherwise might constitute a legal or equitable defense or discharge of the liabilities of a guarantor or surety or which otherwise might limit recourse against Borrower or Guarantor to the fullest extent permitted by law.
8. Guarantor Waivers.
Guarantor hereby waives:
(a) the benefit of all principles or provisions of law, statutory or otherwise, which are or might be in conflict with the terms of this Guaranty (and agrees that Guarantor’s obligations shall not be affected by any circumstances, whether or not referred to in this Guaranty, which might otherwise constitute a legal or equitable discharge of a surety or a guarantor);
(b) the benefits of any right of discharge under any and all statutes or other laws relating to guarantors or sureties and any other rights of sureties and guarantors;
(c) diligence in collecting the Indebtedness, presentment, demand for payment, protest and all notices with respect to the Loan Documents and this Guaranty which may be required by statute, rule of law or otherwise to preserve Lender’s rights against Guarantor under this Guaranty, including notice of acceptance, notice of any amendment of the Loan Documents, notice of the occurrence of any Event of Default, notice of intent to accelerate, notice of acceleration, notice of dishonor, notice of foreclosure, notice of protest and notice of the incurring by Borrower of any obligation or indebtedness; and
(d) all rights to require Lender to:
(1) proceed against or exhaust any collateral held by Lender to secure the repayment of the Indebtedness;
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(2) proceed against or pursue any remedy it may now or hereafter have against Borrower or any guarantor, or, if Borrower or any guarantor is a partnership, any general partner of Borrower or general partner of any guarantor; or
(3) demand or require collateral security from Borrower, any other guarantor or any other Person as provided by applicable law or otherwise.
9. No Effect Upon Obligations.
At any time or from time to time and any number of times, without notice to Guarantor and without releasing, discharging or affecting the liability of Guarantor:
(a) the time for payment of the principal of or interest on the Indebtedness may be extended or the Indebtedness may be renewed in whole or in part;
(b) the rate of interest on or period of amortization of the Mortgage Loan or the amount of the Monthly Debt Service Payments payable under the Loan Documents may be modified;
(c) the time for Borrower’s performance of or compliance with any covenant or agreement contained in any Loan Document, whether presently existing or hereinafter entered into, may be extended or such performance or compliance may be waived;
(d) the maturity of the Indebtedness may be accelerated as provided in the Loan Documents;
(e) any or all payments due under the Loan Agreement or any other Loan Document may be reduced;
(f) any Loan Document may be modified or amended by Lender and Borrower in any respect, including an increase in the principal amount of the Mortgage Loan;
(g) any amounts under the Loan Agreement or any other Loan Document may be released;
(h) any security for the Indebtedness may be modified, exchanged, released, surrendered or otherwise dealt with or additional security may be pledged or mortgaged for the Indebtedness;
(i) the payment of the Indebtedness or any security for the Indebtedness, or both, may be subordinated to the right to payment or the security, or both, of any other present or future creditor of Borrower;
(j) any payments made by Borrower to Lender may be applied to the Indebtedness in such priority as Lender may determine in its discretion; and
(k) any other terms of the Loan Documents may be modified as required by Lender.
10. Joint and Several (or Solidary) Liability.
If more than one Person executes this Guaranty as Guarantor, such Persons shall be liable for the obligations hereunder on a joint and several (solidary instead for purposes of Louisiana law) basis. Lender, in its discretion, may:
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(a) to the extent permitted by applicable law, bring suit against Guarantor, or any one or more of the Persons constituting Guarantor, and any other guarantor, jointly and severally (solidarily instead for purposes of Louisiana law), or against any one or more of them;
(b) compromise or settle with any one or more of the Persons constituting Guarantor, or any other guarantor, for such consideration as Lender may deem proper;
(c) discharge or release one or more of the Persons constituting Guarantor, or any other guarantor, from liability or agree not to sue such Person; and
(d) otherwise deal with Guarantor and any guarantor, or any one or more of them, in any manner, and no such action shall impair the rights of Lender to collect from Guarantor any amount guaranteed by Guarantor under this Guaranty.
Nothing contained in this Section 10 shall in any way affect or impair the rights or obligations of Guarantor with respect to any other guarantor.
11. Subordination of Affiliated Debt.
Any indebtedness of Borrower held by Guarantor now or in the future is and shall be subordinated to the Indebtedness and any such indebtedness of Borrower shall be collected, enforced and received by Guarantor, as trustee for Lender, but without reducing or affecting in any manner the liability of Guarantor under the other provisions of this Guaranty.
12. Subrogation.
Guarantor shall have no right of, and hereby waives any claim for, subrogation or reimbursement against Borrower or any general partner of Borrower by reason of any payment by Guarantor under this Guaranty, whether such right or claim arises at law or in equity or under any contract or statute, until the Indebtedness has been paid in full and there has expired the maximum possible period thereafter during which any payment made by Borrower to Lender with respect to the Indebtedness could be deemed a preference under the Insolvency Laws.
13. Voidable Transfer.
If any payment by Borrower is held to constitute a preference under any Insolvency Laws or similar laws, or if for any other reason Lender is required to refund any sums to Borrower, such refund shall not constitute a release of any liability of Guarantor under this Guaranty. It is the intention of Lender and Guarantor that Guarantor’s obligations under this Guaranty shall not be discharged except by Guarantor’s performance of such obligations and then only to the extent of such performance. If any payment by any Guarantor should for any reason subsequently be declared to be void or voidable under any state or federal law relating to creditors’ rights, including provisions of the Insolvency Laws relating to a Voidable Transfer, and if Lender is required to repay or restore, in whole or in part, any such Voidable Transfer, or elects to do so upon the advice of its counsel, then the obligations guaranteed hereunder shall automatically be revived, reinstated and restored by the amount of such Voidable Transfer or the amount of such Voidable Transfer that Lender is required or elects to repay or restore, including all reasonable costs, expenses and legal fees incurred by Lender in connection therewith, and shall exist as though such Voidable Transfer had never been made, and any other guarantor, if any, shall remain liable for such obligations in full.
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14. Credit Report/Credit Score.
Guarantor acknowledges and agrees that Lender is authorized, no more frequently than once in any twelve (12) month period, to obtain a credit report (if applicable) on Guarantor, the cost of which shall be paid for by Guarantor. Guarantor acknowledges and agrees that Lender is authorized to obtain a Credit Score (if applicable) for Guarantor at any time at Lender’s expense.
15. Financial Reporting.
Guarantor shall deliver to Lender such Guarantor financial statements as required by Section 8.02 (Books and Records; Financial Reporting – Covenants) of the Loan Agreement.
16. Further Assurances.
Guarantor acknowledges that Lender (including its successors and assigns) may sell or transfer the Mortgage Loan, or any interest in the Mortgage Loan.
(a) Guarantor shall, subject to Section 16(b) below:
(1) do anything necessary to comply with the reasonable requirements of Lender or any Investor of the Mortgage Loan or provide, or cause to be provided, to Lender or any Investor of the Mortgage Loan within ten (10) days of the request, at Borrower’s and Guarantor’s cost and expense, such further documentation or information as Lender or Investor may reasonably require, in order to enable:
(A) Lender to sell the Mortgage Loan to such Investor;
(B) Lender to obtain a refund of any commitment fee from any such Investor; or
(C) any such Investor to further sell or securitize the Mortgage Loan;
(2) confirm that Guarantor is not in default under this Guaranty or in observing any of the covenants or agreements contained in this Guaranty (or, if Guarantor is in default, describing such default in reasonable detail); and
(3) execute and deliver to Lender or any Investor such other documentation, including any amendments, corrections, deletions or additions to this Guaranty as is reasonably required by Lender or such Investor.
(b) Nothing in this Section 16 shall require Guarantor to do any further act that has the effect of:
(1) changing the essential economic terms of the Mortgage Loan set forth in the related commitment letter between Borrower and Lender;
(2) imposing on Borrower or Guarantor greater personal liability under the Loan Documents than that set forth in the related commitment letter between Borrower and Lender; or
(3) materially changing the rights and obligations of Borrower or Guarantor under the commitment letter.
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17. Successors and Assigns.
Lender may assign its rights under this Guaranty in whole or in part and, upon any such assignment, all the terms and provisions of this Guaranty shall inure to the benefit of such assignee to the extent so assigned. Guarantor may not assign its rights, duties or obligations under this Guaranty, in whole or in part, without Lender’s prior written consent and any such assignment shall be deemed void ab initio. The terms used to designate any of the parties herein shall be deemed to include the heirs, legal representatives, successors and assigns of such parties.
18. Final Agreement.
Guarantor acknowledges receipt of a copy of each of the Loan Documents and this Guaranty. THIS GUARANTY REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. All prior or contemporaneous agreements, understandings, representations and statements, oral or written, are merged into this Guaranty. Neither this Guaranty nor any of its provisions may be waived, modified, amended, discharged or terminated except by an agreement in writing signed by the party against which the enforcement of the waiver, modification, amendment, discharge or termination is sought, and then only to the extent set forth in that agreement.
19. Governing Law.
This Guaranty shall be governed by and construed in accordance with the substantive law of the Property Jurisdiction without regard to the application of choice of law principles that would result in the application of the laws of another jurisdiction.
20. Property Jurisdiction.
Guarantor agrees that any controversy arising under or in relation to this Guaranty shall be litigated exclusively in the Property Jurisdiction. The state and federal courts and authorities with jurisdiction in the Property Jurisdiction shall have exclusive jurisdiction over all controversies which shall arise under or in relation to this Guaranty or any other Loan Document with respect to the subject matter hereof. Guarantor irrevocably consents to service, jurisdiction and venue of such courts for any such litigation and waives any other venue to which it might be entitled by virtue of domicile, habitual residence or otherwise.
21. Time is of the Essence.
Guarantor agrees that, with respect to each and every obligation and covenant contained in this Guaranty, time is of the essence.
22. No Reliance.
Guarantor acknowledges, represents and warrants that:
(a) it understands the nature and structure of the transactions contemplated by this Guaranty and the other Loan Documents;
(b) it is familiar with the provisions of all of the documents and instruments relating to such transactions;
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(c) it understands the risks inherent in such transactions, including the risk of loss of all or any part of the Mortgaged Property or of the assets of Guarantor;
(d) it has had the opportunity to consult counsel; and
(e) it has not relied on Lender for any guidance or expertise in analyzing the financial or other consequences of the transactions contemplated by this Guaranty or any other Loan Document or otherwise relied on Lender in any manner in connection with interpreting, entering into or otherwise in connection with this Guaranty, any other Loan Document or any of the matters contemplated hereby or thereby.
23. Notices.
Guarantor agrees to notify Lender of any change in Guarantor’s address within ten (10) Business Days after such change of address occurs. All notices under this Guaranty shall be:
(a) in writing and shall be
(1) delivered, in person;
(2) mailed, postage prepaid, either by registered or certified delivery, return receipt requested;
(3) sent by overnight courier; or
(4) sent by electronic mail with originals to follow by overnight courier;
(b) addressed to the intended recipient at the notice addresses provided under the signature block at the end of this Guaranty; and
(c) deemed given on the earlier to occur of:
(1) the date when the notice is received by the addressee; or
(2) if the recipient refuses or rejects delivery, the date on which the notice is so refused or rejected, as conclusively established by the records of the United States Postal Service or such express courier service.
24. Construction.
(a) Any reference in this Guaranty to an “Exhibit” or “Schedule” or a “Section” or an “Article” shall, unless otherwise explicitly provided, be construed as referring, respectively, to an exhibit or schedule attached to this Guaranty or to a Section or Article of this Guaranty.
(b) Any reference in this Guaranty to a statute or regulation shall be construed as referring to that statute or regulation as amended from time to time.
(c) Use of the singular in this Guaranty includes the plural and use of the plural includes the singular.
(d) As used in this Guaranty, the term “including” means “including, but not limited to” or “including, without limitation,” and is for example only, and not a limitation.
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(e) Whenever Guarantor’s knowledge is implicated in this Guaranty or the phrase “to Guarantor’s knowledge” or a similar phrase is used in this Guaranty, Guarantor’s knowledge or such phrase(s) shall be interpreted to mean to the best of Guarantor’s knowledge after reasonable and diligent inquiry and investigation.
(f) Unless otherwise provided in this Guaranty, if Lender’s approval, designation, determination, selection, estimate, action or decision is required, permitted or contemplated hereunder, such approval, designation, determination, selection, estimate, action or decision shall be made in Lender’s sole and absolute discretion.
(g) All references in this Guaranty to a separate instrument or agreement shall include such instrument or agreement as the same may be amended or supplemented from time to time pursuant to the applicable provisions thereof.
(h) “Lender may” shall mean at Lender’s discretion, but shall not be an obligation.
25. WAIVER OF JURY TRIAL.
TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, EACH OF GUARANTOR AND LENDER (A) AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS GUARANTY OR ANY LOAN DOCUMENT OR THE RELATIONSHIP BETWEEN THE PARTIES AS GUARANTOR AND LENDER THAT IS TRIABLE OF RIGHT BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY GUARANTOR AND LENDER, KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL.
26. Schedules.
The schedules, if any, attached to this Guaranty are incorporated fully into this Guaranty by this reference and each constitutes a substantive part of this Guaranty.
ATTACHED SCHEDULE. The following Schedule is attached to this Guaranty:
x Schedule 1 Modifications to Guaranty
IN WITNESS WHEREOF, Guarantor has signed and delivered this Guaranty under seal (where applicable) or has caused this Guaranty to be signed and delivered under seal (where applicable) by its duly authorized representative. Where applicable law so provides, Guarantor intends that this Guaranty shall be deemed to be signed and delivered as a sealed instrument.
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Guarantor: | ||
BLUEROCK RESIDENTIAL GROWTH REIT, INC., a Maryland corporation | ||
By: | /s/ Michael L. Konig | |
Michael L. Konig, Chief Operating Officer, | ||
Secretary and General Counsel | ||
Address for Notices to Guarantor: | ||
c/o Bluerock Residential Holdings, L.P. | ||
712 Fifth Avenue, 9th Floor | ||
New York, New York 10019 | ||
Attention: Michael Konig, Esq. and Jordan Ruddy |
Email address: | mkonig@bluerockre.com | |
jruddy@bluerockre.com |
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Guarantor: | ||||
CARROLL MULTIFAMILY REAL ESTATE FUND IV, LP, a Delaware limited partnership | ||||
By: | MPC Property Holdings IV, LLC, a Georgia limited liability company, its general partner | |||
By: | MPC Partnership Holdings LLC, a Georgia limited liability company, its sole member and manager | |||
By: | /s/ Josh Champion | |||
Josh Champion | ||||
President | ||||
Address for Notices to Guarantor: | ||||
c/o Carroll Organization, LLC | ||||
3340 Peachtree Road NE, Suite 2250 | ||||
Atlanta, Georgia 30326 | ||||
Email address: josh.champion@carrollorg.com |
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Fannie Mae | 01-16 | © 2016 Fannie Mae |
SCHEDULE 1 TO
GUARANTY OF NON-RECOURSE OBLIGATIONS
State-Specific Provisions
1. Capitalized terms used and not specifically defined herein have the meanings given to such terms in the Guaranty to which this Schedule is attached.
2. The additional provision(s) set forth below shall also apply and are incorporated into the Guaranty:
Section 7 of the Guaranty is hereby amended by adding the following new language to the end thereof:
(i) Guarantor acknowledges and agrees that Lender has the right to collect on other collateral and to apply the receipts and proceeds therefrom to the amount due on the Indebtedness and that such application of such receipts and proceeds shall not reduce, affect or impair the liability of Guarantor under this Guaranty.
Section 8 of the Guaranty is hereby amended by adding the following new language to the end thereof:
(e) In addition, Guarantor waives the benefit of O.C.G.A. Section 10-7-24.
(f) Guarantor also waives any and all defenses, claims and discharges of Borrower, or any other obligor, pertaining to the Indebtedness, except the defense of discharge by payment in full. Without limiting the generality of the foregoing in this subparagraph (f), Guarantor will not assert, plead or enforce against Lender any defense of waiver, release, statute of limitations, res judicata, statute of frauds, fraud, incapacity, minority, usury, illegality or unenforceability which may be available to Borrower or any other person liable in respect of any of the Indebtedness, or any setoff available against Lender to Borrower or any such other person, whether or not on account of a related transaction. Guarantor expressly agrees that Guarantor shall be and remain liable, to the fullest extent permitted by applicable law, for any deficiency remaining after foreclosure of any deed to secure debt or security interest securing the Indebtedness, whether or not the liability of Borrower or any other obligor for such deficiency is discharged pursuant to statute or judicial decision. Guarantor shall remain obligated, to the fullest extent permitted by law, to pay such amounts as though Borrower’s obligations had not been discharged.
Guaranty of Non-Recourse Obligations | Form 6015 | Page Sch. 1-1 |
Fannie Mae | 01-16 | © 2016 Fannie Mae |
/s/ MK | |
Guarantor Initials (BRG REIT) |
Guaranty of Non-Recourse Obligations | Form 6015 | Page Sch. 1-2 |
Fannie Mae | 01-16 | © 2016 Fannie Mae |
/s/ JC | |
Guarantor Initials (CMREF IV) |
Guaranty of Non-Recourse Obligations | Form 6015 | Page Sch. 1-3 |
Fannie Mae | 01-16 | © 2016 Fannie Mae |
Exhibit 10.12
Tenside
ENVIRONMENTAL INDEMNITY AGREEMENT
This ENVIRONMENTAL INDEMNITY AGREEMENT (this “Agreement”), dated as of July 14, 2016, is executed by BR CARROLL TENSIDE, LLC, a Delaware limited liability company (“Borrower”), to and for the benefit of WALKER & DUNLOP, LLC, a Delaware limited liability company (“Lender”).
RECITALS:
A. Borrower is the owner of the real property more particularly described on Exhibit A attached hereto and made a part hereof (the “Mortgaged Property”).
B. Pursuant to that certain Multifamily Loan and Security Agreement dated as of the date hereof, by and between Borrower and Lender (as amended, restated, replaced, supplemented or otherwise modified from time to time, the “Loan Agreement”), Lender is making a loan to Borrower in the original principal amount of $52,150,000.00 (the “Mortgage Loan”), as evidenced by that certain Multifamily Note dated as of the date hereof, executed by Borrower and made payable to the order of Lender in the amount of the Mortgage Loan (as amended, restated, replaced, supplemented or otherwise modified from time to time, the “Note”).
C. The Mortgage Loan is evidenced by the Note issued pursuant to the Loan Agreement and is secured by, among other things, the Security Instrument and the Loan Agreement.
D. As a condition to the making of the Mortgage Loan to Borrower, Lender requires Borrower to deliver this Agreement.
AGREEMENTS:
NOW, THEREFORE, for and in consideration of the foregoing and for other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, Borrower agrees as follows:
1. Recitals.
The recitals set forth above are true and correct and are hereby incorporated by reference.
2. Defined Terms.
All capitalized terms used but not defined in this Agreement shall have the meanings assigned to them in the Loan Agreement. As used in this Agreement, the following terms shall have the following meanings:
“2016 Blackstone Phase I ESA Report” means the Phase I Environmental Site Assessment for the Mortgaged Property prepared by Blackstone Consulting LLC for Lender, dated June 7, 2016 (Blackstone Consulting LLC Project No. CORGGA014.01), and all attachments and exhibits thereto.
Environmental Indemnity Agreement | Form 6085 | Page 1 |
Fannie Mae | 01-16 | © 2016 Fannie Mae |
“Environmental Inspections” means environmental inspections, reports, tests, investigations, studies, audits, reviews or other analyses (including those related to Significant Mold) with respect to the Mortgaged Property.
“Environmental Laws” means all present and future federal, state, and local laws, ordinances, regulations, standards, rules, policies, and other governmental requirements, administrative rulings, court judgments, and decrees, and all amendments thereto, relating to pollution or protection of human health, wildlife, wetlands, natural resources or the environment (including ambient air, surface water, ground water, land surface, or subsurface strata) including such laws governing or regulating the use, generation, storage, removal, remediation, recovery, treatment, handling, transport, disposal, control, release, discharge of, or exposure to, Hazardous Materials. Environmental Laws include (a) the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. Section 9601, et seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., the Toxic Substances Control Act, 15 U.S.C. Section 2601, et seq., the Federal Water Pollution Control Act, 33 U.S.C. Section 1251, et seq., the Hazardous Materials Transportation Act, 49 U.S.C. Section 5101, et seq., the Clean Air Act, 42 U.S.C. Section 7401, et seq., the Safe Drinking Water Act, 42 U.S.C. Section 300f, et seq., the Occupational Safety and Health Act, 29 U.S.C. Chapter 15, et seq., the Oil Pollution Act of 1990, 33 U.S.C. Section 2701, et seq., the Federal Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. Section 136, et seq., and the River and Harbors Appropriation Act, 33 U.S.C. Section 403, et seq., and their state and local analogs, as any such statutes may be amended, restated, modified, or supplemented from time to time, and (b) all voluntary cleanup programs and/or brownfields programs under federal, state or local law, as may be amended, restated, modified, or supplemented from time to time.
“Environmental Permit” means any permit, license, agreement (including any agreement or undertaking pursuant to a voluntary cleanup program and/or a brownfields program) or other authorization issued under any Environmental Law with respect to any activities or businesses conducted on or in relation to the Mortgaged Property.
“GEPD” means the Georgia Environmental Protection Division or any replacement thereof or successor thereto.
“Hazardous Materials” means any substance, chemical, material or waste now or in the future defined as a “hazardous substance,” “hazardous material,” “hazardous waste,” “toxic substance,” “toxic pollutant,” “contaminant,” or “pollutant” within the meaning of or regulated or addressed under any Environmental Law. Without limiting the generality of the foregoing, Hazardous Materials includes: Significant Mold; petroleum and petroleum products and compounds containing them or derived from them, including natural gas, gasoline, diesel fuel, oil and other fuels and petroleum products or fractions thereof; radon; carcinogenic materials; explosives; flammable materials; infectious materials; corrosive materials; mutagenic materials; radioactive materials; polychlorinated biphenyls (PCBs) and compounds containing them; lead and lead-based paint; asbestos or asbestos-containing materials in any form that is or could become friable; underground or above-ground storage tanks, whether empty or containing any substance; pipelines constructed for the purpose of transporting Hazardous Materials, whether empty or containing any substance; any substance the presence of which on, under or about the Mortgaged Property is regulated or prohibited by any Governmental Authority; any substance that is designated, classified or regulated pursuant to any Environmental Law; and any medical products or devices, including those materials defined as “medical waste” or “biological waste” under relevant statutes or regulations pertaining to any Environmental Law.
Environmental Indemnity Agreement | Form 6085 | Page 2 |
Fannie Mae | 01-16 | © 2016 Fannie Mae |
“Historic Impacts” means any current, past or future contamination of, pollution of, or impact to the soil, groundwater, surface water or any other media on, under or about, or the indoor or outdoor air of, the Mortgaged Property arising from, caused by, in connection with or otherwise related in any manner to any prior release and/or condition described, discussed or referenced in the 2016 Blackstone Phase I ESA Report.
“Indemnitees” means, collectively:
(a) Lender;
(b) any prior owner or holder of the Note;
(c) the Loan Servicer;
(d) any prior Loan Servicer;
(e) the officers, directors, shareholders, partners, managers, members, employees and trustees of any of the foregoing; and
(f) the heirs, legal representatives, successors and assigns of each of the foregoing.
“O&M Plan” means a written plan, document, or agreement containing ongoing operating, maintenance, or monitoring actions for the Mortgaged Property or Improvements thereon.
“Prohibited Activities or Conditions” means any of the following:
(a) the presence, use, generation, release, treatment, processing, storage, handling or disposal of any Hazardous Materials on, about or under the Mortgaged Property or any other property owned, leased or otherwise controlled by Borrower, Guarantor, Key Principal or any Borrower Affiliate that is adjacent to the Mortgaged Property and which impacts the Mortgaged Property;
(b) the transportation of any Hazardous Materials to, from or across the Mortgaged Property;
(c) any Remedial Work at, about or under the Mortgaged Property that has not been fully conducted in accordance with an O&M Plan approved in writing by Lender;
Environmental Indemnity Agreement | Form 6085 | Page 3 |
Fannie Mae | 01-16 | © 2016 Fannie Mae |
(d) any activity on the Mortgaged Property that requires an Environmental Permit or other written authorization under Environmental Laws without Lender’s prior written consent;
(e) any occurrence or condition on the Mortgaged Property, which occurrence or condition is or is expected to be in violation of or noncompliance with Environmental Laws, or in violation of or noncompliance with the terms of any Environmental Permit;
(f) any occurrence or condition on any other property owned, leased or otherwise controlled by Borrower, Guarantor, Key Principal or any Borrower Affiliate that is adjacent to the Mortgaged Property, which occurrence or condition impacts the Mortgaged Property and is or is expected to be (1) in violation of or noncompliance with Environmental Laws, or (2) in violation of or noncompliance with the terms of any Environmental Permit; or
(g) any activities on the Mortgaged Property that directly or indirectly result in other property (whether adjacent to the Mortgaged Property or otherwise) being contaminated with Hazardous Materials or which causes such other property to be in violation of or noncompliance with Environmental Laws.
Provided, however, excluded from this definition shall be the safe and lawful use and storage of:
(1) pre-packaged supplies, cleaning materials and petroleum products in such quantities and types as are customarily used for residential purposes or in the operation and maintenance of comparable multifamily properties so long as all of the foregoing are used, stored, handled, transported and disposed of in compliance with Environmental Laws;
(2) cleaning materials, personal grooming items and other items sold in pre-packaged containers for consumer use in such quantities and types as are customarily found in comparable multifamily properties and which are used by tenants and occupants of residential dwelling units in the Mortgaged Property;
(3) petroleum products used in the operation and maintenance of motor vehicles from time to time located on the Mortgaged Property’s parking areas, in such quantities and types as are customarily used in the operation and maintenance of comparable multifamily properties and so long as all of the foregoing are used, stored, handled, transported and disposed of in compliance with Environmental Laws;
(4) petroleum products stored in above-ground and underground storage tanks, so long as the existence of such above-ground and underground storage tanks has been previously disclosed by Borrower to Lender in writing and any such tank complies with and at all times continues to comply with all requirements of Environmental Laws; and
(5) natural gas when transported and used for residential purposes in combustion appliances.
Environmental Indemnity Agreement | Form 6085 | Page 4 |
Fannie Mae | 01-16 | © 2016 Fannie Mae |
“Remedial Work” means any investigation, site monitoring, containment, abatement, clean-up, removal, restoration or other remedial work in connection with the Historic Impacts, any Hazardous Materials, any Significant Mold, any Environmental Laws, or any order of or agreement with any Governmental Authority that has or acquires jurisdiction over the Mortgaged Property, or the use, operation or improvement of the Mortgaged Property under any Environmental Law or as recommended in writing by an environmental professional, certified industrial hygienist or person with similar qualifications with respect to Significant Mold.
“Significant Mold” means any mold, fungus, bacterial, viral, or microbial matter or pathogenic organisms at, in or about the Mortgaged Property of a type or quantity that:
(a) results in, or should reasonably result in, Remedial Work or a significant risk to human health or the environment as determined by a written analysis prepared by an environmental professional, certified industrial hygienist or person with similar qualifications reasonably acceptable to Lender;
(b) is required or recommended to be addressed pursuant to Environmental Law, or written recommendation of an environmental professional, certified industrial hygienist or person with similar qualifications; or
(c) would materially and negatively impact the value of the Mortgaged Property.
3. Environmental Representations and Warranties.
Borrower represents and warrants to Lender that as of the Effective Date, except as previously disclosed by Borrower to Lender in writing or as set forth in any Environmental Inspection performed with respect to the origination of the Mortgage Loan dated prior to the Effective Date:
(a) neither Borrower nor any Borrower Affiliates are in possession of any Environmental Inspections that have not been provided to Lender, nor have any Environmental Inspections been conducted by or on behalf of Borrower that have not been provided to Lender;
(b) Borrower has not at any time engaged in, caused or permitted any Prohibited Activities or Conditions other than Prohibited Activities or Conditions that are the subject of an O&M Plan approved in writing by Lender;
(c) Guarantor has not at any time engaged in, caused or permitted any Prohibited Activities or Conditions with respect to the Mortgaged Property or any adjacent property owned by Borrower, Guarantor, Key Principal or any Borrower Affiliate;
(d) to Borrower’s knowledge, no Prohibited Activities or Conditions exist or have existed;
(e) the Mortgaged Property does not now contain any above-ground or underground storage tanks, and, to Borrower’s knowledge, the Mortgaged Property has not contained any above-ground or underground storage tanks in the past. If there is or was any storage tank located on the Mortgaged Property which has been previously disclosed by Borrower to Lender in writing or in any Environmental Inspection, that tank complies with, or has been removed in accordance with, all requirements of Environmental Laws;
Environmental Indemnity Agreement | Form 6085 | Page 5 |
Fannie Mae | 01-16 | © 2016 Fannie Mae |
(f) Borrower has complied with all Environmental Laws, including all requirements for notification regarding the presence of or any releases of Hazardous Materials. Without limiting the generality of the foregoing, Borrower has obtained all Environmental Permits required for the operation of the Mortgaged Property in accordance with Environmental Laws now in effect, Borrower has disclosed all such Environmental Permits to Lender, and all such Environmental Permits are in full force and effect;
(g) to Borrower’s knowledge, no event has occurred with respect to the Mortgaged Property that constitutes, or with the passing of time or the giving of notice would constitute, noncompliance with the terms of any Environmental Permit;
(h) there are no actions, suits, claims, orders, proceedings pending or, to Borrower’s knowledge, threatened that involve the Mortgaged Property and allege, arise out of or relate to any Prohibited Activity or Condition;
(i) Borrower has not received any written complaint, order, notice of violation or other communication from any Governmental Authority with regard to air emissions, water discharges, noise emissions or Hazardous Materials, or any other environmental, health or safety matters affecting the Mortgaged Property or any other property owned, leased or otherwise controlled by Borrower, Guarantor, Key Principal or any Borrower Affiliate that is adjacent to the Mortgaged Property and, other than as set forth in the 2016 Blackstone Phase I ESA Report, Borrower is not responsible or liable for or in connection with the current, past or threatened presence or release of any Hazardous Materials at, on, to or about the Mortgaged Property, including in connection with the Historic Impacts, and the Historic Impacts have not and will not impede the intended residential and commercial use of the Mortgaged Property;
(j) With respect to the Mortgaged Property, Borrower has conducted “all appropriate inquiries” into the previous ownership and uses of the Mortgaged Property and is a “bona fide prospective purchaser,” as those terms are defined in the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. Section 9601 et seq., as the foregoing may be amended, restated, modified or supplemented from time to time, and is eligible for the prospective purchaser limitation to liability under the Georgia Hazardous Site Reuse and Redevelopment Act, O.C.G.A. Section 12-8-200 et seq., as the foregoing may be amended, restated, modified or supplemented from time to time.
4. Environmental Covenants.
(a) Borrower shall not engage in, cause or permit any Prohibited Activities or Conditions other than Prohibited Activities or Conditions that are the subject of an O&M Plan approved in writing by Lender so long as Borrower remains in full compliance therewith.
Environmental Indemnity Agreement | Form 6085 | Page 6 |
Fannie Mae | 01-16 | © 2016 Fannie Mae |
(b) Borrower shall take all commercially reasonable actions (including the inclusion of appropriate provisions in any Leases executed after the date of this Agreement) to prevent its employees, agents and contractors, and all tenants and other occupants from causing or permitting any Prohibited Activities or Conditions. Borrower shall not lease or allow the sublease or use of all or any portion of the Mortgaged Property to any tenant or subtenant for nonresidential use by any user that, in the ordinary course of its business, would cause or permit any Prohibited Activity or Condition.
(c) Borrower shall not permit Guarantor to engage in, cause or permit any Prohibited Activities or Conditions with respect to any property that is adjacent to the Mortgaged Property that is owned, leased or otherwise controlled by Borrower, Guarantor, Key Principal or any Borrower Affiliate.
(d) Lender shall have the right to require the establishment of, monitor and review an O&M Plan with respect to Hazardous Materials on the Mortgaged Property or any other property owned, leased or otherwise controlled by Borrower, Guarantor, Key Principal or any Borrower Affiliate that is adjacent to the Mortgaged Property. If an O&M Plan has been established, Borrower and its employees shall comply in a timely manner with, and shall use all commercially reasonable efforts to cause all agents and contractors of Borrower and any other persons present on the Mortgaged Property to comply with, the O&M Plan. All costs of performance of Borrower’s obligations under any O&M Plan shall be paid by Borrower, and Lender’s reasonable out-of-pocket costs incurred in connection with the monitoring and review of the O&M Plan and Borrower’s performance shall be paid by Borrower within ten (10) days of demand by Lender. Any such out-of-pocket costs of Lender which Borrower fails to pay promptly shall become an additional part of the Indebtedness as provided in the Security Instrument.
(e) Borrower shall comply with all Environmental Laws applicable to the Mortgaged Property, including (1) all requirements for notification regarding the presence of or any releases of Hazardous Materials, and (2) all requirements governing the presence or removal of any above-ground or underground storage tank located on the Mortgaged Property. Without limiting the generality of the previous sentence, Borrower shall obtain and maintain all Environmental Permits required by Environmental Laws, shall comply with all conditions of such Environmental Permits and all such Environmental Permits shall be kept in full force and effect.
(f) Borrower shall not utilize, contact or permit contact with any groundwater at, under or about, or any contaminated soils beneath, the Mortgaged Property unless required by GEPD or another Governmental Authority for purposes of investigation, monitoring and/or Remedial Work, in which case such investigation, monitoring and/or Remedial Work shall be conducted in a safe and proper manner and in compliance with all Environmental Laws and Environmental Permits.
(g) Borrower shall, at its sole cost and expense, observe and fully comply with all deed restrictions, easements, institutional and/or engineering controls and land use limitations applicable to the Mortgaged Property, whether existing now or in the future.
Environmental Indemnity Agreement | Form 6085 | Page 7 |
Fannie Mae | 01-16 | © 2016 Fannie Mae |
(h) Borrower shall promptly and fully implement, at its sole cost and expense, (1) all recommendations of any environmental professional(s) set forth in the 2016 Blackstone Phase I ESA Report, in any Environmental Inspection required under this Agreement and/or in any Environmental Inspection prepared or issued after the date of this Agreement by an environmental professional retained by or on behalf of Borrower, any Borrower Affiliate or Lender, and (2) all recommendations necessary to protect the environment or human health or safety, or to ensure the Mortgaged Property is in compliance with all Environmental Laws and Environmental Permits, set forth in any other Environmental Inspection related to the Mortgaged Property.
(i) Borrower shall, as soon as possible and in no case later than thirty (30) days from the Initial Effective Date, and at its sole cost and expense, (1) identify and correct the source of the moisture identified in the 2016 Blackstone Phase I ESA Report in those portions of the Mortgaged Property identified as Suite 300 and Suite 950 or in the surrounding areas, (2) engage a qualified environmental professional or professionals to evaluate any actual or potential mold growth (or other moisture-related growth) in Suite 300, Suite 950 and any other area, unit or portion of the Mortgaged Property, (3) cause such qualified environmental professional(s) to promptly complete remediation of all such mold or other moisture-related growth in a safe, proper and effective manner, consistent with recognized best practices for mold remediation, and (4) provide Lender written certification of the completion of all such activities. The required time for completion of the activities and/or work described in clauses (i)(3) and (i)(4) of this paragraph may, on Borrower’s reasonable request and subject to Lender’s approval (such approval by Lender not to be unreasonably withheld), be extended to such reasonable time as agreed to in writing by Lender, provided (i) Borrower has diligently undertaken and pursued execution of all activities and work required under or described in this paragraph, (ii) such request is made in writing to Lender within twenty-five (25) days of the Initial Effective Date, and (iii) Borrower demonstrates in writing that it fulfilled the requirement of clause (i)(2) of this paragraph within five (5) business days of the Initial Effective Date.
(j) Borrower shall provide GEPD and any other Governmental Authority with jurisdiction over the Mortgaged Property, and any of their consultants or environmental professionals, as well as any responsible party associated with the Historic Impacts and any of their consultants or environmental professionals, with reasonable access to the Mortgaged Property to conduct investigation, monitoring and/or Remedial Work associated with the Historic Impacts, and shall comply with all requirements, directives, orders and recommendations of GEPD and/or any other Governmental Authority with jurisdiction over the Mortgaged Property related to the current, past or threatened presence or release of Hazardous Materials at, on, about or to the Mortgaged Property. Borrower shall keep Lender fully and timely informed of such access and/or activities.
(k) Borrower shall, at its sole cost and expense, fully and timely comply with all requirements, directives, orders and recommendations of GEPD associated with, arising out of, or otherwise related to the Historic Impacts.
Environmental Indemnity Agreement | Form 6085 | Page 8 |
Fannie Mae | 01-16 | © 2016 Fannie Mae |
(l) Borrower shall take all steps necessary to maintain its eligibility (1) as a “bona fide prospective purchaser,” as such term is defined in the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. Section 9601 et seq., as the foregoing may be amended, restated, modified or supplemented from time to time, and (2) for the prospective purchaser liability protection provided under the Georgia Hazardous Site Reuse and Redevelopment Act, O.C.G.A. Section 12-8-200 et seq., as the foregoing may be amended, restated, modified or supplemented from time to time. Without limiting the generality of the foregoing, Borrower shall take reasonable steps to (i) stop any continuing release of Hazardous Materials on, from or to the Mortgaged Property, (ii) prevent any threatened future release of Hazardous Materials on, from or to the Mortgaged Property, and (iii) prevent or limit human, environmental and natural resource exposure to earlier Hazardous Materials releases on or to the Mortgaged Property.
(m) Borrower shall promptly notify Lender in writing upon the occurrence of any of the following events:
(1) Borrower’s discovery of any Prohibited Activity or Condition;
(2) any plans or requirements to pay any amount in connection with the Historic Impact or to conduct any Remedial Work;
(3) Borrower’s receipt of notice of any action, suit, claim, proceeding, order, notice of violation or other communication from any property management agents, Governmental Authority or other Person with regard to present or future alleged Prohibited Activities or Conditions or any other environmental, health or safety matters affecting the Mortgaged Property or any other property owned, leased or otherwise controlled by Borrower, Guarantor, Key Principal or any Borrower Affiliate that is adjacent to the Mortgaged Property; and
(4) any representation or warranty in Section 3 of this Agreement was untrue as of the date of this Agreement, or Borrower’s breach of any of its obligations under this Section 4.
Any such notice given by Borrower shall not relieve Borrower of, or result in a waiver of, any obligation under this Agreement, the Note or any other Loan Document.
Environmental Indemnity Agreement | Form 6085 | Page 9 |
Fannie Mae | 01-16 | © 2016 Fannie Mae |
5. Inspections.
Lender shall have the right to cause to be undertaken and thereafter obtain any Environmental Inspections in connection with any Foreclosure Event, or as a condition of Lender’s consent to any Transfer, or required by Lender following a reasonable determination by Lender that Prohibited Activities or Conditions may exist. Borrower shall pay within ten (10) days after written demand from Lender the reasonable costs of any Environmental Inspections required by Lender in accordance with this Section 5. Any such costs incurred by Lender (including the fees and out-of-pocket costs of attorneys and technical consultants whether incurred in connection with any judicial or administrative process or otherwise) which Borrower fails to pay promptly after notice and request by Lender shall become an additional part of the Indebtedness as provided in the Security Instrument. The results of all Environmental Inspections made by Lender shall at all times remain the property of Lender and Lender shall have no obligation to disclose or otherwise make available to Borrower or any other party such results or any other information obtained by Lender in connection with its Environmental Inspections; provided, however, if Borrower reimbursed Lender for the cost of such Environmental Inspections, upon request by Borrower, Lender shall provide a copy of such Environmental Inspections to Borrower. Lender hereby reserves the right, and Borrower hereby expressly authorizes Lender, to make available to any party, including any prospective bidder at a foreclosure sale of the Mortgaged Property, the results of any Environmental Inspections made by Lender or Borrower with respect to the Mortgaged Property. Borrower consents to Lender notifying any party (either as part of a notice of sale or otherwise) of the results of any Environmental Inspections. Borrower acknowledges that Lender cannot control or otherwise assure the truthfulness or accuracy of the results of any Environmental Inspections and that the release of such results to prospective bidders at a foreclosure sale of the Mortgaged Property may have a material and adverse effect upon the amount which a party may bid at such sale. Borrower agrees that Lender shall have no liability whatsoever as a result of delivering the results of any Environmental Inspections to any third party, and Borrower hereby releases and forever discharges Lender from any and all actions, suits, claims, proceedings, orders, damages or causes of action, arising out of, connected with or incidental to conducting any such Environmental Inspections or providing the results of the same or delivering the same to any person or entity.
6. Remedial Work.
If any Remedial Work is contemplated, planned or undertaken at or about the Mortgaged Property or is (a) necessary to comply with or required by any Environmental Law or order (that has not been stayed on appeal) of any Governmental Authority that has or acquires jurisdiction over the Mortgaged Property or the use, operation or improvement of the Mortgaged Property under any Environmental Law or order, or (b) required by Lender based on written recommendation from an environmental professional, certified industrial hygienist or person with similar qualifications with respect to Significant Mold, or (c) is otherwise required by Lender as a consequence of any Prohibited Activity or Condition or to prevent the occurrence of a Prohibited Activity or Condition, Borrower shall, at its sole cost and expense and by the earlier of (1) thirty (30) days after notice from Lender demanding such action, or (2) the applicable deadline required by Environmental Law or order, begin performing the Remedial Work, and thereafter diligently prosecute it to completion, and shall in any event complete the work by the time required by applicable Environmental Law or order or relevant Governmental Authority. If Borrower fails to begin on a timely basis or diligently prosecute any required Remedial Work, Lender may, at its option, cause the Remedial Work to be completed, in which case Borrower shall reimburse Lender on demand for the cost of doing so (including any related reasonable attorneys’ fees). Any reimbursement due from Borrower to Lender shall be due and payable within ten (10) days of demand by Lender.
7. Cooperation.
Borrower, at its sole cost and expense, shall cooperate with any inquiry by any Governmental Authority and any determination of Lender that Prohibited Activities or Conditions may exist (as provided in Section 5), and shall timely comply with any governmental or judicial order which arises from any alleged Prohibited Activity or Condition.
Environmental Indemnity Agreement | Form 6085 | Page 10 |
Fannie Mae | 01-16 | © 2016 Fannie Mae |
8. Indemnification.
(a) Except (1) in connection with any Prohibited Activity or Condition caused directly by Lender or its agents or employees after it takes possession as mortgagee-in-possession or otherwise, (2) as set forth in Section 8(g), or (3) to the extent that any such items occur solely as a result of the gross negligence or willful misconduct of Lender or its affiliates, employees or representatives, as determined by a court of competent jurisdiction pursuant to a final non-appealable court order, Borrower shall indemnify, hold harmless and defend the Indemnitees for, from and against all actions, suits, claims, proceedings, orders, damages, penalties and costs (whether initiated or sought by Governmental Authorities or private parties), including any reasonable fees and out-of-pocket expenses of attorneys and expert witnesses, investigatory fees and remediation costs, whether incurred in connection with any judicial or administrative process or otherwise, arising directly or indirectly from any of the following:
(A) any breach of any representation or warranty of Borrower in this Agreement;
(B) any failure by Borrower to perform any of its obligations under this Agreement;
(C) the Historic Impacts and/or any Remedial Work required of Borrower and/or others on, under, at, or about the Mortgaged Property (including the subsurface, groundwater, or soils at, under or about, or the indoor or outdoor air of, the Mortgaged Property) or any impact that the Historic Impacts have on the Mortgaged Property or any current or future use thereof;
(D) any actual or alleged exposure of any tenant or occupant of the Mortgaged Property to mold or other moisture-related growth at the Mortgaged Property;
(E) any requirement of GEPD or any other Governmental Authority, including with respect to the subsurface, groundwater, surface water or soils at, on, under or about, or the indoor or outdoor air of, the Mortgaged Property;
(F) any Remedial Work;
(G) the existence or alleged existence of any Prohibited Activity or Condition, including any loss, cost or damage arising out of the existence of any underground storage tank on the Mortgaged Property, whether known or unknown to any Borrower;
(H) the presence or alleged presence of Hazardous Materials on or under (i) the Mortgaged Property or (ii) any other property if the Hazardous Materials were derived from, or alleged to have derived from, the Mortgaged Property; and
Environmental Indemnity Agreement | Form 6085 | Page 11 |
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(I) the actual or alleged violation of any Environmental Law at the Mortgaged Property.
(b) Borrower shall be fully and personally liable for its obligations under this Agreement. To the extent permitted by law, Borrower’s liability shall not be limited by the amount of the Indebtedness, the repayment of the Indebtedness or otherwise (including as a result of any limitation on personal liability set forth in the Loan Agreement or any other Loan Document).
(c) Counsel selected by Borrower to defend Indemnitees shall be subject to the approval of those Indemnitees, which approval shall not be unreasonably withheld, conditioned or delayed. However, any Indemnitee may elect to defend any action, suit, claim, proceeding, or order at Borrower’s expense if such Indemnitee reasonably determines that there is a conflict between the interests of Borrower and such Indemnitee, or if such Indemnitee reasonably determines that such election is necessary to protect Indemnitee’s security under the Security Instrument. Notwithstanding the foregoing, Lender may employ at its own cost and expense its own legal counsel and consultants to prosecute, defend or negotiate any action, suit, claim, proceeding, or order. Further, with the prior written consent of Borrower (which shall not be unreasonably withheld, delayed or conditioned), Lender may settle or compromise any action, suit, claim, proceeding, or order. Borrower shall reimburse Lender within fifteen (15) days of its receipt of written demand from Lender for all reasonable costs and expenses incurred by Lender which are required to be reimbursed under the terms of this provision, including all costs of settlements entered into in good faith, and the reasonable fees and out-of-pocket expenses of attorneys and consultants.
(d) Borrower shall not, without the prior written consent of those Indemnitees who are named as parties to any action, suit, claim, proceeding, or order, settle or compromise such action, suit, claim, proceeding, or order if the settlement may materially and adversely affect any Indemnitee, as determined by Lender, or results in the entry of any judgment that does not include as an unconditional term the delivery by the claimant or plaintiff to Lender of a written release of the applicable Indemnitees (such release satisfactory in form and substance to Lender).
(e) Borrower’s obligation to indemnify the Indemnitees shall not be limited or impaired by any of the following, or by any failure of Borrower or any guarantor to receive notice of or consideration for any of the following:
(1) the time for payment of the principal of or interest on the Indebtedness may be extended or the Indebtedness may be renewed in whole or in part;
(2) the rate of interest on or period of amortization of the Mortgage Loan or the amount of the Monthly Debt Service Payments payable under the Loan Documents may be modified;
(3) the time for Borrower’s performance of or compliance with any covenant or agreement contained in any Loan Document, whether presently existing or hereinafter entered into, may be extended or such performance or compliance may be waived;
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(4) the maturity of the Indebtedness may be accelerated as provided in the Loan Documents;
(5) any or all payments due under the Loan Agreement or any other Loan Document may be reduced;
(6) any Loan Document may be modified or amended by Lender and Borrower in any respect, including an increase in the principal amount of the Mortgage Loan;
(7) any amounts under the Loan Agreement or any other Loan Document may be released;
(8) any security for the Indebtedness may be modified, exchanged, released, surrendered or otherwise dealt with or additional security may be pledged or mortgaged for the Indebtedness;
(9) the payment of the Indebtedness or any security for the Indebtedness, or both, may be subordinated to the right to payment or the security, or both, of any other present or future creditor of Borrower;
(10) any payments made by Borrower to Lender may be applied to the Indebtedness in such priority as Lender may determine; and
(11) any other terms of the Loan Documents may be modified as required by Lender.
(f) Borrower shall, at its own cost and expense, do all of the following:
(1) pay or satisfy any judgment or decree that may be entered against any Indemnitee in any legal or administrative proceeding incident to any matters against which Indemnitees are entitled to be indemnified under this Agreement;
(2) reimburse Indemnitees for any expenses paid or incurred in connection with any matters against which Indemnitees are entitled to be indemnified under this Agreement; and
(3) reimburse Indemnitees for any and all expenses, including reasonable fees and out-of-pocket expenses of attorneys and expert witnesses, paid or incurred in connection with the enforcement by Indemnitees of their rights under this Agreement, or in monitoring and participating in any legal or administrative proceeding.
(g) The provisions of this Agreement shall be in addition to any and all other obligations and liabilities that Borrower may have under applicable law or under other Loan Documents, and each Indemnitee shall be entitled to indemnification under this Agreement without regard to whether Lender or that Indemnitee has exercised any rights against the Mortgaged Property or any other security, pursued any rights against any guarantor, or pursued any other rights available under the Loan Documents or applicable law. The obligation of Borrower to indemnify the Indemnitees under this Agreement shall not be applicable to any Prohibited Activities or Conditions or any other environmental contamination that occurs after:
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(1) the date of any Foreclosure Event, or
(2) if Borrower has a right under applicable law to physical possession or control of the Mortgaged Property following the date of any Foreclosure Event, the earlier of the date:
(A) Lender takes physical possession and control of the Mortgaged Property, or
(B) Lender has the legal right to take physical possession and control of the Mortgaged Property;
provided, however, that in any such event, Borrower (i) must have relinquished physical possession and control of the Mortgaged Property as of such date, and (ii) shall have the burden of providing evidence to Lender’s satisfaction that any Prohibited Activities or Conditions or any other environmental contamination occurred after such date.
9. Event of Default.
Borrower understands that a default of its obligations under this Agreement that is not cured after the expiration of all applicable notice and cure periods, if any, shall be an Event of Default under the Loan Agreement (as provided in Article 14 thereof), and that in addition to any remedies specified in this Agreement, Lender shall be entitled to exercise all of its rights and remedies under the Loan Agreement and other Loan Documents, however, the obligations hereunder shall not be secured by the Security Instrument.
10. Subrogation.
Borrower shall at its sole cost and expense take any and all reasonable actions, including institution of legal action against third-parties, necessary or appropriate to obtain reimbursement, payment or compensation from such persons responsible for any Prohibited Activities or Conditions or for the presence of any Hazardous Materials at, in, on, under or near the Mortgaged Property or otherwise obligated by law to bear the cost of any of the foregoing. Indemnitees shall be and hereby are subrogated to all of Borrower’s rights now or hereafter in such actions, suits, claims, or proceedings arising out of or relating to any Prohibited Activity or Condition or any Hazardous Materials.
11. Termination of Indemnification Obligations.
Except as provided in Section 11(a) and Section 11(b), upon full performance by Borrower of all of its obligations under the Loan Documents, including payment in full by Borrower of all Indebtedness pursuant to the terms of the Loan Documents, either at the Maturity Date or by voluntary prepayment, Borrower shall have no obligation to indemnify the Indemnitees from and after the date of the receipt by Lender of payment in full of all Indebtedness under the Loan Documents (the “Repayment Date”). Notwithstanding the foregoing:
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(a) If the payment of all or any part of the Indebtedness by Borrower, any Guarantor or any other Person should for any reason subsequently be declared to be void or voidable under any state or federal law relating to creditors’ rights, including provisions of the Insolvency Laws relating to a Voidable Transfer, and if Lender is required to repay or restore, in whole or in part, any such Voidable Transfer, or elects to do so upon the advice of its counsel, then this Agreement and the indemnification obligations of Borrower under this Agreement shall automatically be revived, reinstated and restored, and shall exist as though such Voidable Transfer had never been made and the Lien of the Security Instrument not been released.
(b) The indemnification obligations of Borrower under this Agreement shall survive past the Repayment Date with respect to any claims, suits, orders, proceedings or actions existing as of the Repayment Date or which subsequently come into existence prior to the date on which Lender repays or restores, in whole or in part, any such Voidable Transfer as set forth in Section 11(a).
(c) The obligation of Borrower to indemnify the Indemnitees under this Agreement, as limited by Section 8(g), shall survive the occurrence of any Foreclosure Event, even if, as a result of the occurrence of such Foreclosure Event, the Indebtedness is paid or satisfied in full.
12. Entity Representations.
Borrower represents and warrants that:
(a) Borrower has the full corporate, trust, limited liability company or partnership power and authority, as applicable, to execute and deliver this Agreement and to perform its obligations hereunder;
(b) the execution, delivery and performance of this Agreement by Borrower has been duly and validly authorized;
(c) all requisite corporate, trust, limited liability company or partnership action, as applicable has been taken by Borrower to make this Agreement valid and binding upon Borrower, enforceable in accordance with its terms, except as such enforceability may be limited by applicable Insolvency Laws or by the exercise of discretion by any court; and
(d) this Agreement constitutes a valid, legal and binding obligation of Borrower, enforceable against it in accordance with the terms hereof, except as such enforceability may be limited by applicable Insolvency Laws or by the exercise of discretion by any court.
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13. Waiver.
Borrower hereby waives and relinquishes:
(a) any right or claim of right to cause a marshaling of Borrower’s assets or to cause any Indemnitee to proceed against any other Person or any of the security for the Indebtedness before proceeding under this Agreement against Borrower;
(b) all rights and remedies accorded by applicable law to indemnitors or guarantors or sureties, except any rights of subrogation which Borrower may have, provided that the indemnity provided for hereunder shall neither be contingent upon the existence of any such rights of subrogation nor subject to any actions, suits, claims, proceedings, orders or defenses whatsoever which may be asserted in connection with the enforcement or attempted enforcement of such subrogation rights including any actions, suits, claims, proceedings, or orders that such subrogation rights were abrogated by any acts of any Indemnitee;
(c) the right to assert a counterclaim, other than a mandatory or compulsory counterclaim, in any action or proceeding brought against or by any Indemnitee;
(d) notice of acceptance hereof and of any action taken or omitted in reliance hereon;
(e) presentment for payment, demand of payment, protest or notice of nonpayment or failure to perform or observe, or other proof, or notice or demand under this Agreement;
(f) all homestead exemption rights against the obligations hereunder and the benefits of any statutes of limitations or repose; and
(g) any limitation on the amount or type of damages, compensation or benefits payable by or for Borrower under workers’ compensation acts, disability benefit acts or other employee benefit acts.
Notwithstanding anything to the contrary contained herein, Borrower hereby agrees to postpone the exercise of any rights of subrogation with respect to any collateral securing the Indebtedness until the Indebtedness shall have been paid in full. No delay by any Indemnitee in exercising any right, power or privilege under this Agreement shall operate as a waiver of any such power, privilege or right.
14. Notices.
All notices, demands and other communications under or concerning this Agreement shall be in writing and given in accordance with the provisions of Section 15.02 (Notice) of the Loan Agreement.
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15. Rights Cumulative.
The rights and remedies provided herein are cumulative and not exclusive of any rights or remedies which Indemnitee has under the Note, the Loan Agreement, the Security Instrument or any other Loan Document or would otherwise have at law or in equity.
16. Entire Agreement.
This Agreement constitutes the entire agreement of Borrower for the benefit of Lender and supersedes any prior agreements with respect to the subject matter hereof.
17. No Modification Without Writing.
This Agreement may not be terminated or modified in any way nor can any right of Lender or any obligation of Borrower be waived or modified, except by a writing signed by Lender and Borrower.
18. Severability.
Each provision of this Agreement shall be interpreted so as to be effective and valid under applicable law, but if any provision of this Agreement shall in any respect be ineffective or invalid under such law, such ineffectiveness or invalidity shall not affect the remainder of such provision or the remaining provisions of this Agreement.
19. Governing Law.
This Agreement shall be governed by and construed in accordance with the substantive law of the Property Jurisdiction without regard to the application of choice of law principles that would result in the application of the laws of another jurisdiction.
20. Jurisdiction.
Any controversy arising under or in relation to this Agreement shall be litigated exclusively in the Property Jurisdiction without regard to conflict of laws principles. The state and federal courts and authorities with jurisdiction in the Property Jurisdiction shall have exclusive jurisdiction over all controversies which shall arise under or in relation to this Agreement or any other Loan Document. Borrower irrevocably consents to service, jurisdiction and venue of such courts for any such litigation and waives any other venue to which it might be entitled by virtue of domicile, habitual residence or otherwise.
21. Successors and Assigns.
Subject to the terms of the Loan Agreement, no Borrower may transfer or assign any of its rights or obligations under this Agreement without the prior written consent of Lender. Subject to the foregoing, this Agreement shall be continuing, irrevocable and binding on each Borrower and its successors and assigns and shall inure to the benefit of Lender and the other Indemnitees, and Lender’s successors and assigns, including to any transferee pursuant to a Foreclosure Event.
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22. Time is of the Essence.
Borrower agrees that, with respect to each and every obligation and covenant contained in this Agreement, time is of the essence.
23. Joint and Several (or Solidary) Liability.
If more than one Person executes this Agreement as Borrower, the obligations of such Persons shall be joint and several (solidary instead for purposes of Louisiana law).
24. Construction.
(a) The captions and headings of the sections of this Agreement are for convenience only and shall be disregarded in construing this Agreement.
(b) Any reference in this Agreement to an “Exhibit” or “Schedule” or a “Section” or an “Article” shall, unless otherwise explicitly provided, be construed as referring, respectively, to an exhibit or schedule attached to this Agreement or to a Section or Article of this Agreement.
(c) Any reference in this Agreement to a statute or regulation shall be construed as referring to that statute or regulation as amended from time to time.
(d) Any reference in this Agreement to the “Mortgaged Property” shall be construed as referring to the Mortgaged Property in its entirety or to any portion thereof, including any portion of the Mortgaged Property used for any residential, commercial or other purpose.
(e) Use of the singular in this Agreement includes the plural and use of the plural includes the singular.
(f) As used in this Agreement, the term “including” means “including, but not limited to” or “including, without limitation,” and is for example only, and not a limitation.
(g) Whenever Borrower’s knowledge is implicated in this Agreement or the phrase “to Borrower’s knowledge” is used in this Agreement, Borrower’s knowledge or such phrase(s) shall be interpreted to mean to the best of Borrower’s knowledge after reasonable and diligent inquiry and investigation.
(h) Unless otherwise provided in this Agreement, if Lender’s designation, determination, selection, estimate, action, approval or decision is required, permitted or contemplated hereunder, such designation, determination, selection, estimate, action, approval or decision shall be made or withheld in Lender’s sole and absolute discretion.
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(i) All references in this Agreement to a separate instrument or agreement shall include such instrument or agreement as the same may be amended or supplemented from time to time pursuant to the applicable provisions thereof.
25. WAIVER OF TRIAL BY JURY.
TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, EACH OF BORROWER AND LENDER (A) COVENANTS AND AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, THAT IS TRIABLE OF RIGHT BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN BY BORROWER AND LENDER, KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL.
[Remainder of Page Intentionally Blank]
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IN WITNESS WHEREOF, Borrower has signed and delivered this Agreement under seal (where applicable) or has caused this Agreement to be signed and delivered under seal (where applicable) by its duly authorized representative. Where applicable law so provides, Borrower intends that this Agreement shall be deemed to be signed and delivered as a sealed instrument.
BORROWER: | ||
BR CARROLL TENSIDE, LLC, a Delaware limited liability company | ||
By: | /s/ Jordan Ruddy | |
Jordan Ruddy | ||
Authorized Signatory |
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Exhibit A
TO
ENVIRONMENTAL INDEMNITY AGREEMENT
[Description of the Land]
ALL THAT TRACT OR PARCEL OF LAND lying and being in Land Lot(s) 149 & 150 of the 17TH District, Fulton County, Georgia and being more particularly described as follows:
Beginning at a pk nail set at the southwest end of the mitered intersection of the westerly right-of-way line of Northside Drive (90' R/W) and the northerly right-of-way line of Tenth Street (60' R/W) said point being the POINT OF BEGINNING; thence along the northerly right-of-way line of Tenth Street (60' R/W the following courses and distances: North 89 degrees 35 minutes 01 seconds West a distance of 27.90 feet to a point; thence, North 89 degrees 34 minutes 09 seconds West a distance of 243.08 feet to a point; thence North 89 degrees 31 minutes 07 seconds West a distance of 149.89 feet to a pk nail set at the intersection of said right-of-way line and the easterly right-of-way line of Watkins street (R/W Varies); thence along the easterly right-of-way line of Watkins Street (R/W Varies) North 02 degrees 59 minutes 27 seconds East a distance of 245.14 feet to a pk nail set at the intersection of said right-of-way line and the southerly right-of-way line of Edgehill Avenue (40' R/W); thence along the southerly right-of-way line of Edgehill Avenue (40' R/W) South 84 degrees 28 minutes 25 seconds East a distance of 149.84 feet to a point; thence leaving said right-of-way line North 00 degrees 03 minutes 05 seconds West a distance of 40.33 feet to a point; thence North 00 degrees 05 minutes 47 seconds East, a distance of 107.91 feet to a pk nail set; thence South 89 degrees 42 minutes 31 seconds East a distance of 39.73 feet to a pk nail set; thence North 00 degrees 22 minutes 13 seconds East a distance of 100.06 feet to a pk nail set on the southerly right-of-way line of Eleventh Street (40' R/W); thence along said right-of-way line the following courses and distances: North 89 degrees 56 minutes 42 seconds East a distance of 142.12 feet to a point; thence South 89 degrees 58 minutes 43 seconds East a distance of 105.45 feet to a pk nail set of the intersection of said right-of-way line and the westerly right-of-way line of Northside Drive (90' R/W); thence along the westerly right-of-way line of Northside Drive (90' R/W) the following courses and distances: South 00 degrees 19 minutes 26 seconds West a distance of 147.18 feet to a point; thence South 00 degrees 26 minutes 51 seconds West a distance of 69.53 feet to a point; thence South 00 degrees 32 minutes 10 seconds West a distance of 242.59 feet to a pk nail set; thence South 48 degrees 31 minutes 09 seconds West a distance of 34.07 feet to a pk nail set and the TRUE POINT OF BEGINNING.
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Exhibit 10.13
Prepared by, and after recording
return to:
Ashanté L. Smith, Esquire
Troutman Sanders LLP
Post Office Box 1122
Richmond, Virginia 23218-1122
Tenside
ASSIGNMENT OF SECURITY INSTRUMENT
(MULTIFAMILY DEED TO SECURE DEBT, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND FIXTURE FILING)
WALKER & DUNLOP, LLC, a Delaware limited liability company, whose address is 7501 Wisconsin Avenue, Suite 1200E, Bethesda, Maryland 20814 ("Lender"), as the holder of the instrument hereinafter described and for valuable consideration hereby endorses, assigns and delivers to FANNIE MAE, a corporation organized under the laws of the United States of America, whose address is c/o Walker & Dunlop, LLC, 7501 Wisconsin Avenue, Suite 1200E, Bethesda, Maryland 20814, its successors, participants and assigns, all right, title and interest of Lender in and to the following:
A Multifamily Deed to Secure Debt, Assignment of Leases and Rents, Security Agreement and Fixture Filing, among BR Carroll Tenside, LLC, a Delaware limited liability company (the "Borrower"), and Lender, as Mortgagee, dated as of the 14th day of July, 2016, and recorded immediately prior hereto, in the Fulton County, Georgia Records, securing the payment of a Multifamily Note, dated as of the 14th day of July, 2016, in the original principal amount of $52,150,000.00 made by the Borrower, payable to the order of Lender, and creating a first lien on the Leasehold Estate (as defined in the Security Instrument) in the property described in Exhibit A attached hereto and by this reference made a part hereof.
Together with any and all notes and obligations therein described, the debt secured thereby and all sums of money due and to become due thereon, with the interest provided for therein, and hereby irrevocably appoints assignee hereunder its attorney to collect and receive such debt, and to foreclose, enforce and satisfy the foregoing the same as it might or could have done were these presents not executed, but at the cost and expense of assignee.
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Together with any and all other liens, privileges, security interests, rights, entitlements, equities, claims and demands as to which assignor hereunder possesses or to which assignor is otherwise entitled as additional security for the payment of the notes and other obligations described herein.
This Assignment shall be governed in all respects by the laws of the state in which the aforementioned instrument was recorded and shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns.
IN WITNESS WHEREOF, Lender has caused its name to be signed hereto by Holly Shonosky, its Senior Closing Officer, and does hereby appoint said Holly Shonosky its authorized officer to execute, acknowledge and deliver these presents on its behalf, all done as of this 14th day of July, 2016.
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WALKER & DUNLOP, LLC, a Delaware limited liability company | ||
By: | /s/ Holly Shonosky (SEAL) | |
Holly Shonosky | ||
Senior Closing Officer |
Signed, sealed and delivered in the presence of: | |
/s/ Rob Littleton | |
Print Name: Rob Littleton, Unofficial Witness | |
/s/ S. Michelle Potts | |
Notary Public, Georgia | |
County, Fayette | |
[SEAL] | |
Date: June 24, 2016 | |
My commission expires: June 8, 2019 |
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EXHIBIT A
TO THE ASSIGNMENT OF SECURITY INSTRUMENT
ALL THAT TRACT OR PARCEL OF LAND lying and being in Land Lot(s) 149 & 150 of the 17TH District, Fulton County, Georgia and being more particularly described as follows:
Beginning at a pk nail set at the southwest end of the mitered intersection of the westerly right-of-way line of Northside Drive (90' R/W) and the northerly right-of-way line of Tenth Street (60' R/W) said point being the POINT OF BEGINNING; thence along the northerly right-of-way line of Tenth Street (60' R/W the following courses and distances: North 89 degrees 35 minutes 01 seconds West a distance of 27.90 feet to a point; thence, North 89 degrees 34 minutes 09 seconds West a distance of 243.08 feet to a point; thence North 89 degrees 31 minutes 07 seconds West a distance of 149.89 feet to a pk nail set at the intersection of said right-of-way line and the easterly right-of-way line of Watkins street (R/W Varies); thence along the easterly right-of-way line of Watkins Street (R/W Varies) North 02 degrees 59 minutes 27 seconds East a distance of 245.14 feet to a pk nail set at the intersection of said right-of-way line and the southerly right-of-way line of Edgehill Avenue (40' R/W); thence along the southerly right-of-way line of Edgehill Avenue (40' R/W) South 84 degrees 28 minutes 25 seconds East a distance of 149.84 feet to a point; thence leaving said right-of-way line North 00 degrees 03 minutes 05 seconds West a distance of 40.33 feet to a point; thence North 00 degrees 05 minutes 47 seconds East, a distance of 107.91 feet to a pk nail set; thence South 89 degrees 42 minutes 31 seconds East a distance of 39.73 feet to a pk nail set; thence North 00 degrees 22 minutes 13 seconds East a distance of 100.06 feet to a pk nail set on the southerly right-of-way line of Eleventh Street (40' R/W); thence along said right-of-way line the following courses and distances: North 89 degrees 56 minutes 42 seconds East a distance of 142.12 feet to a point; thence South 89 degrees 58 minutes 43 seconds East a distance of 105.45 feet to a pk nail set of the intersection of said right-of-way line and the westerly right-of-way line of Northside Drive (90' R/W); thence along the westerly right-of-way line of Northside Drive (90' R/W) the following courses and distances: South 00 degrees 19 minutes 26 seconds West a distance of 147.18 feet to a point; thence South 00 degrees 26 minutes 51 seconds West a distance of 69.53 feet to a point; thence South 00 degrees 32 minutes 10 seconds West a distance of 242.59 feet to a pk nail set; thence South 48 degrees 31 minutes 09 seconds West a distance of 34.07 feet to a pk nail set and the TRUE POINT OF BEGINNING.
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Exhibit 10.14
PROPERTY MANAGEMENT AGREEMENT
dated as of July 14, 2016
between
BR CARROLL TENSIDE, LLC
Owner
and
CARROLL MANAGEMENT GROUP, LLC
Manager
PROPERTY MANAGEMENT AGREEMENT
THIS PROPERTY MANAGEMENT AGREEMENT (this "Agreement") is made as of July 14, 2016 (the “Effective Date”), by and between BR CARROLL TENSIDE, LLC, a Delaware limited liability company ("Owner"), and CARROLL MANAGEMENT GROUP, LLC, a Georgia limited liability company ("Manager").
RECITALS:
A. Owner is the owner of certain real property more particularly described in Exhibit “A” attached hereto and incorporated herein by this reference, upon which certain improvements consisting of a 336-unit multifamily and 17-unit retail Project and related amenities, landscaping, parking facilities and other common areas have been constructed (collectively, the "Project").
B. Manager has represented to Owner that Manager is experienced in the management, leasing, operation, bookkeeping, reporting, marketing, maintenance and repair of projects similar to the Project;
C. Owner hereby appoints Manager as sole and exclusive agent of Owner to manage the Project on the terms herein and Manager accepts such appointment on the terms herein and agrees to use diligent efforts to conduct and enhance the management of the Project, subject to the terms herein; and
D. The relationship of Manager to Owner shall be that of an independent contractor. Nothing herein shall be construed as creating a partnership, joint venture, or any other relationship between the parties hereto;
NOW, THEREFORE, in consideration of the premises and the sum of TEN AND NO/100 DOLLARS ($10.00) paid by Owner to Manager, and for other valuable consideration, including the mutual covenants hereinafter set forth, the receipt, adequacy, and sufficiency of which are acknowledged by the parties hereto, Owner and Manager covenant and agree as follows:
1. Definitions.
"Affiliate" means any person that directly or indirectly, through one or more intermediaries, controls or is controlled by or is under common control with a designated Person.
“Annual Business Plan” shall mean, with respect to calendar year 2016, the Annual Business Plan for the management and operation of the Project attached hereto as Exhibit “B” and incorporated herein by this reference, and for all other years during the term of this Agreement, the Annual Business Plan for such year established pursuant to Section 5(e) below.
“Applicable Law” shall mean all building codes, zoning ordinances, laws, orders, writs, ordinances, rules and regulations of any Federal, state, county, city, borough, or municipality, or of any division, agency, bureau, court, commission or department or of any division, agency, bureau, court, commission or department thereof, or of any public officer or official, having jurisdiction over or with respect to the Project.
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“Approved Operating Expenses” shall mean, with respect to calendar year 2016, the expenses set forth in the Annual Business Plan attached hereto as Exhibit “B” and incorporated herein by this reference, and for all other years during the term of this Agreement, the expenses contained in the Annual Business Plan for such year established pursuant to Section 5(e) below, together with all other operating expenses with respect to the Project which are otherwise approved by Owner or permitted pursuant to the express terms of this Agreement.
“Asset Management Fee” shall have the meaning set forth in Section 4(a) below.
“Cause” shall have the meaning set forth in the Operating Agreement.
“Claims” shall have the meaning set forth in Section 9(a) below.
“Code” means the Internal Revenue Code of 1986, as amended from time to time, or any corresponding provision or provisions of succeeding law.
“Confidential Information” shall mean the books, records, business practices, methods of operations, computer software, financial models, financial information, policies and procedures, and all other information relating to Owner and the Project (including any such information relating to the Project generated by Manager), which is not available to the public.
“Controllable Expenses” shall mean all expenses, other than Uncontrollable Expenses, with respect to the Project.
“Depository Accounts” shall have the meaning set forth in Section 5(c) below.
“Emergency” shall mean an event requiring action to be taken prior to the time that approval could reasonably be obtained from Owner, (i) in order to comply with Applicable Law, any insurance requirement or this Agreement, or to preserve the Project (or any part thereof), or (ii) for the safety of any Tenants, occupants, customers or invitees thereof, or (iii) to avoid the suspension of any services necessary to the Tenants, occupants, licensees or invitees thereof.
“Emergency Expenditures” shall have the meaning set forth in Section 5(k) below.
“Excluded Items” means:
(a) capital contributions by Owner or any interest therein;
(b) the refinancing of any loan or any voluntary conversion, sale, exchange or other disposition of the Project or any portion thereof;
(c) casualty insurance proceeds;
(d) proceeds of condemnation awards;
(e) any deposits including rental, security, damage, or cleaning deposits;
(f) interest on investments or otherwise;
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(g) abatement of taxes;
(h) any utility reimbursements received from Tenants for amounts actually paid by Owner or Manager directly to the utility companies (Owner acknowledging and agreeing that any revenues, fees, mark-ups and overhead charges received from Tenants in excess of amounts actually paid to the utility companies shall be included in Monthly Gross Receipts);
(i) discounts and dividends on insurance policies;
(j) door fees, marketing fees or similar lump sum payments from third parties under laundry contracts, cable contracts, antennae leases, and similar arrangements which are in addition to the monthly payments payable thereunder by such third parties;
(k) revenue generated from third party contracts negotiated by Owner and managed by Owner or a third party (other than Manager); and
(l) other income not directly derived from Manager's management of the Project.
“Leases” shall have the meaning set forth in Section 5(f)(ii) below.
“Loan Documents” shall mean any and all documents evidencing or securing any indebtedness obtained by Owner and secured by the Project with respect to which Manager has received written notice from Owner, as same shall be amended, replaced, refinanced or otherwise modified from time to time during the Term of this Agreement. Manager acknowledges receipt of the Loan Documents of even date herewith evidencing and securing that certain Loan in the original maximum principal amount of $52,150,000.00, more or less, from Walker & Dunlop, LLC and its successors or assigns (collectively, “Lender”) to Owner.
“Management Fee” shall have the meaning set forth in Section 4(a).
“Manager Indemnitees” shall have the meaning set forth in Section 9(b) below.
“Manager’s Event of Default” shall have the meaning set forth in Section 10(a) below.
“Master Insurance Program” shall have the meaning set forth in Section 6(b) below.
“Monthly Gross Receipts” shall include the entire amount of all Rental Income and additional revenues derived from the Project other than the Excluded Items, including all receipts, determined on a cash basis, from:
(a) | Rental Income; |
(b) | Owner's share of vendor income proceeds from vending machines and concessions; and |
(c) | All other income and cash receipts attributable to or derived from the Project other than the Excluded Items. |
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“Operating Agreement” shall mean that certain Limited Liability Company Agreement for BR Carroll Tenside JV, LLC, dated as of the Effective Date.
“Owner Indemnitees” shall have the meaning set forth in Section 9(a) below.
“Owner’s Event of Default” shall have the meaning set forth in Section 10(c) below.
“Person” means any individual, partnership, corporation, trust, limited liability company or other entity.
“Project” shall have the meaning set forth in the recitals above.
“Reimbursable Expenses” shall have the meaning set forth in Section 4(b) below.
“Rental Income” means all rent and other charges due from Tenants, from users of garage spaces, storage closets, parking charges, and from any other lessees of other non-dwelling facilities, if any, in the Project, from concessionaires in consequence of the authorized operation of facilities in the Project maintained primarily for the benefit of Tenants, and all other rental fees and other charges otherwise due Owner and collected by Manager with respect to the Project.
“Security Account” shall have the meaning set forth in Section 5(d) below.
“Tenants” shall have the meaning set forth in Section 5(d) below.
“Uncontrollable Expenses” shall mean the following expenses with respect to the Owner or the Project: taxes and insurance; licenses; HOA assessments; utilities; unanticipated material repairs that are essential to preserve or protect the Project; debt service; and costs due to a change in law.
2. Appointment of Manager. On and subject to the terms and conditions of this Agreement, Owner hereby retains Manager commencing on the Effective Date (the “Commencement Date”) to manage and lease the Project.
3. Term. This Agreement shall commence on the Commencement Date and shall continue for a term of thirty-six (36) months (the “Initial Term”) or until Manager is terminated pursuant to Section 11 of this Agreement. For avoidance of doubt, the Initial Term shall be automatically extended for additional twelve (12) month periods unless either party terminates this Agreement pursuant to Section 11.
4. Management Fee; Other Fees; Reimbursement of Expenses. In consideration of the performance by Manager of its duties and obligations hereunder:
(a) Owner agrees to pay to Manager a property management fee computed and payable monthly in arrears in an amount equal to two and one half percent (2.50%) of Monthly Gross Receipts (the “Management Fee”). The Management Fee shall be deducted each month from the Monthly Gross Receipts to be paid to Owner pursuant to this Agreement. The foregoing notwithstanding, if at any time the Owner elects to hire a separate property management company solely with respect to the property management activities related to the retail space, then the Management Fee (and the Asset Management Fee described below) shall be reduced on a dollar for dollar basis to offset the corresponding fees payable to such replacement retail property manager.
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(b) In addition to the Management Fee, Owner agrees to pay to Manager an asset management fee computed and payable monthly in arrears in an amount equal to one half of one percent (0.50%) of Monthly Gross Receipts (the “Asset Management Fee”). Notwithstanding the foregoing to the contrary, Manager acknowledges and agrees that the Asset Management Fee is subordinated to the payment of all operating expenses (excluding the Management Fee and the Asset Management Fee), monthly principal, interest, escrows, insurance, reserves or other required items or charges due under the Loan Documents. After Manager has notice of or acquires actual knowledge of an “Event of Default” (as such term is defined in the Loan Documents) under the Loan Documents (a “Loan Default Notice”), Manager’s right to receive payment of the Asset Management Fee shall be suspended. After cure of such Event of Default, pursuant to any relevant cure period and upon confirmation of the cure by Lender, Manager’s right to receive payment of the Asset Management Fee, including that portion thereof which was not paid during the period of suspension, shall resume. If payment of the Asset Management Fee is included with payment of the Management Fee after a Loan Default Notice, Manager will be entitled to retain only that portion of the payment equal to the Management Fee, less the Asset Management Fee. If Manager receives payment of the Asset Management Fee after receipt of a Loan Default Notice, Manager will receive and hold such payment in trust for Lender, to be applied to amounts due under the Loan Documents.
(c) Subject to the Annual Business Plan, Owner agrees to reimburse Manager for the aggregate expenses incurred by Manager in connection with or arising from the ownership, operation, management, repair, replacement, maintenance and use or occupancy of the Project, including, without limitation, those costs expressly set forth in Exhibit “C” attached hereto and incorporated herein by this reference (all items to be reimbursed pursuant to this Section 4(c) are referred to herein as “Reimbursable Expenses”). If any such Reimbursable Expenses are a part of the Approved Operating Expenses and are paid by Manager and not from Monthly Gross Receipts on hand, then Owner agrees to reimburse such amounts to Manager. All other Reimbursable Expenses which are not a part of Approved Operating Expenses and not contained in the list set forth in Exhibit “C” attached hereto must be approved by Owner in advance, such approval not to be unreasonably withheld, conditioned or delayed. Manager shall submit to Owner an invoice detailing the calculation of such Reimbursable Expenses no later than the fifteenth (15th) day of each month for the immediately preceding month. The Reimbursable Expenses then owed shall be deducted each month from the Monthly Gross Receipts to be paid to Owner pursuant to this Agreement.
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(d) A construction management fee in the amount of five percent (5.0%) of any expenses incurred in connection with (a) all interior renovation projects with respect to the units in the Project to the extent costs with respect to same exceed $10,000, in the aggregate, in any single calendar year, (b) any individual capital expenditure project set forth in the Annual Business Plan, and (c) any other individual capital expenditure project the cost of which exceeds $10,000, which fee shall in all cases be calculated and paid upon each respective draw and within thirty (30) days of final draw or following completion of the restoration or satisfaction of the claim, whichever is applicable. The foregoing notwithstanding, with respect to the retail units the construction management fee shall only be paid to Manager in connection with any work performed to upgrade any currently vacant retail units from their current condition to a white box condition, the cost of which work is not expected to exceed $120,000. For purposes hereof, white box condition will include applicable framing and sheet rock installation, pre-painting preparatory work and painting of the units and the installation of applicable ceiling grid. Finally, for the avoidance of doubt, the parties acknowledge and agree that no construction management fee shall be paid or be payable in connection with any tenant improvement work or other tenant specific work with respect to any retail units.
(e) A fee will be charged for the initial takeover of the Project in the amount of $2,000.00 to cover costs for training and marketing of the Project.
(f) Intentionally Omitted
(g) Upon the termination of this Agreement by Owner pursuant to Section 11(c), Owner shall pay to Manager a close-out fee equal to the sum of (i) the Management Fees and (ii) the Asset Management Fees paid by Owner to Manager for the full three (3) months immediately preceding the date of termination (the “Close Out Fee”). The Close Out Fee shall be deducted from the final month’s Monthly Gross Receipts to be paid to Owner.
5. Authority and Responsibilities of Manager.
(a) Independent Contractor. In the performance of its duties hereunder, Manager shall be and act as an independent contractor, with the sole duty to supervise, manage, operate, control, direct and determine the methods of performance of the specified duties and obligations hereunder. Nothing contained in this Agreement shall be deemed or construed to create a partnership, joint venture, employment relationship, or otherwise to create any liability for one party with respect to indebtedness, liabilities or obligations of the other party except as otherwise may be expressly set forth herein.
(b) Standard of Care. Manager shall perform its duties and obligations in a professional manner, and shall maintain the Project in accordance with the applicable Annual Business Plan and in accordance with the standards a reasonably prudent multifamily property manager would employ with respect to properties of similar age, size, and class as the Project in the market area in which the Project is located.
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(c) Depository Accounts. All Monthly Gross Receipts from the Project, after deducting Approved Operating Expenses, Reimbursable Expenses, the Management Fee and the Asset Management Fee, shall be deposited by Manager into one or more deposit accounts designated by Owner (each a “Depository Account”). All Depository Accounts shall be the sole and exclusive property of Owner, and Manager shall retain no interest therein, except as may be expressly provided in this Agreement. Manager shall not commingle Depository Accounts with any other funds. Checks may be drawn upon such Depository Accounts only by persons authorized by Owner in writing to sign checks, at least one of whom shall be a designee of Manager. No loans shall be made from the Depository Account. All Depository Accounts shall be established in the name of Owner.
(d) Security Deposits. Manager shall deposit and maintain all security deposits in a separate account designated by Owner and insured by the Federal Deposit Insurance Corporation (the “Security Account”). Manager shall fully fund all security deposits actually received by Manager from tenants of the Project under written leases (collectively, “Tenants”) into the Security Account, notwithstanding whether Applicable Law requires full funding. The Security Account shall be a segregated account that is distinct from the Depository Accounts and any other accounts relating to the Project or Manager. The Security Account shall be the sole and exclusive property of Owner, and Manager shall retain no interest therein, except as may be expressly provided herein. Manager shall not commingle the Security Account with any other funds. Checks may be drawn upon the Security Account only by persons authorized by Owner in writing to sign checks, at least one of whom shall be a designee of Manager. No loans shall be made from the Security Account. Manager shall not use a "standardized clearing account" for the Security Account. The Security Account shall be established in the name of Manager to be held in trust for Owner.
(e) Annual Business Plan.
(i) The initial Annual Business Plan for the period from the Effective Date through the end of calendar year 2016, which is deemed approved by Owner and Manager and is attached hereto as Exhibit “B” and is incorporated herein for all intents and purposes under this Agreement (the “Initial Business Plan”). The foregoing notwithstanding, the Manager shall also deliver to Owner on the Effective Date, for informational and planning purposes, a 12-month budget for the Project.
(ii) For Annual Business Plans for calendar years 2017 and 2018, Manager agrees to prepare an Annual Business Plan for the operation of the Project for Owner's review and approval, no later than September 15 of the immediately preceding year for the 2017 calendar year and September 15 of the immediately preceding year for the 2018 (and any subsequent) calendar year. If final approval of a proposed Annual Business Plan by Owner has not been given by the beginning of the year to which such proposed Annual Business Plan relates, Manager shall operate the Project on the basis of the previous year’s approved Annual Business Plan, adjusted by (i) assuming that the revenue from the Project will increase to 103% of the revenues collected in the prior year, (ii) assuming that the Controllable Expenses will increase to 103% of the amount of the actual Controllable Expenses incurred in the prior year, (iii) increasing all Uncontrollable Expenses by any anticipated or known increases in such Uncontrollable Expenses, and (iv) including any Emergency Expenditure (as defined in Section 5(k) below). Notwithstanding the foregoing to the contrary, if, prior to the commencement of calendar year 2017, the parties have not agreed on the budget for capital expenditures at the Project in the Annual Business Plan for calendar year 2017, there shall be no budgeted capital expenditures for calendar year 2017; provided, however, that any incomplete capital projects commenced in calendar year 2016 and contemplated in the Initial Business Plan shall be funded as provided in the Initial Business Plan until such capital projects are completed.
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(iii) If Manager and Owner agreed to the Annual Business Plan for calendar year 2018 in accordance with subsection (ii) above, then the Annual Business Plan for calendar year 2019 shall also be determined in accordance with the applicable provisions of subsection (ii) above. If, however, Manager and Owner were unable to agree to the Annual Business Plan for calendar year 2018, then Owner may establish the Annual Business Plan for calendar year 2019 without Manager’s consent.
(iv) For Annual Business Plans for calendar years 2020 and all subsequent calendar years, if applicable, Manager shall have the right to prepare and propose an Annual Business Plan for such calendar year on or prior to September 15 of the immediately preceding year (without obligation to do so), and Owner may, regardless of the information contained in Manager’s proposal, establish the Annual Business Plan for the applicable calendar year, without Manager’s consent.
(v) Manager and Owner each acknowledge and agree that, in establishing the Annual Business Plans in accordance with this Section 5(e), each shall be obligated to act reasonably and in good faith, taking into account past performance of the Project, leasing trends and competitive properties within the market where the Project is located, the age of the Project and the units at the time such Annual Business Plan is established, and such other factors as reasonably prudent owners and managers of multifamily and retail assets substantially similar to the Project would take into account in order to maximize revenue therefrom.
(vi) No material deviations (as defined herein) from any item in an Annual Business Plan approved in accordance with the terms herein shall be made by Manager without the prior approval of the “Management Committee” (as defined in the Operating Agreement), to the extent required by the Operating Agreement. The Manager shall provide quarterly updates to the Annual Business Plan, solely for informational purposes. Each Annual Business Plan shall include the information set forth in Exhibit “E”. Owner (and its sole member) will consider the proposed Annual Business Plan in accordance with the terms of the Operating Agreement and will consult with Manager prior to the commencement of the forthcoming calendar year in order to agree on an Annual Business Plan for such calendar year. In no event shall Owner have the right to modify the Annual Business Plan to reduce the Management Fee, the Asset Management Fee or Reimbursable Expenses otherwise due pursuant to Section 4. In no event shall Manager be deemed in default under this Agreement if such changes by Owner to the Annual Business Plan cause Manager to have insufficient funds to perform its obligations hereunder. Manager agrees to use commercially reasonable efforts to ensure that the actual costs of maintaining and operating the Project shall not exceed the amount reasonably necessary and, in any event, will not exceed the Annual Business Plan either in total amount or in any one accounting category. Notwithstanding anything to the contrary, Manager shall secure Owner's prior written approval for any expenditure that will result in an excess of the annual budgeted amount set forth in the Annual Business Plan in any one accounting category by the lesser of ten percent (10%) or $10,000 or $25,000 in the aggregate for all categories (a “material deviation”). Manager shall promptly advise and inform the Owner of any transaction, notice, event or proposal directly relating to the management and operation of the Project which does or is likely to significantly affect, either adversely or favorably, the Project, other assets of the Owner or cause a material deviation from the Annual Business Plan. Nothing contained herein shall in any way diminish the obligations or duties of Manager hereunder.
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(f) Leasing, Collection of Rents, Etc.
(i) Manager shall use commercially reasonable efforts consistent with the standard of care set forth herein to lease apartment units and the retail spaces in accordance with all Applicable Laws, to retain residents and to maximize Rental Income. Manager shall not enter into any apartment Lease which has a term less than six (6) months or greater than fifteen (15) months, except as approved by Owner or as may be expressly permitted by any loan documents applicable to the Project entered into by Owner from time to time during the term hereof. Manager shall not enter into any retail leases without the express approval of Owner, such approval to be given or withheld in Owner’s sole discretion. Manager shall comply in all material respects with all of the terms and conditions applicable to the leasing of the Project set forth in any Loan Documents.
(ii) Manager shall sign apartment leases and retail leases (“Leases”) on behalf of Owner in its capacity as property manager hereunder. Manager shall only sign apartment Leases in the form of lease attached hereto as Exhibit “D” and will only sign retail Leases in the form of lease approved by Owner with respect to such retail Lease.
(iii) Manager shall collect rents, security deposits and other charges payable by Tenants in accordance with the Leases, and shall collect Monthly Gross Receipts due Owner with respect to the Project from all other sources, and shall deposit all such monies received promptly upon receipt in the appropriate accounts as provided herein. If Manager receives Excluded Items, Manager shall promptly deposit same in an account designated by Owner.
(iv) Manager shall pay all debt service, monthly bills and insurance premiums on the Project from the Depository Account.
(v) Manager shall, at Owner's expense, market the Project for rental, terminate Leases, evict Tenants, institute and settle suits for delinquent payments as Manager, in its reasonable discretion, deems advisable, subject to other provisions of this Agreement. In connection therewith, Manager may, at Owner's expense, as limited by the provisions of Section 5(l) of this Agreement, consult and retain legal counsel. Further notwithstanding anything contained in this Agreement to the contrary, in no event shall Manager institute or defend any legal proceedings where the amount in dispute exceeds $5,000 without Owner’s prior written consent.
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(vi) Manager shall, at Owner’s written request, on the twenty-first (21st) day of each month, pay Owner an amount equal to Monthly Gross Receipts for such month, less amounts paid for Approved Operating Expenses of the Project in accordance with this Agreement, including, without limitation, the fees owed to Manager pursuant to Section 4 of this Agreement.
(vii) The responsibilities and services included in this Section 5 as part of Manager's duties shall not entitle Manager to any additional compensation over and above the fees set forth in Section 4 of this Agreement. Except as expressly provided in Section 4, Manager shall not be entitled to any compensation based upon any Project financing or sale of the Project, unless Manager is engaged pursuant to a separate agreement with Owner to provide brokerage services in connection therewith, in which case Manager's right to compensation for Project financing or sale shall be based upon such separate agreement.
(g) Repair, Maintenance and Service.
(i) Manager shall maintain the Project in good repair and condition, consistent with the standard of care set forth herein and in accordance with the Annual Business Plan.
(ii) Subject to the other terms and conditions of this Agreement, Manager in its capacity hereunder shall, in Owner's name and at Owner's expense, execute contracts for water, sanitary sewer, electricity, gas, internet service, telephone, trash removal, television, vermin or pest extermination and any other services which are necessary to properly maintain the Project, except for utility services to individual apartment units, which shall be each Tenants’ respective responsibility to the extent provided in the applicable Leases. Any such contracts shall not, unless the Owner otherwise approves the terms thereof, materially deviate from the terms of the then existing approved Annual Business Plan of the Project. Manager shall, in Owner's name and at Owner's expense, out of available cash flow, hire and discharge independent contractors for the repair and maintenance of the Project. Other than apartment Leases, which Manager is authorized to execute hereunder, Manager shall not, without the prior written consent of the Owner, enter into any contract in the name of Owner which may not be terminated without payment of penalty or premium with not more than thirty (30) days’ notice. Except as set forth above, Manager shall be permitted to and shall enter into all other contracts (in the name of and/or as agent for Owner) in accordance with the standard of care established by this Agreement and as Manager reasonably believes are necessary to perform Manager’s obligations hereunder. Manager shall act at arms’ length with all contractors and shall employ no Affiliates of Manager without the prior written consent of Owner.
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(h) Manager's Employees. Manager shall have in its employ at all times a sufficient number of employees to enable it to professionally manage the Project in accordance with the terms of this Agreement, as determined by Manager in its professional discretion and subject to the Annual Business Plan. Manager shall prepare, execute and file all forms, reports and returns, as applicable, but only to the extent expressly required by Applicable Laws, and Manager shall be permitted to rely on the advice of counsel and other experts in making the determination of what is required. Manager is authorized to screen, test, investigate, hire, supervise, discharge, and pay all personnel necessary in Manager’s reasonable discretion to maintain and operate the Project. Owner shall reimburse Manager for all employee related expenses, liabilities, and administrative burden (including, without limitation, costs for all full-time and part-time employees such as gross salaries and wages, payroll taxes, health insurance, workers compensation, and other benefits of Manager’s employees including the costs for training, software, and other administrative and processing costs, including without limitation, payroll processing, risk management, benefits administration, travel, marketing expenses, bank charges, telephone and answering service [which may be equitably allocated on a prorata basis (based on the gross revenues of each such property) among the Project and other properties managed by Manager, if applicable]) and all costs related to pre-employment testing and screening, provided, however, that all of the foregoing costs shall be subject to the then effective Annual Business Plan or otherwise permitted or approved by Owner pursuant to this Agreement. Owner expressly acknowledges and agrees that Manager may use employees normally assigned to other work centers and/or part-time employees to properly staff the Project, in which case wages and related expenses shall be reimbursed on a pro rata basis for the time actually spent for the Project (rather than being allocated based on the gross revenues of each property); provided, however, Owner shall not pay or reimburse Manager for all or any part of Manager's general overhead expenses, including salaries and payroll expenses of personnel of Manager, except as otherwise set forth herein.
(i) Books and Records. Manager shall keep, or shall supervise and direct the keeping of, a comprehensive system of office records, books and accounts pertaining to the Project. Such accounts shall be maintained using accrual method of accounting in accordance with generally accepted accounting principles (GAAP); provided that Owner may instruct Manager in writing to utilize an accounting method other than GAAP. Manager shall preserve all invoices for a period of seven years (or such other period as may be required by applicable law) or until this Agreement terminates and such items are delivered to Owner at Owner’s request and expense. All books, correspondence and data pertaining to the leasing, management and operation of the Project shall, at all times, be safely preserved. Such books, correspondence and data shall be available to Owner at all reasonable times, upon not less than forty-eight (48) hours’ advance notice, for Owner’s inspection thereof, and shall, upon the termination of this Agreement be delivered to Owner in their entirety and upon request of Owner be delivered to Owner within thirty (30) days of such request. Manager shall maintain files of all original documents relating to Leases, vendors and all other business of the Project in an orderly fashion at the Project, which files shall be the property of Owner and shall at all times be open to Owner's inspection and available for copying at Owner's request, cost and expense. Manager shall comply with the Capitalization and Expense Policy of Bluerock Real Estate, L.L.C., a copy of the current form of which has been provided to Manager.
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(j) Reporting. Manager shall electronically furnish Owner with the statements and reports listed on Exhibit “F” attached hereto. For the purposes of delivering any and all statements and reports to be made on a monthly basis pursuant to Exhibit “F”, Owner acknowledges and agrees that Manager shall base such statements and reports on information current as of the close of business on the last day of the month, including applicable accruals, with respect to which such statements or reports apply. In addition, an annual audit report shall be prepared at Owner's expense, showing a balance sheet and an income and expense statement, all in reasonable detail and certified by an independent certified public accountant approved by Owner in its sole discretion. Within five (5) days after the end of each calendar quarter of each year, Manager shall cause to be furnished to BR Tenside JV Member, LLC (“Bluerock”) such information as reasonably requested in writing by Bluerock as is necessary for any reporting requirements of Bluerock or any direct or indirect members of Bluerock or for any reporting requirements of any REIT Member (as defined in the Operating Agreement) (whether a direct or indirect owner) to determine its qualification as a real estate investment trust and its compliance with REIT Requirements (as defined in the Operating Agreement) as shall be reasonably requested by Bluerock. Further, the Manager shall cooperate in a reasonable manner at the request of Owner and any direct or indirect member of Owner to work in good faith with any designated accountants or auditors of such party or its Affiliates so that such party or its Affiliate is able to comply with its public reporting, attestation, certification and other requirements under the Securities Exchange Act of 1934, as amended, applicable to such entity, and to work in good faith with the designated accountants or auditors of such party or any of its Affiliates in connection therewith, including for purposes of testing internal controls and procedures of such party or its Affiliates. Owner may request, and Manager shall provide within a commercially reasonable period after such request, assistance with draw requests, ad hoc reports and special accounting projects at a reasonable cost to be pre-approved by Owner. Manager shall also prepare and provide to Owner such reports and information as reasonably required by Owner to prepare the reports and tax returns required under (i) its limited liability company operating agreement and (ii) the Loan Documents. Except as noted above, in Section 4(b) or Exhibit F of this Agreement, all costs and expenses incurred in connection with the preparation of any statements, budgets, schedules, computations and other reports required under this Agreement shall be the responsibility of Manager.
(k) Approved Operating Expenses; Emergency Expenditures. The Approved Operating Expenses which Manager is authorized to incur and pay on behalf of Owner under this Agreement shall in all respects be limited to those expenses set forth in the Annual Business Plan for the period during which such expenses are paid; provided, however, that (x) notwithstanding the inclusion of any such expense in the Annual Business Plan, Manager shall be required to obtain Owner’s specific approval of any capital expenditure in excess of $25,000 prior to incurring such expense, and (y) Manager shall be authorized to incur and pay for all other expenses permitted pursuant to Section 5(e) above, or which are otherwise expressly permitted by this Agreement regardless of whether or not such expenses are within the limitations set by the Annual Business Plan. Any expenses permitted pursuant to Section 5(e) or otherwise approved in writing by Owner which were not included in the Annual Business Plan shall be deemed sums permitted to be expended by Manager in addition to (and not in limitation of) the amounts permitted under the Annual Business Plan. The foregoing notwithstanding, if an Emergency occurs necessitating repairs the cost of which would have the effect of exceeding the Annual Business Plan by more than those limitations as provided above (such expenses referred to herein as “Emergency Expenditures”), and Manager is unable to communicate promptly with Owner, then Manager may order, contract for and pay for such Emergency Expenditures not to exceed $20,000, with the cost thereof being included as a Reimbursable Expense for the purposes of the Agreement, and Manager shall promptly thereafter notify Owner of any such expenses and the nature of the Emergency.
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(l) Legal Proceedings and Compliance with Applicable Laws.
(i) Manager shall promptly notify Owner (and each insurance carrier of which Manager is aware and whose policy may cover a related claim) in writing of the receipt of, or attempted service on Owner or Manager of (A) any demand, notice or legal process, or (B) the occurrence of any casualty, loss, injury or damage on, at or concerning the Project.
(ii) Manager acknowledges that it is not authorized to accept service of process or any other notice on behalf of Owner. Manager shall not make representations or provide information to any Person that is inconsistent with the foregoing.
(iii) Manager shall promptly provide copies to Owner of all notices and other written communications from Owner's insurance carriers with respect to accepting coverage, appointing counsel or any other matter related to a claim against Owner.
(iv) Manager shall promptly provide notice to Owner of any oral or written communication relating to the Project that Manager receives from a governmental or regulatory agency. Manager shall promptly provide Owner with a complete copy of any such written materials.
(v) Manager shall fully comply and cause its employees to fully comply, with all Applicable Laws in connection with this Agreement and the performance of its obligations hereunder.
(vi) Manager agrees that it shall not, and shall not permit its employees to, cause any hazardous materials or toxic substances, to be stored, released or disposed of on or in the Project except as may be incidental to the operation of the Project (e.g., cleaning supplies, fertilizers, paint, pool supplies and chemicals) and then only in complete compliance with all Applicable Laws, in conformity with the standard of care established hereby and in accordance with any limitations set forth in any loan documents evidencing or securing any financing secured by the Project. If (A) there is a violation of Applicable Laws or a violation of the terms of any applicable loan documents regarding the storage, release and disposal of such hazardous materials, or toxic substances, or (B) Manager reasonably believes that the storage, release or disposal of any hazardous material, petroleum product, or toxic substances, could cause liability to the Owner, including any releases caused by Tenants, third parties or employees, on or affecting the Project, Manager shall notify Owner promptly.
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(vii) Manager agrees that the Project shall be offered to all prospective tenants on a nondiscriminatory basis without regard to race, color, religion, sex, family status, handicap or national origin in accordance with Applicable Law.
(m) Computers. All computers, hardware, software, computer upgrades and maintenance in connection therewith shall be at Owner's expense.
(n) Insufficient Cash Flow. In the event that the Depository Accounts for the Project do not have sufficient funds to cover the monetary obligations of Manager or the Project pursuant to this Agreement, Manager shall give Owner prompt written notice with respect to such shortfall and if Owner has not promptly provided funds, then Manager will have no duty to perform any such obligations until Owner provides sufficient funding, and Manager shall not be in default under this Agreement for failure to perform any obligation hereunder as a result of such lack of funds. If Manager suspects that the cash flow from the Project will not, at any time, be sufficient to cover any Project related expenses, Manager shall promptly notify Owner, and Manager and Owner shall mutually determine the order in which the obligations of the Project will be satisfied; provided, however, that Manager and Owner agree that available cash flow will in any event first be applied to Uncontrollable Expenses that are then due and payable.
6. Insurance Requirements.
(a) MANAGER'S INSURANCE: Manager shall obtain and maintain the following insurance (the specifications for which may be changed from time to time by Owner) necessary to protect the interest of Owner as it relates to Manager's operations hereunder, at Manager's sole cost and expense, from authorized insurance companies approved by Owner rated by Best's Rating at A XII or higher.
(i) COMMERCIAL GENERAL LIABILITY INSURANCE: Commercial general liability insurance for the benefit of Manager and Owner in the amount of $1,000,000 per occurrence and $2,000,000 in the aggregate covering claims for bodily injury, property damage, personal and advertising injury, products and completed operations (the "Manager's Liability Insurance"). The Manager’s Liability Insurance shall provide for:
1. Coverage on an occurrence form.
2. Contractual liability coverage covering the indemnification section of this Agreement.
3. “Additional Insured – Owners, Lessees or Contractors – (FORM B), CG 20 10 11 85” or its equivalent providing coverage for both ongoing and completed operations and naming Owner as an additional insured.
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4. Manager’s policy shall not include a Limitation of Coverage Real Estate Operations (CG 22 60 07 98) endorsement, Real Estate Property Managed Endorsement (CG 22 70 11 85) or similar endorsements excluding or limiting coverage for bodily injury, property damage or personal and advertising injury.
5. Manager shall continue to name Owner as an additional insured for a period of three years following the termination of this Agreement. Manager shall provide Owner with an original certificate of insurance not less than fifteen days prior to each renewal date during this three-year period.
6. If the Manager utilizes the services of an employee leasing company, then its general liability policy must include ISO endorsement CG 04 24 10 93 Coverage for Injury to Leased Workers.
7. The pollution exclusion must be modified to include coverage for pollution claims related to a hostile fire as well as pollutants that are released from the building’s heating equipment or equipment used to heat water.
8. A separation of insured clause.
(ii) UMBRELLA OR EXCESS LIABILITY: limits of $5,000,000: Providing follow-form coverage over the Commercial General Liability, Automobile Liability and Employers’ Liability policies.
(iii) AUTO LIABILITY INSURANCE: Manager, at its expense which is not reimbursable, shall carry and maintain business auto liability insurance covering owned, non-owned and hired vehicles with a limit of not less than $1,000,000 per accident. If the Manager utilizes the services of an employee leasing company then its Commercial Auto Liability policy must include ISO endorsement CA 23 25 07 97 Coverage for Injury to Leased Workers. Owner shall be named as additional insured.
(iv) WORKERS’ COMPENSATION AND EMPLOYERS’ LIABILITY INSURANCE:
1. Workers’ compensation – Statutory limits of insurance covering employees, including principals. In the event the principal has waived coverage for himself/herself, it is hereby agreed by all parties that the principal may not perform any work under this Agreement.
2. Employers’ liability limits.
(A) $1,000,000 for bodily injury caused by accident, each accident.
(B) $1,000,000 for bodily injury caused by disease, each employee.
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(C) $1,000,000 for bodily injury caused by disease, policy limit.
(v) PROPERTY MANAGER’S ERRORS AND OMISSIONS LIABILITY:
1. Limits of Insurance: $1,000,000 per occurrence, $2,000,000 aggregate
2. If coverage is on a claims-made basis, the retroactive date must be a date that is not later than the date on which Manager began performing services on behalf of the Owner.
3. Contingent bodily injury and property damage coverage.
4. Coverage shall be maintained for a period of three years after the termination of services. Manager shall provide Owner with an original certificate of insurance on or before each renewal date during this three-year period.
5. The policy shall include a separation of insureds clause.
(vi) COMMERCIAL CRIME INSURANCE:
1. Limits of Insurance: $1,000,000 employee dishonesty, $1,000,000 forgery or alteration, $1,000,000 computer fraud, $1,000,000 wire funds transfer fraud, $1,000,000 money and securities on and off premises
2. Third party coverage.
3. No limitation or exclusion related to acts of collusion.
4. Owner shall be included as Loss Payees as its interest may appear.
5. Coverage shall be included for theft of Owner’s property by Manager’s owners, directors and officers.
6. The definition of employee shall include leased employees if the Manager utilizes the services of an employee leasing firm.
(vii) EMPLOYMENT PRACTICES LIABILITY INSURANCE: Employment Practices Liability insurance with limits of $1,000,000 per occurrence/aggregate, including third party coverage for sexual harassment, discrimination and other coverable employment-related torts.
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(viii) CERTIFICATES OF INSURANCE: Manager shall not begin performing services hereunder until original certificates of insurance showing evidence of the coverages outlined below have been furnished to and approved by Owner. Each policy shall provide for thirty (30) days' advance written notice of cancellation or material change by mail to Owner from the insurance company, and this provision shall be evidenced on the certificates. Evidence of renewal or replacement coverages shall be furnished to the Owner not less than ten (10) days prior to expiration but in no event later than the renewal date itself.
(b) OWNER’S INSURANCE: Owner shall obtain and maintain the following insurance (the specifications for which may be changed from time to time by Owner) necessary to protect the interest of Owner as it relates to the Project, at Owner's sole cost and expense, from authorized insurance companies with an AM Best rating of A VIII or higher.
(i) PROPERTY INSURANCE: Hazard insurance in the amount of the full replacement cost of the Project, and such other property insurance as Owner may elect, at Owner's expense.
(ii) LIABILITY INSURANCE: Commercial general liability insurance including contractual liability for insured contracts, on an "occurrence" basis, naming Manager as an additional insured, with limits of not less than Three Million Dollars ($3,000,000) per occurrence (the "Owner's Liability Insurance"). This limit may be satisfied by a combination of CGL and umbrella/excess liability insurance. The Owner's Liability Insurance shall include coverage for losses arising from the ownership, management, and operation of the Project. This insurance shall be primary for Owner and Manager with respect to the Project.
(iii) CERTIFICATE OF INSURANCE: Owner shall provide to Manager a certificate of insurance evidencing such coverage from an insurance carrier with an A.M. Best Rating of A VIII or higher reflecting that the Owner's Liability Insurance is effective in accordance with this section and that the Owner's Liability Insurance will not be canceled without at least thirty (30) days prior written notice to Manager.
(c) MASTER INSURANCE PROGRAM. Alternatively, Manager has arranged, through its insurance agent, a master insurance program in which owners of property managed by Manager may participate (the “Master Insurance Program”). If Owner elects to participate in the Master Insurance Program, the Owner shall pay the amount thereof set forth on the insurance invoice delivered to Owner under the Master Insurance Program, which invoice may include administrative charges in excess of the actual insurance premiums charged by the underling insurance carriers. All insurance coverage provided under the Master Insurance Program shall be terminated when this Agreement expires or is sooner terminated without the need for prior notice of termination of the insurance coverage. Owner acknowledges that Manager is not an expert or consultant regarding insurance coverages and requirements; accordingly, Owner assumes all risk with respect to the adequacy of insurance coverages, whether such insurance is provided through the Master Insurance Program or otherwise, and Manager shall have no liability therefor in any respect. Manager shall be named an additional insured under any policies of insurance carried by Owner with respect to the Project.
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(d) ANNUAL BUSINESS PLAN. Upon Manager’s submission of each Annual Business Plan, Manager shall affirmatively and in writing confirm and set forth the scope of all existing insurance coverage, including confirming coverage for the forthcoming year.
7. Representations and Duties of Manager. Manager represents, warrants, covenants and agrees that:
(a) Manager has the authority to enter into and to perform this Agreement, to execute and deliver all documents relating to this Agreement, and to incur the obligations provided for in this Agreement.
(b) When executed, this Agreement shall constitute the valid and legally binding obligations of Manager in accordance with its terms.
(c) Manager has all necessary licenses, consents and permissions to enter into this Agreement, manage the Project, and otherwise comply with and perform Manager's obligations and duties hereunder. Manager shall comply with any conditions or requirements set out in any such licenses, consents and permissions, and shall at all times operate and manage the Project in accordance with such conditions and requirements.
(d) During the term of this Agreement, Manager will be a valid limited liability company, duly organized under the laws of the State of its formation, be qualified in the State in which the Project is located and shall have full power and authority to manage the Project, and otherwise comply with and perform Manager's obligations and duties under this Agreement.
(e) Manager shall comply with any requirements under applicable environmental laws, regulations and orders which affect the Project.
(f) Manager shall cause the Project to be operated in a manner so that all requirements shall be met which are necessary to obtain or achieve issuance of all necessary permanent unconditional certificates of occupancy, including all governmental approvals required to permit occupancy of all of the apartment units in the Project.
8. Representations of Owner. Owner represents and warrants, that:
(a) Owner has the authority to enter into and to perform this Agreement, to execute and deliver all documents relating to this Agreement, and to incur the obligations provided for in this Agreement;
(b) The Person executing this Agreement on behalf of Owner has the requisite power and authority to execute this Agreement on behalf of Owner; and
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(c) When executed, this Agreement, together with all documents executed pursuant hereto, shall constitute the valid and legally binding obligations of Owner in accordance with its terms.
9. Indemnification.
(a) Indemnification of Owner. Manager shall indemnify, protect, defend (with legal counsel approved by Owner) and hold harmless Owner and Owner's members, managers, partners and Affiliates, together with their respective officers, directors, agents, employees and affiliates (collectively, "Owner Indemnitees"), from and against any and all claims, demands, actions, liabilities, losses, costs, expenses, damages, penalties, interest, fines, injuries and obligations, including reasonable attorneys' fees, court costs and litigation expenses ("Claims") actually incurred by any Owner Indemnitee as a result of (i) any act by Manager (or any officer, agent, employee or contractor of Manager) outside the scope of Manager's authority hereunder, (ii) any act or failure to act by Manager (or any officer, agent, employee or contractor of Manager) constituting gross negligence, willful misconduct, fraud or material breach of this Agreement, other than as covered by Owner's insurance (for negligence or misconduct only) and to the extent Owner's insurance is available, (iii) Claims made by current or former employees or applicants for employment arising from hiring, supervising, firing, sexual harassment, and other employment-related torts, (iv) any act or omission by Manager, its employees, officers, agents or contractors knowingly in violation of any Applicable Laws or (v) any claims for financial harm that are the type covered under Manager’s property management errors and omissions/professional liability insurance.
(b) Indemnification of Manager by Owner. Owner shall indemnify, protect, defend and hold harmless Manager and its Affiliates, together with their respective officers, directors, agents, employees and affiliates (collectively, "Manager Indemnitees") from and against any and all Claims actually incurred by any Manager Indemnitee resulting from performance of its obligations under this Agreement, except that this indemnification shall not apply with respect to any Claims (i) resulting from any act by Manager, its employees, officers, agents or contractors outside the scope of Manager's authority hereunder, (ii) resulting from any act or failure to act by Manager, its employees, officers, agents or contractors constituting gross negligence, willful misconduct, fraud or material breach of this Agreement, (iii) resulting from Claims made by current, former employees or applicants for employment arising from hiring, supervising, firing, sexual harassment, and other employment-related torts, (iv) any act by Manager, its employees, agents or contractors knowingly in violation of any Applicable Law, or (v) any claims for financial harm that are the type covered under Manager’s property management errors and omissions/professional liability insurance.
(c) Survival. The provisions of this Section 9 shall survive the termination of this Agreement.
10. Defaults.
(a) Manager's Event of Default. Manager shall be deemed to be in default hereunder upon the happening of any of the following ("Manager's Event of Default"):
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(i) The failure by Manager to keep, observe or perform any covenant, agreement, term or provision of this Agreement and the continuation of such failure, in full or in part, for a period of thirty (30) days after written notice thereof by Owner to Manager, or if such default cannot be cured within such thirty (30) day period, then such additional period as shall be reasonable (but in no event to exceed an additional thirty (30) days thereafter), provided Manager commences to cure such default within such thirty (30) day period and proceeds diligently to prosecute such cure to completion;
(ii) The making of a general assignment by Manager for benefit of its creditors, the filing by Manager with any bankruptcy court of competent jurisdiction of a voluntary petition under Title 11 of U.S. Code, as amended from time to time, the filing by Manager of any petition or answer seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under any present or future federal or state act or law relating to bankruptcy, insolvency, or other relief for debtors, Manager being the subject of any order for relief issued under such Title 11 of the U.S. Code, as amended from time to time, or the dissolution or liquidation of Manager;
(iii) The failure of the net operating income derived from operation of the Project for any twelve (12) consecutive month period to be 92% or more of the net operating income projected in the applicable Annual Business Plan (or Annual Business Plans, as applicable) for such trailing twelve (12) consecutive month period (the “Performance Standard”). For purposes of this Section 10(a)(iii), the Performance Standard shall be tested every six (6) months, with the first test occurring in the month after the first (1st) anniversary of this Agreement;
(iv) The intentional misapplication, misappropriation or commingling of funds held by Manager for the benefit of Owner, including the payment of fees to Affiliates of the Manager or the loaning of funds to Affiliates; or
(v) The occurrence of any other for Cause event with respect to Manager’s Affiliate, Carroll Co-Invest IV Tenside, LLC, a Georgia limited liability company.
(b) Remedies of Owner. Upon a Manager's Event of Default, after expiration of any applicable notice and cure periods, Owner shall be entitled to (i) terminate in writing this Agreement effective as of the date designated by Owner (which may be the date upon which notice is given) and/or (ii) pursue an action for the actual compensatory damages incurred by Owner provided the Manager’s Event of Default has not then been cured or such cure has not commenced and is not being diligently pursued. Owner expressly agrees that termination of this Agreement and compensatory monetary damages are its sole rights and remedies with respect to a Manager's Event of Default and Owner expressly waives and releases all other rights and remedies, including, without limitation, the right to seek equitable relief, including specific performance or injunctive relief, and to sue for any consequential or punitive damages.
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(c) Owner's Event of Default. Owner shall be deemed to be in default hereunder upon the happening of any of the following (an "Owner's Event of Default"):
(i) The failure by Owner to keep, observe or perform any covenant, agreement, term or provision of this Agreement to be kept, observed or performed by Owner, and such default shall continue for a period of thirty (30) days after written notice thereof by Manager to Owner, or if such default cannot be cured within such thirty (30) day period, then such additional period as shall be reasonable, provided Owner commences to cure such default within such thirty (30) day period and proceeds diligently to prosecute such cure to completion; or
(ii) The making of a general assignment by Owner for benefit of its creditors, the filing by Owner with any bankruptcy court of competent jurisdiction of a voluntary petition under Title 11 of U.S. Code, as amended from time to time, the filing by Owner of any petition or answer seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under any present or future federal or state act or law relating to bankruptcy, insolvency, or other relief for debtors, Owner being the subject of any order for relief issued under such Title 11 of the U.S. Code, as amended from time to time, or the dissolution or liquidation of Owner.
(d) Remedies of Manager. Upon an Owner's Event of Default, Manager shall be entitled to (i) terminate in writing this Agreement effective as of the date designated by Manager which is at least ten (10) days after receipt of such notice of termination by Owner provided the Owner’s Event of Default has not then been cured or such cure commenced, and/or (ii) pursue an action for the actual compensatory damages incurred by Manager. Manager expressly agrees that termination and compensatory monetary damages are its sole rights and remedies with respect to an Owner's Event of Default and Manager expressly waives and releases the right to seek equitable relief, including specific performance or injunctive relief, and to sue for any consequential or punitive damages.
11. Termination Rights. In addition to the termination right set forth in Section 3 above, Manager and Owner shall have the following rights to terminate this Agreement:
(a) Termination By Owner Upon Manager's Event of Default. Upon a Manager's Event of Default, Owner may terminate this Agreement as specified in Section 10(b) of this Agreement.
(b) Termination By Manager Upon Owner's Event of Default. Upon an Owner's Event of Default, Manager may terminate this Agreement as specified in Section 10(d) of this Agreement.
(c) Termination Without Cause. Beginning on the first day of the thirty-fifth (35th) month of the Initial Term, and continuing thereafter during any renewal term pursuant to Section 3, either Owner or Manager may give a written notice of termination, providing the other party at least thirty (30) days’ prior written notice, without cause.
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(d) Termination Upon Sale. Upon any sale of the Project, this Agreement shall automatically terminate as of the closing date of such sale.
(e) Effect of Termination Upon Payment of Fees. Upon the termination of this Agreement for any reason, Manager shall be entitled to its earned, but unpaid, fees as set forth in Section 4 of this Agreement, for the period prior to the termination.
(f) Final Accounting; Delivery of Project Upon Termination.
(i) Within thirty (30) days after termination of this Agreement for any reason, Manager shall:
1. deliver to Owner all funds (less final payroll and applicable fees), checks, keys, Lease files, books and records, plans and specifications pertaining to the Project and other Confidential Information; and
2. Promptly leave the Project and cause Manager’s employees to leave the Project without causing any damage thereto.
(ii) Within thirty (30) days after termination of this Agreement, Manager shall deliver to Owner a final accounting for the Project, reflecting the balance of income and expenses with respect to the Project as of the date of termination.
(iii) Termination of this Agreement under any of the provisions of this Agreement shall not release either party as against the other from liability for failure to perform any of its duties or obligations as expressed herein and required to be performed prior to such termination. Owner agrees to cooperate with Manager, and Manager agrees to cooperate with Owner, in the performance of the obligations set forth in this Section 11(f).
Notwithstanding anything set forth in this Agreement to the contrary, so long as that loan (the “Loan”) in favor of Owner from Lender is outstanding, Owner and Manager acknowledge and agree that Lender may require termination of this Agreement as more particularly set forth in the Loan Documents, including, without limitation, any subordination of this Agreement executed by Manager in connection therewith (the “Subordination”).
12. Confidentiality.
(a) Preservation of Confidentiality. In connection with the performance of its obligations hereunder, Manager acknowledges that it will have access to Confidential Information. Manager shall treat such Confidential Information as proprietary to Owner and private, and shall preserve the confidentiality thereof and not disclose, or cause or permit its employees, agents or contractors to disclose, such Confidential Information. Notwithstanding the foregoing, Manager shall have the right to disclose Confidential Information if and only to the extent it has become public knowledge, but not due to the actions of Manager, or Manager is required by court order to disclose any Confidential Information. If Manager or anyone to whom Manager transmits Confidential Information pursuant to this Agreement becomes legally compelled to disclose any of the Confidential Information, Manager shall provide Owner with prompt notice thereof so that Owner may seek a protective order or other appropriate remedy or waive compliance with the provisions of this Agreement. In the event that such protective order or other remedy is not obtained by Owner or Owner waives compliance with the provisions of this Agreement, Manager shall furnish or cause to be furnished only that portion of the Confidential Information which Manager is required by Applicable Law to furnish, and will exercise commercially reasonable efforts to obtain reliable assurances that confidential treatment is accorded the Confidential Information so furnished. The parties shall consult with each other in preparing any press release, public announcement, statement to the press, or other form of release of information to the news media or the public that is related to this Agreement or the relationship of the parties hereto (a “Press Release”).
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(b) Property Right in Confidential Information. All Confidential Information shall remain the property of Owner and Manager shall have no ownership interest therein.
13. Survival of Agreement. All indemnity obligations set forth herein, all obligations to pay earned and accrued fees and expenses, all confidentiality obligations, and all obligations to perform accrued prior to the date of termination shall survive the termination of this Agreement.
14. Enforcement of Agreement. This Agreement, its interpretation, performance and enforcement, and the rights and remedies of the parties hereto, shall be governed and construed by and in accordance with the law of the State in which the Project is located. In any dispute pertaining to, or litigation or arbitration arising from the enforcement or interpretation of the provisions of this Agreement, the prevailing party shall be entitled to recover its reasonable attorney’s fees and costs actually incurred, including those incurred in connection with all appellate levels, bankruptcy, mediation or otherwise to maintain such action, from the losing party.
15. Assignment. Manager shall not sell, directly or indirectly, assign or otherwise transfer by operation of law or otherwise all or any part of its rights or obligations under this Agreement, except, with Owner’s consent, to an Affiliate of Manager or to any lender of Manager as collateral security for any and all borrowings of Manager and/or any of its Affiliates, and any such unauthorized assignment shall be void ab initio and of no effect. A change in the ownership of Manager shall not constitute an assignment, provided that the Key Individuals (as defined in the Operating Agreement), or any of them, remain in control of the day to day operations of Manager with respect to the Project.
16. Use of Trademark. If at any time the Project shall be promoted and branded using the name “ARIUM” (the “Trademark”), as elected by Owner in its sole discretion, Owner shall grant (or cause to be granted) to Manager a non-exclusive, royalty-free license to use (but not the right to sublicense) the Trademark for such purpose, until the earlier of (i) the dissolution and termination of this Agreement or (ii) the date on which Owner elects, in its sole discretion, to brand the Project using a different name. Owner and certain of its Affiliates retain ownership of and the right to use (and to license) the Trademark in connection with any and all matters. At no time during the term of the Agreement shall any value be placed upon the Trademark by Manager or the right to its use, or the goodwill, if any, attached thereto. Upon the dissolution of this Agreement, neither the Trademark nor the right to its use, nor the goodwill, if any, attached thereto shall be considered as an asset of the Manager, unless otherwise licensed or sublicensed to Manager by Affiliates of Owner having a right to so license or sublicense the Trademark.
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17. Mortgage Provision. Notwithstanding any provisions contained in this Agreement to the contrary, the Manager shall observe the restrictions and requirements of any mortgages, deeds of trust and other loan documents now or hereafter affecting the Project, including, without limitation, the Loan Documents, provided the Owner provides copies thereof to Manager (Manager acknowledging receipt of the applicable Loan Documents in existence as of the date hereof). Without limiting the generality of the foregoing, Manager shall comply with any insurance and cash management system required by such loan documents. Manager agrees to enter into such agreements as the lender under such loan documents reasonably requires (including, without limitation, any Subordination) (i) to evidence and confirm the subordination of Manager’s rights hereunder to the rights of such lender; (ii) to acknowledge any assignment of this Agreement by the Owner to such lender; (iii) to give such lender notice of and opportunity to cure any default of Owner under this Agreement; (iv) to permit termination of this Agreement upon an event of default under such loan documents; and (v) to agree to continue performance hereunder for the benefit of such lender (so long as the fees provided herein continue to be paid).
18. Notices. All notices, demands, requests or other communications to be sent by one party to the other hereunder or required by Applicable Law shall be in writing and shall be deemed to have been validly given or served by delivery of same in person to the addressee, by depositing same with a nationally recognized overnight delivery service such as Federal Express for next business day delivery ("Overnight Delivery") or by sending by facsimile transmission, addressed as follows:
If to Owner: | c/o Bluerock Real Estate, L.L.C. |
712 Fifth Avenue, 9th Floor | |
New York, New York 10019 | |
Attention: Jordan B. Ruddy | |
Facsimile No. (646) 278-4220 | |
with copies to: | c/o Bluerock Real Estate, L.L.C. |
712 Fifth Avenue, 9th Floor | |
New York, New York 10022 | |
Attention: Michael Konig, Esq. | |
Facsimile No. (646) 278-4220 |
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And: | c/o Carroll Organization, LLC |
3340 Peachtree Road, Suite 1620 | |
Atlanta, Georgia 30326 | |
Attention: M. Patrick Carroll | |
Facsimile No. (404) 523-9372 | |
If to Manager: | Carroll Management Group, LLC. |
c/o Carroll Organization, LLC | |
3340 Peachtree Rd, NE Suite 2250 | |
Atlanta, GA 30326 | |
Attn: Linda Masterson | |
Facsimile No. 404-806-4266 |
All notices shall be effective upon such personal delivery, upon being deposited in Overnight Delivery or upon facsimile transmission as required above. However, with respect to notices so deposited in Overnight Delivery, the time period in which a response to any such notice, demand or request must be given shall commence to run from the next business day following any such deposit in Overnight Delivery. Notices delivered via facsimile will be effective upon sender's receipt of confirmation of transmission. A party may change its address for notice purposes by giving to the other party hereto at least fifteen (15) days' prior written notice in accordance with the provisions hereof.
19. Miscellaneous.
(a) Captions. The captions of this Agreement are inserted only for the purposes of convenient reference and do not define, limit or prescribe the scope or intent of this Agreement or any part hereof.
(b) Amendments. This Agreement cannot be amended or modified except by another agreement in writing, signed by both Owner and Manager.
(c) Entire Agreement. This Agreement embodies the entire understanding of the parties, and there are no further agreements or understandings, written or oral, in effect between the parties relating to the subject matter hereof.
(d) Time is of Essence. Time is the essence hereof.
(e) Construction of Document. This Agreement has been negotiated at arms' length and has been reviewed by counsel for the parties. No provision of this Agreement shall be construed against any party based upon the identity of the drafter.
(f) Severability. If any provision of this Agreement or the application thereof is held to be invalid or unenforceable, such defect shall not affect other provisions or applications of this Agreement that can be given effect without the invalid or unenforceable provisions or applications, and to this end, the provisions and applications of this Agreement shall be severable.
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(g) Waiver of Jury Trial. To the fullest extent permitted by Applicable Law, each party to this Agreement severally, knowingly, irrevocably and unconditionally waives any and all rights to trial by jury in any action, suit or counterclaim brought by any party to this Agreement arising in connection with, out of or otherwise relating to this Agreement.
(h) No Continuing Waiver. No waiver by a party hereto of any breach of this Agreement shall be effective unless in a writing executed by such party. No waiver shall operate or be construed to be a waiver of any subsequent breach.
(i) Terrorism and Money Laundering: Owner and Manager mutually represent and warrant to each other as follows:
(i) They are not now nor will they be at any time following the execution of this Agreement a Person with whom a U.S. Person is prohibited from transacting business of the type contemplated by this Agreement, whether such prohibition arises under U.S. law, regulation, executive orders and lists published by the Office of Foreign Asset Control (“OFAC”) (including those executive orders and lists published by OFAC with respect to Specially Designated Nationals and Blocked Persons) or otherwise (such persons being referred to in this Agreement as “Prohibited Persons”); and
(ii) They have made reasonable inquiry and taken such other steps, consistent with best industry practices (including conducting background searches and checking published lists of Prohibited Persons) and in any event as required by Applicable Law, to ensure that no Person who is an employee of their respective organization or who owns an interest in their respective organization is now, or will be at any time following the execution of the Agreement, a Prohibited Person.
(j) Governing Law. It is the express intention of Manager and Owner that all legal actions and proceedings related to this Agreement or to any rights or any relationship between the parties arising therefrom shall be solely and exclusively initiated and maintained in the courts and the laws of the State in which the Project is located, and such laws shall govern the validity, interpretation, construction and performance of this Agreement, excluding any conflict-of-law rules which would direct the application of the law of another jurisdiction. Manager represents that it has qualified to do business in the State in which the Property is located in connection with all actions based on or arising out of this Agreement. Venue for any action brought to enforce this Agreement or collect any sum due under this Agreement shall be in any court of applicable jurisdiction in the county where the Property is located.
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IN WITNESS WHEREOF, the parties have executed this Agreement under seal as of the date first set forth above.
OWNER:
BR CARROLL TENSIDE, LLC,
a Delaware limited liability company
By: | /s/ Josh Champion |
Name: | Josh Champion |
Title: | Authorized Signatory |
MANAGER:
CARROLL MANAGEMENT GROUP, LLC, a Georgia
limited liability company
By: | /s/ Josh Champion |
Name: | Josh Champion |
Title: | President |
Exhibits:
Exhibit A - Property Description
Exhibit B – 2016 Annual Business Plan
Exhibit C - Reimbursable Expenses
Exhibit D - Form of Apartment Lease
Exhibit E - Additional Business Plan Information
Exhibit F- Statements and Reports
EXHIBIT “A”
Project Legal Description
A-1
EXHIBIT “B”
Calendar Year 2016
Annual Business Plan
[See Attached]
B-1
EXHIBIT “C”
Approved Reimbursable Expenses
1. | license and permit fees, homeowner association fees and assessments, and all other charges of any kind or nature by any governmental or public authority |
2. | Management Fees |
3. | advertising and marketing expenses, and leasing fees and commissions |
4. | legal, accounting, risk management, engineering, and other professional and consulting fees and disbursements |
5. | accounts payable to contractors providing labor, materials, services, and equipment to the Project |
6. | premiums for insurance paid with respect to the Project or the operations thereof and costs and expenses associated with the administration thereof |
7. | resident improvements and replacements and segregated reserves therefore |
8. | maintenance and repair of the Project and all property and equipment used in connection |
with the operation thereof
9. | refunds of security or other deposits to residents and contracting parties |
10. | funds reserved for contingent or contested liabilities, real estate taxes, insurance premiums, or other amounts not payable on a monthly basis |
11. | service contracts and public utility charges and assessments |
12. | personnel administration charges and pre-employment screening |
13. | payroll costs including, without limitation, those set forth in Section5(h) of this Agreement |
14. | costs of credit reports, bank charges and like matters |
15. | incidental expenses incurred with respect to the performance of Manager’s obligations under this Agreement, including, without limitation: courier services, postage, photocopies, signage, check printing, marketing expenses, bank charges, telephone and answering services (which may be equitably allocated on a prorata basis (based on the gross revenues of all properties against which such charges are allocated) among the other properties managed by Manager). |
C-1
EXHIBIT “D”
Approved form of Apartment Lease
[See attached]
D-1
EXHIBIT “E”
Annual Business Plan Information
1. | a narrative description of any acquisitions or sales that are planned and any other activities proposed to be undertaken; |
2. | a projected annual income statement (accrual basis) on a quarter-by-quarter basis; |
3. | a projected balance sheet as of the end of the next year; |
4. | a schedule of projected operating cash flow (including itemized operating revenues, project costs and project expenses) for such year on a quarter-by-quarter basis, including a schedule of projected operating deficits, if any; |
5. | a marketing plan indicating the portions of the Project that Manager recommends be made available for lease and the proposed terms and conditions relating thereto; |
6. | a detailed budget reflecting on a line by line basis all projected operating expenses and any proposed construction and capital expenditures for the Project, including projected dates for commencement and completion of the foregoing; |
7. | a description of the proposed investment of any funds of the Owner which are (or are expected to become) available for investment; |
8. | a description, including the identity of the recipient (if known) and the amount and purpose, of all fees and other payments proposed, expected or projected to be paid for professional services and, if a fee or payment exceeds $25,000, for other services rendered to or on behalf of the Owner by third parties; |
9. | a projection of the amount of any anticipated additional Capital Contributions (as defined in the Operating Agreement) which may be called for pursuant to Section 5.2(a) of the Operating Agreement and the purposes for which such additional Capital Contributions may be used; and |
10. | such other information reasonably requested from time to time by Owner. |
E-1
EXHIBIT “F”
Statements and Reports
(a) | Within five (5) days following the end of each month, a statement of Monthly Gross Receipts for each month; |
(b) | Within five (5) days following the end of each month, a monthly GAAP balance sheet and GAAP income statement, with a cumulative calendar year GAAP income statement to date, and a statement of change in the Capital Account for each Member of Owner (“Member”) the preceding month and year to date; |
(c) | Within five (5) days following the end of each month, the monthly and year to date activity which shall be furnished (without notice or demand) as follows: |
1. | Balance Sheet, including monthly comparison and comparison to year end (if applicable) |
2. | Budget Comparison[*], including month-to-date and year-to-date variances- Detailed Income Statement, including prior 12 months |
3. | Profit and loss statement compared to budget with narrative for any large fluctuations compared to budget |
4. | Trial Balance that includes mapping of the accounts to the financial statements |
5. | Account reconciliations for each balance sheet account within the trial balance. – Detailed support for each account reconciliation including the following: |
a. | Detail Accounts Payable Aging Listing – 0-30 days, 31-60 days, 61-90 days and over 90 days |
b. | Detail Accounts Receivable/Delinquency Aging Report - 0-30 days, 31-60 days, 61-90 days, over 90 days and prepayments |
c. | Fixed asset roll-forward and support (invoices and checks) for any new acquisition/additions and/or support for any disposals to fixed assets. |
6. | Security Deposit Activity |
7. | Mortgage Statement |
8. | Monthly Management Fee Calculation |
9. | Monthly Distribution Calculation |
10. | General Ledger, with description and balance detail |
11. | Monthly Check Register together with a detailed bank reconciliation including copies of all associated checks |
12. | Market Survey, including property comparison, trends, and concessions |
13. | Rent Roll |
14. | Variance Report, including the following: |
a. | Cap Ex Summary and Commentary |
b. | Monthly Income/Expense Variance with notes |
c. | Yearly Income/Expense Variance with notes |
d. | Occupancy Commentary |
e. | Market/Competition Commentary |
f. | Rent Movement/Concessions Commentary |
F-1
g. | Crime Commentary |
h. | Staffing Commentary |
i. | Operating Summary, with leasing and traffic reporting |
j. | -Other reasonable reporting, as requested (e.g. Renovation/Rehab report) |
All reports shall be prepared on an Accrual Basis in accordance with generally accepted accounting principles, and shall be as of each calendar month end. Manager shall furnish to Owner such other reports as may be reasonably requested by Members in order for such Members to be able to comply with any reporting requirements that are applicable to any such Member (or any Affiliate of any such Member) under any applicable organizational or offering documents affecting such Member or its Affiliates.
Within fifteen (15) days of the end of each quarter of each year, Manager shall furnish to Owner such information as requested by Owner or its Members or affiliates as is necessary for any REIT Member of Owner (whether a direct or indirect owner) to determine its qualification as a real estate investment trust (a “REIT”) and its compliance with any requirements for qualifying as a REIT (the “REIT Requirements”) as shall be requested by Owner or its Members. Further, Manager shall cooperate in a reasonable manner at the request of any Member to work in good faith with any designated accountants or auditors of such Member or its Affiliates so that such Member or its Affiliate is able to comply with its public reporting, attestation, certification and other requirements under the Securities Exchange Act of 1934, as amended, applicable to such entity, and to work in good faith with the designated accountants or auditors of the Member or any of its Affiliates in connection therewith, including for purposes of testing internal controls and procedures of such Member or its Affiliates. The requesting Member shall bear the cost of any information or reports provided to such Member pursuant to this Exhibit.
[*] Budget Comparison shall include (i) an unaudited income and expense statement showing the results of operation of the Project for the preceding calendar month and the Fiscal Year to-date; (ii) a comparison of monthly line item actual income and expenses with the monthly line item income and expenses projected in the Budget. The balance sheet will show the cash balances for reserves and operating accounts as of the cut-off date for such month.
F-2
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