Maryland (State or other jurisdiction of incorporation) | 333-170802 (Commission File Number) | 27-3663988 (I.R.S. Employer Identification No.) |
399 Park Avenue, 18th Floor, New York, NY | 10022 | |
(Address of principal executive offices) | (Zip Code) |
Exhibit Number | Description |
10.1 | Management Agreement, dated as of February 5, 2014, by and between Watermark Parkview, LLC and Watermark Retirement Communities, Inc. |
10.2 | Senior Housing Loan and Security Agreement, dated as of February 5, 2014, by and between Watermark Parkview Owner, LLC, and CBRE Capital Markets, Inc. |
10.3 | Multifamily Note, dated as of February 5, 2014, by and between Watermark Parkview Owner, LLC and CBRE Capital Markets, Inc. |
10.4 | Multifamily Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing, dated as of February 5, 2014, by Watermark Parkview Owner, LLC to Tamela K. Cooper, for the benefit of CBRE Capital Markets, Inc. |
10.5 | Contribution Agreement, dated as of February 5, 2014, by and between NorthStar Healthcare Income Operating Partnership, LP, David Freshwater and David Barnes |
NorthStar Healthcare Income, Inc. | ||
Date: February 11, 2014 | By: | /s/ Ronald J. Lieberman |
Ronald J. Lieberman | ||
Executive Vice President, General Counsel and Secretary |
Exhibit Number | Description | |||
10.1 | Management Agreement, dated as of February 5, 2014, by and between Watermark Parkview, LLC and Watermark Retirement Communities, Inc. | |||
10.2 | Senior Housing Loan and Security Agreement, dated as of February 5, 2014, by and between Watermark Parkview Owner, LLC, and CBRE Capital Markets, Inc. | |||
10.3 | Multifamily Note, dated as of February 5, 2014, by and between Watermark Parkview Owner, LLC and CBRE Capital Markets, Inc. | |||
10.4 | Multifamily Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing, dated as of February 5, 2014, by Watermark Parkview Owner, LLC to Tamela K. Cooper, for the benefit of CBRE Capital Markets, Inc. | |||
10.5 | Contribution Agreement, dated as of February 5, 2014, by and between NorthStar Healthcare Income Operating Partnership, LP, David Freshwater and David Barnes |
1.1 | Defined Terms. In addition to the terms defined elsewhere in this Agreement, the following terms shall have the meanings assigned to them herein: |
a) | Accounting Period shall mean each month. |
b) | Affiliate shall mean, when used with reference to a specified Person, (a) any member, partner, shareholder, director, officer or employee of such Person, or (b) any Person that, directly or indirectly, Controls, is Controlled by or is under common Control with the specified Person. |
c) | Agreement shall have the meaning described in the Introductory Paragraph. |
d) | Agreement Termination Fee shall have the meaning described in Section 4.1(b). |
e) | Annual Financial Statement shall have the meaning described in Section 8.2(c). |
f) | Authorized Expenditures shall have the meaning described in Section 6.2. |
g) | Capital Expenditures Budget shall have the meaning described in Section 7.1(c). |
h) | Cash Flow Budget shall have the meaning described in Section 7.1(b). |
i) | Claims shall have the meaning described in Section 2.2(a). |
j) | Code shall mean the Internal Revenue Code of 1986, as in effect and hereafter amended, and, unless the context otherwise requires, applicable regulations thereunder. Any reference herein to a specific section or sections of the Code shall be deemed to include a reference to any corresponding provision of future law. |
k) | Community shall have the meaning described in the Introductory Paragraph. |
l) | Community Employees shall have the meaning described in Section 5.3(a). |
m) | Consumable Supplies shall mean office supplies, cleaning supplies, uniforms, laundry and valet supplies, engineering supplies, soap, toilet tissues and such other supplies as are consumed customarily on a daily basis in the operation of the Community, together with food and beverages that are to be served or offered for sale to residents of the Community and to the public. |
n) | Control, Controls and Controlled by shall mean the ability, directly or indirectly, whether through the ownership of voting securities, by contract, or otherwise (including by being the general partner, officer or director of the Person in question), to direct or cause the direction of the management and policies of a Person. |
o) | Default Rate shall have the meaning described in Section 2.3(b). |
p) | Disability means, with respect to any Person, any condition that will prevent or materially hinder such Person from discharging his duties on behalf of the Manager for any period of forty-five (45) consecutive days or a total of one hundred-twenty (120) days in any six (6) month period or is adjudicated mentally incompetent by a court. |
q) | Effective Date shall mean the date hereof. |
r) | Eligible Independent Contractor shall mean a management company that meets all of the following requirements: |
i) | The management company does not own, directly or indirectly, more than nine and nine-tenths percent (9.9%) of the equity interests in the NorthStar REIT; |
ii) | If the management company is a corporation (within the meaning of the Code), no more than nine and nine-tenths percent (9.9%) of the total combined voting power of such management company’s outstanding stock (or nine and nine-tenths percent (9.9%) of the total shares of all classes of the outstanding stock) or, if it is not a corporation, no more than nine and nine-tenths percent (9.9%) of the ownership interest in its assets or profits is owned directly or indirectly, by one or more Persons owning nine and nine-tenths percent (9.9%) or more of the equity interests of the NorthStar REIT; |
iii) | None of the NorthStar REIT (nor any of its Affiliates), Owner Parent, Watermark Aqua Owner, LLC, or Owner derive any income from the management company. For this purpose, the NorthStar REIT (or any of its Affiliates), Owner Parent, Watermark Aqua Owner, LLC, or Owner will be treated as deriving income from the management company if the NorthStar REIT (or any of its Affiliates), Owner Parent, Watermark Aqua Owner, LLC, or Owner leases property to the management company (or an Affiliate of the management company), unless the lease is to an Affiliate of the management company that is a separate legal entity for state law purposes and federal income tax purposes from the management company and that is not a direct or indirect subsidiary of the management company, such Affiliate maintains its own bank accounts and books and records, and such Affiliate has its own employees under its separate control; |
iv) | At all times, the management company (or any “related persons” within the meaning of Section 856(d)(9)(F) of the Code) is actively engaged in the trade or business of operating “qualified health care properties” within the meaning of Section 856(e)(6)(D)(i) of the Code for any Person who is not a “related persons” within the meaning of Section 856(d)(9)(F) of the Code with respect to the NorthStar REIT (or any of its Affiliates), Owner Parent, Watermark Aqua Owner, LLC, or Owner (an “Unrelated Person”). For purposes of determining whether the requirement of this paragraph (iv) has been met, a management company shall be treated as being actively engaged in such a trade or business if the management company (A) maintains at least three (3) management contracts (and has a continuing obligation to actively pursue replacement contracts if necessary) to manage three separate “qualified health care properties” within the meaning of 856(e)(6)(D)(i) of the Code |
s) | Emergency Expenses means any expense which is necessary to (a) prevent an immediate threat to the health, safety or welfare of any resident or other person in the immediate vicinity of the Community, (b) prevent immediate damage or loss to the Community, (c) avoid the suspension of essential services to, or essential licenses at, a Community, or (d) avoid criminal or civil liability on the part of Owner or Manager with respect to activities at the Community or pursuant to this Agreement or the Owner Parent Operating Agreement. |
t) | Entry Fee shall mean and refer to all deposits of whatsoever nature or kind paid by residents including but not limited to security deposits, damage deposits and entry fees paid by residents for the use and occupancy of the Community. |
u) | Equipment Leases shall mean any leases or rental agreements for Operating Equipment or Furniture, Furnishings and Equipment used in the Community, or any modifications or renewals thereof, presently existing or made subsequent to the date of this Agreement. |
v) | Federal Privacy Regulations shall have the meaning described in Section 5.19. |
w) | Federal Security Regulations shall have the meaning described in Section 5.19. |
x) | Fiscal Year shall mean each January through December during the Operating Term of this Agreement, except that the first Fiscal Year shall be the period commencing on the Effective Date and ending on December 31. The words “full Fiscal Year” shall mean any Fiscal Year containing not fewer than 365 days. A partial Fiscal Year after the end of the last full Fiscal Year and ending with the expiration or earlier termination of the Operating Term shall constitute a separate Fiscal Year. |
y) | Force Majeure shall have the meaning described in Section 12.15. |
z) | Furniture, Furnishings and Equipment (“FF&E”) shall mean furniture and furnishings of public areas and rooms, office furniture and equipment, signs, carpets, televisions, computers and other electrical and electronic equipment, any vehicles |
aa) | Gross Revenues for the Community shall mean the total of all rents, revenues, income and receipts (less any discounts) of every kind derived directly or indirectly from the operation of the Community and all departments and parts thereof, including, without limitation, income (from cash and credit transactions before commissions) from the rental of rooms and apartments, amortization of resident entry fees in accordance with generally accepted accounting practices, termination fees, service charges, and proceeds, if any, from business interruption or other loss of income insurance. Gross Revenues for the Community shall not include, as applicable (i) the proceeds of sales or dispositions of capital assets used in the operation of such Community or sales or dispositions of investment assets, notes or loans receivable; (ii) donations or grants; (iii) refunds, rebates, refinancing and sale and insurance proceeds (except business interruption insurance as described above); (iv) fee simple sales; (v) condominium sales; (vi) payments received as interest or principal on notes or loans receivable; (vii) condemnation awards or (viii) resident security deposits. |
bb) | HIPAA shall have the meaning described in Section 5.19. |
cc) | Home Office Reimbursables shall have the meaning described in Section 5.13. |
dd) | Key Person shall mean each of David Freshwater and David Barnes. |
ee) | Key Person Event shall mean the failure of at least one Key Person to do both of the following: (A) remain actively engaged in the executive management of Manager and (B) devote a sufficient amount of his time to the operations of the Community. |
ff) | Lender shall mean CBRE CAPITAL MARKETS, INC., a Texas corporation and its successors and assigns. |
gg) | Lessor shall have the meaning described in the Introductory Paragraph. |
hh) | Loan shall mean, individually and collectively, the loan made by Lender, and the corresponding loan documents entered into by Lessor, Owner and Lender. |
ii) | Management Fee shall have the meaning described in Section 2.3(a). |
jj) | Manager Liability Claims shall have the meaning described in Section 2.2(a). |
kk) | Marketing Plan shall have the meaning described in Section 7.1(d). |
ll) | Material Breach shall mean a breach of this Agreement by Manager pursuant to Subsections 4.1(d)(i), 4.1(d)(iii), 4.1(d)(iv) or 4.1(d)(ix). |
mm) | Material License shall have the meaning described in Section 4.1(d)(v). |
nn) | Material License Event shall have the meaning described in Section 4.1(d)(vi). |
oo) | Miscellaneous Contracts shall mean any contract or commitment or outstanding bid or proposal, whether oral or written, relating to the operation or ownership of the Community, or any modification or renewal thereof, whether presently existing or made subsequent to the date of this Agreement by Owner or by Manager pursuant to this Agreement. Miscellaneous Contracts shall include, without limitation, all service contracts, employment contracts and union contracts, but shall not include mortgages and Equipment Leases. |
pp) | Monthly Operating Statements shall have the meaning described in Section 8.2(a). |
qq) | Net Operating Income shall mean Gross Revenues less Operating Expenses. |
rr) | Non-Discretionary Expenses means payments made to third parties on account of (a) Emergency Expenses; or (b) other non-discretionary expenditures such as real estate taxes, insurance premiums, utility charges, and other third-party non-discretionary expenses of a similar nature if the failure to pay the same would result in a default under a Loan, the suspension of any essential service or license relating to the Community or any other material and adverse effect on the Community. |
ss) | NorthStar Member shall mean Aqua Operations NT-HCI, LLC, a Delaware limited liability company. |
tt) | NorthStar REIT shall mean NorthStar Healthcare Income, Inc., a Maryland corporation. |
uu) | Notice Period shall have the meaning described in Section 4.1(b). |
vv) | Operating Account shall mean a checking account for the Community established at a federally insured financial institution selected from time to time by Manager which shall be separate and apart from any of Manager’s or Owner’s other accounts. Manager shall not be held liable in the event of bankruptcy or failure of a depository institution. The Operating Account shall be established in accordance with requirements of the Loan, if any. |
ww) | Operating Budget shall have the meaning described in Section 7.1(a). |
xx) | Operating Equipment shall mean chinaware, glassware, linens, silverware, utensils, and other items of a like or similar nature used in the operation of the Community. |
yy) | Operating Expenses for the Community for any period shall include the following outlays, provided, in each case, that such outlay is in accordance with the approved Operating Plan then in effect: |
i) | All wages and salaries of all Community Employees (exclusive of salaries paid to corporate executive personnel of Manager, but including such wages, salaries and other compensation chargeable to the Community pursuant to Section 5.13 hereof, but only to the extent so chargeable) employed by Manager in connection with the operation and management of the Community and all other payroll costs, fringe benefits, employer taxes and similar charges related to employment of such Community Employees; |
ii) | All department and administrative and general expenses relating to the Community, including, without limitation, advertising and promotional expenses specific to the Community including the allocable portion of such costs billed to multiple seniors housing communities (it being agreed that any pro rata allocation of advertising and promotional expenses applicable to other senior housing communities or properties managed by Manager in addition to the Community shall require the consent of Owner but the portion allocable to the Community shall constitute Operating Expenses hereunder), and costs of heat, light, power and other utilities; |
iii) | All costs and expenses of routine maintenance, repairs and minor alterations which are necessary to keep the Community in good operating condition and which, under generally accepted accounting principles, are expensed currently rather than capitalized; |
iv) | All license fees and permits relating to the Community or the operation thereof; |
v) | All amounts due under service contracts relating to the Community or operation thereof; |
vi) | All costs and fees of technical consultants and operational experts for technical or specialized services rendered with respect to the Community (such as, for example, a property tax consultant or union consultant) and which, under generally accepted accounting principles, are expensed currently rather than capitalized; |
vii) | All compensation and (without duplication of any other items listed in this definition) reimbursements paid to Manager under this Agreement with respect to its operation of the Community, including Section 5.13 hereof; |
viii) | All costs and expenses of insurance specific to the Community (and not with respect to other senior housing communities or properties managed by Manager or Manager generally) as described in Section 11 and all local, state and federal taxes (exclusive of income taxes), including but not limited to real estate and personal property taxes, sales taxes, property assessments, service charges and other items included in a property tax billing; |
ix) | All costs necessary to keep the Community in compliance with any state or federal licensing requirements; and |
x) | All other costs and expenses incurred and capable of being properly listed as expenses on a complete and accurate profit and loss statement for the Community. |
zz) | Operating Plan shall have the meaning described in Section 7.1. |
[[) | Operating Term shall have the meaning described in Section 3.1. |
aaa) | Owner shall have the meaning described in the Introductory Paragraph. |
bbb) | Owner Parent shall mean Watermark Aqua Operator, LLC, a Delaware limited liability company, which is the direct or indirect owner of all of the membership interests in Owner. |
ccc) | Owner Parent Operating Agreement shall mean that certain Limited Liability Company Agreement of Owner Parent, dated as of December 27, 2013, by and between the NorthStar Member and the TFG Member. |
ddd) | Person shall mean any individual, corporation, association, partnership, limited liability company, joint venture, trust, estate or other entity or organization. |
eee) | PHI shall have the meaning described in Section 5.19. |
fff) | Quarterly Financial Statement shall have the meaning described in Section 8.2(b). |
ggg) | Renewal Term shall have the meaning described in Section 3.1. |
hhh) | Resident Refunds shall mean amounts due to residents after moving out of their apartments as specified in their residency agreements. |
iii) | TFG Member shall mean Watermark Aqua Investments, LLC, a Delaware limited liability company. |
jjj) | Working Capital shall have the meaning described in Section 6.4. |
2.1 | Appointment of Manager. |
a) | Owner hereby appoints and engages Manager, and Manager hereby accepts appointment by Owner on the terms and conditions hereinafter provided, to stabilize, maintain, operate, manage, supervise, rent and lease the Community on Owner’s behalf. The performance of all activities by Manager hereunder shall be as an independent contractor and not as an agent of Owner, except as otherwise specifically provided herein. With reference to any item in this Agreement, whenever written criteria are submitted to Manager from Owner, Manager shall use its best efforts to meet such criteria; however, if no written criteria are submitted to Manager, Manager shall carry out the policies and terms of this Agreement in a manner consistent with the highest standards of professional management applicable to the senior living industry. |
b) | The parties to this Agreement understand and acknowledge that Manager is an affiliate of the TFG Member and the TFG Member is the current Administrative Member (as defined in the Owner Parent Operating Agreement) of Owner Parent. Manager acknowledges and agrees that, as an affiliate of the TFG Member, Manager has (and shall be deemed to have) knowledge of and familiarity with all of the terms and conditions of the Owner Parent Operating Agreement including, but not limited to (i) requirements under the Owner Parent Operating Agreement to obtain the consent or approval of the NorthStar Member for certain decisions as therein provided, (ii) the provisions of the Owner Parent Operating Agreement regarding removal of the TFG Member as the Administrative Member and the termination of this Agreement, and (iii) the provisions of the Owner Parent Operating Agreement regarding the exercise of rights and the enforcement of remedies of Owner under this Agreement by the NorthStar Member. Without limiting the foregoing or any other provisions of this Agreement limiting the right of Manager to act on behalf of Owner or otherwise take any action, Manager will not take or effectuate any NorthStar Approval Action (as defined in the Owner Parent Operating Agreement) without first obtaining the consent of the NorthStar Member in accordance with the Owner Parent Operating Agreement. |
2.2 | Indemnification. |
a) | By Manager. Manager shall indemnify, defend and hold Owner (including the members and affiliates of Owner and the shareholders, directors, officers, employees and agents of Owner and such members and affiliates) harmless from and against any and all third party claims, damages, liabilities, costs and expenses (including, without limitation, experts’ and attorneys’ fees and expenses), actions proceedings, demands or suits of any kind (“Claims”) arising directly or indirectly from (i) the gross negligence, willful misconduct or fraud in managing and/or operating the Community, (ii) any claims of Community Employees at the Community if and to the extent such claims arise from Manager’s gross negligence, willful misconduct, fraud or Material Breach, or (iii) a Material Breach of this Agreement by Manager (collectively, “Manager Liability Claims”). For the avoidance of doubt, neither Claims resulting from environmental conditions at the Community (other than to the extent caused by the gross negligence, willful misconduct, criminal acts or fraud of Manager) nor Claims resulting from the actions or inactions of Community Employees at the Community (so long as neither the hiring nor supervision of such employees, in and of itself, constituted gross negligence, or fraud willful misconduct of Manager) shall be deemed to be Manager Liability Claims. All costs and expenses incurred by Manager under this Section 2.2(a) shall be born solely by Manager and shall not be treated as Authorized Expenditures. |
b) | By Owner. Owner shall indemnify, defend and hold Manager harmless from and against any and all Claims arising directly or indirectly from the ownership, operation and management of the Community except to the extent that such Claims are Manager Liability Claims. All costs and expenses incurred by Owner under this Subsection 2.2(b) shall be Authorized Expenditures (as defined in Section 6.2). |
c) | Survival. This Section 2.2 shall survive the termination of this Agreement. |
2.3 | Management Fee. |
a) | Commencing on the Effective Date, Owner shall pay Manager a monthly management fee equal to Five Percent (5%) of Gross Revenue (prorated for partial months) (the “Management Fee”). The Manager acknowledges that the Management Fee (together with any other compensation to Manager set forth herein) adequately compensates it for the services it is to perform hereunder. |
b) | An estimate of the Management Fee shall be due and payable on the first (1st) business day of the month in which such services are to be provided; provided, however, that the actual Management Fee shall thereafter be adjusted, from time to |
c) | Owner shall also pay Manager a one-time fee of Fifteen Thousand Dollars ($15,000) to cover the Manager’s start-up and mobilization costs. |
d) | Any dispute, claim or controversy arising out of or relating to this Section 2.3 shall be determined by binding arbitration in New York, New York before a sole arbitrator (who must be a current, former or retired federal district judge, or an experienced arbitrator who has been admitted to the practice of law for at least fifteen years, each with experience with large, complex real estate and retirement facility disputes). The parties hereto shall have twenty (20) days from receipt by respondent of notice of a dispute to agree on the identity of the arbitrator. If the parties cannot timely agree on the arbitrator, the arbitrator shall be appointed by the American Arbitration Association. The arbitrator shall render a decision within thirty (30) days of selection, and shall allocate all of the costs of arbitration, including the fees of the arbitrator and the reasonable attorneys’ fees of the prevailing party. |
2.4 | Eligible Independent Contractor. |
a) | Manager hereby represents and warrants that, as of the Effective Date, Manager satisfies the requirements and conditions of being an Eligible Independent Contractor. |
b) | Manager hereby covenants that, at all times during the Operating Term, it shall maintain its status as an Eligible Independent Contractor and shall not do, or omit to do, anything that would cause Manager to no longer meet the requirements of being an Eligible Independent Contractor. |
c) | Within five (5) business days of Owner’s request, Manager shall deliver to Owner a certificate, executed by an executive officer of Manager, addressed to the NorthStar REIT and, and in the form attached hereto as Schedule E, confirming that either (i) Manager is, and has at all times from and after the date of this Agreement been, in compliance with the terms of this Section 2.4, (ii) Manager is in compliance with the terms of this Section 2.4 and has timely cured any past failure to comply with the terms of this Section 2.4, or (iii) Manager is using commercially reasonable efforts to cure any failure to comply with the terms of this Section 2.4. |
d) | If there shall be an amendment or modification to Section 856(d)(9) of the Code after the date of this Agreement that adversely impacts Manager’s qualification as an Eligible Independent Contractor under the Code, Manager shall cooperate reasonably with Owner, the NorthStar REIT and their respective Affiliates and shall exercise reasonable efforts to effectuate solutions or “workarounds” to address any REIT qualification concerns under the Code of the NorthStar REIT and its Affiliates arising out of any such amendment or modification; provided that (i) to the extent reasonably practicable, any such changes shall be structured so as to not have any negative impact on Manager in any material respect, and (ii) Owner shall bear one hundred percent (100%) of the cost (including legal fees for Manager) in connection with the negotiation and documentation of any such amendments or modifications. |
e) | Manager shall notify Owner within five (5) business days of any matter, event, transaction or other circumstance that, to Manager’s knowledge, could reasonably be expected to (i) violate the terms of this Section 2.4 and (ii) jeopardize or threaten the qualification or status or legal compliance with any government regulations relating to the operation or qualification as a real estate investment trust for United States federal tax purposes, of the NorthStar REIT or its Affiliates (either presently or with the passage of time) or both. |
f) | Manager acknowledges that Owner, the NorthStar REIT and/or their respective Affiliates may suffer immediate and irreparable harm in the event of any breach by Manager of any of its obligations contained in this Section 2.4. Accordingly, Owner, as its sole and exclusive remedy in the event of a breach of this Section 2.4 shall be entitled to terminate this Agreement in accordance with Section 4.1(g)(iii); provided, however, that (i) Manager shall be permitted to cure any such breach of this Section 2.4 (so long as Manager is pursuing such cure with reasonable diligence) unless Owner determines that the REIT status of NorthStar REIT is, or is at such time reasonably likely to be, impaired by such breach (and accordingly, Owner shall not be permitted to enforce its termination right unless Owner determines that the REIT status of NorthStar REIT is, or at such time is reasonably likely to be, impaired by such breach); and (ii) the restriction on Owner’s remedies set forth in this Section 2.4(f) shall not apply with respect to (A) a breach of Section 2.4(a) or (B) a breach of any other provision of this Section 2.4 which also constitutes a breach under any provision of Section 4.1(d) (other than clause (ii) thereof). |
3.1 | Operating Term. Subject to the termination provisions as hereinafter provided (which shall also serve as the sole grounds for non-renewal by either party), the “Operating Term” of this Agreement shall commence on the Effective Date and terminate on the Seventh (7th) anniversary of the Effective Date. Thereafter, the Operating Term shall be extended automatically for subsequent periods of one (1) year each (“Renewal Term”). |
4.1 | Termination. |
e) | By Either Party. Either party may terminate or elect not to renew this Agreement by written notice to the other upon the occurrence of any of the following events (and if this Agreement is terminated under this Section 4.1(a), Owner shall not be liable to pay to Manager any fee or penalty): |
i) | Bankruptcy. The making by the other party of a general assignment for the benefit of creditors; the filing by the other party of a voluntary petition in bankruptcy or for relief of debtors; the seeking by such other party of appointment of a trustee or owner to take possession of substantially all of its assets or the Community; the failure of such other party to obtain within thirty (30) days the discharge, release or stay of any involuntary petition in bankruptcy or for the reorganization, appointment of such a trustee or owner or the attachment, execution or other judicial seizure of substantially all such party’s assets or the Community. |
ii) | Condemnation or Destruction. The permanent taking by lawful condemnation of the Community or so substantial a portion of the Community as to render operation of the Community not economically viable or the determination by Owner not to rebuild following the destruction of a substantial portion of the Community. |
f) | Termination by Owner Without Cause. Owner shall not be permitted to terminate this Agreement other than as expressly permitted under this Section 4.1. |
g) | Termination by Manager Without Cause. Manager shall not be permitted to terminate this Agreement other than as expressly permitted under this Section 4.1. |
h) | Manager Breach. The Owner may terminate this Agreement without the payment of any fee or penalty to Manager upon notice to Manager of the occurrence of any of the following: |
i) | a monetary breach by Manager of Manager’s obligations under this Agreement, provided that Owner shall have notified Manager in writing of such breach and Manager shall not, within five (5) business days after receipt of such notice, have cured such breach; |
ii) | a non-monetary breach by Manager of Manager’s obligations under this Agreement, provided Owner shall have notified Manager in writing of such breach setting forth the details of such breach, and Manager shall not, within thirty (30) days after the receipt of such notice, have cured such breach or if such breach cannot reasonably be cured within such time period, commence the cure of such breach and diligently prosecute the cure of such breach; |
iii) | the commission of gross negligence, fraud or willful misconduct by Manager in the performance of its duties under this Agreement or the intentional or wanton breach or disregard of Manager’s duties and obligations under this Agreement; |
iv) | the conviction of Manager, any Key Principal, any Community Employee or any of Manager’s other employees or officers of a crime (whether or not a felony) involving fraud, theft, misappropriation of funds or any crime of moral turpitude and such crime is committed against Owner (or Owner Parent, Watermark Parkview Owner, LLC, Watermark Aqua Owner, LLC, NorthStar Member or an Affiliate of NorthStar Member) or the Community (unless, in the case of the conviction of any Community Employee or other employee or officer (as applicable) who is not a Key Person, such Community Employee or other employee or officer shall have been immediately fired); |
v) | except as set forth in clause (iv) above, the conviction of Manager, any Key Principal, or any Community Employee of any felony which constitutes a crime of moral turpitude (unless, in the case of the conviction of any Community Employee who is not a Key Person, such Community Employee shall have been immediately fired); |
vi) | The occurrence of (A) the receipt by Manager or Owner of written notice of any pending or threatened action by a governmental authority (or other regulatory body) to cancel, revoke or suspend any license the cancellation, revocation or suspension of which would prevent the operation of the Community or any material part thereof (any such license, a “Material License”) so long as the underlying facts or circumstances that caused such notice to be delivered, or such action to be commenced or threatened, are not |
vii) | The occurrence of any cancellation, revocation or suspension of any Material License (any such cancellation, revocation or suspension, a “Material Licensure Event”) so long as the underlying facts or circumstances that caused such cancellation, revocation or suspension are not the direct result of any failure of Owner to comply with its obligations under this Agreement; provided, that the Material Licensure Event shall not constitute a Manager breach hereunder until it becomes final and non-appealable so long as (1) Manager has a legal right to appeal such Material Licensure Event, (2) Manager timely appeals the Material Licensure Event, (3) while Manager is contesting such Material Licensure Event, the Community must be continuously permitted to operate in substantially the manner in which it was operating prior to such event without any conditions or restrictions that have a material adverse impact on the Community (other than admissions bans, which are addressed below), and (4) Manager is diligently and continuously pursuing the reinstatement of the Material License; |
viii) | The occurrence of any full or partial ban by a governmental authority (or other regulatory agency) on new admissions of any residents that, prior to such ban, were permitted at the Community so long as the underlying facts or circumstances that caused such ban are not the direct result of any failure of Owner to comply with its obligation under this Agreement; provided, that any such full or partial ban shall not constitute a Manager breach hereunder if Manager promptly commences to pursue, and thereafter diligently and continuously pursues, the full termination of such ban, and such ban is fully terminated by on or prior to the ninetieth (90th) day after such ban first commenced and no other full or partial ban of the nature referenced in this clause (vii) occurs after the date of such full termination and on or prior to such 90th day; |
ix) | the occurrence of a Key Person Event other than as a result of the death or Disability of a Key Person. |
i) | Owner Breach. The Manager may terminate this Agreement upon notice to Owner of the occurrence of the following: |
i) | a monetary breach by Owner of Owner’s obligations under this Agreement, provided that Manager shall have notified Owner in writing of such breach and Owner shall not, within five (5) business days after receipt of such notice, cure such breach; or, |
ii) | a non-monetary breach by Owner of Owner’s obligations under this Agreement, provided Manager shall have notified Owner in writing of such breach setting forth the details of such breach, and Owner shall not, within thirty (30) days after the receipt of such notice, cure such breach or if such breach cannot be cured within such time period, commence the cure of such breach and diligently prosecute the cure of such breach which shall be completed within ninety (90) days after receipt of such notice. |
j) | Mutual Termination. Notwithstanding the foregoing, this Agreement may also be terminated at any time by the written agreement of Owner and Manager. |
k) | Additional Owner Termination Rights. Owner may terminate this Agreement without the payment of any fee or penalty to Manager upon notice to Manager of the occurrence of any of the following: |
i) | the direct or indirect sale or conveyance (voluntary or involuntary) of the Community or of the interest (direct or indirect) of the TFG Member (or any Affiliate thereof) in Owner or Lessor; |
ii) | the occurrence of any other event that allows the NorthStar Member to terminate this Agreement pursuant to the Owner Parent Operating Agreement; |
iii) | a Key Person Event resulting from the death or Disability of a Key Person; |
iv) | Manager’s failure to be an Eligible Independent Contractor or to comply with the terms and provisions set forth in Section 2.4; or |
v) | Manager’s failure to use its commercially reasonable best efforts to manage and operate the Community such that the Community qualifies as a “qualified health care property” as defined in Section 856(e)(6)(D)(i) of the Code. |
l) | Additional Manager Termination Rights. Manager may terminate this Agreement upon notice to Owner of the occurrence of the removal of TFG Member as the Administrative Member of Owner Parent. Owner shall not have any obligation to make any payment of any fee or penalty to Manager upon any such termination pursuant to this Section 4.1(h) |
m) | Notification of Breach. If Manager has knowledge of any breach of this Agreement by Manager, Manager shall promptly notify Owner of such breach. |
4.2 | Rights and Obligations Following Termination. In addition to the rights and remedies otherwise available to the parties at law or in equity (but subject to the limitations set forth in Section 4.1(b)), the following provisions shall apply following termination pursuant to this Article IV: |
g) | Manager shall quit, vacate, surrender and deliver to Owner peacefully and promptly the Community and documents and records in its possession pertaining to the Community and the operation thereof, including but not limited to, all licenses, permits, books, records, accounts, contracts, keys and Working Capital or any funds legally or beneficially belonging to Owner other than funds due and owing to Manager pursuant to the terms of this Agreement for the period prior to termination; provided, however, that Manager shall not be required to deliver such documents and records deemed proprietary by Manager (such as manuals or other materials containing Manager’s trade secrets) or Manager’s separate books and records; |
h) | Any funds or other amounts received by Manager with respect to the Community following the termination of this Agreement shall promptly be delivered to Owner, and Manager shall take all actions necessary to ensure that thereafter Owner directly receives all such amounts; |
i) | Manager shall do all acts and execute and deliver all documents reasonably requested by Owner which involves no third-party out of pocket cost or expense to Manager (unless Owner agrees to pay any of the same) to insure or facilitate an orderly continuation of the business of the Community and to accomplish an orderly transfer of the operation and management of the Community to Owner or to any entity designated by Owner; |
j) | The rights and liabilities of the parties having accrued prior to the termination shall continue (it being acknowledged and agreed that this shall include payment to Manager of all compensation owing to Manager, and payment by Manager of all amounts owing to Owner, hereunder through the date of such termination); |
k) | Manager will turn over possession of the Community to Owner or its designee in a clean, safe and secure manner, and at Owner’s request and at the Owner’s expense, Manager shall arrange for an independent agency to conduct an inventory of FF&E, copies of which shall be made available to both Owner and Manager; |
l) | As required under applicable law, Owner shall notify the appropriate licensing authorities of the termination of the Manager, and Manager shall surrender and assign to Owner, to the extent assignable, any and all licenses, permits and other authorizations required for the operation of the Community in accordance with the directions of the Owner and with applicable laws, regulations, or orders; |
m) | Owner shall, not later than ninety (90) days following termination, cease using the name “Watermark” or any variation thereof and shall remove all signage using the name “Watermark” or any variation thereof from the Community at Manager’s expense; |
n) | Owner shall, not later ninety (90) days following termination, cease using any forms and documents or other materials bearing the name “Watermark” or any variation thereof and destroy or turn over possession of such items; and |
o) | This Section 4.2 shall survive the termination of this Agreement. |
5.1 | Manager’s General Covenants. Manager shall manage and operate the Community, its businesses, services and sales and shall do so at all times in a manner appropriate for a high quality seniors housing community, consistent with all applicable legal and regulatory requirements and the approved Operating Plan then in effect. Manager upon its own initiative with reasonable frequency shall consult with and advise Owner and otherwise bring to Owner’s attention opportunities to (a) increase or stabilize Community revenues and control or minimize Community expenses and (b) maximize the quality of services to the residents of the Community. Manager shall promptly notify Owner of any material developments with respect to the Community. Without limiting the generality of the foregoing and in addition to the obligations of Manager set forth elsewhere herein, Manager shall perform the duties and provide the services described below. |
5.2 | Policies and Practices. Manager shall implement administrative, accounting, budgeting, marketing, personnel and operational policies and practices: (i) to facilitate effective and efficient discharge of its obligations hereunder; (ii) to create and enhance goodwill among existing and prospective residents and patrons; (iii) to establish and maintain for the |
5.3 | Personnel. |
a) | Community Employees. Subject to the terms of this Agreement (including, without limitation, the approved Operating Plan then in effect, Manager shall select, promote, terminate where appropriate, supervise, direct, train and assign the duties of all “on-site” personnel that Manager reasonably determines to be necessary or appropriate for the direct management and operation of the Community (collectively, “Community Employees”). All Community Employees shall be employed by the Manager or an affiliate of Manager. All persons employed in the management or operation of the Community (including all Community Employees) shall be employees of Manager or an affiliate of Manager and shall not be employees of Owner or the Community. All Community Employees duties in connection with their employment shall be exclusively dedicated to the Community and not to any other senior housing communities or properties managed by Manager without the consent of Owner; provided, however, that any Community Employee may be “loaned” to (or from) another seniors housing facility managed by Manager without Owner’s consent for a period not to exceed ten (10) days in any calendar year and in either such case, there will be no adjustment made to the books of either the lending or receiving community. The primary place of work of all Community Employees shall be the Community. Except to the extent expressly provided in Section 5.13, any costs and expenses of any employees of Manager who are not Community Employees working directly at the Community shall not be reimbursable hereunder. Manager shall exercise reasonable care to select qualified, competent and trustworthy employees. Owner may at any time consult or communicate with Manager regarding any of the Community Employees, but Owner shall not give orders to or otherwise interfere in the day-to-day activities of Community Employees. Owner may at any time converse with the Manager’s Executive Director or other employee in charge of the Community regarding any subject, and Manager shall instruct such personnel to disclose fully to Owner upon Owner’s request all information regarding the operation of the Community. The Manager shall not discriminate against any employee or applicant for employment because of race, color, religion, national origin, ancestry, age, sex or sexual orientation, and all employment advertising shall indicate that the Community is an equal opportunity employer. |
b) | Compensation. Subject to compliance with the approved Operating Plan, Manager shall set the salaries and benefits of all Community Employees, including but not limited to all bonuses, moving costs and any severance payable to such Community |
c) | Insurance. Except as provided in Section 11.1 hereof and subject to compliance with the approved Operating Plan then in effect, Manager shall procure and maintain, as Authorized Expenditure, insurance to cover all Community Employees as required by any applicable laws or any regulatory agency having jurisdiction with respect thereto. |
5.4 | Community Operations and Maintenance. Manager shall contract or otherwise arrange for the Community to be furnished with water, electricity, gas, telephone and other utilities, pest control services, trash removal, landscape maintenance, cleaning, equipment maintenance, security and such other services as are necessary for the efficient operation and proper maintenance of the Community. Manager shall (i) maintain the Community in good condition and repair generally and (ii) maintain, repair and replace when necessary the Operating Equipment and the FF&E, all out of funds made available for such purpose by Owner from the Operating Account in accordance with the approved Operating Plan. Manager will utilize its reasonable best efforts to keep the Community in a safe, neat, clean and sanitary condition at all times and will remove all garbage and trash from the grounds, sidewalks, adjoining driveways, parking areas and other public spaces within a reasonable time frame. |
5.5 | Advertising, Promotion and Sales. Subject to compliance with the approved Operating Plan then in effect, Manager will plan, prepare and contract for advertising and promotions for the Community designed to publicize the Community and attract residents in accordance with the standards set by other high quality seniors housing communities. To this end, Manager shall arrange and make contracts for such advertising and promotion, as it may deem advisable from time to time for the successful operation of the Community, and in all cases in accordance with the Operating Plan. In performance of its obligations under this Agreement Manager will comply with the provisions of all federal, state and local laws, including those prohibiting discrimination in housing. Manager may either (i) use graphic |
5.6 | Emergencies. In the event that any circumstance shall occur that Manager reasonably and in good faith judges to be an Emergency, then Manager shall take such action and cause such things to be done as Manager reasonably and in good faith believes necessary (including the expenditure of funds in excess of those approved in the Operating Plan). Manager shall inform Owner of any and all Emergencies and expenditures with respect thereto as soon as practical |
5.7 | Contracting. Manager shall be authorized to negotiate and execute, on behalf of Owner and without Owner’s prior approval; (a) non-resident leases to the extent that such leases (i) are terminable without penalty on notice to the counterparty of ninety (90) days or less, (ii) require a use of the applicable space that is complimentary to a senior housing facility and (iii) provide for arms-length rent and are otherwise on market terms, (b) resident agreements which are in compliance with the approved Operating Plan and (c) contracts which are in compliance with the approved Operating Plan and terminable without penalty on notice to the counterparty of sixty (60) days or less. With respect to all contracts negotiated by Manager for the Community, Manager shall use its reasonable best efforts to secure for Owner all possible rebates, discounts and other benefits to be derived from each contract Manager negotiates with respect to the Community. Any rebate, discount or other benefit derived under any such contract shall accrue to the benefit of the Community (and not to the Manager or any other senior living community or property managed by Manager). |
5.8 | Loan and Contract Compliance. Manager shall use commercially reasonable efforts to cause the operation of the Community to comply with all terms, conditions and obligations contained in the Loan, any lease (including, without limitation, resident leases), and any other agreements of which Manager is made aware and provided a complete copy that are executed by Owner and relate to the Community, and Manager shall execute and deliver promptly any agreements and documents which Owner or Lender may reasonably request to provide for or verify operation of the Community in such manner. Owner agrees to provide Manager with copies of all documents evidencing any Loan (and for this purpose, Manager shall be deemed to have a copy of any such documents of which the TFG Member has a copy). |
5.9 | Licensure. Manager shall obtain and use its commercially reasonable best efforts to keep in full force and effect all permits, licenses and authorizations required for the conduct of the business of the Community. Permits, licenses and authorization shall be in Owner’s name to the extent allowed by the applicable licensing authorities. Owner shall cooperate fully with Manager in its efforts to make applications for such licenses and permits. Manager shall advise Owner of its obligation with respect to all rules, regulations and requirements related to state licensure of the Community and of the steps to be taken so that the Community is at all times in compliance and in good standing with the applicable licensing authorities. Manager is authorized to and shall take such action and expend such funds to the extent provided by Owner as are necessary to cause the Community to comply in all respects to state licensure requirements. Any such expenditure shall be considered an Authorized Expenditure. Manager shall (i) promptly notify Owner of any material compliance issues with respect to any permits, licenses and authorizations held by the Community or required for the conduct of the business of the Community (including, without limitation, receipt of any notices from governmental authorities or other applicable regulatory bodies relating to any such material compliance issues) and (ii) provide Owner with weekly status updates regarding any uncured compliance issues under Sections 4.1(d)(vi), (vii) or (viii) during the pendency of any related cure periods. |
5.10 | Compliance with Government Rules and Regulations. Manager shall conduct the business of the Community in compliance with all applicable laws and regulations in and ensure that no activity or condition occurs on or about the Community in violation of any such laws or regulations. In the event that Manager shall have reason to believe that any laws or regulations may be violated on or about the Community, the Manager shall promptly so notify Owner. Manager shall use reasonable efforts to comply with environmental laws, shall not negligently permit the discharge of hazardous or toxic substance and shall report any problem to Owner immediately. Upon notice and written approval of Owner, Manager will retain the appropriate consultants to determine and make recommendations to remedy the situation and the costs and expenses associated therewith shall be an Authorized Expenditure. |
5.11 | Credit and Pricing Policies; Billing and Collection Practices. |
a) | Pricing Policies. Manager will propose in connection with the Operating Plan the rate and price schedules for all rooms, products and services provided at the Community. |
b) | Billing and Collection Practices. Manager shall establish and administer systems for the timely issuance of bills, including claims for reimbursement from governmental and other third-party payors as applicable, for all rooms, products and |
c) | Fees and Rates. Manager may establish or modify the entry fees, monthly rates, and discounts/concessions to residents in accordance the Operating Plan. |
d) | Admission and Discharge Policies. Manager shall establish or modify resident admission and discharge policies, and any other policies relating to the health, welfare and safety of residents in accordance with its usual policies and practices. |
e) | Third Party Payors. Manager shall establish or modify policies and practices related to third-party payors including, without limitation, Medicare and Medicaid in accordance with its usual policies and practices. |
f) | Licenses. Manager may terminate, amend or change any license necessary to operate any Property as a retirement community to the extent reasonably necessary to continue to operate the Community. |
5.12 | Litigation. Manager, as an Authorized Expenditure (subject to compliance with the approved Operating Plan then in effect), shall institute any necessary or desirable legal actions or proceedings to collect charges or other income of the Community or to evict or dispossess nonpaying or legally undesirable persons in possession, or exercise right to cancel or terminate or sue for damages under any agreement relating to the operation of the Community, other than this Agreement. No such action or proceeding shall be instituted without Owner’s prior approval, and Manager shall only use counsel approved by Owner and shall direct counsel to supply Owner with a copy of all pleadings relating to such litigation. With respect to all actions brought by Manager concerning the Community, Manager shall be permitted to charge all necessary and appropriate filing and legal fees and expenses as an Authorized Expenditure (subject to compliance with the approved Operating Plan then in effect). |
5.13 | Home Office Activities. Manager shall employ the resources of its home office and personnel to supervise and assist the operation of the Community. Manager shall cause appropriate officers and employees of Manager or an affiliate of Manager to visit and inspect (either |
5.14 | Limitation Upon Obligations. In the event that performance of any of Manager’s obligations under this Agreement require expenditure of Owner’s funds or Owner’s assistance or cooperation hereunder shall be impeded by reason of unavailability of such funds or lack of Owner’s assistance or cooperation, then Manager’s performance of such obligations shall be excused to the extent so impeded and until such funds become available or until Owner’s assistance or cooperation is obtained. Manager’s obligations also shall be excused to the extent performance would be contrary to instructions of Owner. |
5.15 | Taxes and Assessments. Manager shall obtain bills for real estate and personal property taxes, improvement assessments and other like charges that are, or may become liens against the Community, recommend to Owner payment thereof or appeal therefrom and, unless specifically instructed by Owner to withhold any payment (or such amounts are impounded and paid by Lender), shall make payments with respect thereto, which shall be an Authorized Expenditure. Manager shall review and submit all real estate and personal property taxes |
5.16 | Inventories and Supplies. Manager shall purchase such Consumable Supplies and other expendable items as are necessary to operate the Community and shall pay for such supplies out of the Operating Account in accordance with the Operating Plan. When taking bids or issuing purchase orders, Manager shall use commercially reasonable efforts to secure for and credit to Owner any discounts, commissions or rebates obtainable as a result of such purchase. Manager shall utilize a reasonable competitive bidding process with respect to any contracts or orders that are reasonably likely to result in the aggregate amount payable with respect thereto exceeding $15,000 in any one (1) year period. |
5.17 | Liens. Manager shall use its best efforts to prevent any liens from being filed against the Community which arise from any maintenance, changes, repairs, alterations, improvements, renewals or replacements in or to the Community and shall (i) to the extent required under any Loan, obtain or (ii) with respect to the provision of goods or services to the Community in excess of $25,000, upon written request from Owner, use commercially reasonable efforts to obtain, lien waivers from any person providing goods or services to the Community. The costs and expenses associated therewith shall be an Authorized Expenditure. |
5.18 | Related-Party Transactions. Manager shall not engage or enter into a contract with any entity that is an affiliate of Manager to provide services with respect to the Community unless (i) the nature of such affiliation is disclosed in writing to Owner in advance, (ii) Manager receives Owner’s prior written consent to each specific contract or agreement, and (iii) the compensation paid for the services shall be competitive with the compensation paid to nonaffiliated entities furnishing the same or similar services. |
5.19 | HIPAA Business Associate Obligations. The parties acknowledge and agree that, with respect to certain services furnished at the Community, Owner is subject to the requirements of the Health Insurance Portability and Accountability Act of 1996 and its implementing regulations (“HIPAA”), including the privacy regulations at 45 C.F.R. Parts 160 and 164, as amended (the “Federal Privacy Regulations”) and the security regulations at 45 C.F.R. Parts 160, 162 and 164, as amended (the “Federal Security Regulations”), and, as a result, Owner is obligated to obtain from Manager contractual assurances concerning the privacy and security of Protected Health Information (as that term is defined in the Federal Privacy Regulations) (“PHI”) used or disclosed in connection with the provision of services under this Agreement. In order that Owner can comply with the requirements of HIPAA and any applicable state privacy laws, Manager agrees to comply with the requirements set forth in Schedule A to this Agreement. |
6.1 | Bank Accounts. Manager shall open an Operating Account that may be drawn upon by authorized signatories of the Manager, subject to the limitations set forth in this Section. Owner shall deposit in the Operating Account monthly the amount specified in the Operating Plan. Owner and Manager shall deposit or cause to be deposited into the Operating Account all Gross Revenues received with respect to the operation of the Community. Manager shall be authorized to withdraw funds from the Operating Account during the term hereof on its signature alone for any purpose authorized hereunder; provided, that Manager shall not have any right to withdraw or deduct any funds from the Operating Account or any other account of Owner to pay any fees, compensation, costs or expenses of Manager other than the Management Fee and those amounts constituting Authorized Expenditures. So long as Manager’s President or such other individuals appointed by Manager and approved by Owner are reasonably available to sign the checks, then Manager’s President and such appointees shall be the Manager’s primary signatories on the Operating Account in addition to Owner’s representative, as requested. In addition to the monthly deposits, specific amounts budgeted in the Operating Plan shall be transferred to the Operating Account for payment of expenses. |
6.2 | Payments of Costs and Expenses; Authorized Expenditures. Manager shall be permitted to expend such funds from the Operating Account and shall be entitled to reimbursement for expenses or payments, only to the extent the same constitute Authorized Expenditures hereunder, and Owner agrees to reimburse Manager for the expenditure by Manager of any and all Authorized Expenditures. For purposes of this Agreement, Authorized Expenditures shall include but be limited to expenditures which: (i) are provided for in the approved Operating Plan then in effect or an amendment thereto or otherwise permitted to be expended in accordance with Section 7.2; (ii) are specifically approved in advance by Owner for such purpose in writing; (iii) are specifically authorized herein as an Authorized Expenditure pursuant to Section 5.9, 5.10 or 5.17; or (iv) are otherwise expressly authorized or permitted hereunder. Manager shall endeavor to pay Authorized Expenditures before any penalty or interest accrues thereon, while taking into account sound cash management. Manager will use sound internal control procedures in the handling of Owner’s assets. |
6.3 | Other Expenses. Except to the extent that such costs and expenses may be approved for payment by Owner in writing apart from this Agreement, the following costs and expenses shall be borne solely by Manager, shall be paid by Manager prior to delinquency and shall not be paid from the Operating Account or otherwise reimbursed by Owner hereunder: (a) costs of gross salary and wages, bonuses, payroll taxes, insurance, worker’s compensation and other benefits of employees of Manager (other than Community Employees), except |
6.4 | Working Capital. Owner shall provide the Community with the amount of “Working Capital” per annum as is set forth in the approved Operating Plan from time to time, which is the amount of funds that Owner and Manager have reasonably determined is reasonably necessary for the day-to-day operation of the Community, including, without limitation, amounts sufficient for the maintenance of petty cash funds, operating bank accounts, receivables, payrolls, prepaid expenses and funds required to maintain inventories, less accounts payable and accrued current liabilities. From time to time thereafter, subject to Manager’s withdrawal and use of Working Capital solely to pay Authorized Expenditures (including, to the extent permitted under Section 7.2, Authorized Expenditures which are not expressly contemplated in the Operating Plan), Owner shall deposit in the Operating Account, upon the reasonable request of Manager together with reasonably detailed supporting documentation, such additional funds as are necessary to maintain the necessary amount of Working Capital for the Community. |
6.5 | Manager Not Required to Advance Funds. In the event the balance in the Operating Account is any time insufficient to pay disbursements due and payable, including Resident Refunds, under this Agreement, and provided that such insufficiency is not the result of Manager’s use of funds from the Operating Account for purposes not permitted under this Agreement, Owner shall, promptly upon notice from Manager together with reasonably detailed supporting documentation, deposit into the Operating Account sufficient funds to cover the deficiency. |
6.6 | Resident Funds. Manager shall properly manage and account for any deposits, funds or fees paid by residents of the Community to Manager, including, but not limited to, security deposits, damage deposits, entry fees paid by residents for the use and occupancy of the Community, and funds held by Manager on behalf of residents of the Community for their current personal use or safekeeping. Manager shall comply with applicable laws, rules and regulations regarding the handling of all such security deposits, damage deposits and entry fees paid by residents. |
7.1 | Operating Plan. The annual operating plan for the Community (the “Operating Plan”), for the remainder of the 2013 Fiscal Year and the 2014 Fiscal Year is attached hereto as Schedule |
d) | A proposed revenue and expense statement (the “Operating Budget”) on a monthly and yearly basis with reasonably detailed schedules for Gross Revenues and Operating Expenses; |
e) | A proposed cash flow statement (“Cash Flow Budget”) showing in reasonable detail the projection of current assets and liabilities for such period; |
f) | A proposed budget (“Capital Expenditures Budget”) with respect to the Community setting forth in reasonable detail Manager’s best estimate of capital expenditures to be made for major building improvements, renovation, repairs and expansion for such period as well as replacement of and additions to Furniture, Furnishings and Equipment and Operating Equipment for such period; |
g) | A proposed marketing plan (“Marketing Plan”) to include, but not be limited to, a detailed program for advertising and promotion, a detailed program for sales strategies and a competitive property analysis for such period; |
h) | A proposed schedule of salaries and benefits for Community Employees for such period as provided for in Section 5.3(b); and |
i) | A financial analysis for any new programs to be established or any recommendations to close existing programs during such period. |
7.2 | Compliance with Operating Plan. Manager shall be permitted to incur or expend any Operating Expenses on behalf of the Company unless such incurrence or expenditure would: (i) cause the aggregate expenditures for the accounting category which includes the applicable line item(s) (on a year to date basis) to be exceeded by ten percent (10%) or more of the budgeted amount therefor or (ii) cause the aggregate operating expenditures or capital expenditures (as applicable) set forth in the Operating Plan to be exceeded by five percent (5%) or more of the budgeted amount therefor (and, accordingly, any operating or capital expenditure that is within (i.e., less than) the maximum permitted variances set forth in both clause (i) and clause (ii) shall be deemed to be Authorized Expenditures and “in compliance with the Operating Plan” or satisfy words of similar import); provided, that (A) Manager may, on behalf of the Company, incur Non-Discretionary Expenses without regard to any such limitations and the expenditure of such Non-Discretionary Expenses shall Authorized |
7.3 | Approval by Owner. If any of the above elements of the proposed Operating Plan are disapproved by Owner, the Manager and Owner shall enter into discussions in an attempt to agree upon a mutually satisfactory Operating Plan. Owner shall make the final determination with respect to the Operating Plan. No proposed Operating Plan shall become approved unless approved in writing by Owner. For the purposes of this Agreement, email communications, the receipt of which is confirmed by the recipient by return email shall be deemed in writing. |
8.1 | Books and Records. Manager shall establish and operate accounting and internal audit control systems reasonably acceptable to Owner and, in connection with the foregoing, complete proper, current and accurate records and books of account reflecting all transactions of the Community and of Manager with respect to the Community. Such books and records shall be prepared on an accrual basis in accordance with GAAP, consistently applied within each Accounting Period and from year to year, and consistent with applicable requirements of the Loan. Manager shall make such books and records available during normal business hours and at all other reasonable hours at the Community for inspection, copying and audit with or without notice by Owner or its agent. Any books and records relating to the Community maintained at Manager’s home office shall be made available, either at the Community, or electronically (at Manager’s election) upon ten (10) business days’ notice from Owner. |
8.2 | Financial and Operating Statements. Commencing in the Accounting Period following the Effective Date and continuing thereafter as to each Accounting Period of the Operating Term, Manager shall cause Community Employees to prepare and deliver to Owner (i) the financial statements required pursuant to Schedule J hereto, (ii) any financial reports required by governmental agencies in connection with any license at the Community and (iii) any financial reports required to be delivered to a Lender. |
8.3 | Other Reports. Upon request by Owner, Manager shall promptly prepare or cause to be prepared such other reports and information constituting matters of interest to Owner. Upon |
8.4 | Annual Audit. Owner may cause an audit of the books, records and operations of the Community to be made by an independent certified accounting firm, as and when required by the Loan documents. Manager shall cooperate fully with such auditors and shall make available to them promptly any and all requested information concerning the Community. The cost of any such independent audit, including a coordination fee as outlined in the Operating Plan paid to the Manager, shall be an administrative and general expense of the Community for the succeeding Fiscal Year, provided that such cost shall be an expense of the subject year in the event that such year is the last year of the Operating Term. In the event an audit determines weaknesses or a need for reasonable changes in the internal control system pertaining to the safeguarding of Owner’s assets, Manager will make all necessary changes. The independent certified accounting firm shall be selected by Owner. |
8.5 | Tax Statements. Owner shall cause the filing of all Owner and Community tax returns with the applicable government authorities within allowable time periods, including extensions. Manager shall cooperate fully and shall make available promptly any and all requested information concerning the Community. |
8.6 | Survival Following End of Operating Term. Owner’s and Manager’s obligations under this Article VIII shall continue as to an Accounting Period occurring within the term hereof notwithstanding that such performance may be due following the end of the Operating Term. |
9.1 | Supervision of Capital Improvements. If capital improvements to the Community are needed and funding is available, Manager agrees, if requested, to assist Manager personnel in the supervision of the construction of such improvements without additional compensation beyond the Management Fee for any such improvement (or group of related improvements) for which the aggregate expenditures are $100,000 or less in any Fiscal Year. For any improvements for which the aggregate expenditures are greater than $100,000 in any Fiscal Year, if there is no third-party project manager being paid a fee with respect to such capital improvements, Manager shall be paid for its services in supervising the construction of such improvements at rates outlined in Schedule B and the Capital Expenditures Budget. No capital improvements to the Community shall commence without Owner’s prior written approval. |
9.2 | Expenditures for Capital Improvements. Notwithstanding the foregoing, provided sufficient funds have been made available to Manager, Manager shall make such capital improvements |
10.1 | Assignment by Manager. This Agreement, or any rights and duties expressed herein, may not be assigned or transferred by Manager without the prior written consent of Owner, which consent may be granted or withheld in Owner’s sole discretion; provided, however, that (i) Manager may, as part of an assignment of all or substantially all of the communities managed by Manager, assign this Agreement directly or indirectly to an entity Controlled on a day to day basis by David Barnes and/or David Freshwater that qualifies as an Eligible Independent Contractor and (ii) Manager may, with the consent of Owner (not to be unreasonably withheld, conditioned or delayed), as part of an assignment of communities constituting a significant portion but less than all or substantially all of the communities managed by Manager, assign this Agreement directly or indirectly to an entity Controlled on a day to day basis by David Barnes and/or David Freshwater that qualifies as an Eligible Independent Contractor. |
10.2 | Assignment by Owner. This Agreement, or any rights and duties expressed herein, may be assigned or transferred by Owner at any time. |
11.1 | Unless Owner undertakes to provide such insurance, Manager shall, commencing on the Effective Date and during the term of this Agreement, procure and maintain, using funds in the Operating Account, with insurance companies reasonably acceptable to Owner, the insurance set forth on Schedule H or such greater coverage as is required under a Loan. |
11.2 | Operational Insurance. Manager shall, commencing on the Effective Date and during the term of this Agreement, procure and maintain, using funds in the Operating Account, the following insurance: |
a) | Worker’s compensation and employer’s liability insurance as may be required under applicable laws covering all of the Community Employees with such deductible limits or self-insured retentions as determined by Owner; |
b) | Crime/fidelity bonds with limits not less than $1,000,000 and deductibles to be determined by Manager, covering its Community Employees in job classifications normally bonded in the seniors housing industry or as otherwise required by law, and comprehensive crime insurance to the extent Manager determines it is necessary for the Community; and |
c) | Such other insurance and/or additional coverage in amounts as Owner in its reasonable judgment deems advisable for its protection against claims, liabilities and losses arising out of or connected with Manager’s performance under this Agreement. |
11.3 | Cost and Expense. Insurance premiums and any costs or expenses with respect to the insurance described in this Article XI and Schedule H (including, without limitation, insurance for claims asserted by Community Employees against Manager for Manager’s employment practices or actions) shall be treated as Authorized Expenditures to the extent in accordance with Section 6.2. Premiums on policies for more than one (1) year shall be charged pro rata against Gross Revenues over the period of the policies. Any reserves, losses, costs, damages or expenses which are uninsured, or fall within deductible limits or self-insured retentions, shall be treated as a cost of insurance and shall be Authorized Expenditures. Upon termination of this Agreement, an escrow fund in an amount reasonably acceptable to Owner and Manager shall be established from Gross Revenues (or, if Gross Revenues are not sufficient, with funds provided by Owner) to cover the amount of any deductible limits or self-insured retentions which will eventually have to be paid by either Owner or Manager, as applicable, with respect to pending claims. |
11.4 | Policies and Endorsements. |
a) | All policies of insurance provided under Section 11.1 shall name Manager and Owner and Lessor and their respective members and principals as insured, and shall name the parties set forth on Schedule I as additional insured parties. In addition, Lender shall be named as mortgagee, loss payee and an additional insured party, as applicable. The Owner shall deliver to Manager and Manager shall deliver to Owner certificates of insurance with respect to all policies so procured, including existing, additional and renewal policies and, in the case of insurance about to expire, shall deliver certificates of insurance with respect to the renewal policies not less than ten (10) days prior to the respective dates of expiration. |
b) | All policies of insurance provided for under Article XI shall, to the extent obtainable, have attached thereto an endorsement that such policy shall not be canceled (except for non-payment of premium) or materially changed without at least thirty (30) days |
c) | Policies must be written on a per occurrence basis except for earthquake and professional liability coverage. |
d) | Coverage must be issued by an insurance carrier with an A.M. Best general policyholder’s rating of “A” or better and a performance index rating of X or higher. |
e) | All policies and renewals thereof, are to be written for not less than one year. |
f) | All existing or new policies must be paid in full and cannot be financed unless approved in advance by Owner. |
11.5 | Tail Insurance. Manager shall procure and maintain, using funds deducted from Gross Revenues, with insurance companies reasonably acceptable to Owner, tail insurance with a policy term of at least two (2) years for any insurance policy maintained by the Manager or Owner on so-called “claims made” basis in the occurrence of the following events: |
g) | Upon any change in liability insurance from a so-called “claims-made” basis to a so-called “occurrence” basis. A “prior acts endorsement” may be procured in lieu of the tail insurance referenced above. |
h) | Upon termination of this Agreement or the date of closing of a sale or other disposition of the Community to any person or entity other than an affiliate of the Owner. |
12.1 | Inspection of Community. Owner and its agents, employees and designees may go anywhere in the Community for the purpose of i) inspecting the Community; ii) inspecting the performance by Manager of the terms and conditions hereof, or iii) showing the Community to prospective purchasers, lessees or mortgagees. Manager shall upon request facilitate access permitted under this Section 12.1. |
12.2 | Attorney’s Fees. Should either party commence any action against the other to enforce any obligations hereunder, the prevailing party shall be entitled to recover from the other its reasonable attorneys’ fees and costs. |
12.3 | Confidentiality. In connection with services furnished pursuant to this Agreement, Manager may receive access to certain financial, operating and other information regarding the |
12.4 | Amendments. The terms, covenants, conditions and provisions of this Agreement may not be modified or revised, except in writing signed by both of the parties hereto. |
12.5 | Time. Time is of the essence hereof. |
12.6 | Notices. All notices provided for in this Agreement shall be in writing and emailed, faxed or mailed by registered or certified mail, postage prepaid or by express mail, to the following addresses until such time as written notice of change of address is given the other party. |
12.7 | Entire Agreement. This Agreement is the entire agreement between the parties with respect to the subject matter hereof and no modification or interpretation hereof shall be binding unless in writing and signed by both of the parties hereto. |
12.8 | Severability. If any provision of this Agreement or the application thereof to any person or circumstances shall be invalid or unenforceable to any extent, and such invalidity or unenforceability does not destroy the basis of the bargain between the parties, then the remainder of this Agreement and the application of such provisions to other persons or circumstances shall not be affected thereby and shall be enforced to the greatest extent permitted by law. |
12.9 | Applicable Law. This Agreement shall be construed and enforced in accordance with the laws of the State of New York. |
12.10 | Use. Manager shall manage and operate the Community solely as a seniors housing community under standards comparable to those prevailing in the seniors housing industry and for activities in connection therewith that are customary and usual to such an operation. |
12.11 | Waiver. The failure of either party to insist upon a strict performance of any of the terms or provisions of this Agreement or to exercise any option, right or remedy herein contained shall not be construed as a waiver or as a relinquishment for the future of such term, provision, option, right or remedy, but the same shall continue and remain in full force and effect. No |
12.12 | Failure to Perform. If Manager or Owner shall at any time fail to make any payments as specified or required hereunder or shall fail to perform any other act on its part to be made or performed hereunder, without limitation, then the other party, after ten (10) business days written notice to the defaulting party, may (but shall not be obligated to) pay any such delinquent amount or perform any other act on the defaulting party’s part to be made or performed as provided in this Agreement and may enter upon the Community premises for said purpose and take all such action thereon as may be necessary or desirable therefor. Any sums thus paid and all performance of any such acts, together with interest thereon at the fixed rate of eight percent (8%) per annum (the “Default Rate”) from the date that such payment is made or such costs and expenses incurred, shall constitute a liquidated amount to be paid by the defaulting party under this Agreement to the other on demand from the defaulting party’s funds. |
12.13 | Breach of Covenant. Subject to the terms, conditions and limitations set forth in this Agreement, Owner and Manager and/or their affiliates shall be entitled, in case of any breach of this Agreement by the other party or other claiming through it, to seek injunctive relief and any other right or remedy available at law or in equity. The rights of Owner and Manager pursuant to this Section 12.13 shall survive termination of this Agreement. |
12.14 | Headings. Headings or Articles and Sections are inserted only for convenience and are in no way to be construed as a limitation on the scope of the particular Articles or Sections to which they refer. |
12.15 | Force Majeure. In the event that either party should be prevented from performing any of its duties hereunder by operation of Force Majeure, or other cause beyond the party’s reasonable control, then while so prevented, the affected party’s duties to comply with such obligations shall be suspended. The term “Force Majeure” shall mean forces of nature, acts of God, strikes, lockouts, accidents to building or machinery, explosions or other causes not within the reasonable control of the affected party. For avoidance of doubt, the failure of Owner to provide Working Capital required under Section 6.4 shall be deemed an event of Force Majeure with respect to the performance of specific obligations by Manager that are affected by the level of Working Capital. |
12.16 | Execution. Each individual signing this Agreement warrants that such execution has been duly authorized by the party for which he/she is signing. The execution and performance of this Agreement by each party has been duly authorized by all necessary corporate action, |
12.17 | Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original and all of which shall constitute one agreement. |
OPERATOR: | WATERMARK RETIREMENT COMMUNITIES, INC. /s/ David Barnes By: David Barnes Its: Vice President |
OWNER: | WATERMARK PARKVIEW, LLC |
/s/ David Barnes By: David Barnes Its: Authorized Signatory |
(a) | So long as there is no Event of Default, Lender or Loan Servicer will remit to Borrower each Cap Payment received by Lender or Loan Servicer with respect to |
(b) | Neither the existence of a Cap Agreement nor anything in this Loan Agreement will relieve Borrower of its primary obligation to timely pay in full all amounts due under the Note and otherwise due on account of the Indebtedness. |
(a) | Security Interest. To secure Borrower’s obligations under this Loan Agreement and to further secure Borrower’s obligations under the Note and the other Loan Documents, Borrower conveys, pledges, transfers and grants to Lender a security interest pursuant to the Uniform Commercial Code of the Property Jurisdiction or any other applicable law in and to all money in the Reserve Funds, as the same may increase or decrease from time to time, all interest and dividends thereon and all proceeds thereof. |
(b) | Supplemental Loan. If this Loan Agreement is entered into in connection with a Supplemental Loan and if the same Person is or becomes both Senior Lender and Supplemental Lender, then: |
(i) | Borrower assigns and grants to Supplemental Lender a security interest in the Reserve Funds established in connection with the Senior Indebtedness as additional security for all of Borrower’s obligations under the Supplemental Note. |
(ii) | In addition, Borrower assigns and grants to Senior Lender a security interest in the Reserve Funds established in connection with the Supplemental Indebtedness as additional security for all of Borrower’s obligations under the Senior Note. |
(iii) | It is the intention of Borrower that all amounts deposited by Borrower in connection with either the Senior Loan Documents, the Supplemental Loan Documents, or both, constitute collateral for the Supplemental Indebtedness secured by the Supplemental Instrument and the Senior Indebtedness secured by the Senior Instrument, with the application of such amounts to such Senior Indebtedness or Supplemental Indebtedness to be at the discretion of Senior Lender and Supplemental Lender. |
(a) | Establishment of Reserve Funds; Investment of Deposits. Unless otherwise provided in Section 4.04, each Reserve Fund will be established on the date of this Loan Agreement and all Reserve Funds will be deposited in an Eligible Account at an Eligible Institution or invested in “permitted investments” as then defined and required by the Rating Agencies. Lender will not be obligated to open additional accounts or deposit Reserve Funds in additional institutions when the amount of any Reserve Fund exceeds the maximum amount of the federal deposit insurance or guaranty. Borrower acknowledges and agrees that it will not have the right to direct Lender as to any specific investment of monies in any Reserve Fund. Lender will not be responsible for any losses resulting from investment of monies in any Reserve Fund or for obtaining any specific level or percentage of earnings on such investment. |
(b) | Interest on Reserve Funds; Trust Funds. Unless applicable law requires, Lender will not be required to pay Borrower any interest, earnings or profits on the Reserve Funds. Any amounts deposited with Lender under this Article IV will not be trust funds, nor will they operate to reduce the Indebtedness, unless applied by Lender for that purpose pursuant to the terms of this Loan Agreement. |
(c) | Use of Reserve Funds. Each Reserve Fund will, except as otherwise provided in this Loan Agreement, be used for the sole purpose of paying, or reimbursing Borrower for payment of, the item(s) for which the applicable Reserve Fund was established. Borrower acknowledges and agrees that, except as specified in this Loan Agreement, monies in one Reserve Fund will not be used to pay, or reimburse Borrower for, matters for which another Reserve Fund has been established. |
(d) | Termination of Reserve Funds. Upon the payment in full of the Indebtedness, Lender will pay to Borrower all funds remaining in any Reserve Funds. |
(a) | Deposits to Imposition Reserve Deposits. Borrower will deposit with Lender on the day monthly installments of principal or interest, or both, are due under the Note (or on another day designated in writing by Lender), until the Indebtedness is paid in full, an additional amount sufficient to accumulate with Lender the entire sum required to pay, when due, the items marked “Collect” below. Except as provided |
[Deferred] | Hazard Insurance premiums or premiums for other Insurance required by Lender under Section 6.10 |
[Collect] | Taxes and payments in lieu of taxes |
[Deferred] | water and sewer charges that could become a Lien on the Mortgaged Property |
[N/A] | Ground Rents |
[Deferred] | assessments or other charges that could become a Lien on the Mortgaged Property |
(b) | Disbursement of Imposition Reserve Deposits. Lender will apply the Imposition Reserve Deposits to pay Impositions so long as no Event of Default has occurred and is continuing. Lender will pay all Impositions from the Imposition Reserve Deposits held by Lender upon Lender’s receipt of a bill or invoice for an Imposition. If Borrower holds a ground lessee interest in the Mortgaged Property and Imposition Reserve Deposits are collected for Ground Rent, then Lender will pay the monthly or other periodic installments of Ground Rent from the Imposition Reserve Deposits, whether or not Lender receives a bill or invoice for such installments. Lender will have no obligation to pay any Imposition to the extent it exceeds the amount of the Imposition Reserve Deposits then held by Lender. Lender may pay an Imposition according to any bill, statement or estimate from the appropriate public office, Ground Lessor (if applicable) or insurance company without inquiring into the accuracy of the bill, statement or estimate or into the validity of the Imposition. |
(c) | Excess or Deficiency of Imposition Reserve Deposits. If at any time the amount of the Imposition Reserve Deposits held by Lender for payment of a specific Imposition exceeds the amount reasonably deemed necessary by Lender, the excess will be credited against future installments of Imposition Reserve Deposits. If at any time the amount of the Imposition Reserve Deposits held by Lender for payment of a |
(d) | Delivery of Invoices. Borrower will promptly deliver to Lender a copy of all notices of, and invoices for, Impositions. |
(e) | Deferral of Collection of Any Imposition Reserve Deposits; Delivery of Receipts. If Lender does not collect an Imposition Reserve Deposit with respect to an Imposition either marked “Deferred” in Section 4.02(a) or pursuant to a separate written deferral by Lender, then on or before the date each such Imposition is due, or on the date this Loan Agreement requires each such Imposition to be paid, Borrower will provide Lender with proof of payment of each such Imposition. Upon Notice to Borrower, Lender may revoke its deferral and require Borrower to deposit with Lender any or all of the Imposition Reserve Deposits listed in Section 4.02(a), regardless of whether any such item is marked “Deferred” (i) if Borrower does not timely pay any of the Impositions, (ii) if Borrower fails to provide timely proof to Lender of such payment, or (iii) at any time during the existence of an Event of Default. |
(a) | There are no judicial, administrative, mediation or arbitration actions, suits or proceedings pending or, to the best of Borrower’s knowledge, threatened in writing against or affecting Borrower (and, if Borrower is a limited partnership, any of its general partners or if Borrower is a limited liability company, any member of Borrower) or the Mortgaged Property which, if adversely determined, would have a Material Adverse Effect. |
(b) | Without limiting the generality of subsection (a) above, neither Borrower, any operator of the Facility, nor the Facility are subject to any proceeding, suit or investigation by any Governmental Authority and neither Borrower nor any operator of the Facility has received any notice from any Governmental Authority which may, directly or indirectly, or with the passage of time, result in the imposition of a fine, or interim or final sanction, or would (i) have a Material Adverse Effect, (ii) result in the appointment of a receiver or trustee, (iii) affect Borrower’s or any operator of the Facility’s ability to accept and retain residents, (iv) result in the Downgrade, revocation, transfer, surrender or suspension, or non-renewal or reissuance or other impairment of any License, or (v) affect Borrower’s or operator’s continued participation in any Governmental Payor Program, or any successor programs thereto, at current rate certifications. |
(a) | Borrower has not at any time engaged in, caused or permitted any Prohibited Activities or Conditions on the Mortgaged Property. |
(b) | To the best of Borrower’s knowledge after due inquiry and investigation, no Prohibited Activities or Conditions exist or have existed on the Mortgaged Property. |
(c) | The Mortgaged Property does not now contain any underground storage tanks, and, to the best of Borrower’s knowledge after due inquiry and investigation, the Mortgaged Property has not contained any underground storage tanks in the past. If there is an underground storage tank located on the Mortgaged Property that has been previously disclosed by Borrower to Lender in writing, that tank complies with all requirements of Hazardous Materials Laws. |
(d) | To the best of Borrower’s knowledge after due inquiry and investigation, Borrower has complied with all Hazardous Materials Laws, including all requirements for notification regarding releases of Hazardous Materials. Without limiting the |
(e) | To the best of Borrower’s knowledge after due inquiry and investigation, no event has occurred with respect to the Mortgaged Property that constitutes, or with the passage of time or the giving of notice, or both, would constitute, noncompliance with the terms of any Environmental Permit. |
(f) | There are no actions, suits, claims or proceedings pending or, to the best of Borrower’s knowledge after due inquiry and investigation, threatened in writing, that involve the Mortgaged Property and allege, arise out of, or relate to any Prohibited Activity or Condition. |
(g) | Borrower has received no actual or constructive notice of 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 property that is adjacent to the Mortgaged Property. |
(a) | Borrower has fully disclosed in writing to the title insurance company issuing the mortgagee title insurance policy insuring the Lien of the Security Instrument that work has been commenced or performed on the Mortgaged Property, or materials or equipment have been ordered or delivered to or upon the Mortgaged Property. |
(b) | Borrower has obtained and delivered to Lender and the title company issuing the mortgagee title insurance policy insuring the Lien of the Security Instrument Lien waivers from all contractors, subcontractors, suppliers or any other applicable party, pertaining to all work commenced or performed on the Mortgaged Property, or materials or equipment ordered or delivered to or upon the Mortgaged Property. |
(a) | To the best of Borrower’s knowledge after due inquiry and investigation, (i) all Improvements and the use of the Mortgaged Property comply with all applicable statutes, rules and regulations, including all applicable statutes, rules and regulations pertaining to requirements for equal opportunity, anti-discrimination, fair housing, environmental protection, zoning and land use (“legal, non-conforming” status with respect to uses or structures will be considered to comply with zoning and land use requirements for the purposes of this representation), (ii) the Improvements comply with applicable health, fire, and building codes, and (iii) there is no evidence of any illegal activities relating to controlled substances on the Mortgaged Property. |
(b) | Without limiting the generality of subsection (a) above, Borrower, any operator of the Facility, and the Facility (and its operation) and all residential care agreements and residential Leases are in compliance with the applicable provisions of all laws, regulations, ordinances, orders or standards of any Governmental Authority having jurisdiction over the operation of the Facility (including any Governmental Payor Program requirements and disclosure of ownership and related information requirements), including without limitation: (i) Healthcare Laws, Privacy Laws, fire and safety codes and building codes (and no waivers of such requirements exist at the Facility); (ii) laws, rules, regulations and published interpretations thereof regulating the preparation and serving of food; (iii) laws, rules, regulations and published interpretations thereof regulating the handling and disposal of medical or biological waste; (iv) the applicable provisions of all laws, rules, regulations and published interpretations thereof to which Borrower or the Facility is subject by virtue of its Intended Use; and (v) all criteria established to classify the Facility as housing for older persons under the Fair Housing Amendments Act of 1988. |
(c) | Borrower has received no notice of, and is not aware of, any violation of applicable antitrust laws or securities laws relating to the Facility, the Borrower, or any operator of the Facility. |
(a) | Borrower, any commercial tenant of the Mortgaged Property and/or any operator of the Mortgaged Property is in possession of all material licenses, permits and |
(b) | Without limiting the generality of subsection (a) above, Borrower has obtained or has caused any operator of the Facility to obtain all Licenses necessary to use, occupy or operate the Facility for its Intended Use (such Licenses being in its own name or in the name of an operator of the Facility, if any, and in any event in the names of the Persons required by the applicable Governmental Authorities), and all such Licenses are in full force and effect. Borrower has provided Lender with complete and accurate copies of all Licenses. The Intended Use of the Facility is in conformity with all certificates of occupancy and Licenses and any other restrictions or covenants affecting the Facility. The Facility has all equipment, staff and supplies necessary to use and operate the Facility for its Intended Use. |
(c) | Each License, and the name of the Person in whose name each License is issued, if other than Borrower, is identified on Exhibit J, and a copy of each License is attached as Exhibit J. |
(d) | As of the Closing Date, the Licenses attached as Exhibit J are true and complete copies, the Licenses are current, and Borrower has not received any notice of pending violations or investigations that have not been brought to Lender’s attention in writing. |
(e) | Other than the Licenses attached as Exhibit J, as of the Closing Date, no other Licenses are required to operate the Facility as it is currently being operated and for its Intended Use. |
(f) | Neither the execution and delivery of the Note, this Loan Agreement, the Security Instrument nor any other Loan Document, Borrower’s performance under the Loan Documents, nor the recordation of the Security Instrument, nor the exercise of any remedies by Lender pursuant to the Loan Documents, at law or in equity, will adversely affect the Licenses. |
(a) | All information in the application for the Loan submitted to Lender, including all financial statements for the Mortgaged Property, Borrower and any Borrower Principal, and all Rent Schedules, reports, certificates, and any other documents submitted in connection with the application (collectively, “Loan Application”) is complete and accurate in all material respects as of the date such information was submitted to Lender. |
(b) | There has been no Material Adverse Change since the Loan Application was submitted to Lender in any fact or circumstance that would make any information submitted as part of the Loan Application incomplete or inaccurate. |
(c) | The organizational structure of Borrower is as set forth in Exhibit H. |
(a) | Borrower is not an “investment company,” or a company under the Control of an “investment company,” as such terms are defined in the Investment Company Act of 1940, as amended. |
(a) | No Pending Proceedings or Judgments. No Borrower or Borrower Principal is (i) the subject of or a party to (other than as a creditor) any completed or pending bankruptcy, reorganization or insolvency proceeding; or (ii) the subject of any judgment unsatisfied of record or docketed in any court located in the United States. |
(b) | Insolvency. Borrower is not presently insolvent, and the Loan will not render Borrower insolvent. As used in this Section, the term “insolvent” means that the total of all of a Person’s liabilities (whether secured or unsecured, contingent or fixed, or liquidated or unliquidated) is in excess of the value of all of the assets of the Person that are available to satisfy claims of creditors. |
[ ] | Refinance Loan: The Loan is a refinancing of existing indebtedness and, except to the extent specifically required by Lender, there is to be no change in the ownership of either the Mortgaged Property or Borrower Principals. The intended use of any cash received by Borrower from Lender, to the extent applicable, in connection with the refinancing has been fully disclosed to Lender. |
[ X ] | Acquisition Loan: All of the consideration given or received or to be given or received in connection with the acquisition of the Mortgaged Property has been fully disclosed to Lender. The Mortgaged Property was or will be purchased from Parkview Frisco, L.P., a Texas limited partnership (“Property Seller”). No Borrower or Borrower Principal has or had, directly or indirectly (through a family member or otherwise), any interest in the Property Seller and the acquisition of the Mortgaged Property is an arm’s-length transaction. To the best of Borrower’s knowledge after due inquiry and investigation, the purchase price of the Mortgaged Property represents the fair market value of the Mortgaged Property and Property Seller is not or will not be insolvent subsequent to the sale of the Mortgaged Property. |
[ ] | Supplemental Loan: The Loan is a Supplemental Loan and, except to the extent specifically required or approved by Lender, there has been no change in the ownership of either the Mortgaged Property or Borrower Principals since the date of the Senior Note. The intended use of any cash received by Borrower from Lender, to the extent applicable, in connection with the refinancing has been fully disclosed to Lender. |
[ ] | Cross-Collateralized/Cross-Defaulted Loan Pool: The Loan is part of a cross-collateralized/cross-defaulted pool of loans described as follows: |
____ | being simultaneously made to Borrower and/or Borrower’s Affiliates |
____ | made previously to Borrower and/or Borrower’s Affiliates |
a. | Seniors Apartments |
b. | Independent Living Units |
c. | Assisted Living Residences |
d. | Skilled Nursing Beds |
(b) | The number of units set aside as Assisted Living Residences and Independent Living Units may be increased by no more than 10% of the present number of total units in the Facility. |
(a) | Exhibit L lists all Contracts in effect as of the date of this Loan Agreement, the names of the parties to such Contracts and the dates of such Contracts. |
(b) | With regard to each Contract listed in Exhibit L, (i) the Contract is in full force and effect in accordance with its terms, and (ii) there is no default by any party under the Contract. |
(c) | Borrower has delivered to Lender a copy of each Contract, together with all amendments, modifications, supplements and renewals thereto in effect as of the date of this Loan Agreement. |
(d) | Except as set forth on Exhibit L, each Contract listed in Exhibit L provides that it is terminable by Borrower or any operator of the Facility upon not more than 30 days’ notice without the necessity of establishing cause and without payment of a penalty or termination fee by Borrower or any operator of the Facility or their respective successors or assigns, except only Third Party Provider Agreements. |
(a) | Exhibit M lists all Material Contracts in effect as of the date of this Loan Agreement. |
(b) | With regard to each Material Contract listed in Exhibit M, (i) the Material Contract is assignable by Borrower, or if Borrower is not a party thereto, by an operator of the Facility, without the consent of the other party thereto (or Borrower and any operator of the Facility, as applicable, has obtained express written consent to the assignment from the other party thereto), except only Third Party Provider Agreements; (ii) no previous assignment of Borrower’s or any operator of the Facility’s interest in the Material Contract has been made except such assignments that have been properly terminated prior to or concurrently with the execution and delivery of this Loan Agreement; (iii) the Material Contract is in full force and effect in accordance with its terms; and (iv) there is no default by any party under the Material Contract. |
(c) | Borrower has delivered to Lender a copy of each Material Contract, together with all amendments, modifications, supplements and renewals thereto in effect as of the date of this Loan Agreement. |
(d) | Each Material Contract listed in Exhibit M provides that it is terminable upon not more than 30 days notice without the necessity of establishing cause and without payment of a penalty or termination fee by Borrower or any operator of the Facility or their respective successors or assigns, except only Third Party Provider Agreements. |
(a) | The Facility has not received a statement of charges or deficiencies and no penalty enforcement actions have been undertaken against the Facility, the operator of the Facility or Borrower or against any officer, director or stockholder thereof, by any Governmental Agency during the last three calendar years, and there have been no violations over the past three years that have threatened the Facility’s or the operator of the Facility’s or Borrower’s certification for participation in any Governmental Payor Program. |
(b) | Reserved. |
(a) | Unless required by applicable law, without the prior written consent of Lender, Borrower will not, and will not permit any operator of the Facility to, take any of the following actions: |
(i) | Allow changes in the use for which all or any part of the Mortgaged Property is being used at the time this Loan Agreement is executed. |
(ii) | Convert any individual dwelling units or common areas to commercial use. |
(iii) | Initiate a change in the zoning classification of the Mortgaged Property or acquiesce to a change in the zoning classification of the Mortgaged Property. |
(iv) | Establish any condominium or cooperative regime with respect to the Mortgaged Property beyond any which may be in existence on the date of this Loan Agreement. |
(v) | Combine all or any part of the Mortgaged Property with all or any part of a tax parcel which is not part of the Mortgaged Property. |
(vi) | Subdivide or otherwise split any tax parcel constituting all or any part of the Mortgaged Property. |
(vii) | Add to or change any location at which any of the Mortgaged Property is stored, held or located unless Borrower (A) gives Notice to Lender within 30 days after the occurrence of such addition or change, (B) executes and delivers to Lender any modifications of or supplements to this Loan |
(b) | Notwithstanding anything contained in this Section to the contrary, if Borrower is a housing cooperative corporation or association, Lender acknowledges and consents to Borrower’s use of the Mortgaged Property as a housing cooperative. |
(c) | Without the prior written consent of Lender, which may be granted or withheld in Lender’s discretion, Borrower will not, and will not permit any operator of the Facility to, provide or contract for skilled nursing care, assisted living care, Alzheimer’s care, memory care or dementia care for any of the residents other than that level of care which both (i) is consistent with the Intended Use and (ii) is permissible for Borrower or the operator of the Facility to provide at the Facility under (A) applicable Healthcare Laws, and (B) applicable Licenses. |
(a) | Prohibited New Non-Residential Leases or Modified Non-Residential Leases. Borrower will not enter into any New Non-Residential Lease, enter into any Modified Non-Residential Lease or terminate any Non-Residential Lease (including any Non-Residential Lease in existence on the date of this Loan Agreement) without the prior written consent of Lender. |
(b) | Reserved. |
(c) | Executed Copies of Non-Residential Leases. Borrower will, without request by Lender, deliver a fully executed copy of each Non-Residential Lease to Lender promptly after such Non-Residential Lease is signed. |
(d) | Subordination and Attornment Requirements. All Non-Residential Leases will specifically include the following provisions: |
(i) | The Lease is subordinate to the Lien of the Security Instrument, with such subordination to be self-executing. |
(ii) | The tenant will attorn to Lender and any purchaser at a foreclosure sale, such attornment to be self-executing and effective upon acquisition of title to the Mortgaged Property by any purchaser at a foreclosure sale or by Lender in any manner. |
(iii) | The tenant agrees to execute such further evidences of attornment as Lender or any purchaser at a foreclosure sale may from time to time request. |
(iv) | The tenant will, upon receipt of a written request from Lender following the occurrence of and during the continuance of an Event of Default, pay all Rents payable under the Lease to Lender. |
(v) | If Lender or a purchaser at a foreclosure sale so elects, the Lease will not be terminated by foreclosure or any other transfer of the Mortgaged Property. |
(vi) | After a foreclosure sale of the Mortgaged Property, Lender or any other purchaser at such foreclosure sale may, at Lender’s or such purchaser’s option, accept or terminate such Lease without payment of any fee or penalty. |
(a) | Right of Entry. Borrower will permit Lender, its agents, representatives and designees and any interested Governmental Authority to make or cause to be made entries upon and inspections of the Mortgaged Property to inspect, among other things (i) Repairs, (ii) Capital Replacements, in process and upon completion, and (iii) Improvements (including environmental inspections and tests performed by professional inspection engineers) during normal business hours, or at any other reasonable time, upon reasonable Notice to Borrower if the inspection is to include occupied residential units (which Notice need not be in writing). During normal business hours, or at any other reasonable time, Borrower will also permit Lender to examine all books and records and contracts and bills pertaining to the foregoing. Notice to Borrower will not be required in the case of an emergency, as determined in Lender’s Discretion, or when an Event of Default has occurred and is continuing. |
(b) | Inspection of Mold. If Lender determines that Mold has or may have developed as a result of a water intrusion event or leak, Lender, at Lender’s Discretion, may require that a professional inspector inspect the Mortgaged Property to confirm whether Mold has developed and, if so, thereafter as frequently as Lender determines is necessary until any issue with Mold and its cause(s) are resolved to Lender’s satisfaction. Such inspection will be limited to a visual and olfactory inspection of the area that has experienced the Mold, water intrusion event or leak. Borrower will be responsible for the cost of each such professional inspection and any remediation deemed to be necessary as a result of the professional inspection. After any issue with Mold is remedied to Lender’s satisfaction, Lender will not require a professional inspection any more frequently than once every 3 years unless Lender otherwise becomes aware of Mold as a result of a subsequent water intrusion event or leak. |
(c) | Certification in Lieu of Inspection. If Lender or Loan Servicer determines not to conduct an annual inspection of the Mortgaged Property, and in lieu thereof Lender requests a certification, Borrower will provide to Lender a factually correct certification each year that the annual inspection is waived to the following effect: |
(a) | Delivery of Books and Records. Borrower will keep and maintain at all times at the Mortgaged Property or the Property Manager’s or operator of the Facility’s office, and upon Lender’s request will make available at the Mortgaged Property (or, at Borrower’s option, at the Property Manager’s or operator of the Facility’s office), 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, in accordance with GAAP consistently applied (or such other method which is reasonably acceptable to Lender), and copies of all written contracts, Leases, and other instruments which affect the Mortgaged Property. The books, records, contracts, Leases and other instruments will be subject to examination and inspection by Lender at any reasonable time. |
(b) | Delivery of Statement of Income and Expenses; Rent Schedule and Other Statements. Borrower will furnish to Lender each of the following: |
(i) | Within 25 days after the end of each calendar quarter prior to Securitization and within 35 days after each calendar quarter after Securitization, each of the following: |
(A) | A Rent Schedule dated no earlier than the date that is 5 days prior to the end of such quarter. |
(B) | A statement of income and expenses for Borrower’s operation of the Mortgaged Property that is either of the following: |
(1) | For the 12 month period ending on the last day of such quarter. |
(2) | If at the end of such quarter Borrower or any Affiliate of Borrower has owned the Mortgaged Property for less than 12 months, for the period commencing with the acquisition of the Mortgaged Property by Borrower or its Affiliate, and ending on the last day of such quarter. |
(C) | A statement of changes in financial position of Borrower relating to the Mortgaged Property for that fiscal quarter and, when requested by Lender, a balance sheet showing all assets and liabilities of Borrower relating to the Mortgaged Property as of the end of that fiscal quarter. |
(ii) | Within 90 days after the end of each fiscal year of Borrower, each of the following: |
(A) | An annual statement of income and expenses for Borrower’s operation of the Mortgaged Property for that fiscal year. |
(B) | A statement of changes in financial position of Borrower relating to the Mortgaged Property for that fiscal year. |
(C) | A balance sheet showing all assets and liabilities of Borrower relating to the Mortgaged Property as of the end of that fiscal year and a profit and loss statement for Borrower. |
(D) | 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. |
(iii) | Within 30 days after the date of filing, copies of all tax returns filed by Borrower. |
(c) | Delivery of Borrower Financial Statements Upon Request. Borrower will furnish to Lender each of the following: |
(i) | Upon Lender’s request, in Lender’s sole and absolute discretion prior to a Securitization, and thereafter upon Lender’s request in Lender’s Discretion, a monthly Rent Schedule and a monthly statement of income and expenses for Borrower’s operation of the Mortgaged Property, in each case within 25 days after the end of each month. |
(ii) | Upon Lender’s request in Lender’s sole and absolute discretion prior to a Securitization, and thereafter upon Lender’s request in Lender’s Discretion, a statement that identifies all owners of any interest in Borrower and any Designated Entity for Transfers and the interest held by each (unless Borrower or any Designated Entity for Transfers is a publicly-traded entity in which case such statement of ownership will not be required), and if Borrower or a Designated Entity for Transfers is a corporation then all officers and directors of Borrower and the Designated Entity for Transfers, and if |
(iii) | Upon Lender’s request in Lender’s Discretion, such other financial information or property management information (including information on tenants under Leases to the extent such information is available to Borrower, copies of bank account statements from financial institutions where funds owned or controlled by Borrower are maintained, and an accounting of security deposits) as may be required by Lender from time to time, in each case within 30 days after such request. |
(iv) | Upon Lender’s request in Lender’s Discretion, a monthly property management report for the Mortgaged Property, showing the number of inquiries made and rental applications received from tenants or prospective tenants and deposits received from tenants and any other information requested by Lender within 30 days after such request. However, Lender will not require the foregoing more frequently than quarterly except when there has been an Event of Default and such Event of Default is continuing, in which case Lender may require Borrower to furnish the foregoing more frequently. |
(d) | Form of Statements; Audited Financials. A natural person having authority to bind Borrower (or the SPE Equity Owner or Guarantor, as applicable) will certify each of the statements, schedules and reports required by Sections 6.07(b), 6.07(c) and 6.07(f) to be complete and accurate. Each of the statements, schedules and reports required by Sections 6.07(b), 6.07(c)(i) and (iii) and 6.07(f) will be in such form and contain such detail as Lender may reasonably require. Lender also may require that any of the statements, schedules or reports listed in Sections 6.07(b), 6.07(c) and 6.07(f) be audited at Borrower’s expense by independent certified public accountants acceptable to Lender, at any time when an Event of Default has occurred and is continuing or at any time that Lender, in its reasonable judgment, determines that audited financial statements are required for an accurate assessment of the financial condition of Borrower or of the Mortgaged Property. |
(e) | Failure to Timely Provide Financial Statements. If Borrower fails to provide in a timely manner the statements, schedules and reports required by Sections 6.07(b), 6.07(c) and 6.07(f), Lender will give Notice to Borrower specifying the statements, schedules and reports required by Sections 6.07(b), 6.07(c) and 6.07(f) that Borrower has failed to provide. If Borrower has not provided the required statements, schedules and reports within 10 Business Days following such Notice, then (i) Borrower will pay a late fee of $500 for each late statement, schedule or report, plus an additional $500 per month that any such statement, schedule or report continues to be late, and (ii) Lender will have the right to have Borrower’s books and records audited, at Borrower’s expense, by independent certified public accountants selected by Lender |
(f) | Delivery of Guarantor and SPE Equity Owner Financial Statements Upon Request. Borrower will cause each Guarantor and, at Lender’s request in Lender’s Discretion, any SPE Equity Owner, to provide to Lender (i) within 90 days after the close of such party’s fiscal year, such party’s balance sheet and profit and loss statement (or if such party is a natural person, within 90 days after the close of each calendar year, such party’s personal financial statements) in form reasonably satisfactory to Lender and certified by such party to be accurate and complete; and (ii) such additional financial information (including copies of state and federal tax returns with respect to any SPE Equity Owner but Lender will only require copies of such tax returns with respect to each Guarantor if an Event of Default has occurred and is continuing) as Lender may reasonably require from time to time and in such detail as reasonably required by Lender. |
(g) | Reporting Upon Event of Default. If an Event of Default has occurred and is continuing, Borrower will deliver to Lender upon written demand all books and records relating to the Mortgaged Property or its operation. |
(h) | Credit Reports. Borrower authorizes Lender to obtain a credit report on Borrower at any time. |
(a) | Payment of Taxes and Ground Rent. Subject to the provisions of Sections 6.08(c) and (d), Borrower will pay or cause to be paid (i) all Taxes when due and before the addition of any interest, fine, penalty or cost for nonpayment, and (ii) if Borrower’s interest in the Mortgaged Property is as a Ground Lessee, then the monthly or other periodic installments of Ground Rent before the last date upon which each such installment may be made without penalty or interest charges being added. |
(b) | Payment of Operating Expenses. Subject to the provisions of Section 6.08(c), Borrower will (i) pay the expenses of operating, managing, maintaining and repairing the Mortgaged Property (including utilities, Repairs and Capital Replacements) before the last date upon which each such payment may be made without any penalty or interest charge being added, and (ii) pay Insurance premiums at least 30 days prior to the expiration date of each policy of Insurance, unless applicable law specifies some lesser period. |
(c) | Payment of Impositions and Reserve Funds. If Lender is collecting Imposition Reserve Deposits pursuant to Article IV, then so long as no Event of Default exists, |
(d) | Right to Contest. Borrower, at its own expense, may contest by appropriate legal proceedings, conducted diligently and in good faith, the amount or validity of any Imposition other than Insurance premiums and Ground Rent (if applicable), if (i) Borrower notifies Lender of the commencement or expected commencement of such proceedings, (ii) the Mortgaged Property is not in danger of being sold or forfeited, (iii) if Borrower has not already paid the Imposition, Borrower deposits with Lender reserves sufficient to pay the contested Imposition, if requested by Lender, and (iv) Borrower furnishes whatever additional security is required in the proceedings or is reasonably requested by Lender, which may include the delivery to Lender of reserves established by Borrower to pay the contested Imposition. |
(a) | Maintenance of Mortgaged Property; No Waste. Borrower will keep the Mortgaged Property in good repair, including the replacement of Personalty and Fixtures with items of equal or better function and quality. Borrower will not commit waste or permit impairment or deterioration of the Mortgaged Property. |
(b) | Abandonment of Mortgaged Property. Borrower will not abandon the Mortgaged Property. |
(c) | Preservation of Mortgaged Property. Borrower will 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 such other condition as Lender may approve in writing, whether or not Insurance proceeds or Condemnation awards are available to cover any costs of such Restoration or repair; provided, however, that Borrower will not be obligated to perform such Restoration or repair if (i) no Event of Default has occurred and is continuing, and (ii) Lender has elected to apply any available Insurance proceeds and/or Condemnation awards to the payment of Indebtedness pursuant to Section 6.10(j) or Section 6.11(d). |
(d) | Property Management. Borrower will provide for professional management of the Mortgaged Property by the Property Manager at all times under a property management agreement approved by Lender in writing. Borrower will not surrender, |
(e) | Alteration of Mortgaged Property. |
(i) | Borrower will give Notice to Lender of and, unless otherwise directed in writing by Lender, will appear in and defend any action or proceeding purporting to affect the Mortgaged Property, Lender’s security or Lender’s rights under this Loan Agreement. Borrower will not (and will not permit any tenant or other Person to) remove, demolish or alter the Mortgaged Property or any part of the Mortgaged Property, including any removal, demolition or alteration occurring in connection with a rehabilitation of all or part of the Mortgaged Property, except that each of the following is permitted: |
(A) | Repairs or Capital Replacements pursuant to Sections 4.03 or 4.04. |
(B) | Replacement of tangible Personalty. |
(C) | If Borrower is a cooperative housing corporation or association, Repairs or Capital Replacements to the extent permitted with respect to individual dwelling units under the form of a proprietary lease or occupancy agreement. |
(D) | Repairs and Capital Replacements in connection with making an individual unit ready for a new occupant or pursuant to Sections 6.09(a) and (c). |
(E) | Repairs made in connection with and pursuant to the Repair Schedule of Work, if applicable. |
(ii) | Reserved. |
(f) | Establishment of MMP. Unless otherwise waived by Lender in writing, Borrower will have or will establish and will adhere to the MMP. If Borrower is required to |
(g) | No Reduction of Housing Cooperative Charges. If Borrower is a housing cooperative corporation or association, until the Indebtedness is paid in full, Borrower will not reduce the maintenance fees, charges or assessments payable by shareholders or residents under proprietary leases or occupancy agreements below a level which is sufficient to pay all expenses of Borrower, including all operating and other expenses for the Mortgaged Property and all payments due pursuant to the terms of the Note and any Loan Documents. |
(a) | Hazard and Other Insurance. At all times during the term of this Loan Agreement, Borrower will maintain, at its sole cost and expense, for the mutual benefit of Borrower and Lender, the following Insurance coverages: |
(i) | All Risks of Physical Loss. Insurance against any peril included within the classification “All Risks of Physical Loss” in amounts not less than the Replacement Cost of the Mortgaged Property. In all cases where any of the Improvements or the use of the Mortgaged Property will at any time constitute legal non-conforming structures or uses under applicable legal requirements of any Governmental Authority, the policy referred to in this Section 6.10 will include “Ordinance and Law Coverage,” with “Loss to the Undamaged Portion of the Building,” “Demolition Cost” and “Increased Cost of Construction” endorsements, in the amount of coverage required by Lender and will either include a “Time Element” endorsement or the business income/rental value Insurance for the Mortgaged Property will be endorsed to cover income/rent loss arising out of any increased time necessary to repair or rebuild the Mortgaged Property due to the enforcement of any zoning laws. |
(ii) | Commercial General Liability. Commercial general liability Insurance on an occurrence-based policy form that insures against legal liability resulting from bodily injury, property damage, personal injury and advertising injury, and includes contractual liability coverage and any and all claims, including all legal liability (to the extent insurable) imposed upon Borrower and all Attorneys’ Fees and Costs arising out of or connected with the possession, use, leasing, operation, maintenance or condition of the Mortgaged Property |
Number of Stories | Minimum umbrella or excess liability limits |
1 to 3 | $1,000,000 |
4 to 10 | $3,000,000 |
11 to 20 | $5,000,000 |
Greater than 20 | $10,000,000 |
(iii) | Business Income/Rental Value. Business income/rental value Insurance for the Mortgaged Property in an amount equal to at least the effective gross Rents attributable to the Mortgaged Property for (A) 12 months if the Indebtedness is less than or equal to $50,000,000, and (B) 18 months if the Indebtedness is greater than $50,000,000, based on effective gross Rents for the immediately preceding year and otherwise sufficient to avoid any co-insurance penalty; coverage will include a 90-day extended period of indemnity if the Indebtedness is equal to or greater than $50,000,000. The waiting period for this coverage will not exceed 7 days. |
(iv) | Flood. If any portion of the Improvements is located within an area identified by the Federal Emergency Management Agency (or any successor) as a special flood hazard area (“SFHA”), flood Insurance in an amount equal to the greater of the following: |
(A) | The maximum flood Insurance available under the National Flood Insurance Program (“NFIP”) for each building within a SFHA. |
(B) | The sum of the following for each building within a SFHA being insured: |
(1) | The Replacement Cost of all areas of the Improvements below grade. |
(2) | The Replacement Cost of the bottom two stories (above grade) of the Improvements. |
(3) | Any additional coverage dictated by the nature of the Mortgaged Property as determined by Lender in Lender’s Discretion. |
(v) | Boiler and Machinery. If the Mortgaged Property contains a central heating, ventilation and cooling system (“HVAC System”) where steam boilers and/or other pressurized systems are in operation and are regulated by the Property Jurisdiction, Insurance providing coverage for damage to the HVAC System or other portions of the Mortgaged Property, if the damage is the result of an explosion of steam boilers, pressure vessels or similar apparatus now or hereafter installed at the Mortgaged Property, with minimum limits at least equal to the Replacement Cost of the building housing the HVAC System, including the Replacement Cost of the HVAC System. |
(vi) | Terrorism. Insurance coverage required under Section 6.10(a)(i) through (iii) will cover perils of terrorism and acts of terrorism. Such coverage may be provided through one or more separate policies, which will be on terms (including amounts) consistent with those required under Section 6.10(a)(i) through (iii). |
(vii) | Builder’s All Risk. During any period of Restoration, builder’s “All Risk” Insurance (including fire and other perils within the scope of a policy known as a “Causes of Loss – Special Form” or “All Risk” policy) in an amount at least equal to 100% of the sum of the contract or contracts and all materials to complete the Restoration (as determined by Lender in Lender’s Discretion). |
(viii) | Earthquake. If Lender requires earthquake Insurance, the amount of coverage will be equal to the greater of the following: |
(1) | The Replacement Cost of the Mortgaged Property multiplied by the probable maximum loss for the Mortgaged Property, as determined by a Site Specific Seismic Report. |
(2) | The Replacement Cost of the Mortgaged Property multiplied by the projected loss with a 20% probable maximum loss. |
(ix) | Windstorm. If windstorm and/or windstorm related perils and/or “named storms” (“Windstorm Coverage”) are excluded from the “All Risks” policy required under Section 6.10(a)(i), Borrower will obtain separate coverage for such risks, either through an endorsement or a separate policy. Windstorm Coverage will be written in an amount equal to 100% of the Replacement Cost. Business income/rental value Insurance required under Section 6.10(a)(iii) will be in force for all losses covered by Windstorm Coverage. |
(x) | Other. Such other Insurance against loss or damage with respect to the Improvements and Personalty located on the Mortgaged Property as required by Lender (including liquor/dramshop and Mold Insurance) provided such Insurance is of the kind for risks from time to time customarily insured against and in such minimum coverage amounts and maximum deductibles as are generally required by institutional lenders for properties comparable to the Mortgaged Property or which Lender may deem necessary in Lender’s Discretion. |
(xi) | Professional Liability. Required if the Mortgaged Property has assisted living, Alzheimer’s care, or skilled nursing units. The policy may be written on a Claims Made Policy Form or an Occurrence-based Policy Form. Minimum coverage of $1,000,000 per occurrence and $2,000,000 in the general aggregate is required. If the professional liability policy covers multiple locations, aggregate limits apply per location. In addition, Borrower must maintain the following minimum umbrella or excess professional liability coverage: |
Total number of licensed beds covered by the policy | Minimum Umbrella/ Excess Coverage |
Less than or equal to 100 | $1 million |
100 to 500 | $5 million |
501 to 1,000 | $10 million |
Greater than 1,000 | $25 million |
(b) | Deductibles – Specific Insurance. |
(i) | The Insurance required pursuant to Section 6.10(a)(i) [All Risks of Physical Loss], (iv) [Flood], (v) [Boiler and machinery], (vi) [Terrorism], (vii) [Builder's All Risk] and (ix) [Windstorm] will have a per occurrence deductible meeting the following requirements: |
(A) | The deductible will not exceed $50,000 if the Replacement Cost of the Mortgaged Property is less than $10,000,000. |
(B) | The deductible will not exceed $75,000 if the Replacement Cost of the Mortgaged Property is equal to or greater than $10,000,000. |
(C) | For Windstorm Coverage the deductible will not exceed 5% of the Replacement Cost if the Mortgaged Property is located (1) in Florida, or (2) within 50 miles of the coast of any East Coast or Gulf Coast state. |
(D) | For flood Insurance provided under the NFIP, the deductible will comply with the NFIP deductible for the type of improvement insured. |
(ii) | Commercial general liability Insurance required pursuant to Section 6.10(a)(ii) will have a maximum per occurrence deductible or self-insured retention, or combined deductible or self-insured retention that meets the following requirements: |
(A) | The deductible or self-insured retention, as applicable, will not exceed $35,000 if the Indebtedness is less than or equal to $25,000,000. |
(B) | The deductible or self-insured retention, as applicable, will not exceed $50,000 if the Indebtedness is greater than $25,000,000. |
(c) | Payment of Premiums. All Hazard Insurance premiums and premiums for other Insurance required under this Section 6.10 will be paid in the manner provided in Article IV, unless Lender has designated in writing another method of payment. |
(d) | Policy Requirements. All policies will be in a form approved by Lender. All policies of Hazard Insurance will include a standard non-contributing, non-reporting mortgagee clause in favor of, and in a form approved by, Lender. All policies for general liability Insurance will contain a standard additional insured provision, in |
(e) | Evidence of Insurance; Renewals. Borrower will deliver to Lender a legible copy of each Insurance policy (or duplicate original), and Borrower will promptly deliver to Lender a copy of all renewal and other notices received by Borrower with respect to the policies. Borrower will ensure that the Mortgaged Property is continuously covered by the required Insurance policies and will deliver to Lender evidence acceptable to Lender in Lender’s Discretion that each policy has been renewed at least 15 days prior to the expiration date of such Insurance policy. If the evidence of a renewal does not include a legible copy of the renewal policy (or duplicate original), Borrower will deliver a legible copy of such renewal policy (or duplicate original) in a form satisfactory to Lender in Lender’s Discretion prior to the earlier of (i) 60 days after the expiration date of the original policy, or (ii) the date of any Notice to Lender under Section 6.10(i). |
(f) | Insurance Company Rating Requirements. Borrower will maintain the Insurance coverage described in this Section 6.10 with companies acceptable to Lender having a rated claims paying ability of at least one of the following: |
(i) | “A-” by Fitch, Inc. |
(ii) | “A-” by Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc. |
(iii) | “A3” by Moody’s Investors Service, Inc. |
(iv) | “A-” by A.M. Best Company and a financial size rating by A.M. Best Company of: |
(A) | “VII” for companies with an Aggregate Carrier Exposure of $5,000,000 or less. |
(B) | “VIII” for companies with an Aggregate Carrier Exposure greater than $5,000,000 and less than or equal to $25,000,000. |
(C) | “IX” for companies with an Aggregate Carrier Exposure greater than $25,000,000. |
(g) | Compliance With Insurance Requirements. Borrower will comply with all Insurance requirements and will not permit any condition to exist on the Mortgaged Property that would invalidate any part of any Insurance coverage required under this Loan Agreement. |
(h) | Blanket Insurance; Master Program. Borrower may provide Insurance coverage described in this Section 6.10 under a blanket insurance policy or master program which provides one “per occurrence” (per peril) limit of coverage as a shared limit for two or more properties (“Blanket Insurance Policy”) provided that each of the following conditions is satisfied: |
(i) | The Blanket Insurance Policy is acceptable to Lender in Lender’s Discretion. |
(ii) | The coverages under the Blanket Insurance Policy for the “All Risks” policy required under Section 6.10(a)(i) will be at least equal to the greater of: |
(A) | The largest individual Total Insurable Value of any property covered by the Blanket Insurance Policy. |
(B) | 10% of the aggregate Total Insurable Value of all properties covered by the Blanket Insurance Policy. |
(iii) | The coverages under the Blanket Insurance Policy for Windstorm Coverage will be at least equal to: |
(A) | 40% of the aggregate Total Insurable Value for all properties covered by the Blanket Policy if the Mortgaged Property is located (1) in Florida, or (2) within 50 miles of the coast of any East Coast or Gulf Coast state. |
(B) | If the Mortgaged Property is not located (1) in Florida, or (2) within 50 miles of the coast of any East Coast or Gulf Coast state, the greater of: |
(x) | The largest individual Total Insurable Value of any property covered by the Blanket Insurance Policy. |
(y) | 10% of the aggregate Total Insurable Value of all properties covered by the Blanket Insurance Policy. |
(iv) | The coverages under the Blanket Insurance Policy for flood Insurance will be at least equal to the greater of: |
(A) | The sum of the maximum flood Insurance available under the NFIP for each building covered by the Blanket Insurance Policy located in a SFHA. |
(B) | The largest individual Total Insurable Value of any property covered by the Blanket Insurance Policy that is required to be covered by flood Insurance. |
(C) | 40% of the largest aggregate Total Insurable Value within any Metropolitan Statistical Area that contains properties for which flood Insurance is required. |
(v) | For all other coverages provided under the Blanket Insurance Policy, the per occurrence limits for the applicable coverage will be at least equal to the coverages required under this Section 6.10 for the property having the largest individual Total Insurable Value of any property covered by the Blanket Insurance Policy. |
(vi) | Borrower will provide evidence acceptable to Lender in Lender’s Discretion that the per occurrence limit of the Insurance coverages provided by the Blanket Insurance Policy will be no less than the Replacement Cost of the property with the largest replacement cost exposure covered by the Blanket Insurance Policy unless a higher amount is required by Lender in Lender’s Discretion. |
(vii) | The maximum per occurrence deductible for the Blanket Insurance Policy providing property damage coverage and/or Windstorm Coverage is 1% of the Replacement Cost of the covered properties (to a maximum of $250,000). However, if the Blanket Insurance Policy provides Windstorm Coverage and the Mortgaged Property is located (A) in Florida, or (B) within 50 miles of the coast of any East Coast or Gulf Coast state, then the maximum per occurrence deductible for Windstorm Coverage will not exceed 5% of the aggregate Replacement Cost of the covered properties. The waiting period for business income/rental value Insurance coverage provided by the Blanket Insurance Policy will not exceed 7 days. |
(viii) | The minimum umbrella or excess liability coverage required if the Blanket Insurance Policy provides commercial general liability Insurance is as follows: |
Number of properties covered by the policy | Number of stories (based on the covered property with the greatest number of stories) | Minimum umbrella or excess liability |
2 to 3 | 3 or fewer 4 – 10 11 – 20 greater than 20 | $3,000,000 $5,000,000 $10,000,000 $15,000,000 |
4 to 10 | 3 or fewer 4 – 10 11 – 20 greater than 20 | $5,000,000 $10,000,000 $15,000,000 $20,000,000 |
11 to 20 | 3 or fewer 4 – 10 11 – 20 greater than 20 | $10,000,000 $15,000,000 $20,000,000 $25,000,000 |
Greater than 20 | 3 or fewer 4 – 10 11 – 20 greater than 20 | $15,000,000 $20,000,000 $25,000,000 $50,000,000 |
(i) | Obligations Upon Casualty; Proof of Loss. |
(i) | In the event of loss, Borrower will give immediate written notice to the Insurance carrier and to Lender. |
(ii) | Borrower authorizes and appoints Lender as attorney in fact for Borrower to make proof of loss, to adjust and compromise any claims under policies of Hazard Insurance, to appear in and prosecute any action arising from such Hazard Insurance policies, to collect and receive the proceeds of Hazard Insurance, to hold the proceeds of Hazard Insurance, and to deduct from such proceeds Lender’s expenses incurred in the collection of such proceeds. This power of attorney is coupled with an interest and therefore is irrevocable. However, nothing contained in this Section 6.10 will require Lender to incur any expense or take any action. Lender may, at Lender’s option, take one of the following actions: |
(A) | Require a “repair or replacement” settlement, in which case the proceeds will be used to reimburse Borrower for the cost of restoring and repairing the Mortgaged Property to the equivalent of its original condition or to a condition approved by Lender (“Restoration”). If Lender determines to require a repair or replacement settlement and to apply Insurance proceeds to Restoration, Lender will apply the proceeds in accordance with Lender’s then-current policies relating |
(B) | Require an “actual cash value” settlement in which case the proceeds may be applied to the payment of the Indebtedness, whether or not then due. |
(iii) | Subject to Section 6.10(j), Borrower may take the following actions: |
(A) | If a casualty results in damage to the Mortgaged Property for which the cost of Repairs will be less than the Borrower Proof of Loss Threshold, Borrower will have the sole right to make proof of loss, adjust and compromise the claim and collect and receive any proceeds directly without the approval or prior consent of Lender so long as the Insurance proceeds are used solely for the Restoration of the Mortgaged Property. |
(B) | If a casualty results in damage to the Mortgaged Property for which the cost of Repairs will be more than the Borrower Proof of Loss Threshold, but less than the Borrower Proof of Loss Maximum, Borrower is authorized to make proof of loss and adjust and compromise the claim without the prior consent of Lender, and Lender will hold the applicable Insurance proceeds to be used to reimburse Borrower for the cost of Restoration of the Mortgaged Property and will not apply such proceeds to the payment of the Indebtedness. |
(j) | Right to Apply Insurance Proceeds to Indebtedness. Lender will have the right to apply Insurance proceeds to the payment of the Indebtedness if Lender determines, in Lender’s Discretion, that any of the following conditions are met: |
(i) | An Event of Default (or any 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. |
(ii) | There will not be sufficient funds from Insurance proceeds, anticipated contributions of Borrower of its own funds or other sources acceptable to Lender to complete the Restoration. |
(iii) | The rental income from the Mortgaged Property after completion of the Restoration will not be sufficient to meet all operating costs and other expenses, deposits to Reserve Funds and Loan repayment obligations relating to the Mortgaged Property. |
(iv) | The Restoration will not be completed by the earlier of (A) at least one year before the Maturity Date (or 6 months before the Maturity Date if re-leasing |
(v) | The Restoration will not be completed within one year after the date of the loss or casualty. |
(vi) | The casualty involved an actual or constructive loss of more than 30% of the fair market value of the Mortgaged Property, and rendered untenantable more than 30% of the residential units of the Mortgaged Property. |
(vii) | After completion of the Restoration the fair market value of the Mortgaged Property is expected to be less than the fair market value of the Mortgaged Property immediately prior to such casualty (assuming the affected portion of the Mortgaged Property is relet within a reasonable period after the date of such casualty). |
(viii) | Leases covering less than 35% of the residential units of the Mortgaged Property will remain in full force and effect during and after the completion of Restoration. |
(k) | Succession to Insurance Policies. If the Mortgaged Property is sold at a foreclosure sale or Lender acquires title to the Mortgaged Property, Lender will automatically succeed to all rights of Borrower in and to any Insurance policies and unearned Insurance premiums and in and to the proceeds resulting from any damage to the Mortgaged Property prior to such sale or acquisition. |
(l) | Payment of Installments After Application of Insurance Proceeds. Unless Lender otherwise agrees in writing, any application of any Insurance proceeds to the Indebtedness will not extend or postpone the due date of any monthly installments referred to in the Note, Article IV of this Loan Agreement or change the amount of such installments. |
(m) | Assignment of Insurance Proceeds. Borrower agrees to execute such further evidence of assignment of any Insurance proceeds as Lender may require. |
(a) | Rights Generally. Borrower will promptly notify Lender in writing of any action or proceeding or notice relating to any proposed or actual condemnation or other taking, or conveyance in lieu thereof, of all or any part of the Mortgaged Property, whether direct or indirect (“Condemnation”). Borrower will appear in and prosecute or defend any action or proceeding relating to any Condemnation unless otherwise directed by Lender in writing. Borrower authorizes and appoints Lender as attorney in fact for Borrower to commence, appear in and prosecute, in Lender’s or Borrower’s name, any action or proceeding relating to any Condemnation and to settle or compromise any claim in connection with any Condemnation, after consultation |
(b) | Application of Award. Lender may hold such awards or proceeds and apply such awards or proceeds, after the deduction of Lender’s expenses incurred in the collection of such amounts (including Attorneys’ Fees and Costs) at Lender’s option, to the Restoration or repair of the Mortgaged Property or to the payment of the Indebtedness, with the balance, if any, to Borrower. Unless Lender otherwise agrees in writing, any application of any awards or proceeds to the Indebtedness will not extend or postpone the due date of any monthly installments referred to in the Note or Article IV of this Loan Agreement, or change the amount of such installments. Borrower agrees to execute such further evidence of assignment of any Condemnation awards or proceeds as Lender may require. |
(c) | Borrower’s Right to Condemnation Proceeds. Notwithstanding any provision to the contrary in this Section 6.11, but subject to Section 6.11(e), in the event of a partial Condemnation of the Mortgaged Property, as long as no Event of Default, or any 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, in the event of a partial Condemnation resulting in proceeds or awards in the amount of less than $100,000, Borrower will have the sole right to make proof of loss, adjust and compromise the claim and collect and receive any proceeds directly without the approval or prior consent of Lender so long as the proceeds or awards are used solely for the Restoration of the Mortgaged Property. |
(d) | Right to Apply Condemnation Proceeds to Indebtedness. In the event of a partial Condemnation of the Mortgaged Property resulting in proceeds or awards in the amount of $100,000 or more and subject to Section 6.11(e), Lender will have the right to exercise its option to apply Condemnation proceeds to the payment of the Indebtedness only if Lender, in Lender’s Discretion, determines that at least one of the following conditions is met: |
(i) | An Event of Default (or any 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. |
(ii) | There will not be sufficient funds from Condemnation proceeds, anticipated contributions of Borrower of its own funds or other sources acceptable to Lender to complete the Restoration. |
(iii) | The rental income from the Mortgaged Property after completion of the Restoration will not be sufficient to meet all operating costs and other expenses, deposits to Reserve Funds and Loan repayment obligations relating to the Mortgaged Property. |
(iv) | The Restoration will not be completed at least one year before the Maturity Date (or 6 months before the Maturity Date if re-leasing of the Mortgaged Property will be completed within such 6 month period). |
(v) | The Restoration will not be completed within one year after the date of the Condemnation. |
(vi) | The Condemnation involved an actual or constructive loss of more than 15% of the fair market value of the Mortgaged Property, and rendered untenantable more than 25% of the residential units of the Mortgaged Property. |
(vii) | After Restoration the fair market value of the Mortgaged Property is expected to be less than the fair market value of the Mortgaged Property immediately prior to the Condemnation (assuming the affected portion of the Mortgaged Property is relet within a reasonable period after the date of the Condemnation). |
(viii) | Leases covering less than 35% of residential units of the Mortgaged Property will remain in full force and effect during and after the completion of Restoration. |
(e) | Right to Apply Condemnation Proceeds in Connection with a Partial Release. Notwithstanding anything to the contrary set forth in this Loan Agreement, including this Section 6.11, for so long as the Loan or any portion of the Loan is included in a Securitization, then each of the following will apply: |
(i) | If any portion of the Mortgaged Property is released from the Lien of the Loan in connection with a Condemnation and if the ratio of (A) the unpaid principal balance of the Loan to (B) the value of the Mortgaged Property (taking into account only the related land and buildings and not any personal property or going-concern value), as determined by Lender in its sole and absolute discretion based on a commercially reasonable valuation method permitted in connection with a Securitization, is greater than 125% immediately after such Condemnation and before any Restoration or repair of the Mortgaged Property (but taking into account any planned Restoration or repair of the Mortgaged Property as if such planned Restoration or repair were completed), then Lender will apply any net proceeds or awards from such Condemnation, in full, to the payment of the principal of the Indebtedness whether or not then due and payable, unless Lender has received an opinion of counsel that a different application of such net proceeds or awards will not cause such Securitization to fail to meet applicable federal |
(ii) | If neither Borrower nor Lender has the right to receive any or all net proceeds or awards as a result of the provisions of any agreement affecting the Mortgaged Property (including any Ground Lease, condominium document, or reciprocal easement agreement) and, therefore cannot apply such net proceeds or awards to the payment of the principal of the Indebtedness as set forth above, then Borrower will prepay the Indebtedness in an amount which Lender, in its sole and absolute discretion, deems necessary to ensure that the Securitization will not fail to meet applicable federal income tax qualification requirements or be subject to any tax as a result of the Condemnation. |
(f) | Succession to Condemnation Proceeds. If the Mortgaged Property is sold at a foreclosure sale or Lender acquires title to the Mortgaged Property, Lender will automatically succeed to all rights of Borrower in and to any Condemnation proceeds and awards prior to such sale or acquisition. |
(a) | Prohibited Activities and Conditions. Except for matters described in this Section 6.12, Borrower will not cause or permit Prohibited Activities or Conditions. Borrower will comply with all Hazardous Materials Laws applicable to the Mortgaged Property. Without limiting the generality of the previous sentence, Borrower will (i) obtain and maintain all Environmental Permits required by Hazardous Materials Laws and comply with all conditions of such Environmental Permits, (ii) cooperate with any inquiry by any Governmental Authority, and (iii) comply with any governmental or judicial order that arises from any alleged Prohibited Activity or Condition. |
(b) | Employees, Tenants and Contractors. Borrower will take all commercially reasonable actions (including the inclusion of appropriate provisions in any Leases executed after the date of this Loan Agreement) to prevent its employees, agents and contractors, and all tenants and other occupants from causing or permitting any Prohibited Activities or Conditions. Borrower will 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) | O&M Programs. As required by Lender, Borrower will also have established a written operations and maintenance program with respect to certain Hazardous Materials. Each such operations and maintenance program and any additional or revised operations and maintenance programs established for the Mortgaged Property pursuant to this Section 6.12 must be approved by Lender and will be referred to in this Loan Agreement as an “O&M Program.” Borrower will comply |
(d) | Notice to Lender. Borrower will promptly give Notice to Lender upon the occurrence of any of the following events: |
(i) | Borrower’s discovery of any Prohibited Activity or Condition. |
(ii) | Borrower’s receipt of or knowledge of any written complaint, order, notice of violation or other communication from any tenant, Property Manager, operator of the Facility, 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. |
1. | Borrower’s breach of any of its obligations under this Section 6.12. |
(e) | Environmental Inspections, Tests and Audits. Borrower will pay promptly the costs of any environmental inspections, tests or audits, a purpose of which is to identify the extent or cause of or potential for a Prohibited Activity or Condition (“Environmental Inspections”), required by Lender in connection with any foreclosure or deed in lieu of foreclosure, or as a condition of Lender’s consent to any Transfer under Article VII, or required by Lender following a reasonable determination by Lender that Prohibited Activities or Conditions may exist. Any such costs incurred by Lender (including Attorneys’ Fees and Costs and the costs of technical consultants whether incurred in connection with any judicial or administrative process or otherwise) that Borrower fails to pay promptly will become an additional part of the Indebtedness as provided in Section 9.02. As long as (i) no Event of Default has occurred and is continuing, (ii) Borrower has actually paid for or reimbursed Lender for all costs of any such Environmental Inspections performed or required by Lender, and (iii) Lender is not prohibited by law, contract or otherwise from doing so, Lender will make available to Borrower, without representation of any kind, copies of Environmental Inspections prepared by third parties and delivered to Lender. Lender reserves the right, and Borrower 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 or for Lender 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 |
(f) | Remedial Work. If any investigation, site monitoring, containment, clean-up, Restoration or other remedial work (“Remedial Work”) is necessary to comply with any Hazardous Materials Law or order of any Governmental Authority that has or acquires jurisdiction over the Mortgaged Property or the use, operation or improvement of the Mortgaged Property, or 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 will, by the earlier of (i) the applicable deadline required by Hazardous Materials Law or (ii) 30 days after Notice from Lender demanding such action, begin performing the Remedial Work, and thereafter diligently prosecute it to completion, and must in any event complete the work by the time required by applicable Hazardous Materials Law. 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 will reimburse Lender on demand for the cost of doing so. Any reimbursement due from Borrower to Lender will become part of the Indebtedness as provided in Section 9.02. |
(a) | Single Purpose Entity Requirements. Until the Indebtedness is paid in full, each Borrower and any SPE Equity Owner will remain a “Single Purpose Entity,” which means at all times since its formation and thereafter it will satisfy each of the following conditions: |
(i) | It will not engage in any business or activity, other than the ownership, operation and maintenance of the Mortgaged Property and activities incidental thereto. |
(ii) | It will not acquire, own, hold, lease, operate, manage, maintain, develop or improve any assets other than the Mortgaged Property and such Personalty as may be necessary for the operation of the Mortgaged Property and will conduct and operate its business as presently conducted and operated. |
(iii) | It will preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the laws of the jurisdiction of its |
(iv) | It will not merge or consolidate with any other Person. |
(v) | It will not take any action to dissolve, wind-up, terminate or liquidate in whole or in part; to sell, transfer or otherwise dispose of all or substantially all of its assets; to change its legal structure; transfer or permit the direct or indirect transfer of any partnership, membership or other equity interests, as applicable, other than Transfers permitted under this Loan Agreement; issue additional partnership, membership or other equity interests, as applicable, or seek to accomplish any of the foregoing. |
(vi) | It will not, without the prior unanimous written consent of all of Borrower’s partners, members, or shareholders, as applicable, and, if applicable, the prior unanimous written consent of 100% of the members of the board of directors or of the board of Managers of Borrower or the SPE Equity Owner, take any of the following actions: |
(A) | File any insolvency, or reorganization case or proceeding, to institute proceedings to have Borrower or any SPE Equity Owner be adjudicated bankrupt or insolvent. |
(B) | Institute proceedings under any applicable insolvency law. |
(C) | Seek any relief under any law relating to relief from debts or the protection of debtors. |
(D) | Consent to the filing or institution of bankruptcy or insolvency proceedings against Borrower or any SPE Equity Owner. |
(E) | File a petition seeking, or consent to, reorganization or relief with respect to Borrower or any SPE Equity Owner under any applicable federal or state law relating to bankruptcy or insolvency. |
(F) | Seek or consent to the appointment of a receiver, liquidator, assignee, trustee, sequestrator, custodian, or any similar official for Borrower or a substantial part of its property or for any SPE Equity Owner or a substantial part of its property. |
(G) | Make any assignment for the benefit of creditors of Borrower or any SPE Equity Owner. |
(H) | Admit in writing Borrower’s or any SPE Equity Owner’s inability to pay its debts generally as they become due. |
(I) | Take action in furtherance of any of the foregoing. |
(vii) | It will not amend or restate its organizational documents if such change would cause the provisions set forth in those organizational documents not to comply with the requirements set forth in this Section 6.13. |
(viii) | It will not own any subsidiary or make any investment in, any other Person. |
(ix) | It will not commingle its assets with the assets of any other Person and will hold all of its assets in its own name. |
(x) | It will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation), other than, (A) the Indebtedness (and any further indebtedness as described in Section 12.11 with regard to Supplemental Instruments) and (B) customary unsecured trade payables incurred in the ordinary course of owning and operating the Mortgaged Property provided the same are not evidenced by a promissory note, do not exceed, in the aggregate, at any time a maximum amount of 2% of the original principal amount of the Indebtedness and are paid within 60 days of the date incurred. |
(xi) | It will maintain its records, books of account, bank accounts, financial statements, accounting records and other entity documents separate and apart from those of any other Person and will not list its assets as assets on the financial statement of any other Person; provided, however, that Borrower’s assets may be included in a consolidated financial statement of its Affiliate provided that (A) appropriate notation will be made on such consolidated financial statements to indicate the separateness of Borrower from such Affiliate and to indicate that Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate or any other Person and (B) such assets will also be listed on Borrower’s own separate balance sheet. |
(xii) | Except for capital contributions or capital distributions permitted under the terms and conditions of its organizational documents, it will only enter into any contract or agreement with any general partner, member, shareholder, principal or Affiliate of Borrower or any Guarantor, or any general partner, member, principal or Affiliate thereof, upon terms and conditions that are commercially reasonable and substantially similar to those that would be available on an arm’s-length basis with third parties. |
(xiii) | It will not maintain its assets in such a manner that will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person. |
(xiv) | It will not assume or guaranty (excluding any guaranty that has been executed and delivered in connection with the Note) the debts or obligations of any other Person, hold itself out to be responsible for the debts of another Person, |
(xv) | It will not make or permit to remain outstanding any loans or advances to any other Person except for those investments permitted under the Loan Documents and will not buy or hold evidence of indebtedness issued by any other Person (other than cash or investment-grade securities). |
(xvi) | It will file its own tax returns separate from those of any other Person, except to the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under applicable law, and will pay any taxes required to be paid under applicable law. |
(xvii) | It will hold itself out to the public as a legal entity separate and distinct from any other Person and conduct its business solely in its own name, will correct any known misunderstanding regarding its separate identity and will not identify itself or any of its Affiliates as a division or department of any other Person. |
(xviii) | It will maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations and will pay its debts and liabilities from its own assets as the same become due. |
(xix) | It will allocate fairly and reasonably shared expenses with Affiliates (including shared office space) and use separate stationery, invoices and checks bearing its own name. |
(xx) | It will pay (or cause the Property Manager or any operator of the Facility to pay on behalf of Borrower from Borrower’s funds) its own liabilities (including salaries of its own employees) from its own funds. |
(xxi) | It will not acquire obligations or securities of its partners, members, shareholders, or Affiliates, as applicable. |
(xxii) | Except as contemplated or permitted by the property management agreement with respect to the Property Manager or any operating lease or operating agreement with respect to any operator of the Facility, it will not permit any Affiliate or constituent party independent access to its bank accounts. |
(xxiii) | It will maintain a sufficient number of employees (if any) in light of its contemplated business operations and pay the salaries of its own employees, if any, only from its own funds. |
(xxiv) | If such entity is a single member limited liability company, such entity will satisfy each of the following conditions: |
(A) | Be formed and organized under Delaware law. |
(B) | Have either one springing member that is a corporation or two springing members who are natural persons. If there is more than one springing member, only one springing member will be the sole member of Borrower or SPE Equity Owner (as applicable) at any one time, and the second springing member will become the sole member only upon the first springing member ceasing to be a member. |
(C) | Otherwise comply with all Rating Agencies’ criteria for single member limited liability companies (including the delivery of Delaware single member limited liability company opinions acceptable in all respects to Lender and to the Rating Agencies). |
(D) | At all times Borrower or SPE Equity Owner (as applicable) will have one and only one member. |
(xxv) | If such entity is a single member limited liability company that is board-managed, such entity will have a board of Managers separate from that of Guarantor and any other Person and will cause its board of Managers to keep minutes of board meetings and actions and observe all other Delaware limited liability company required formalities. |
(xxvi) | If an SPE Equity Owner is required pursuant to this Loan Agreement, if Borrower is (A) a limited liability company with more than one member, then Borrower has and will have at least one member that is an SPE Equity Owner that has satisfied and will satisfy the requirements of Section 6.13(b) and such member is its managing member, or (B) a limited partnership, then all of its general partners are SPE Equity Owners that have satisfied and will satisfy the requirements set forth in Section 6.13(b). |
(b) | SPE Equity Owner Requirements. The SPE Equity Owner, if applicable, will at all times since its formation and thereafter comply in its own right (subject to the modifications set forth below), and will cause Borrower to comply, with each of the requirements of a Single Purpose Entity. Upon the withdrawal or the disassociation of an SPE Equity Owner from Borrower, Borrower will immediately appoint a new SPE Equity Owner, whose organizational documents are substantially similar to those of the withdrawn or disassociated SPE Equity Owner, and deliver a new nonconsolidation opinion to the Rating Agencies and Lender in form and substance satisfactory to Lender and to the Rating Agencies (unless the opinion is waived by the Rating Agencies), with regard to nonconsolidation by a bankruptcy court of the assets of each of Borrower and SPE Equity Owner with those of its Affiliates. |
(i) | With respect to Section 6.13(a)(i), the SPE Equity Owner will not engage in any business or activity other than being the sole managing member or general partner, as the case may be, of Borrower and owning at least 0.5% equity interest in Borrower. |
(ii) | With respect to Section 6.13(a)(ii), the SPE Equity Owner has not and will not acquire or own any assets other than its equity interest in Borrower and personal property related thereto. |
(iii) | With respect to Section 6.13(a)(viii), the SPE Equity Owner will not own any subsidiary or make any investment in any other Person, except for Borrower. |
(iv) | With respect to Section 6.13(a)(x), the SPE Equity Owner has not and will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation), other than (A) customary unsecured payables incurred in the ordinary course of owning Borrower provided the same are not evidenced by a promissory note, do not exceed, in the aggregate, at any time a maximum amount of $10,000 and are paid within 60 days of the date incurred and (B) in its capacity as general partner of Borrower (if applicable). |
(v) | With respect to Section 6.13(a)(xiv), the SPE Equity Owner will not assume or guaranty the debts or obligations of any other Person, hold itself out to be responsible for the debts of another Person, pledge its assets to secure the obligations of any other Person or otherwise pledge its assets for the benefit of any other Person, or hold out its credit as being available to satisfy the obligations of any other Person, except for in its capacity as general partner of Borrower (if applicable). |
(c) | Effect of Transfer on Special Purpose Entity Requirements. Notwithstanding anything to the contrary in this Loan Agreement, no Transfer will be permitted under Article VII unless the provisions of this Section 6.13 are satisfied at all times. |
(a) | Completion of Repairs. Borrower will commence any Repairs as soon as practicable after the date of this Loan Agreement and will diligently proceed with and complete such Repairs on or before the Completion Date. All Repairs and Capital Replacements will be completed in a good and workmanlike manner, with suitable materials, and in accordance with good building practices and all applicable laws, ordinances, rules, regulations, building setback lines and restrictions applicable to the Mortgaged Property. Borrower agrees to cause the replacement of any material or work that is defective, unworkmanlike or that does not comply with the requirements of this Loan Agreement, as determined by Lender. |
(b) | Purchases. Without the prior written consent of Lender, no materials, machinery, equipment, fixtures or any other part of the Repairs or Capital Replacements will be purchased or installed under conditional sale contracts or lease agreements, or any other arrangement wherein title to such Repairs or Capital Replacements is retained or subjected to a purchase money security interest, or the right is reserved or accrues to anyone to remove or repossess any such Repairs or Capital Replacements, or to consider them as personal property. |
(c) | Lien Protection. Borrower will promptly pay or cause to be paid, when due, all costs, charges and expenses incurred in connection with the construction and completion of the Repairs or Capital Replacements, and will keep the Mortgaged Property free and clear of any and all Liens other than the Lien of the Security Instrument and any other junior Lien to which Lender has consented. |
(d) | Adverse Claims. Borrower will promptly advise Lender in writing of any litigation, Liens or claims affecting the Mortgaged Property and of all complaints and charges made by any Governmental Authority that may delay or adversely affect the Repairs or Capital Replacements. |
(a) | Borrower will, promptly upon Lender’s request, deliver to Lender an executed copy of each residential Lease then in effect. All Leases for residential dwelling units will be on forms acceptable to Lender, will be for initial terms of at least 6 months and not more than 2 years, and will not include options to purchase. |
(b) | If Borrower is a cooperative housing corporation or association, notwithstanding anything to the contrary contained in this Loan Agreement, so long as Borrower remains a cooperative housing corporation or association and is not in breach of any covenant of this Loan Agreement, Lender consents to each of the following: |
(i) | The execution of Leases for terms in excess of 2 years to a tenant shareholder of Borrower, so long as such Leases, including proprietary Leases, are and will remain subordinate to the Lien of the Security Instrument. |
(ii) | The surrender or termination of such Leases where the surrendered or terminated Lease is immediately replaced or where Borrower makes its best efforts to secure such immediate replacement by a newly-executed Lease of the same apartment to a tenant shareholder of Borrower. However, no consent is given by Lender to any execution, surrender, termination or assignment of a Lease under terms that would waive or reduce the obligation of the resulting tenant shareholder under such Lease to pay cooperative assessments in full when due or the obligation of the former tenant shareholder to pay any unpaid portion of such assessments. |
(a) | Deliver to Lender a written statement, signed and acknowledged by Borrower, certifying to Lender or any Person designated by Lender, as of the date of such statement, (i) 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), (ii) the unpaid principal balance of the Note, (iii) the date to which interest under the Note has been paid, (iv) 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), (v) whether there are any then-existing setoffs or defenses known to Borrower against the enforcement of any right or remedy of Lender under the Loan Documents, and (vi) any additional facts requested by Lender. |
(b) | Execute, acknowledge and/or deliver, at its sole cost and expense, all further acts, deeds, conveyances, assignments, estoppel certificates, financing statements or amendments, transfers and assurances as Lender may 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 Loan Documents or in connection with Lender’s consent rights under Article VII. |
(a) | Borrower will not engage in any transaction which would cause an obligation, or action taken or to be taken under this Loan Agreement (or the exercise by Lender of any of its rights under the Note, this Loan Agreement or any of the other Loan |
(b) | Borrower will deliver to Lender such certifications or other evidence from time to time throughout the term of this Loan Agreement, as requested by Lender in Lender’s Discretion, confirming each of the following: |
(i) | Borrower is not an “employee benefit plan” as defined in Section 3(3) of ERISA, which is subject to Title I of ERISA, a “plan” to which Section 4975 of the Tax Code applies, or an entity whose underlying assets constitute “plan assets” of one or more of such plans. |
(ii) | Borrower is not a “governmental plan” within the meaning of Section 3(32) of ERISA. |
(iii) | Borrower is not subject to state statutes regulating investments or fiduciary obligations with respect to governmental plans. |
(iv) | One or more of the following circumstances is true: |
(A) | Equity interests in Borrower are publicly offered securities within the meaning of 29 C.F.R. Section 2510.3-101(b)(2), as amended from time to time or any successor provision. |
(B) | Less than 25% of each outstanding class of equity interests in Borrower are held by “benefit plan investors” within the meaning of Section 3(42) of ERISA, as amended from time to time or any successor provision. |
(C) | Borrower qualifies as either an “operating company” or a “real estate operating company” within the meaning of 29 C.F.R. Section 2510.3-101(c) or (e), as either may be amended from time to time or any successor provisions, or is an investment company registered under the Investment Company Act of 1940. |
(a) | Without limiting the generality of Section 6.03, Borrower will, or will cause any operator of the Facility to, operate the Facility for its Intended Use and will, or will cause any operator of the Facility to, provide, to Lender’s reasonable satisfaction, all of the facilities, services, staff, equipment and supplies required or normally associated with a typical high quality property devoted to the Intended Use. |
(b) | Borrower will, or will cause any operator of the Facility to, operate the Facility in a manner such that all applicable Licenses now or hereafter in effect will remain in |
(c) | Borrower will, or as applicable, Borrower will cause any operator of the Facility to, maintain and implement all compliance and procedures policies as may be required by any applicable Healthcare Laws or Governmental Authority. Upon request by Lender, Borrower will provide Lender with copies of Borrower’s, and if applicable, each operator of the Facility’s, compliance manuals which evidence such compliance. |
(a) | Borrower will, or will cause any operator of the Facility to, furnish to Lender, within 10 days after receipt by Borrower or any operator of the Facility, any and all written notices from any Governmental Authority that (i) any License is being Downgraded, revoked, terminated, suspended, restricted or conditioned or may not be renewed or reissued or that action is pending or being considered to Downgrade, revoke, terminate, suspend, restrict or condition (or not renew or reissue) any such License, (ii) any violation, fine, finding, investigation or corrective action concerning any License is pending or being considered, rendered or adopted, or (iii) any Healthcare Law or any health or safety code or building code violation or other deficiency at the Mortgaged Property has been identified, but in each case only if the subject matter of such written notice (A) could materially impact the operation or value of the Facility, or (B) requires additional formal or informal action by Borrower or operator of the Facility that is more than development or implementation of a routine plan of correction, including, without limitation, participation in hearings concerning continued licensing or Medicare or Medicaid participation, entering into consent orders affecting licensing affecting the Facility, or engaging in oversight management. |
(b) | Borrower will, or will cause any operator of the Facility to, furnish to Lender, within 10 days after receipt by Borrower or any operator of the Facility, a copy of any survey, report or statement of deficiencies by any Governmental Authority, but only if the subject matter of such survey, report or statement of deficiencies (i) could materially impact the operation or value of the Facility, or (ii) requires additional formal or informal action by Borrower or operator of the Facility that is more than development or implementation of a routine plan of correction, including, without limitation, participation in hearings concerning continued licensing or Medicare or |
(c) | Upon Lender’s request and subject to Privacy Laws, Borrower will, or will cause the operator of the Facility to, furnish to Lender true and correct rent rolls and copies of all Leases. |
(d) | Borrower will provide Lender with a copy of any License issued or renewed in the future by a Governmental Authority within 30 days after its issuance or renewal. To the extent that any such License is assignable, Borrower will assign it to Lender as additional security for the Indebtedness, using a form of assignment acceptable to Lender in its discretion. If any License is issued to an operator of the Facility, to the extent such License is assignable, Borrower will cause such operator or management agent to assign the License to Lender as additional security for the Indebtedness, using a form of assignment acceptable to Lender in its discretion. |
(e) | Subject to Privacy Laws, Borrower will furnish, and will cause any operator of the Facility to furnish, to Lender at Borrower’s expense all evidence, which Lender may from time to time reasonably request as to the continuing accuracy and validity of all representations and warranties made by Borrower in the Loan Documents and the continuing compliance with and satisfaction of all covenants and conditions contained therein. |
(a) | Borrower will not, and will not permit any operator of the Facility to, enter into any Material Contract, unless that Material Contract provides that it is terminable upon not more than 30 days’ notice by Borrower, or if Borrower is not a party to the Material Contract, the operator of the Facility, and their respective successors and assigns, without the necessity of establishing cause and without payment of a penalty or termination fee or extra charge. |
(b) | Borrower will (or if Borrower is not a party thereto, will cause an operator of the Facility to) fully perform all of its obligations under each Contract, and Borrower will not (and Borrower will not permit an operator of the Facility to) enter into, terminate or amend, modify, assign or otherwise encumber its interest in any Material Contract without the prior written approval of Lender. If Borrower or an operator of the Facility enters into any Material Contract in the future (with Lender’s consent thereto), Borrower will (or will cause the operator to), simultaneously with entering |
(a) | The form of residential Lease and/or residential care agreement or similar resident agreement approved by Lender prior to the date of this Loan Agreement with respect to the Facility will not be revised in any material respect (except as may be required by applicable Healthcare Laws) without Lender’s prior written consent thereto. All Leases and agreements with residents at the Facility will be on forms approved by Lender. |
(b) | Borrower or any operator of the Facility will maintain all deposits by all residents of the Facility in accordance with all applicable laws and regulations pertaining thereto, and in accordance with the terms of each such resident’s Lease or resident care agreement, and otherwise in accordance with the other provisions of this Loan Agreement and the other Loan Documents. |
(a) | Without the prior written consent of Lender, which may be granted or withheld in Lender’s discretion, Borrower will not, and will not permit any management agent for the Mortgaged Property or any operator of the Mortgaged Property to, participate in any Governmental Payor Program, or any provider agreement under any Governmental Payor Program, or accept any resident whose ability to reside in the Mortgaged Property requires that Borrower, the Mortgaged Property or any management agent for the Mortgaged Property or any operator of the Mortgaged Property participate in any Governmental Payor Program. |
(b) | In addition to the Events of Default listed in Section 9.01, it also will constitute an Event of Default if Borrower participates, or permits any management agent for the Mortgaged Property or operator of the Mortgaged Property to participate, in any Governmental Payor Program. |
ARTICLE VII | TRANSFERS OF THE MORTGAGED PROPERTY OR INTERESTS IN BORROWER. |
(a) | A Transfer to which Lender has consented in Lender’s sole discretion (without limiting Lender’s sole discretion, Lender will not consent to a Transfer while an Event of Default exists) so long as Lender has received (i) a $5,000 review fee as a condition of Lender’s considering any proposed Transfer, (ii) a transfer fee in an amount equal to 1% of the unpaid principal balance of the Indebtedness immediately before the Transfer as a condition of Lender’s consent to the proposed Transfer, (iii) reimbursement for all of Lender’s out-of-pocket costs (including reasonable |
(b) | A Transfer that is not a prohibited Transfer pursuant to Section 7.02. |
(c) | A Transfer that is conditionally permitted pursuant to Section 7.03 upon the satisfaction of all applicable conditions. |
(d) | The grant of a leasehold interest in an individual dwelling unit for a term of 2 years or less (or longer if approved by Lender in writing) not containing an option to purchase. |
(e) | Entering into any New Non-Residential Lease, or modifying or terminating any Non-Residential Lease, in each case in compliance with Section 6.04. |
(f) | 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, encumbrances and security interests other than those created by the Loan Documents or consented to by Lender. |
(g) | The creation of a mechanic’s, materialmen’s, or judgment Lien against the Mortgaged Property, which is released of record, bonded, or otherwise remedied to Lender’s satisfaction within 60 days of the date of creation; provided, however, if Borrower is diligently prosecuting such release or other remedy and advises Lender that such release or remedy cannot be consummated within such 60-day period, Borrower will have an additional period of time (not exceeding 120 days from the date of creation or such earlier time as may be required by applicable law in which the lienor must act to enforce the Lien) within which to obtain such release of record or consummate such other remedy. |
(h) | If Borrower is a housing cooperative corporation or association, the Transfer of the shares in the housing cooperative or the assignment of the occupancy agreements or Leases relating thereto to tenant shareholders of the housing cooperative or association. |
(i) | A Supplemental Instrument that complies with Section 12.11 or Defeasance that complies with Section 12.12. |
(a) | A Transfer of all or any part of the Mortgaged Property or any interest in the Mortgaged Property, including the grant, creation or existence of any Lien on the Mortgaged Property, whether voluntary, involuntary or by operation of law, and whether or not such Lien has priority over the Lien of the Security Instrument, other than the Lien of the Security Instrument or, if this Loan Agreement is entered into in connection with a Supplemental Loan, the Lien of the Senior Instrument, or any other Lien to which Lender has consented. |
(b) | A Transfer or series of Transfers of any legal or equitable interest of any Guarantor which owns a direct or indirect interest in Borrower that result(s) in such Guarantor no longer owning any direct or indirect interest in Borrower. |
(c) | A Transfer or series of Transfers of any legal or equitable interest since the Closing Date that result(s) in a change of more than 50% of the ownership interests (or beneficial interests, if the applicable entity is a trust) in Borrower or any Designated Entity for Transfers. |
(d) | A Transfer of any general partnership interest in a partnership, or any manager interest (whether a member manager or nonmember manager) in a limited liability company, or a change in the trustee of a trust other than as permitted in Section 7.04, if such partnership, limited liability company, or trust, as applicable, is the Borrower or a Designated Entity for Transfers. |
(e) | If Borrower or any Designated Entity for Transfers is a corporation whose outstanding voting stock is held by 100 or more shareholders, one or more Transfers by a single transferor within a 12-month period affecting an aggregate of 10% or more of that stock. |
(f) | The grant, creation or existence of any Lien, whether voluntary, involuntary or by operation of law, and whether or not such Lien has priority over the Lien of the Security Instrument, on any ownership interest in Borrower or any Designated Entity for Transfers, if the foreclosure of such Lien would result in a Transfer prohibited under Sections 7.02(b), (c), (d), or (e). |
(a) | Transfer by Devise, Descent or Operation of Law. Upon the death of a natural person, a Transfer which occurs by devise, descent, or by operation of law to one or more Immediate Family Members of such natural person or to a trust or family conservatorship established for the benefit of such Immediate Family Members (each a “Beneficiary”), provided that each of the following conditions is satisfied: |
(i) | The Property Manager or operator of the Facility, as applicable, continues to be responsible for the management of the Mortgaged Property, and such Transfer will not result in a change in the day-to-day operations of the Mortgaged Property. |
(ii) | Lender receives confirmation acceptable to Lender, in Lender’s Discretion, that Borrower continues to satisfy the requirements of Section 6.13. |
(iii) | Each Guarantor executes such documents and agreements as Lender requires in Lender’s Discretion to evidence and effect the ratification of each Guaranty, or in the event of the death of any Guarantor, Borrower causes one of the following to occur: |
(A) | One or more Persons acceptable to Lender, in Lender’s Discretion, execute(s) and deliver(s) to Lender a guaranty in a form acceptable to Lender and in substantially the same form as the Guaranty executed on the Closing Date, without any cost or expense to Lender. |
(B) | The estate of the deceased Guarantor immediately ratifies the Guaranty in writing, and within 6 months after the date of the death of the deceased Guarantor one or more Persons, acceptable to Lender in Lender’s Discretion, execute(s) and deliver(s) to Lender a guaranty in a form acceptable to Lender and in substantially the same form as the Guaranty executed on the Closing Date, without any cost or expense to Lender. |
(iv) | Borrower gives Lender Notice of such Transfer together with copies of all documents effecting such Transfer not more than 30 calendar days after the date of such Transfer, and contemporaneously with the Notice, takes each of the following additional actions: |
(A) | Borrower reaffirms the representations and warranties under Article V. |
(B) | Borrower satisfies Lender, in Lender’s Discretion, that the Beneficiary’s organization, credit and experience in the management of similar properties are appropriate to the overall structure and documentation of the existing financing. |
(v) | Borrower or Beneficiary causes to be delivered to Lender such legal opinions as Lender deems necessary, in Lender’s Discretion, including a nonconsolidation opinion (if a nonconsolidation opinion was delivered on the Closing Date and if required by Lender), an opinion that the ratification of the Loan Documents and Guaranty (if applicable) have been duly authorized, executed, and delivered and that the ratification documents and |
(vi) | Borrower (A) pays the Transfer Review Fee to Lender, and (B) pays or reimburses Lender, upon demand, for all costs and expenses including all Attorneys’ Fees and Costs, incurred by Lender in connection with such Transfer; provided, however, that Lender will not be entitled to collect a Transfer Fee. |
(b) | Easement, Restrictive Covenant or Other Encumbrance. The grant of an easement, restrictive covenant or other encumbrance, provided that each of the following conditions is satisfied: |
(i) | Borrower provides Lender with at least 30 days prior Notice of the proposed grant and pays the Transfer Review Fee to Lender. |
(ii) | Prior to the grant, Lender determines, in Lender’s Discretion, that the easement, restrictive covenant or other encumbrance will not materially affect the operation or value of the Mortgaged Property or Lender’s interest in the Mortgaged Property. |
(iii) | Borrower pays or reimburses Lender, upon demand, for all costs and expenses, including all Attorneys’ Fees and Costs, incurred by Lender in connection with reviewing Borrower’s request for Lender’s review of such grant of easement, restrictive covenant or other encumbrance; provided, however, that Lender will not be entitled to collect a Transfer Fee. |
(iv) | If the Note is held by a REMIC trust, if required by Lender, Borrower provides an opinion of counsel for Borrower, in form and substance satisfactory to Lender in its sole and absolute discretion, confirming each of the following: |
(A) | The grant of such easement has been effected in accordance with the requirements of Treasury Regulation Section 1.860G-2(a)(8) (as such regulation may be modified, amended or replaced from time to time). |
(B) | The qualification and status of the REMIC trust as a REMIC will not be adversely affected or impaired as a result of such grant. |
(C) | The REMIC trust will not incur a tax under Section 860G(d) of the Tax Code as a result of such grant. |
(c) | Publicly-Held Fund or Publicly-Held Real Estate Investment Trust. If a Designated Entity for Transfers is a publicly-held fund or a publicly-held real estate investment trust, either of the following: |
(i) | The public issuance of common stock, convertible debt, equity or other similar securities (“Public Fund/REIT Securities”) and the subsequent Transfer of such Public Fund/REIT Securities. |
(ii) | The acquisition by a single Public Fund/REIT Securities holder of an ownership percentage of 10% or more in the Designated Entity for Transfers, if Borrower provides notice of that acquisition to Lender within 30 days following the acquisition. |
(d) | Reserved. |
(a) | Continuation of Rate Cap Agreement. If a Transfer of all or part of the Mortgaged Property permitted by this Loan Agreement occurs, Borrower will ensure that any third-party interest rate cap is transferred to the applicable transferee or, if the interest rate cap is not transferable, Borrower will replace the third-party interest rate cap in accordance with Lender’s then-current requirements. |
(b) | Establishment or Modification of Rate Cap Agreement Reserve Fund. |
(i) | If the interest rate cap which will be in place immediately following the Transfer is scheduled to expire prior to the Maturity Date, Lender may require Borrower to establish a Rate Cap Agreement Reserve Fund. |
(ii) | If Borrower has previously established a Rate Cap Agreement Reserve Fund, then Lender will determine whether the balance of any existing Rate Cap Agreement Reserve Fund is sufficient under then-current market conditions to purchase a replacement cap, and may then take any of the following actions: |
(A) | Lender may require Borrower to make an additional deposit into the Rate Cap Agreement Reserve Fund. |
(B) | If funding of the Rate Cap Agreement Reserve Fund has been deferred, Lender may require Borrower to begin making monthly deposits into the Replacement Cap Agreement Reserve Fund. |
(C) | Lender may require Borrower to increase the amount of monthly deposits to the Rate Cap Agreement Reserve Fund. |
(a) | Borrower fails to pay or deposit when due any amount required by the Note, this Loan Agreement or any other Loan Document. |
(b) | Borrower fails to maintain the Insurance coverage required by Section 6.10. |
(c) | Borrower or any SPE Equity Owner fails to comply with the provisions of Section 6.13 or if any of the assumptions contained in any nonconsolidation opinions delivered to Lender at any time is or becomes untrue in any material respect. |
(d) | Borrower or any SPE Equity Owner, any of its officers, directors, trustees, general partners or managers or any Guarantor commits fraud or a material misrepresentation or material omission in connection with (i) the application for or creation of the Indebtedness, (ii) any financial statement, Rent Schedule, or other report or information provided to Lender during the term of the Indebtedness, or (iii) any request for Lender’s consent to any proposed action, including a request for disbursement of funds under this Loan Agreement. |
(e) | Borrower fails to comply with the Condemnation provisions of Section 6.11. |
(f) | A Transfer occurs that violates the provisions of Article VII, whether or not any actual impairment of Lender’s security results from such Transfer. |
(g) | A forfeiture action or proceeding, whether civil or criminal, is commenced which could result in a forfeiture of the Mortgaged Property or otherwise materially impair the Lien created by the Security Instrument or Lender’s interest in the Mortgaged Property. |
(h) | Borrower fails to perform any of its obligations under this Loan Agreement (other than those specified in Sections 9.01(a) through (g)), as and when required, which failure continues for a period of 30 days after Notice of such failure by Lender to Borrower. However, if Borrower’s failure to perform its obligations as described in this Section 9.01(h) is of the nature that it cannot be cured within the 30 day cure period after such Notice from Lender but reasonably could be cured within 90 days, then Borrower will have additional time as determined by Lender in Lender’s |
(i) | Borrower fails to perform any of its obligations as and when required under any Loan Document other than this Loan Agreement which failure continues beyond the applicable cure period, if any, specified in that Loan Document. |
(j) | The holder of any other debt instrument secured by a mortgage, deed of trust or deed to secure debt on the Mortgaged Property exercises any right to declare all amounts due under that debt instrument immediately due and payable. |
(k) | Any of the following occurs: |
(i) | Borrower or any SPE Equity Owner commences any case, Proceeding or other action under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization, conservatorship or relief of debtors (A) seeking to have an order for relief entered with respect to it, or seeking to adjudicate it bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debt, or (B) seeking appointment of a receiver, trustee, custodian, conservator or other similar official for it or for all or any substantial part of its assets. |
(ii) | Any party other than Lender commences any case, Proceeding, or other action of a nature referred to in Section 9.01(k)(i) against Borrower or any SPE Equity Owner which (A) results in the entry of an order for relief or any such adjudication or appointment, or (B) has not been dismissed, discharged or bonded for a period of 90 days. |
(iii) | Any case, Proceeding or other action is commenced against Borrower or any SPE Equity Owner seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets which results in the entry of any order by a court of competent jurisdiction for any such relief which is not vacated, discharged, or stayed or bonded pending appeal within 90 days from the entry thereof. |
(iv) | Borrower or any SPE Equity Owner takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in Section 9.01(k)(i), (ii) or (iii). |
(l) | Borrower or any SPE Equity Owner has made any representation or warranty in Article V or any other Section of this Loan Agreement that is false or misleading in any material respect. |
(m) | If the Loan is secured by an interest under a Ground Lease, Borrower fails to comply with the provisions of Section 6.19. |
(n) | If the Loan is a Supplemental Loan, any Event of Default occurs under (i) the Senior Note, the Senior Instrument or any other Senior Loan Document, or (ii) any loan document related to another loan in connection with the Mortgaged Property, regardless of whether Borrower has obtained Supplemental Lender’s approval of the placement of such Lien on the Mortgaged Property. In addition, if the Loan is a Supplemental Loan, as Borrower under both the Supplemental Instrument and the Senior Instrument, Borrower acknowledges and agrees that if there is an Event of Default under the Supplemental Note, the Supplemental Instrument or any other Supplemental Loan Document, such Event of Default will be an Event of Default under the terms of the Senior Instrument and will entitle Senior Lender to invoke any and all remedies permitted to Senior Lender by applicable law, the Senior Note, the Senior Instrument or any of the other Senior Loan Documents. |
(o) | If the Mortgaged Property is subject to any covenants, conditions and/or restrictions, land use restriction agreements or similar agreements, Borrower fails to perform any of its obligations under any such agreement as and when required, and such failure continues beyond any applicable cure period. |
(p) | A Guarantor files for bankruptcy protection under the Bankruptcy Code or a Guarantor voluntarily becomes subject to any reorganization, receivership, insolvency proceeding or other similar proceeding pursuant to any other federal or state law affecting debtor and creditor rights, or any creditor (other than Lender) of a Guarantor commences any involuntary case against a Guarantor pursuant to the Bankruptcy Code or other federal or state law affecting debtor and creditor rights, unless each of the following conditions is satisfied: |
(i) | Borrower or Guarantor provides Notice of such action to Lender within 30 days after the filing of such action. |
(ii) | Either (A) the case is dismissed or discharged within 90 days after filing, or (B) within 90 days following the date of such filing or commencement, the affected Guarantor is replaced with one or more other Persons acceptable to Lender, in Lender’s Discretion, each of whom executes and delivers to Lender a replacement Guaranty in form and content acceptable to Lender, together with such legal opinions as Lender deems necessary; provided, however, that if Lender determines, in Lender’s Discretion, that any proposed replacement Guarantor is not acceptable, then the action will constitute a prohibited Transfer governed by Section 7.02. |
(iii) | If Lender approves a replacement Guarantor, Borrower pays the Transfer Review Fee to Lender. |
(q) | With respect to a Guarantor, either of the following occurs: |
(i) | The death of any Guarantor who is a natural person, unless within 30 days following the Guarantor’s death, Borrower causes one of the following to occur: |
(A) | One or more Persons acceptable to Lender, in Lender’s Discretion, execute(s) and deliver(s) to Lender a guaranty in a form acceptable to Lender and in substantially the same form as the Guaranty executed on the Closing Date, without any cost or expense to Lender. |
(B) | The estate of the deceased Guarantor immediately ratifies the Guaranty in writing, and within 6 months after the date of the death of the deceased Guarantor one or more Persons, acceptable to Lender in Lender’s Discretion, execute(s) and deliver(s) to Lender a guaranty in a form acceptable to Lender and in substantially the same form as the Guaranty executed on the Closing Date, without any cost or expense to Lender. |
(ii) | The dissolution of any Guarantor who is an entity, unless within 30 days following the dissolution of the Guarantor, Borrower causes one or more Persons acceptable to Lender, in Lender’s Discretion, to execute and deliver to Lender a guaranty in a form acceptable to Lender and in substantially the same form as the Guaranty executed on the Closing Date, without any cost or expense to Lender. |
(r) | Borrower or any operator of the Facility fails, within the time deadlines set by any Governmental Authority, to correct any deficiency, which failure could result in an action by such Governmental Authority with respect to the Facility that could have a Material Adverse Effect. |
(s) | A default under any of the Material Contracts by Borrower or by any operator of the Facility, which continues beyond the expiration of any applicable cure period. |
(t) | Any continuing representation or warranty made by Borrower in this Loan Agreement or any other Loan Document becomes false or misleading in any material respect. |
(u) | The Facility is no longer classified as housing for older persons pursuant to the Fair Housing Amendments Act of 1988. |
(v) | If a Cap Agreement is required, Borrower fails to provide Lender with a Replacement Cap Agreement prior to the expiration of the then-existing Cap Agreement. |
(a) | If Borrower fails to perform any of its obligations under this Loan Agreement or any other Loan Document, or if any action or proceeding is commenced which purports to affect the Mortgaged Property, Lender’s security or Lender’s rights under this Loan Agreement, including eminent domain, insolvency, code enforcement, civil or criminal forfeiture, enforcement of Hazardous Materials Laws, fraudulent conveyance or reorganizations or proceedings involving a bankrupt or decedent, then Lender, in Lender’s Discretion, may make such appearances, file such documents, disburse such sums and take such actions as Lender reasonably deems necessary to perform such obligations of Borrower and to protect Lender’s interest, including (i) payment of Attorneys’ Fees and Costs, (ii) payment of fees and out-of-pocket expenses of accountants, inspectors and consultants, (iii) entry upon the Mortgaged Property to make Repairs or secure the Mortgaged Property, (iv) procurement of the Insurance required by Section 6.10, (v) payment of amounts which Borrower has failed to pay under Section 6.08, (vi) performance of Borrower’s obligations under Section 6.09, and (vii) advances made by Lender to pay, satisfy or discharge any obligation of Borrower for the payment of money that is secured by a Prior Lien. |
(b) | Any amounts disbursed by Lender under this Section 9.02, or under any other provision of this Loan Agreement that treats such disbursement as being made under this Section 9.02, will be secured by the Security Instrument, will be added to, and become part of, the principal component of the Indebtedness, will be immediately due and payable and will bear interest from the date of disbursement until paid at the Default Rate. |
(c) | Nothing in this Section 9.02 will require Lender to incur any expense or take any action. |
(a) | Upon an Event of Default, Lender may exercise any or all of its rights and remedies provided under the Loan Documents and Borrower will pay all costs associated therewith, including Attorneys’ Fees and Costs. |
(b) | 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 or equity, and each will be cumulative and may be exercised concurrently, independently or successively, in any order. Lender’s exercise of any particular right or remedy will not in any way prevent Lender from exercising any other right or remedy available to Lender. Lender may exercise any such remedies from time to time and as often as Lender chooses. |
(c) | Lender will have all remedies available to Lender under Revised Article 9 of the Uniform Commercial Code of the Property Jurisdiction, the Loan Documents and under applicable law. |
(d) | Lender may also retain (i) all money in the Reserve Funds, including interest, and (ii) any Cap Payment, and in Lender’s sole and absolute discretion, may apply such amounts, without restriction and without any specific order of priority, to the payment of any and all Indebtedness. |
(e) | If a claim or adjudication is made that Lender has acted unreasonably or unreasonably delayed acting in any case where, by law or under this Loan Agreement or the other Loan Documents, Lender has an obligation to act reasonably or promptly, then Lender will not be liable for any monetary damages, and Borrower’s sole remedy will be limited to commencing an action seeking injunctive relief or declaratory judgment. Any action or proceeding to determine whether Lender has acted reasonably will be determined by an action seeking declaratory judgment. |
(a) | Lender may (but will 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, any Guarantor or other third party obligor, to take any of the following actions: |
(i) | Extend the time for payment of all or any part of the Indebtedness. |
(ii) | Reduce the payments due under this Loan Agreement, the Note or any other Loan Document. |
(iii) | Release anyone liable for the payment of any amounts under this Loan Agreement, the Note or any other Loan Document. |
(iv) | Accept a renewal of the Note. |
(v) | Modify the terms and time of payment of the Indebtedness. |
(vi) | Join in any extension or subordination agreement. |
(vii) | Release any portion of the Mortgaged Property. |
(viii) | Take or release other or additional security. |
(ix) | Modify the rate of interest or period of amortization of the Note or change the amount of the monthly installments payable under the Note. |
(x) | Otherwise modify this Loan Agreement, the Note or any other Loan Document. |
(b) | Any forbearance by Lender in exercising any right or remedy under the Note, this Loan Agreement or any other Loan Document or otherwise afforded by applicable law, will not be a waiver of or preclude the exercise of any other right or remedy, or the subsequent exercise of any 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, will 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 will not constitute an election by Lender of remedies so as to preclude the exercise of any other right available to Lender. Lender’s receipt of any awards or proceeds under Sections 6.10 and 6.11 will not operate to cure or waive any Event of Default. |
(a) | General Indemnity. Borrower agrees to indemnify, hold harmless and defend Lender, including any custodian, trustee and other fiduciaries who hold or have held a full or partial interest in the Loan for the benefit of third parties, any prior owner or holder of the Note, the Loan Servicer, any prior Loan Servicer, the officers, directors, shareholders, partners, employees and trustees of each of the foregoing, and the heirs, legal representatives, successors and assigns of each of the foregoing (collectively, “Indemnitees”) against any and all losses, claims, damages, liabilities and expenses including Attorneys’ Fees and Costs, which may be imposed or incurred by any of them directly or indirectly arising out of, or in any way relating to, or as a result of |
(b) | Environmental Indemnity. Borrower agrees to indemnify, hold harmless and defend Indemnitees from and against all proceedings, claims, damages, penalties and costs (whether initiated or sought by Governmental Authorities or private parties), including Attorneys’ Fees and Costs and remediation costs, whether incurred in connection with any judicial or administrative process or otherwise, arising directly or indirectly from any of the following: |
(i) | Any breach of any representation or warranty of Borrower in Section 5.05. |
(ii) | Any failure by Borrower to perform any of its obligations under Section 6.12. |
(iii) | The existence or alleged existence of any Prohibited Activity or Condition. |
(iv) | The presence or alleged presence of Hazardous Materials on or under the Mortgaged Property or in any of the Improvements. |
(v) | The actual or alleged violation of any Hazardous Materials Law. |
(c) | Indemnification Regarding ERISA Covenants. BORROWER WILL INDEMNIFY LENDER AND DEFEND AND HOLD LENDER HARMLESS FROM AND AGAINST ALL CIVIL PENALTIES, EXCISE TAXES, OR OTHER LOSS, COST, DAMAGE AND EXPENSE (INCLUDING REASONABLE ATTORNEYS’ FEES AND COSTS INCURRED IN THE INVESTIGATION, DEFENSE AND SETTLEMENT OF CLAIMS AND LOSSES INCURRED IN CORRECTING ANY PROHIBITED TRANSACTION OR IN THE SALE OF A PROHIBITED LOAN, AND IN OBTAINING ANY INDIVIDUAL PROHIBITED TRANSACTION EXEMPTION UNDER ERISA THAT MAY BE REQUIRED, IN LENDER’S SOLE AND ABSOLUTE DISCRETION) THAT LENDER MAY INCUR, DIRECTLY OR INDIRECTLY, AS A RESULT OF DEFAULT UNDER SECTION 6.20. THIS INDEMNITY WILL SURVIVE ANY TERMINATION, SATISFACTION OR FORECLOSURE OF THE SECURITY INSTRUMENT. |
(d) | Securitization Indemnification. |
(i) | Borrower agrees to indemnify, hold harmless and defend the Indemnified Parties from and against any and all proceedings, losses, claims, damages, |
(ii) | Borrower will not be liable under the Securitization Indemnification if the claim is based on Borrower Information which Lender has materially misstated or materially misrepresented in the Disclosure Document. |
(A) | “Borrower Information” includes any information provided at any time to Lender or Loan Servicer by Borrower, any SPE Equity Owner, any operator of a Facility, any Guarantor, any Property Manager or any Affiliates of the foregoing with respect to any of the following: |
(B) | The term “Lender” includes its officers and directors. |
(C) | An “Issuer Person” includes all of the following: |
(1) | Any Affiliate of Lender that has filed the registration statement, if any, relating to the Securitization. |
(2) | Any Affiliate of Lender which is acting as issuer, depositor, sponsor and/or in a similar capacity with respect to the Securitization. |
(D) | The “Issuer Group” includes all of the following: |
(1) | Each director and officer of any Issuer Person. |
(2) | Each entity that Controls any Issuer Person within the meaning of Section 15 of the Securities Act or Section 20 of the Securities Exchange Act. |
(E) | The “Underwriter Group” includes all of the following: |
(1) | Each entity which is acting as an underwriter, manager, placement agent, initial purchaser or in a similar capacity with respect to the Securitization. |
(2) | Each of its directors and officers. |
(3) | Each entity that Controls any such entity within the meaning of Section 15 of the Securities Act or Section 20 of the Securities Exchange Act and is acting as an underwriter, manager, placement agent, initial purchaser or in a similar capacity with respect to the Securitization. |
(4) | The directors and officers of such entity described in Section 10.02(d)(iii)(E)(1). |
(F) | “Indemnified Party” or “Indemnified Parties” means one or more of Lender, Issuer Person, Issuer Group, and Underwriter Group. |
(e) | Selection and Direction of Counsel. Counsel selected by Borrower to defend Indemnitees will be subject to the approval of those Indemnitees. In any circumstances in which the indemnity under this Article X applies, Lender may employ its own legal counsel and consultants to prosecute, defend or negotiate any claim or legal or administrative proceeding and Lender, with the prior written consent of Borrower (which will not be unreasonably withheld, delayed or conditioned) may settle or compromise any action or legal or administrative proceeding. However, unless an Event of Default has occurred and is continuing, or the interests of Borrower and Lender are in conflict, as determined by Lender in Lender’s Discretion, Lender will permit Borrower to undertake the actions referenced in this Article X so long as Lender approves such action, which approval will not be unreasonably withheld or delayed. Borrower will reimburse Lender upon demand for all costs and expenses incurred by Lender, including all costs of settlements entered into in good faith, consultants’ fees and Attorneys’ Fees and Costs. |
(f) | Settlement or Compromise of Claims. Borrower will not, without the prior written consent of those Indemnitees who are named as parties to a claim or legal or administrative proceeding (“Claim”), settle or compromise the Claim if the |
(g) | Effect of Changes to Loan on Indemnification Obligations. Borrower’s obligation to indemnify the Indemnitees will 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: |
(i) | Any amendment or modification of any Loan Document. |
(ii) | Any extensions of time for performance required by any Loan Document. |
(iii) | Any provision in any of the Loan Documents limiting Lender’s recourse to property securing the Indebtedness, or limiting the personal liability of Borrower or any other party for payment of all or any part of the Indebtedness. |
(iv) | The accuracy or inaccuracy of any representations and warranties made by Borrower under this Loan Agreement or any other Loan Document. |
(v) | The release of Borrower or any other Person, by Lender or by operation of law, from performance of any obligation under any Loan Document. |
(vi) | The release or substitution in whole or in part of any security for the Indebtedness. |
(vii) | Lender’s failure to properly perfect any Lien or security interest given as security for the Indebtedness. |
(h) | Payments by Borrower. Borrower will, at its own cost and expense, do all of the following: |
(i) | Pay or satisfy any judgment or decree that may be entered against any Indemnitee or Indemnitees in any legal or administrative proceeding incident to any matters against which Indemnitees are entitled to be indemnified under this Article X. |
(ii) | Reimburse Indemnitees for any expenses paid or incurred in connection with any matters against which Indemnitees are entitled to be indemnified under this Article X. |
(iii) | Reimburse Indemnitees for any and all expenses, including Attorneys’ Fees and Costs, paid or incurred in connection with the enforcement by Indemnitees of their rights under this Article X, or in monitoring and participating in any legal or administrative proceeding. |
(i) | Other Obligations. The provisions of this Article X will 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 will be entitled to indemnification under this Article X 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. If Borrower consists of more than one Person, the obligation of those Persons to indemnify the Indemnitees under this Article X will be joint and several. The obligation of Borrower to indemnify the Indemnitees under this Article X will survive any repayment or discharge of the Indebtedness, any foreclosure proceeding, any foreclosure sale, any delivery of any deed in lieu of foreclosure, and any release of record of the Lien of the Security Instrument. Notwithstanding the foregoing, if Lender has never been a mortgagee-in-possession of, or held title to, the Mortgaged Property, Borrower will have no obligation to indemnify the Indemnitees under this Article X after the date of the release of record of the Lien of the Security Instrument by payment in full at the Maturity Date or by voluntary prepayment in full. |
(a) | This Loan Agreement, and any Loan Document which does not itself expressly identify the law which is to apply to it, will be governed by the laws of the Property Jurisdiction. |
(b) | Borrower agrees that any controversy arising under or in relation to the Note, the Security Instrument, this Loan Agreement or any other Loan Document may be litigated in the Property Jurisdiction. The state and federal courts and authorities with jurisdiction in the Property Jurisdiction will have jurisdiction over all controversies that may arise under or in relation to the Note, any security for the Indebtedness 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 |
(a) | All Notices under or concerning this Loan Agreement will be in writing. Each Notice will be deemed given on the earliest to occur of (i) the date when the Notice is received by the addressee, (ii) the first Business Day after the Notice is delivered to a recognized overnight courier service, with arrangements made for payment of charges for next Business Day delivery, or (iii) the third Business Day after the Notice is deposited in the United States mail with postage prepaid, certified mail, return receipt requested. Addresses for Notice are as follows: |
If to Lender: | c/o GEMSA Loan Services, L.P. 929 Gessner, Suite 1700 Houston, Texas 77024 Attention: Loan Servicing |
If to Borrower: | c/o The Freshwater Group, Inc. 2020 West Rudasill Road Tucson, Arizona 85704 Attention: Carl Mittendorff |
(b) | 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 party in accordance with this Section 12.03. Each party agrees that it will not refuse or reject delivery of any Notice given in accordance with this Section 12.03, that it will acknowledge, in writing, the receipt of any Notice upon request by the other party and that any Notice rejected or refused by it will be deemed for purposes of this Section 12.03 to have been received by the rejecting party on the date so refused or rejected, as conclusively established by the records of the U.S. Postal Service or the courier service. |
(c) | Any Notice under the Note and any other Loan Document that does not specify how Notices are to be given will be given in accordance with this Section 12.03. |
(a) | The relationship between Lender and Borrower will be solely that of creditor and debtor, respectively, and nothing contained in this Loan Agreement will create any other relationship between Lender and Borrower. Nothing contained in this Loan Agreement will 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 creditor of any party to this Loan Agreement and no other Person will be a third party beneficiary of this Loan Agreement or any other Loan Document. Without limiting the generality of the preceding sentence, (i) any arrangement (“Servicing Arrangement”) between Lender and any Loan Servicer for loss sharing or interim advancement of funds will constitute a contractual obligation of such Loan Servicer that is independent of the obligation of Borrower for the payment of the Indebtedness, (ii) Borrower will not be a third party beneficiary of any Servicing Arrangement, and (iii) no payment by the Loan Servicer under any Servicing Arrangement will reduce the amount of the Indebtedness. |
(a) | The invalidity or unenforceability of any provision of this Loan Agreement will not affect the validity or enforceability of any other provision, and all other provisions will remain in full force and effect. This Loan Agreement contains the entire agreement among the parties as to the rights granted and the obligations assumed in this Loan Agreement. |
(b) | This Loan Agreement may not be amended or modified except by a writing signed by the party against whom enforcement is sought. |
(a) | This Section will apply only if at the time of any application referred to in Section 12.11(b), Freddie Mac has in effect a product described in its Multifamily Seller/Servicer Guide under which it purchases supplemental mortgages on multifamily properties that meet specified criteria (“Supplemental Mortgage Product”). For purposes of this Section 12.11 only, the term “Freddie Mac” will include any affiliate or subsidiary of Freddie Mac. |
(b) | After the first anniversary of the date of the Senior Indebtedness, Freddie Mac will consider an application from an originating lender that is generally approved by Freddie Mac to sell mortgages to Freddie Mac under the Supplemental Mortgage Product (“Approved Seller/Servicer”) for the purchase by Freddie Mac of a proposed indebtedness of Borrower to the Approved Seller/Servicer to be secured by one or more Supplemental Instruments on the Mortgaged Property. Freddie Mac will purchase each Supplemental Loan secured by the Mortgaged Property if each of the following conditions is satisfied: |
(i) | At the time of the proposed Supplemental Loan, no Event of Default may have occurred and be continuing and no event or condition may have occurred and be continuing that, with the giving of Notice or the passage of time, or both, would become an Event of Default. |
(ii) | Borrower and the Mortgaged Property must be acceptable to Freddie Mac under its Supplemental Mortgage Product. |
(iii) | New loan documents must be entered into to reflect each Supplemental Loan, such documents to be acceptable to Freddie Mac in its discretion. |
(iv) | No Supplemental Loan may cause the combined debt service coverage ratio of the Mortgaged Property after the making of that Supplemental Loan to be less than the Required DSCR. As used in this Section, the term “combined debt service coverage ratio” means, with respect to the Mortgaged Property, the ratio of: |
(A) | the annual net operating income from the operations of the Mortgaged Property at the time of the proposed Supplemental Loan, |
(B) | the aggregate of the annual principal and interest payable on all of the following: |
(I) | the Indebtedness under this Loan Agreement (using a 30 year amortization schedule), |
(II) | any “Indebtedness” as defined in any security instruments recorded against the Mortgaged Property (using a 30 year amortization schedule for any Supplemental Loans), and |
(III) | the proposed “Indebtedness” for any Supplemental Loan (using a 30 year amortization schedule). |
(X) | If the loan has an internal interest rate cap, the Capped Interest Rate. |
(Y) | If the loan has an external interest rate cap, the external interest rate cap. |
(Z) | If the loan has no interest rate cap, the greater of (I) 7%, or (II) the then-current LIBOR Index Rate plus the Margin plus 300 basis points. |
(v) | No Supplemental Loan may cause the combined loan to value ratio of the Mortgaged Property after the making of that Supplemental Loan to exceed the Required LTV, as determined by Freddie Mac. As used in this Section, “combined loan to value ratio” means, with respect to the Mortgaged Property, the ratio, expressed as a percentage, of: |
(A) | the aggregate outstanding principal balances of all of the following: |
(I) | the Indebtedness under this Loan Agreement, |
(II) | any “Indebtedness” as defined in any security instruments recorded against the Mortgaged Property, and |
(III) | the proposed “Indebtedness” for any Supplemental Loan, |
(B) | the value of the Mortgaged Property. |
(vi) | Borrower’s organizational documents are amended to permit Borrower to incur additional debt in the form of Supplemental Loans (Lender will consent to such amendment(s)). |
(vii) | One or more Persons acceptable to Freddie Mac executes and delivers to the Approved Seller/Servicer a Guaranty in a form acceptable to Freddie Mac with respect to the exceptions to non-recourse liability described in Freddie Mac’s form promissory note, unless Freddie Mac has elected to waive its requirement for a Guaranty. |
(viii) | The loan term of each Supplemental Loan will be coterminous with the Senior Indebtedness or longer than the Senior Indebtedness, in Freddie Mac’s discretion. |
(ix) | Prepayment Premium Period of each Supplemental Loan will be coterminous with the Prepayment Premium Period or the combined Lockout Period and Defeasance Period, as applicable, of the Senior Indebtedness. |
(x) | The interest rate of each Supplemental Loan will be determined by Freddie Mac in its discretion. |
(xi) | Lender enters into an intercreditor agreement (“Intercreditor Agreement”) acceptable to Freddie Mac and to Lender for each Supplemental Loan. |
(xii) | Borrower’s payment of fees and other expenses charged by Lender, Freddie Mac, the Approved Seller/Servicer, and the Rating Agencies (including reasonable Attorneys’ Fees and Costs) in connection with reviewing and originating each Supplemental Loan. |
(xiii) | Notwithstanding anything to the contrary in Article IV, Borrower will make all required deposits under the Senior Indebtedness for the payment of any Impositions, so long as a Supplemental Loan is outstanding, and such deposits will be credited to the payment of any such required Impositions under any Supplemental Loan. |
(xiv) | If any covenants, conditions and restrictions affecting the Mortgaged Property provide for a lien for any assessments or other unpaid amounts, Borrower will provide satisfactory evidence that such lien will be subordinate to the lien of the Supplemental Instrument. |
(xv) | All other requirements of the Supplemental Mortgage Product must be met, unless Freddie Mac has elected to waive one or more of its requirements. |
(c) | No later than 5 Business Days after Lender’s receipt of a written request from Borrower, Lender will provide the following information to an Approved Seller/Servicer: |
(i) | The then-current outstanding principal balance of the Senior Indebtedness. |
(ii) | Payment history of the Senior Indebtedness. |
(iii) | Whether any Reserve Funds are being collected on the Senior Indebtedness and the amount of each such Reserve Fund deposit as of the date of the request. |
(iv) | Whether any Repairs, Capital Replacements or improvements or rental achievement or burn-off guaranty requirements are existing or outstanding under the terms of the Senior Indebtedness. |
(v) | A copy of the most recent inspection report for the Mortgaged Property. |
(vi) | Whether any modifications or amendments have been made to the Loan Documents for the Senior Indebtedness since origination of the Senior Indebtedness and, if applicable, a copy of such modifications and amendments. |
(vii) | Whether to Lender’s knowledge any Event of Default exists under the Senior Indebtedness. |
(d) | Lender will have no obligation to consent to any mortgage or Lien on the Mortgaged Property that secures any indebtedness other than the Indebtedness, except as set forth in this Loan Agreement. |
(e) | If a Supplemental Loan is made to Borrower, Borrower agrees that the terms of the Intercreditor Agreement will govern with respect to any distributions of excess proceeds by Lender to the Supplemental Lender, and Borrower agrees that Lender may distribute any excess proceeds received by Lender pursuant to the Loan Documents to Supplemental Lender pursuant to the Intercreditor Agreement. |
(a) | Borrower will not have the right to obtain Defeasance at any of the following times: |
(i) | If the Loan is not assigned to a REMIC trust. |
(ii) | During the Lockout Period. |
(iii) | After the expiration of the Defeasance Period. |
(iv) | After Lender has accelerated the maturity of the unpaid principal balance of, accrued interest on, and other amounts payable under, the Note pursuant to Section 11 of the Note. |
(b) | Borrower will give Lender Notice (“Defeasance Notice”) specifying a Business Day (“Defeasance Closing Date”) on which Borrower desires to close the Defeasance. The Defeasance Closing Date specified by Borrower may not be more than 60 calendar days, nor less than 30 calendar days, after the date on which Lender receives |
(c) | The Defeasance Notice must be accompanied by a $10,000 non-refundable fee (“Defeasance Fee”). If Lender does not receive the Defeasance Fee, then Borrower’s right to obtain Defeasance pursuant to that Defeasance Notice will terminate. |
(d) | (i) If Borrower timely pays the Defeasance Fee, but Borrower fails to perform its other obligations under this Section, Lender will have the right to retain the Defeasance Fee as liquidated damages for Borrower’s default and, except as provided in Section 12.12(d)(ii), Borrower will be released from all further obligations under this Section 12.12. Borrower acknowledges that Lender will incur financing costs in arranging and preparing for the release of the Mortgaged Property from the Lien of the Security Instrument in reliance on the executed Defeasance Notice. Borrower agrees that the Defeasance Fee represents a fair and reasonable estimate, taking into account all circumstances existing on the date of this Loan Agreement, of the damages Lender will incur by reason of Borrower’s default. |
(ii) | If the Defeasance is not consummated on the Defeasance Closing Date for any reason, Borrower agrees to reimburse Lender for all third party costs and expenses (other than financing costs covered by Section 12.12(d)(i)) incurred by Lender in reliance on the executed Defeasance Notice, within 5 Business Days after Borrower receives a written demand for payment, accompanied by a statement, in reasonable detail, of Lender’s third party costs and expenses. |
(iii) | All payments required to be made by Borrower to Lender pursuant to this Section 12.12 will be made by wire transfer of immediately available funds to the account(s) designated by Lender in its acknowledgement of the Defeasance Notice. |
(e) | No Event of Default has occurred and is continuing. |
(f) | Borrower will deliver each of the following documents to Lender, in form and substance satisfactory to Lender, on or prior to the Defeasance Closing Date, unless Lender has issued a written waiver of its right to receive any such document: |
(i) | One or more opinions of counsel for Borrower confirming each of the following: |
(A) | Lender has a valid and perfected first Lien and first priority security interest in the Defeasance Collateral and the proceeds of the Defeasance Collateral. |
(B) | The Pledge Agreement is duly authorized, executed, delivered and enforceable against Borrower in accordance with its terms. |
(C) | If, as of the Defeasance Closing Date, the Note is held by a REMIC trust, then each of the following is correct: |
(D) | The Defeasance will not result in a “sale or exchange” of the Note within the meaning of Section 1001(c) of the Tax Code and the temporary and final regulations promulgated thereunder. |
(ii) | A written certificate from an independent certified public accounting firm (reasonably acceptable to Lender), confirming that the Defeasance Collateral will generate cash sufficient to make all Scheduled Debt Payments as they fall due under the Note, including full payment due on the Note on the Maturity Date. |
(iii) | Lender’s form of a pledge and security agreement (“Pledge Agreement”) and financing statements which pledge and create a first priority security interest in the Defeasance Collateral in favor of Lender. |
(iv) | Lender’s form of a transfer and assumption agreement (“Transfer and Assumption Agreement”), pursuant to which Borrower and any Guarantor (in each case, subject to satisfaction of all requirements under this Loan Agreement) will be relieved from liability in connection with the Loan to the extent described in Sections 7.05(b)(i) and 7.05(c)(i), respectively, and Successor Borrower will assume all remaining obligations. |
(v) | Forms of all documents necessary to release the Mortgaged Property from the Liens created by the Security Instrument and related UCC financing statements (collectively, “Release Instruments”), each in appropriate form required by the Property Jurisdiction. |
(vi) | Any other opinions, certificates, documents or instruments that Lender may reasonably request. |
(g) | Borrower will deliver to Lender on or prior to the Defeasance Closing Date each of the following: |
(i) | The Defeasance Collateral, which meets all of the following requirements: |
(A) | It is owned by Borrower, free and clear of all Liens and claims of third-parties. |
(B) | It is in an amount sufficient to provide for (A) redemption payments to occur prior, but as close as possible, to all successive Installment Due Dates occurring under the Note after the Defeasance Closing Date, and (B) delivery of redemption proceeds at least equal to the amount of principal and interest due on the Note on each Installment Due Date including full payment due on the Note on the Maturity Date (“Scheduled Debt Payments”). |
(C) | All redemption payments received from the Defeasance Collateral will be paid directly to Lender to be applied on account of the Scheduled Debt Payments occurring after the Defeasance Closing Date. |
(D) | The pledge of the Defeasance Collateral will be effected through the book-entry facilities of a qualified securities intermediary designated by Lender in conformity with all applicable laws. |
(ii) | All accrued and unpaid interest and all other sums due under the Note, this Loan Agreement and under the other Loan Documents, including all amounts due under Section 12.12(i), up to the Defeasance Closing Date. |
(h) | Reserved. |
(i) | Borrower will pay all reasonable costs and expenses incurred by Lender in connection with the Defeasance in full on or prior to the Defeasance Closing Date, which payment is required prior to Lender’s issuance of the Release Instruments and whether or not Defeasance is completed. Such expenses include the following: |
(A) | All fees, costs and expenses incurred by Lender and its agents in connection with the Defeasance (including Attorneys’ Fees and Costs for the review and preparation of the Pledge Agreement and of the other materials described in this Loan Agreement and any related documentation, and any servicing fees, Rating Agencies’ fees or other costs related to the Defeasance). |
(B) | A processing fee to cover Lender’s administrative costs to process Borrower’s Defeasance request. |
(j) | No Transfer Fee will be payable to Lender upon a Defeasance made in accordance with this Section. |
(i) | For each individual carrier providing Hazard Insurance, one of the following: |
(A) | The sum of the required building coverage limits and required business income/rental value Insurance if such coverage is provided by specific Insurance or a policy covering only the Mortgaged Property. |
(B) | The blanket Insurance or master program limit if such coverage is provided by a Blanket Insurance Policy or master program from a single carrier. |
(C) | The total limit provided by the carrier in all layers in which the carrier participates if such coverage is provided by a Blanket Insurance Policy or master program with more than one carrier participating with layered limits. |
(ii) | For each individual carrier providing liability Insurance pursuant to Section 6.10(a)(ii) or as otherwise required by Lender, one of the following: |
(A) | The total aggregate limits (general liability plus excess/umbrella) if such coverage is provided by specific Insurance or a policy covering only the Mortgaged Property. |
(B) | The total aggregate limits (general liability plus excess/umbrella) if such coverage is provided by liability Insurance for multiple properties or a master program from a single carrier. |
(C) | The total limit provided by the carrier in all layers in which the carrier participates if such coverage is provided by an individual policy, liability Insurance policy for multiple properties or a master program with more than one carrier participating with layered limits Blanket Insurance Policy or master program with more than one carrier participating with layered limits. |
(i) | Any general partner of Borrower (if Borrower is a partnership). |
(ii) | Any manager or managing member of Borrower (if Borrower is a limited liability company). |
(iii) | Any Person (limited partner, member or shareholder) with a collective direct or indirect equity interest in Borrower equal to or greater than 25%. |
(iv) | Any Guarantor of all or any portion of the Loan or of any obligations of Borrower under the Loan Documents. |
(i) | The Cap Agreement. |
(ii) | The Cap Payments. |
(iii) | All rights of Borrower under any Cap Agreement and all rights of Borrower to all Cap Payments, including contract rights and general intangibles, whether existing now or arising after the date of this Loan Agreement. |
(iv) | All rights, liens and security interests or guaranties granted by a Cap Provider or any other Person to secure or guaranty payment of any Cap Payments whether existing now or granted after the date of this Loan Agreement. |
(v) | All documents, writings, books, files, records and other documents arising from or relating to any of the foregoing, whether existing now or created after the date of this Loan Agreement. |
(vi) | All cash and non-cash proceeds and products of (ii) through (v) of this definition. |
(i) | for preparing or serving food (but do not include food supply Contracts); |
(ii) | for medical services or healthcare provider agreements; |
(iii) | the average annual consideration of which, directly or indirectly, is at least $20,000; |
(iv) | having a term of more than one year unless subject to termination by Borrower or if Borrower is not a party to the Contract, the operator of the Facility, and their respective successors and assigns, upon not more than thirty days notice, without cause and without payment of any termination fee, penalty or extra charge; or |
(v) | determined by Lender to be material to the operation of the Facility. |
(i) | The Land, or, if Borrower’s interest in the Land is pursuant to a Ground Lease, the Ground Lease and the Leasehold Estate. |
(ii) | The Improvements (including, without limitation, the Facility). |
(iii) | The Fixtures. |
(iv) | The Personalty. |
(v) | All 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 benefiting 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. |
(vi) | All proceeds paid or to be paid by any insurer of the Land, the Improvements, the Fixtures, the Personalty or any other part of the Mortgaged Property, whether or not Borrower obtained the Insurance pursuant to Lender’s requirement. |
(vii) | All awards, payments and other compensation made or to be made by any municipal, state or federal authority with respect to the Land or the Leasehold Estate, as applicable, the Improvements, the Fixtures, the Personalty or any other part of the Mortgaged Property, including any awards or settlements resulting from Condemnation proceedings or the total or partial taking of the Land, the Improvements, the Fixtures, 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. |
(viii) | All contracts, options and other agreements for the sale of the Land, or the Leasehold Estate, as applicable, the Improvements, the Fixtures, 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. |
(ix) | All proceeds from the conversion, voluntary or involuntary, of any of the items described in items (i) through (viii) of this definition, into cash or liquidated claims, and the right to collect such proceeds. |
(x) | All Rents and Leases. |
(xi) | All 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 Loan. |
(xii) | All Imposition Reserve Deposits. |
(xiii) | All refunds or rebates of Impositions by any Governmental Authority or insurance company (other than refunds applicable to periods before the real property tax year in which this Loan Agreement is dated). |
(xiv) | All tenant security deposits which have not been forfeited by any tenant under any Lease and any bond or other security in lieu of such deposits. |
(xv) | All names under or by which any of the Mortgaged Property may be operated or known, and all trademarks, trade names and goodwill relating to any of the Mortgaged Property. |
(xvi) | If required by the terms of Section 4.05, all rights under the Letter of Credit and the Proceeds, as such Proceeds may increase or decrease from time to time. |
(xvii) | All payments received and all rights to receive payments from any source, which payments (or rights thereto) arise from operation of or at the Facility, including, without limitation, entrance fees, application fees, processing fees, community fees and any other amounts or fees deposited or to be deposited by any resident or tenant, payments received and the right to receive payments of second party charges added to base rental income, base and additional meal sales, payments received and rights to receive payments from commercial operations located at or on the Facility or provided as a service to the occupants of the Facility, rental from guest suites, seasonal lease charges, rental payments under furniture leases, income from laundry service, and income and fees from any and all other services provided to residents of the Facility. |
(xviii) | All rights to payments from Medicare, Medicaid or TRICARE programs or similar federal, state or local programs or agencies and rights to payment from private insurers, arising from the operation of the Facility. |
(xix) | All Licenses. |
(xx) | All Contracts, including without limitation, operating contracts, franchises, licensing agreements, healthcare services contracts, food service contracts and other contracts for services related to the operation of the Facility. |
(xxi) | All utility deposits. |
(xxii) | If the Note provides for interest to accrue at an adjustable or variable rate and there is a Cap Agreement, the Cap Collateral. |
(xxiii) | Without duplication of the foregoing or the inclusions in Mortgaged Property set forth elsewhere in this Loan Agreement, all of the real and personal property, both tangible and intangible, described on Exhibit N. |
(i) | Accounts (including deposit accounts) of Borrower related to the Mortgaged Property. |
(ii) | Equipment and inventory owned by Borrower, which are used now or in the future in connection with the ownership, management or operation of the Land or Improvements or are located on the Land or Improvements, including furniture, furnishings, machinery, building materials, goods, supplies, tools, books, records (whether in written or electronic form) and computer equipment (hardware and software). |
(iii) | Other tangible personal property owned by Borrower which is used now or in the future in connection with the ownership, management or operation of the Land or Improvements or is located on the Land or in the Improvements, including ranges, stoves, microwave ovens, refrigerators, dishwashers, garbage disposers, washers, dryers and other appliances (other than Fixtures). |
(iv) | Any operating agreements relating to the Land or the Improvements. |
(v) | Any surveys, plans and specifications and contracts for architectural, engineering and construction services relating to the Land or the Improvements. |
(vi) | All other intangible property, general intangibles and rights relating to the operation of, or used in connection with, the Land or the Improvements, including all |
(vii) | Any rights of Borrower in or under any Letter of Credit. |
(i) | The presence, use, generation, release, treatment, processing, storage (including storage in above-ground and underground storage tanks), handling or disposal of any Hazardous Materials on or under the Mortgaged Property. |
(ii) | The transportation of any Hazardous Materials to, from or across the Mortgaged Property. |
(iii) | Any occurrence or condition on the Mortgaged Property, which occurrence or condition is or may be in violation of Hazardous Materials Laws. |
(iv) | Any violation of or noncompliance with the terms of any Environmental Permit with respect to the Mortgaged Property. |
(v) | Any violation or noncompliance with the terms of any O&M Program. |
(i) | It must have an effective date not later than the day following the last day of the term of the Cap Agreement that preceded it, and may not expire before the earlier of (A) the 5th anniversary of the effective date of such Replacement Cap Agreement or (B) the Maturity Date. |
(ii) | It must obligate the Cap Provider, which Cap Provider must be acceptable to Lender, to make monthly payments to Lender equal to the excess of (A) the actual interest on a notional principal amount of the Indebtedness over (B) interest on that notional amount at a specified fixed cap rate. |
(i) | A sale, assignment, transfer or other disposition or divestment of any interest in Borrower, a Designated Entity for Transfers, or the Mortgaged Property (whether voluntary, involuntary or by operation of law). |
(ii) | The granting, creating or attachment of a Lien, encumbrance or security interest (whether voluntary, involuntary or by operation of law). |
(iii) | The issuance or other creation of an ownership interest in a legal entity, including a partnership interest, interest in a limited liability company or corporate stock. |
(iv) | The withdrawal, retirement, removal or involuntary resignation of a partner in a partnership or a member or Manager in a limited liability company. |
(v) | The merger, dissolution, liquidation, or consolidation of a legal entity or the reconstitution of one type of legal entity into another type of legal entity. |
(vi) | A change of the Guarantor. |
(i) | A conveyance of the Mortgaged Property at a judicial or non-judicial foreclosure sale under the Security Instrument. |
(ii) | The Mortgaged Property becoming part of a bankruptcy estate by operation of law under the Bankruptcy Code. |
(iii) | The filing or recording of a Lien against the Mortgaged Property for local taxes and/or assessments not then due and payable. |
Name of Rider | Date Revised |
COLLATERAL ASSIGNMENT OF LICENSES, CERTIFICATES AND PERMITS | 9-1-2011 |
REPLACEMENT RESERVE FUND – IMMEDIATE DEPOSITS | 1-11-2012 |
RATE CAP AGREEMENT RESERVE FUND | 11-25-2013 |
TRADE NAMES | 4-25-2013 |
MONTH TO MONTH LEASES | 1-11-2012 |
NO DEFEASANCE | 4-25-2013 |
SENIORS HOUSING OPERATOR | 3-20-2012 |
TERMITE OR WOOD DAMAGING INSECT CONTROL | 9-1-2011 |
AFFILIATE TRANSFER | 7-10-2013 |
BUY-SELL TRANSFER | 7-10-2013 |
LIMITED PARTNER OR NON-MANAGING MEMBER TRANSFER | 7-10-2103 [MODIFIED] |
X | Exhibit A | Description of the Land (required) | |
X | Exhibit B | Modifications to Seniors Housing Loan and Security Agreement | |
X | Exhibit C | Repair Schedule of Work | |
X | Exhibit D | Repair Disbursement Request | |
X | Exhibit E | Work Commenced at Mortgaged Property | |
X | Exhibit F | Capital Replacements (required) | |
Exhibit G | Description of Ground Lease | ||
X | Exhibit H | Organizational Chart of Borrower as of the Closing Date (required) | |
N | |||
X | Exhibit I | Designated Entities for Transfers and Guarantor(s) (required) | |
N | |||
X | Exhibit J | Licenses (required) | |
N | |||
X | Exhibit K | Furniture, Fixtures, Equipment and Motor Vehicles (required) | |
N | |||
X | Exhibit L | Contracts (required) | |
N | |||
X | Exhibit M | Material Contracts (required) | |
N | |||
X | Exhibit N | Additional Mortgaged Property (required) |
(a) | Assignment of the Licenses. As additional security for the Loan, to the extent they are assignable, Borrower hereby transfers, sets over and assigns to Lender, and hereby grants to Lender a security interest in, all of Borrower’s right, title and interest in and to the Licenses and any and all renewals or extensions of the Licenses, together with all cash and non-cash proceeds thereof. |
(b) | Uniform Commercial Code Security Agreement for Licenses. Borrower covenants and agrees as follows: |
(i) | This Loan Agreement is also a security agreement under the Uniform Commercial Code for any of the Licenses which, under applicable law, may be subjected to a security interest under the Uniform Commercial Code. Borrower hereby authorizes Lender to prepare and 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 and Borrower agrees, if Lender so requests, to execute and deliver to Lender such financing statements, continuation statements and amendments. |
(ii) | Unless Borrower gives notice to Lender within 10 days after the occurrence of any of the following, and executes and delivers to Lender modifications or supplements of this Loan Agreement (and any financing statement which may be filed in connection with this Loan Agreement) as Lender may require, Borrower will not (a) change its name, identity, structure or jurisdiction of organization, or (b) change the location of its place of business (or chief executive office if more than one place of business). |
(iii) | If an Event of Default under any of the Loan Documents has occurred and is continuing, Lender will have the remedies of a secured party under the Uniform Commercial Code, in addition to all remedies provided by this Loan Agreement or existing under applicable law or in equity. In exercising any remedies, Lender may exercise its remedies against the Licenses separately |
(c) | Borrower’s Representations and Warranties. In addition to the representations and warranties set forth in Section 5.09, Borrower hereby represents and warrants the following: |
(i) | Borrower has not been subject to or received notice of any inquiry, audit or investigative demand by any Governmental Authority which could reasonably be expected to result in an adverse change in either the operations or financial condition of the Mortgaged Property. |
(ii) | Borrower has timely filed all reports and other information that the Licenses require to be filed. |
(iii) | Borrower is not aware of any deficiencies, actions or inactions that, in the aggregate, will result in a suspension, downgrade, revocation, termination, restriction or conditioning of any License. |
(iv) | There has been no previous assignment or encumbrance of Borrower’s interest in the Licenses except collateral assignments or encumbrances terminated prior to Borrower entering into this Loan Agreement. |
(d) | Lender’s Right Upon Event of Default. Without limiting Lender’s rights described elsewhere, if an Event of Default exists under any Loan Document, then to the extent permitted by applicable law, Lender will have the right to exercise all the rights under the Licenses that Borrower has. Lender does not assume any obligations or duties of Borrower concerning the Licenses. |
(e) | Attorney-in-Fact. Borrower irrevocably constitutes and appoints Lender as Borrower’s attorney-in-fact to demand, receive and enforce Borrower’s rights with respect to the Licenses and to do any and all acts in Borrower’s name or in the name of Lender with the same force and effect as Borrower could do if this Loan Agreement had not been made. This appointment will be deemed to be coupled with an interest and irrevocable. |
(a) | Deposits to Replacement Reserve Fund. On the Closing Date, the parties will establish the Replacement Reserve Fund and Borrower will pay the Initial Deposit to Lender for deposit into the Replacement Reserve Fund. Commencing on the date the first installment of principal and/or interest is due under the Note and continuing on the same day of each successive month until the Loan is paid in full, Borrower will pay the Monthly Deposit to Lender for deposit into the Replacement Reserve Fund, together with its regular monthly payments of principal and/or interest as required by the Note. A transfer of funds into the Replacement Reserve Fund from the Repair Reserve Fund, pursuant to the terms of Section 4.03(e), if applicable, will not alter or reduce the amount of any deposits to the Replacement Reserve Fund. |
(b) | Fees Deducted From Replacement Reserve Fund. Lender will be entitled to deduct from the Replacement Reserve Fund (i) the Investment Fee for establishing the Replacement Reserve Fund and (ii) the Inspection Fee for any inspection required pursuant to this Section 4.04. If Lender, in its discretion, retains a professional inspection engineer or other qualified third party to inspect any Capital Replacements pursuant to the terms of Section 6.06, Lender also will be entitled to deduct from the Replacement Reserve Fund an amount sufficient to pay all reasonable fees and expenses charged by such third party inspector. |
(c) | Adjustments to Replacement Reserve Fund. Lender reserves the right to adjust the amount of the Monthly Deposit based on Lender’s assessment of the physical condition of the Mortgaged Property. Unless the Loan has an initial term of greater than 120 months, Lender will not make such an adjustment prior to the date that is 120 months after the first installment due date, nor more frequently than every 10 years thereafter during the term of the Loan. Upon Notice from Lender or Loan Servicer, Borrower will begin paying the Revised Monthly Deposit on the first monthly payment date that is at least 30 days after the date of Lender’s or Loan Servicer’s Notice. If Lender or Loan Servicer does not provide Borrower with Notice of a Revised |
(d) | Insufficient Amount in Replacement Reserve Fund. If Borrower requests disbursement from the Replacement Reserve Fund for a Capital Replacement in accordance with this Loan Agreement in an amount which exceeds the amount on deposit in the Replacement Reserve Fund, Lender will disburse to Borrower only the amount on deposit in the Replacement Reserve Fund. Borrower will pay all additional amounts required in connection with any such Capital Replacement from Borrower’s own funds. |
(e) | INTENTIONALLY OMITTED. |
(f) | INTENTIONALLY OMITTED. |
(g) | Disbursements from Replacement Reserve Fund. |
(i) | Requests for Disbursement. Lender will disburse funds from the Replacement Reserve Fund as follows: |
(A) | Borrower’s Request. If Borrower determines, at any time or from time to time, that a Capital Replacement is necessary or desirable, Borrower will perform such Capital Replacement and request from Lender, in writing, reimbursement for such Capital Replacement. Borrower’s request for reimbursement will include (1) a detailed description of the Capital Replacement performed, together with evidence, satisfactory to Lender, that the cost of such Capital Replacement has been paid, and (2) if required by Lender, lien waivers from each contractor and material supplier supplying labor or materials for such Capital Replacement. |
(B) | Lender’s Request. If Lender reasonably determines at any time or from time to time, that a Capital Replacement is necessary for the proper maintenance of the Mortgaged Property, it will so notify Borrower, in writing, requesting that Borrower obtain and submit to Lender bids for all labor and materials required in connection with such Capital Replacement. Borrower will submit such bids and a time schedule for completing each Capital Replacement to Lender within 30 days after Borrower’s receipt of Lender’s Notice. Borrower will perform such Capital Replacement and request from Lender, in writing, reimbursement for such Capital Replacement. Borrower’s request for reimbursement will include (1) a detailed description of the Capital Replacement performed, together with evidence, satisfactory to Lender, |
(ii) | Conditions Precedent. Disbursement from the Replacement Reserve Fund will be made no more frequently than once every Replacement Reserve Disbursement Period and, except for the final disbursement, no disbursement will be made in an amount less than the Minimum Replacement Disbursement Request Amount. Disbursements will be made only if the following conditions precedent have been satisfied, as reasonably determined by Lender in Lender’s Discretion: |
(A) | Each Capital Replacement has been performed and/or installed on the Mortgaged Property in a good and workmanlike manner with suitable materials (or in the case of a partial disbursement, performed and/or installed on the Mortgaged Property to an acceptable stage), in accordance with good building practices and all applicable laws, ordinances, rules and regulations, building setback lines and restrictions applicable to the Mortgaged Property, and has been paid for by Borrower as evidenced by copies of all applicable paid invoices or bills submitted to Lender by Borrower at the time Borrower requests disbursement from the Replacement Reserve Fund. |
(B) | There is no condition, event or act that would constitute a default (with or without Notice and/or lapse of time). |
(C) | No Lien or claim based on furnishing labor or materials has been recorded, filed or asserted against the Mortgaged Property, unless Borrower has properly provided a bond or other security against loss in accordance with applicable law. |
(D) | All licenses, permits and approvals of any Governmental Authority required for the Capital Replacement as completed to the applicable stage have been obtained and submitted to Lender upon Lender’s request. |
(h) | Right to Complete Capital Replacements. If Borrower abandons or fails to proceed diligently with any Capital Replacement in a timely fashion or an Event of Default occurs and continues under this Loan Agreement for 30 days after Notice of such failure by Lender to Borrower, Lender will have the right (but not the obligation) to enter upon the Mortgaged Property and take over and cause the completion of such Capital Replacement. However, no such Notice or cure period will apply in the case of such failure which |
(i) | Completion of Capital Replacements. Lender’s disbursement of monies from the Replacement Reserve Fund or other acknowledgment of completion of any Capital Replacement in a manner satisfactory to Lender in Lender’s Discretion will not be deemed a certification by Lender that the Capital Replacement has been completed in accordance with applicable building, zoning or other codes, ordinances, statutes, laws, regulations or requirements of any Governmental Authority. Borrower will at all times have the sole responsibility for ensuring that all Capital Replacements are completed in accordance with all such requirements of any Governmental Authority. |
3.04 | Cap Collateral. Borrower assigns and pledges to Lender all of Borrower’s right, title and interest in and to any Cap Collateral. |
(a) | Deposits to Rate Cap Agreement Reserve Fund. On the Closing Date, the parties will establish the Rate Cap Agreement Reserve Fund. Commencing on the date the first installment of principal and/or interest is due under the Note and continuing on the same day for each successive month until the purchase of the last Replacement Cap Agreement, Borrower will pay to Lender the amount estimated by Lender to be sufficient to result in the accumulation, prior to the expiration of the then-existing Cap Agreement, of funds equal to 125% of the amount expected to be sufficient to pay in full when due the cost of the Replacement Cap Agreement expiring on the Maturity Date and otherwise meeting the requirements set forth in this Section (“Rate Cap Agreement Reserve Deposit”). Notwithstanding the foregoing, in lieu of collecting monthly installments of the amount estimated by Lender to pay the cost for a single Replacement Cap Agreement expiring on the Maturity Date and calculating the Rate Cap Agreement Reserve Deposit based upon Lender’s estimation of the cost of a single Rate Cap Agreement expiring on the Maturity Date, it is agreed and acknowledged that the amount of the Rate Cap Agreement Reserve Deposit may be calculated, in Lender’s discretion, based upon its estimation of the aggregate cost of obtaining two Replacement Cap Agreements, each with a two-year term, and such amount must be deposited by Borrower with Lender in a lump sum on the Closing Date. |
(b) | Adjustments to Rate Cap Agreement Reserve Fund. Lender will recompute every six (6) months the amount of the Rate Cap Agreement Reserve Deposit based on Lender’s estimation of the cost of the Replacement Cap Agreement (or extension or renewal of the existing Cap Agreement) and will provide |
(c) | Replacement Cap Agreement. At least 60 days prior to the date on which an existing Cap Agreement terminates, Borrower will give Notice to and provide evidence satisfactory to Lender that Borrower will deliver the Replacement Cap Agreement. Borrower will ensure that the Replacement Cap Agreement is in full force and effect not later than the day immediately following the expiration of the then-existing Cap Agreement. |
(d) | Disbursements from Rate Cap Agreement Reserve Fund. Lender will apply the funds in the Rate Cap Agreement Reserve Fund to the cost of the Replacement Cap Agreement, unless an Event of Default has occurred and is continuing, in which case Lender at its option may apply such funds to the Indebtedness in any amounts and in any order as Lender determines in Lender’s discretion. |
(e) | Termination of Rate Cap Agreement Reserve Fund. The provisions of Section 4.07(a) will cease to be effective upon the purchase of a Replacement Cap Agreement with an expiration date on or after the Maturity Date. In the event there are funds remaining in the Rate Cap Agreement Reserve Fund upon the earlier to occur of (i) purchase of the last Replacement Cap Agreement, or (ii) payment in full of the Indebtedness, any remaining amounts in the Rate Cap Agreement Reserve Fund will be returned to Borrower. |
C. | Section 5.22 is deleted and replaced with the following: |
D. | Section 6.18 is deleted and replaced with the following: |
6.18 | Cap Collateral. Borrower will instruct each Cap Provider and any guarantor of a Cap Provider’s obligations to make Cap Payments directly to Lender or to Loan Servicer on behalf of Lender. |
E. | The following definitions are added to Article XII: |
6.29 | Lender’s Right To Use Trade Name. Notwithstanding anything contained in this Loan Agreement, Borrower agrees that Lender will have an irrevocable license, coupled with an interest and for which consideration has been paid and received, to use the names “Parkview Frisco”, “Parkview in Frisco” and/or associated trademark rights and trade names relating to any of the Mortgaged Property for a period not to exceed 120 days after the date Lender acquires the Mortgaged Property by foreclosure or deed-in-lieu of foreclosure. |
B. | Section (xv) of the definition of “Mortgaged Property” in Article XIII is modified to read as follows: |
(xv) | all names under or by which any of the Mortgaged Property may be operated or known, and all trademarks, trade names and goodwill relating to any of the Mortgaged Property; provided however, that the name “Parkview Frisco”, “Parkview in Frisco” and/or associated trademark rights are not assigned to Lender, subject to Section 6.29 of this Loan Agreement. |
A. | Section 5.11 is deleted and replaced with the following: |
5.11 | Term of Leases. Unless otherwise approved in writing by Lender, all Leases for residential dwelling units with respect to the Mortgaged Property are on forms acceptable to Lender, are for initial terms of at least 6 months and not more than 2 years, and do not include options to purchase; provided, however, that up to 100% of all Leases may be for an initial term of less than 6 months, but not less than 1 month. |
A. | Section 7.01(i) is deleted and replaced with the following: |
(i) | A Supplemental Instrument that complies with Section 12.11. |
B. | Section 12.12 is deleted. |
C. | The following definitions are deleted from Article XIII: |
A. | ARTICLE XI IS DELETED AND REPLACED WITH THE FOLLOWING: |
11.01 | Additions to Definitions. The following terms, when used in this Loan Agreement, will have the following meanings or will add to the definitions in Article XIII, as applicable: |
(a) | The term “Lease” includes any master lease agreement or operating lease under which control of the use or operation of part or all of the Mortgaged Property has been granted to another entity. |
(b) | “Operating Lease” or “operating lease” means that Lease, dated as of February 5, 2014, entered into by and between Borrower, as landlord, and Operator, as tenant, leasing the Land and Improvements, together with certain personal property used in connection therewith, as described in said Lease, and all modifications, extensions or renewals. |
(c) | “Operator” or “operator” means Watermark Parkview, LLC, a Delaware limited liability company, the tenant of the Land and Improvements under the Operating Lease, together with its permitted successors and assigns. |
11.02 | Additional Covenants. In addition to those covenants contained in Article VI, Borrower covenants to Lender as follows: |
(a) | Borrower will furnish to Lender (i) within 5 days after the receipt by Borrower from Operator, copies of any and all notices of Borrower’s default or failure to pay or perform an obligation under the Operating Lease, and/or (ii) immediately upon the issuance by Borrower to Operator, copies of any and all notices of Operator’s default or failure to pay or perform an obligation under the Operating Lease. |
(b) | Borrower will not surrender, terminate, cancel, modify, renew or extend the Operating Lease; permit the change of the Operator; enter into any other agreement relating to the operation of the Facility with the Operator or any other Person; or consent to the assignment by the Operator of its interest under the Operating Lease or similar agreement, as applicable, in each case |
11.03 | Additional Representations and Warranties. In addition to those representations and warranties contained in Article V, Borrower represents and warrants to Lender as follows: |
(a) | Any management or similar agreement or Operating Lease between Borrower and Operator or between Operator and any management agent or operator of the Facility are in full force and effect and there is no default, breach or violation existing under any management or similar agreement or Operating Lease by any party thereto and no event (other than payments due but not yet delinquent) which, with the passage of time or with notice and the expiration of any grace or cure period, would constitute a default, breach or violation by any party under any management or similar agreement or Operating Lease. |
11.04 | Additional Events of Default. In addition to the Events of Default listed in Article IX, each of the following will also constitute an Event of Default: |
(a) | With regard to the Operating Lease, (i) if the Operating Lease is terminated for any reason prior to the stated term of the Operating Lease or during any renewal period of the Operating Lease, or (ii) if Operator fails to exercise any or all renewal options contained in the Operating Lease or (iii) if Borrower and Operator amend, modify or revise in any way the Operating Lease without the prior written consent of Lender, which consent will be given in Lender’s sole and exclusive discretion or (iv) if a default an “Event of Default” (as such term is defined in the Operating Lease) occurs under the Operating Lease. Notwithstanding the foregoing, it will not be an Event of Default upon the occurrence of any of (i), (ii) or (iv), if Borrower has entered into a new operating lease for the Facility with a term commencing upon the termination of the existing Operating Lease (or as to circumstances described in clause (iv), commencing upon the termination of the existing Operating Lease, which will be on a date agreed to by Lender, in Lender’s sole and exclusive discretion), containing the same terms and conditions as |
(b) | Any change of the operator of the Facility or of any management agent of the Facility as of the date of this Instrument without Lender’s prior written consent, which consent will be given in Lender’s sole and exclusive discretion in accordance with the terms of Section 11.02(b); provided, however, that Sections 7.02(b) through 7.02(e) will apply to the Operator as modified solely for purposes of this subsection as follows: the word “Borrower” used in these subsections will be deleted and replaced with “Operator”; in addition, Sections 7.03(d) and 7.03(e) will be deemed to apply to the Operator as well as to the Borrower, and references in Section 7.03(e) to (1) Watermark Aqua Owner, LLC, the sole member of Borrower, shall also be intended to refer to Watermark Aqua Operator, LLC, the sole member of Operator, and (2) Aqua Property NT-HCI, LLC shall also be intended to refer to Aqua Operations NT-HCI, LLC. |
(c) | Any failure by Operator to perform any of its obligations as and when required under any Loan Document which continues beyond the applicable cure period, if any, specified in that Loan Document. |
(a) | Sections 6.07(d) and (e) are deleted and replaced with the following: |
(d) | Form of Statements; Audited Financials. A natural person having authority to bind Borrower (or the SPE Equity Owner, Operator or Guarantor, as applicable) will certify each of the statements, schedules and reports required by Sections 6.07(b), 6.07(c), 6.07(f) and 11.05(b) to be complete and accurate. Each of the statements, schedules and reports required by Sections 6.07(b), 6.07(c)(i) and (iii), 6.07(f) and 11.05(b) will be in such form and contain such detail as Lender may reasonably require. Lender also may require that any of the statements, schedules or reports listed in Sections 6.07(b), 6.07(c), 6.07(f) and 11.05(b) be audited at Borrower’s expense by independent certified public accountants acceptable to Lender, at any time when an Event of Default has occurred and is continuing or at any time that Lender, in its reasonable judgment, determines that audited financial statements are required for an accurate assessment of the financial condition of Borrower or of the Mortgaged Property. |
(e) | Failure to Timely Provide Financial Statements. If Borrower fails to provide, or cause to be provided, in a timely manner the statements, schedules and |
(b) | In addition to those financial reporting covenants in Section 6.07, Borrower will cause Operator to furnish to Lender each of the following: |
1. | If, in connection with this Loan, the Borrower purchased the Mortgaged Property, then a statement of income and expenses for Operator’s operation of the Mortgaged Property from the origination date to the end of the first full calendar quarter following such origination date, such statement to be provided within 25 days after the end of such quarter; or, for all other cases (for example, a refinance of a loan, a purchase of partnership or other interests, or new debt being placed on the Mortgaged Property), a statement of income and expenses for Operator’s operation of the Mortgaged Property for the trailing 6 months, such statement to be provided within 25 days after the end of such quarter. |
(ii) | After Borrower has caused Operator to furnish such statements required by Section 11.05(b)(i) above, within 25 days after the end of each subsequent calendar quarter of Operator, the following: |
(A) | A Rent Schedule. |
(B) | A statement of income and expenses for Operator’s operation of the Mortgaged Property for that calendar quarter. |
(iii) | Within 25 days after the end of each fiscal quarter of Operator, Borrower will cause Operator to furnish to Lender a statement of changes in financial position of Operator relating to the Mortgaged Property for that fiscal quarter and, when requested by Lender, a balance sheet showing all assets and |
(iv) | Within 90 days after the end of each fiscal year of Operator, Borrower will cause Operator to furnish to Lender each of the following: |
(A) | An annual statement of income and expenses for Operator’s operation of the Mortgaged Property for that fiscal year. |
(B) | A statement of changes in financial position of Operator relating to the Mortgaged Property for that fiscal year. |
(C) | A balance sheet showing all assets and liabilities of Operator relating to the Mortgaged Property as of the end of that fiscal year and a profit and loss statement for Operator. |
(D) | 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. |
a. | Borrower will cause Operator to furnish to Lender each of the following: |
(A) | Prior to a Securitization, and thereafter upon Lender’s reasonable request, a monthly Rent Schedule and a monthly statement of income and expenses for Operator’s operation of the Mortgaged Property. |
(B) | Such other financial information or property management information (including, without limitation, information on tenants under Leases to the extent such information is available to Operator, copies of bank account statements from financial institutions where funds owned or controlled by Operator are maintained, and an accounting of security deposits) as may be required by Lender from time to time. |
A. | The following is added as a new subsection to Section 6.09: |
(h) | Termite or Wood Damaging Insect Control. Borrower will maintain a contract with a qualified service provider for control of termites or other wood damaging insects at the Mortgaged Property for so long as the Indebtedness remains outstanding. |
(d) | Affiliate Transfer. A Transfer of any direct or indirect interests in Borrower held by NorthStar Healthcare Income Operating Partnership, LP (together with its permitted successors and assigns, “NHIOP”) or an entity owned and controlled by NHIOP to one or more of its Affiliates (“Affiliate Transfer”) provided that each of the following conditions is satisfied: |
(i) | Borrower provides Lender with at least 30 days prior Notice of the proposed Affiliate Transfer and pays to Lender the Transfer Review Fee. |
(ii) | At the time of the proposed Affiliate Transfer, no Event of Default has occurred and is continuing and no event or condition has occurred and is continuing that, with the giving of Notice or the passage of time, or both, would become an Event of Default. |
(iii) | If as a result of the Affiliate Transfer, NHIOP will no longer Control the Borrower and instead the Affiliate that is the transferee will Control the Borrower, then Lender determines, in Lender’s Discretion, that the Affiliate meets Lender’s eligibility, credit, management and other standards for seniors housing properties. |
(iv) | After Immediately after the Affiliate Transfer, Control and management of the day-to-day operations of Borrower continue to be held by the Person exercising such Control and management immediately prior to the Affiliate Transfer and there is no change in the Guarantor, if applicable. |
(v) | Lender receives organizational charts reflecting the structure of Borrower prior to and after the Affiliate Transfer. |
(vi) | Borrower pays or reimburses Lender, upon demand, for all costs and expenses including all Attorneys’ Fees and Costs, incurred by Lender in connection with the Affiliate Transfer. |
(vii) | Lender will not be entitled to collect a Transfer Fee as the result of the Affiliate Transfer. |
(viii) | If a nonconsolidation opinion was delivered on the Closing Date and if, after giving effect to the Affiliate Transfer and all prior Transfers, 50% or more in the aggregate of direct or indirect interests in Borrower are owned by any Person and its Affiliates that owned less than a 50% direct or indirect interest in Borrower as of the Closing Date, Borrower delivers to Lender an opinion of counsel for Borrower, in form and substance satisfactory to Lender and to the Rating Agencies, with regard to nonconsolidation. |
(ix) | Lender receives confirmation acceptable to Lender that (A) the requirements of Section 6.13 continue to be satisfied, and (B) the term of existence of the Affiliate (exclusive of any unexercised extension options or rights) does not expire prior to the Maturity Date. |
(x) | Borrower delivers to Lender a search confirming that the Affiliate is not on the list of Specially Designated Nationals or other blocked persons published by the U.S. Office of Foreign Assets Control, or on the list of persons or entities prohibited from doing business with the Department of Housing and Urban Development. |
B. | The following definition is added to Article XII XIII: |
(d)(e) | Buy-Sell Transfer. A one-time Transfer (“Buy-Sell Transfer”) pursuant to a buy-sell agreement, operating agreement, joint venture agreement or similar agreement of the interests in Watermark Aqua Owner, LLC, the sole member of Borrower. |
(A) | The Transfer of the interests of Watermark Aqua Investments, LLC (“Manager” or “Freshwater Member”) to Aqua Property NT-HCI, LLC or to its wholly owned Affiliate which is also owned, directly or indirectly, and Controlled by NHIOP (as defined in Section 7.03(d) above) (“Equity” or “NorthStar Member”) (either by purchase of the ownership interest of the Manager Freshwater Member or replacement of the Freshwater Member Manager as the general partner, manager or managing administrative member of Watermark Aqua Owner, LLC). |
(B) | The Transfer of the Equity’s NorthStar Member’s ownership to the Freshwater Member Manager or to a wholly owned an Affiliate of the Freshwater Member that is also owned, directly or indirectly, and Controlled by David Freshwater and David Barnes Manager. |
(ii) | The Buy-Sell Transfer will be a permitted Transfer if each of the following conditions is satisfied: |
(A) | Borrower provides Lender with at least 30 days prior Notice of the proposed Buy-Sell Transfer and pays to Lender the Transfer Review Fee. |
(B) | At the time of the proposed Buy-Sell Transfer, no Event of Default has occurred and is continuing and no event or condition has occurred and is continuing that, with the giving of Notice or the passage of time, or both, would become an Event of Default; provided, however, if the Buy-Sell Transfer would cure the Event of Default, the Buy- |
(C) | Borrower pays or reimburses Lender, upon demand, for all costs and expenses, including all Attorneys’ Fees and Costs, incurred by Lender in connection with the Buy-Sell Transfer. |
(D) | At the time of the Buy-Sell Transfer, Borrower pays to Lender a Transfer Fee in the following amount, as applicable: |
(1) | $25,000 if there will not be a New Guarantor pursuant to subsection (E) below the Manager will retain the managing member interest, manager interest or general partnership interest, as applicable, in Borrower. |
(2) | $50,000 if there will be a New Guarantor pursuant to subsection (E) below the Equity will obtain directly or indirectly the managing member interest or general partnership interest in, or will become the non-member manager of Borrower, as applicable (“New Borrower Principal”). |
(E) | If the Transfer set forth in subsection (e)(i)(A) above occurs, then NorthStar Member will provide, there is a New Borrower Principal, New Borrower Principal provides a replacement guarantor (“New Guarantor”) acceptable to Lender in Lender’s Discretion, and each of the following requirements is met: |
(1) | At the time of the Buy-Sell Transfer, New Guarantor has a net worth of at least $10,000,000, and liquid assets of at least $2,000,000. |
(2) | Lender has received all information and organizational documents requested by Lender in Lender’s Discretion, with respect to New Guarantor. |
(3) | New Guarantor executes a Guaranty in a form acceptable to Lender and in substantially the same form as the Guaranty executed on the Closing Date with respect to liabilities and obligations thereunder first accruing from and after the Buy-Sell Transfer (“New Guaranty”), however, if New Guarantor is an entity, the following conditions will be applicable: |
(X) | The New Guaranty has been modified to include, at New Guarantor’s option, either the Rider to Guaranty |
(Y) | Section 9.01 will be deemed to be modified to insert the following as a new subsection: |
(__) | Any failure by Guarantor to comply with the Minimum Net Worth/Liquidity Rider to the Guaranty, or the Material Adverse Change Rider to the Guaranty, if applicable. |
(F) | If applicable, the Facility continues to be operated by the initial operator of the Facility or a successor operator of the Facility satisfactory to Lender pursuant to an operating lease approved by Lender in writing, provided that such successor operator of the Facility and Borrower execute a subordination and assignment of such operating lease in form acceptable to Lender. The In addition, the Mortgaged Property continues to be managed by the initial Property Manager or a successor Property Manager satisfactory to Lender pursuant to a property management agreement approved by Lender in writing; which approval will not be unreasonably withheld, provided that such successor Property Manager and Borrower execute an assignment of the management agreement in form acceptable to Lender. |
(G) | At the time of the proposed Buy-Sell Transfer, if the Equity becomes a New Borrower Principal, it there is a New Guarantor pursuant to subsection (E) above, then the NorthStar Member certifies to Lender that its net worth and liquidity are substantially the same as or better than its net worth and liquidity as of the date of this Loan Agreement and there is not any pending bankruptcy, reorganization or litigation which would substantially negatively affect such net worth and/or liquidity. |
(H) | Lender receives organizational charts reflecting the structure of Borrower prior to and after the Buy-Sell Transfer. |
(I) | If a nonconsolidation opinion was delivered on the Closing Date and if, after giving effect to the Buy-Sell Transfer and all prior Transfers, 50% or more in the aggregate of direct or indirect interests in Borrower are owned by any Person and its Affiliates that owned less than a 50% direct or indirect interest in Borrower as of the Closing Date, Borrower delivers to Lender an opinion of counsel for Borrower, in form and substance satisfactory to Lender and to the Rating Agencies, with regard to nonconsolidation. |
(J) | Lender receives confirmation acceptable to Lender that (1) the requirements of Section 6.13 continue to be satisfied, and (2) the term of existence of the NorthStar Member Equity (exclusive of any unexercised extension options or rights) does not expire prior to the Maturity Date. |
(K) | If the Transfer is to an a wholly-owned Affiliate that is permitted under subsection (e)(i)(A) or (B) above of either the NorthStar Member Equity or the Freshwater Member Manager, Borrower must deliver to Lender a search confirming that the transferee Affiliate is not on the list of Specially Designated Nationals or other blocked persons published by the U.S. Office of Foreign Assets Control or on the list of persons or entities prohibited from doing business with the Department of Housing and Urban Development. |
(L) | If there is a New Guarantor and all conditions of Section 7.03(d)(e)(ii)(E) have been satisfied, the Guarantor may request a release of its liability under the Guaranty with respect to liabilities and obligations thereunder first accruing from and after the Buy-Sell Transfer in accordance with Section 7.05(c) of this Loan Agreement. |
B. | The following definitions are added to Article XIII: |
(d)(f) | Limited Partner or Non-Managing Member Partnership Interest Transfer. A Transfer that results in (1) the cumulative Transfer of more than 50% and up to 100% of the non-managing membership interests in or the limited partnership interests in NHIOP (as defined in Section 7.03(d) above) (“Investor Interests”) to third party transferees and/or (2) the conversion to limited partnership interests, or the redemption of a portion, but not all, of the general partnership interests (“GP Interest”) in NHIOP held by NorthStar Healthcare Income, Inc. (“REIT”), as the sole general partner of NHIOP, (each, a “Investor Partnership Interest Transfer”), provided that each of the following conditions is satisfied: |
(i) | Borrower provides Lender with prior Notice of the proposed Investor Interest Transfer. INTENTIONALLY OMITTED. |
(ii) | Following Immediately following the Investor Partnership Interest Transfer, REIT remains the sole general partner of NHIOP and Control and management of the day-to-day operations of Borrower continue to be held by the Person exercising such Control and management immediately prior to the Investor Partnership Interest Transfer and there is no change in the Guarantor, if applicable. |
(iii) | At the time of the proposed Investor Interest Transfer, no Event of Default has occurred and is continuing and no event or condition has occurred and is continuing that, with the giving of Notice or the passage of time, or both, would become an Event of Default. INTENTIONALLY OMITTED. |
(iv) | At any time that one Person acquires 25% or more of the aggregate of direct or indirect Investor Interests, Borrower must meet the following additional requirements: |
(A) | Borrower provides Lender with prior Notice of the proposed Partnership Interest Transfer. |
(B) | At the time of the proposed Partnership Interest Transfer, no Event of Default has occurred and is continuing and no event |
(A)(C) | Borrower pays to Lender the Transfer Review Fee at the time the Borrower provides Lender with the Notice set forth in 7.03(d)(i)(f)(iv)(A). |
(B)(D) | Borrower pays or reimburses Lender, upon demand, for all costs and expenses, including all Attorneys’ Fees and Costs, incurred by Lender in connection with the Investor Partnership Interest Transfer. |
(C)(E) | At the time of the first Partnership Interest Transfer, Borrower pays to Lender a Transfer Fee in the amount of $25,000. (Borrower will not be required to pay a Transfer Fee for subsequent Partnership Interest Transfers.) |
(D)(F) | If a nonconsolidation opinion was delivered on the Closing Date and if, after giving effect to the merger or acquisition and all prior Transfers, 50% or more in the aggregate of direct or indirect interests in Borrower are owned by any Person and its Affiliates that owned less than a 50% direct or indirect interest in Borrower as of the Closing Date, Borrower delivers to Lender an opinion of counsel for Borrower, in form and substance satisfactory to Lender and to the Rating Agencies, with regard to nonconsolidation. |
(E)(G) | Lender receives confirmation acceptable to Lender that (A) the requirements of Section 6.13 continue to be satisfied, and (B) the term of existence of the holder of 25% or more of the Investor Interests after the Investor Partnership Interest Transfer (exclusive of any unexercised extension options or rights) does not expire prior to the Maturity Date. |
(F)(H) | Lender receives organizational charts reflecting the structure of Borrower prior to and after the Investor Partnership Interest Transfer and copies of the then-current organizational documents of Borrower, including any amendments. |
(G)(I) | Each transferee with an interest of 25% or more delivers to Lender a certification that each of the following is true: |
(1) | He/she/it has not been convicted of fraud or a crime involving moral turpitude (or if an entity, then no principal of such entity has been convicted of fraud or a crime involving moral turpitude). |
(2) | He/she/it has not been involved in a bankruptcy or reorganization within the ten years preceding the date of the Investor Partnership Interest Transfer. |
(H)(J) | Borrower delivers to Lender searches confirming that no transferee with an interest of 25% or more is on the list of Specially Designated Nationals or other blocked persons published by the U.S. Office of Foreign Assets Control, or on the list of persons or entities prohibited from doing business with the Department of Housing and Urban Development. |
B. | The following definitions are added to Article XIII: |
(f) | Neither the execution and delivery of the Note, this Loan Agreement, the Security Instrument nor any other Loan Document, Borrower’s performance under the Loan Documents, nor the recordation of the Security Instrument, nor the exercise of any remedies by Lender pursuant to the Loan Documents, at law or in equity, will adversely affect the Licenses, although Lender may be required to obtain one or more new Licenses after a foreclosure. |
(b) | With regard to each Contract listed in Exhibit L, to the best of Borrower’s knowledge after due inquiry and investigation, (i) the Contract is in full force and effect in accordance with its terms, and (ii) there is no default by any party under the Contract. |
134 | 5.37 Patient and Resident Records. All patient or resident records at the Facility as provided to Borrower by the Property Seller, including patient or resident trust fund accounts, are believed by Borrower to be true and correct in all material respects. |
(a) | To the best of Borrower’s knowledge after due inquiry and investigation, the The Facility has not received a statement of charges or deficiencies and no penalty enforcement actions have been undertaken against the Facility, the operator of the Facility or Borrower or against any officer, director or stockholder thereof, by any Governmental Agency during the last three calendar years, and there have been no violations over the past three years that have threatened the Facility’s or the operator of the Facility’s or Borrower’s certification for participation in any Governmental Payor Program. |
(a) | Prohibited New Non-Residential Leases or Modified Non-Residential Leases. Borrower will not enter into any New Non-Residential Lease, enter into any Modified Non-Residential Lease or terminate any Non-Residential Lease (including any Non-Residential Lease in existence on the date of this Loan Agreement) without the prior written consent of Lender; provided, however, that Lender’s prior written |
(d) | Subordination and Attornment Requirements. All Non-Residential Leases entered into after the date hereof will specifically include the following provisions: |
(iv) | Flood. If any portion of the Improvements is located within an area identified by the Federal Emergency Management Agency (or any successor) as a special flood hazard area (“SFHA”), flood Insurance in an amount equal to the greater of the following: |
(A) | The maximum flood Insurance available under the National Flood Insurance Program (“NFIP”) for each building within a SFHA. |
(B) | The sum of the following for each building within a SFHA being insured: |
(1) | The Replacement Cost of all areas of the Improvements below grade. |
(2) | The Replacement Cost of the bottom two stories (above grade) of the Improvements. |
(3) | Any additional coverage dictated by the nature of the Mortgaged Property as determined by Lender in Lender’s Discretion. |
(e) | Evidence of Insurance; Renewals. Borrower will deliver to Lender a legible copy of each Insurance policy (or duplicate original), and Borrower will promptly deliver to Lender a copy of all renewal and other notices received by Borrower with respect to the policies. Borrower will ensure that the Mortgaged Property is continuously covered by the required Insurance policies and will deliver to Lender evidence acceptable to Lender in Lender’s Discretion that each policy has been renewed at least 15 5 days prior to the expiration of each Insurance policy. If the evidence of a renewal does not include a legible copy of the renewal policy (or duplicate original), Borrower will deliver a legible copy of such renewal policy (or duplicate original) in a form satisfactory to Lender in Lender’s Discretion prior to the earlier of |
(xviii) | It will maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations and will pay its debts and liabilities from its own assets as the same become due; provided, however, the aforementioned shall not be deemed to require any member of the Borrower to contribute additional capital to the Borrower. |
(xx) | It will pay (or cause the Property Manager or any operator of the Facility to pay on behalf of Borrower from Borrower’s funds) its own liabilities (including salaries of its own employees) from its own funds; provided, however, the aforementioned shall not be deemed to require any member of the Borrower to contribute additional capital to the Borrower. |
(iii) | Borrower is not, and neither the Loan nor any other transaction contemplated under this Loan Agreement (including the Securitization of the Loan ) is subject to in violation of any state statutes applicable to Borrower regulating investments or fiduciary obligations with respect to governmental plans. No action, inaction, transaction or other event has occurred that would result in a Lien against the Mortgaged Property as a result of the application of any state statutes applicable to Borrower or any fiduciary obligation applicable to Borrower, in each case with respect to any governmental plan. |
6.25 | Property Manager and Operator of the Facility. Borrower will not surrender, terminate, cancel, modify, renew or extend its property management agreement or any operating lease; permit the change of the Property Manager or any operator of the Facility; enter into any other agreement relating to the management or operation of the Facility with Property Manager, the operator of the Facility, or any other Person; or consent to the assignment by the Property Manager or operator of the Facility of its interest under such property management agreement, operating lease or similar agreement, as applicable, in each case without the prior written approval of Lender, and in each such instance the approval by Lender of the property |
(c) | Publicly-Held Fund or Publicly-Held Real Estate Investment Trust. If a Designated Entity for Transfers is a publicly-held fund or a publicly-held real estate investment trust (for purposes of this Loan Agreement, NorthStar Healthcare Income, Inc. (“NorthStar REIT”) shall be deemed to be a publicly-held real estate investment trust), either of the following: |
(i) | The public issuance of common stock, convertible debt, equity or other similar securities (“Public Fund/REIT Securities”) and the subsequent Transfer of such Public Fund/REIT Securities, and any corresponding issuance of units/partnership interests in NHIOP (as defined in Section 7.03(d) below) to NorthStar REIT. |
(ii) | The acquisition by a single Public Fund/REIT Securities holder of an ownership percentage of 10% or more in the Designated Entity for Transfers, if Borrower provides notice of that acquisition to Lender within 30 days following the acquisition. |
(a) | Conditions for Lender’s Consent. With respect to a Transfer that would otherwise constitute an Event of Default under this Article VII, Lender will consent, without any adjustment to the rate at which the Indebtedness bears |
(i) | Borrower has submitted to Lender all information required by Lender to make the determination required by this Section along with the Transfer Review Fee. |
(ii) | No Event of Default has occurred and is continuing and no event or condition has occurred and is continuing that, with the giving of Notice or the passage of time, or both, would become an Event of Default unless such Transfer would cure the Event of Default. |
(iii) | Lender in Lender’s Discretion has determined that the transferee meets Lender’s eligibility, credit, management and other standards (including any standards with respect to previous relationships between Lender and the transferee). |
(iv) | Lender in Lender’s Discretion has determined that the transferee’s organization, credit and experience in the ownership and management of similar senior housing facilities is adequate and appropriate to the overall structure and documentation of the Loan. |
(v) | Lender in Lender’s Discretion has determined that the Mortgaged Property will be managed by a Property Manager meeting the requirements of Section 6.09(d), and, if applicable, an Operator whose organization, credit and experience in the operation of similar senior housing facilities is adequate and appropriate to the overall structure and documentation of the Loan. Any new or replacement Operator approved by Lender must either (A) assume the Loan Documents executed by the prior Operator, if applicable, or (B) execute Lender’s then-standard documents governing operators of senior housing facilities and transferee will execute any modifications to the Loan Documents required by Lender to document Operator’s role in the operation of the Facility and appropriately secure the Loan. |
(vi) | Lender in Lender’s Discretion has determined that the Mortgaged Property, at the time of the proposed Transfer, meets all of Lender’s standards as to its physical condition, occupancy, net operating income and the accumulation of reserves. |
(vii) | Lender in Lender’s Discretion has determined that the transferee and any SPE Equity Owner of such transferee meet the requirements of Section 6.13. |
(viii) | If a Supplemental Instrument is outstanding, Borrower has obtained the consent of the Supplemental Lender, if different from Lender. |
(ix) | In the case of a Transfer of all or any part of the Mortgaged Property, each of the following conditions is satisfied: |
(A) | The transferee executes Lender’s then-standard assumption agreement that, among other things, requires the transferee to perform all obligations of Borrower set forth in the Note, the Security Instrument, this Loan Agreement and any other Loan Document, and may require that the transferee comply with any provisions of this Loan Agreement or any other Loan Document which previously may have been waived or modified by Lender. |
(B) | If Lender requires, the transferee causes one or more Persons acceptable to Lender, in Lender’s Discretion, to execute and deliver to Lender a Guaranty in a form acceptable to Lender. |
(C) | The transferee executes such additional documentation (including filing financing statements, as applicable) as Lender may require. |
(x) | In the case of a Transfer of any interest in Borrower or a Designated Entity for Transfers, if a Guarantor requests that Lender release the Guarantor from its obligations under a Guaranty executed and delivered in connection with the Note, this Loan Agreement or any of the other Loan Documents, then Borrower causes one or more Persons acceptable to Lender, in Lender’s Discretion, to execute and deliver to Lender a Guaranty in a form acceptable to Lender. |
(xi) | Lender has received such legal opinions as Lender deems necessary, including a nonconsolidation opinion (if a nonconsolidation opinion was delivered on the Closing Date and if required by Lender), an opinion that the assignment and assumption of the Loan Documents has been duly authorized, executed, and delivered and that the assignment documents and the Loan Documents are enforceable as the obligations of Borrower, transferee and Guarantor, as applicable. |
(xii) | Lender collects all costs, including the cost of all title searches, title insurance and recording costs, and all Attorneys’ Fees and Costs incurred in reviewing the Transfer request and any fees charged by the Rating Agencies, if applicable. |
(xiii) | At the time of the Transfer, Borrower pays the Transfer Fee to Lender. |
(i) | If Borrower delivers to Lender a current Site Assessment which (A) is dated within 90 days prior to the date of the proposed Transfer, and (B) evidences no presence of Hazardous Materials on the Mortgaged Property and no other Prohibited Activities or Conditions with respect to the Mortgaged Property (“Clean Site Assessment”), then Lender will release Borrower from all of Borrower’s obligations under the Loan Documents except for any liability under Section 6.12 or Section 10.02(b) with respect to any loss, liability, damage, claim, cost or expense which directly or indirectly arises from or relates to any Prohibited Activities or Conditions existing prior to the date of the Transfer. |
(ii) | If Borrower does not deliver a Clean Site Assessment as described in Section 7.05(b)(i), then Lender will release Borrower from all of Borrower’s obligations under the Loan Documents except for liability under Section 6.12 or Section 10.02(b). |
(c) | Continuing Liability of Guarantor. If Guarantor requests a release of its liability under the Guaranty in connection with a Transfer which is permitted, preapproved, or approved by Lender pursuant to this Article VII, and Borrower has provided a replacement Guarantor acceptable to Lender under the terms of Section 7.05(a)(ix)(B), then one of the following will apply: |
(i) | If Borrower delivers to Lender a Clean Site Assessment, then Lender will release Guarantor from all of Guarantor’s obligations except Guarantor’s obligation to guaranty Borrower’s liability under Section 6.12 or Section 10.02(b) with respect to any loss, liability, damage, claim, cost or expense which directly or indirectly arises from or relates to any Prohibited Activities or Conditions existing prior to the date of the Transfer. |
(ii) | If Borrower does not deliver a Clean Site Assessment as described in Section 7.05(b)(i), then Lender will release Guarantor from all of Guarantor’s obligations except for Guarantor’s obligation to guaranty Borrower’s liability under Section 6.12 or Section 10.02(b). |
(i) | The death of any Guarantor who is a natural person, unless within 30 60 days following the Guarantor’s death, Borrower causes one of the following to occur: |
(iv) | The presence or alleged presence of Hazardous Materials on or under the Mortgaged Property or in any of the Improvements other than those excluded from the definition of Prohibited Activity or Condition. |
(d) | Lender shall endeavor to give the individuals or entities listed below courtesy copies of any Notice given to Borrower or any Guarantor by Lender, at the addresses set forth below; provided, however, that failure to provide such courtesy copies of Notices shall not affect the validity or sufficiency of any Notice to Borrower or any Guarantor, shall not affect Lender's rights and remedies hereunder or under any other Loan Documents and shall not subject Lender to any claims by or liability to Borrower, any guarantor or any other individual or entity. It is acknowledged and agreed that no individual or entity listed below is a third-party beneficiary to any of the Loan Documents. |
(i) | for preparing or serving food (but do not include food supply Contracts); |
(ii) | for medical services or healthcare provider agreements; |
(iii) | the average annual consideration of which, directly or indirectly, is at least $20,000 $50,000; |
(iv) | having a term of more than one year unless subject to termination by Borrower or if Borrower is not a party to the Contract, the operator of the Facility, and their respective successors and assigns, upon not more than thirty days’ notice, without cause and without payment of any termination fee, penalty or extra charge; or |
(v) | determined by Lender to be material to the operation of the Facility. |
(i) | It must have an effective date not later than the day following the last day of the term of the Cap Agreement that preceded it, and may not expire before the earlier of (A) the 2nd anniversary of the effective date of such Replacement Cap Agreement or (B) the Maturity Date. |
(ii) | It must obligate the Cap Provider, which Cap Provider must be acceptable to Lender, to make monthly payments to Lender equal to the excess of (A) the actual interest on a notional principal amount of the Indebtedness over (B) interest on that notional amount at the same fixed cap rate as that in the original Cap Agreement. |
US $20,000,000.00 | Effective Date: February 5, 2014 |
(b) | Other capitalized terms used but not defined in this Note will have the meanings given to such terms in the Loan Agreement. |
2. | Address for Payment. All payments due under this Note will be payable at P.O. Box 973788, Dallas, Texas 75397-3788, or such other place as may be designated by Notice to Borrower from or on behalf of Lender. |
(a) | Interest will accrue on the outstanding principal balance of this Note at the Adjustable Interest Rate, subject to the provisions of Section 8 of this Note. |
(b) | Interest under this Note will be computed, payable and allocated on the basis of an actual/360 interest calculation schedule (interest is payable for the actual number of days in each month, and each month’s interest is calculated by multiplying the unpaid principal amount of this Note as of the first day of the month for which interest is being calculated by the applicable Adjustable Interest Rate, dividing the product by 360, and multiplying the quotient by the number of days in the month for which interest is being calculated). For convenience in determining the amount of a monthly installment of principal and interest under this Note, Lender will use a 30/360 interest calculation payment schedule (each year is treated as consisting of twelve 30-day months). However, as provided above, the portion of the monthly installment actually payable as and allocated to interest will be based upon an actual/360 interest calculation schedule, and the amount of each installment attributable to principal and the amount attributable to interest will vary based upon the number of days in the month for which such installment is paid. Each monthly payment of principal and interest will first be applied to pay in full interest due, and the balance of the monthly payment paid by Borrower will be credited to principal. |
(c) | Unless disbursement of principal is made by Lender to Borrower on the first day of a calendar month, interest for the period beginning on the date of disbursement and ending on and including the last day of such calendar month will be payable by Borrower simultaneously with the execution of this Note. If disbursement of principal is made by Lender to Borrower on the first day of a calendar month, then no payment will be due from Borrower at the time of the execution of this Note. The Installment Due Date for the first monthly installment payment under Section 3(d) of interest-only or principal and interest, as applicable, will be the First Installment Due Date set forth in Section 1(a) of this Note. Except as provided in this Section 3(c) and in Section 10, accrued interest will be payable in arrears. |
(d) | (i) Beginning on the First Installment Due Date, and continuing until and including the Installment Due Date immediately prior to the First Principal and Interest Installment Due Date, accrued interest-only will be payable by Borrower in consecutive monthly installments due and payable on the first day of each calendar month. The amount of the monthly installment of interest-only payable pursuant to this Section 3(d)(i) on an Installment Due Date will equal the product of (A) annual interest on the unpaid principal balance of this Note as of the first day of the Interest Adjustment Period immediately preceding the Installment Due Date at the Adjustable Interest Rate in effect for such Interest Adjustment Period, divided by 360, multiplied by (B) the number of days in such Interest Adjustment Period. |
(ii) | Beginning on the First Principal and Interest Installment Due Date, and continuing until and including the monthly installment due on the Maturity Date, principal and accrued interest will be payable by Borrower in consecutive monthly installments due and payable on the first day of each calendar month. The amount of the monthly installment of principal and interest payable pursuant to this Section 3(d)(ii) on an Installment Due Date will be calculated so as to equal the monthly payment amount which would be payable on the Installment Due Date as if the unpaid principal balance of this Note as of the first day of the Interest Adjustment Period immediately preceding the Installment Due Date was to be fully amortized, together with interest thereon at the Adjustable Interest Rate in effect for such Interest Adjustment Period, in equal consecutive monthly payments paid on the first day of each calendar month over the Remaining Amortization Period. |
(e) | All remaining Indebtedness, including all principal and interest, will be due and payable by Borrower on the Maturity Date. |
(f) | Lender will provide Borrower with Notice, given in the manner specified in the Loan Agreement, of the amount of each monthly installment due under this Note. However, if Lender has not provided Borrower with prior notice of the monthly payment due on any Installment Due Date, then Borrower will pay on that Installment Due Date an amount equal to the monthly installment payment for which Borrower last received notice. If Lender at any time determines that Borrower has paid one or more monthly installments in an incorrect amount because of the operation of the preceding sentence, or because Lender has miscalculated the Adjustable Interest Rate or has otherwise miscalculated the amount of any monthly installment, then Lender will give notice to Borrower of such determination. If such determination discloses that Borrower has paid less than the full amount due for the period for which the determination was made, Borrower, within 30 calendar days after receipt of the notice from Lender, will pay to Lender the full amount of the deficiency. If such determination discloses that Borrower has paid more than the full amount due for the period for which the determination was made, then the amount of the overpayment |
(g) | All payments under this Note must be made in immediately available U.S. funds. |
(h) | Any regularly scheduled monthly installment of interest only or principal and interest payable pursuant to this Section 3 that is received by Lender before the date it is due will be deemed to have been received on the due date for the purpose of calculating interest due. |
(i) | Any accrued interest remaining past due for 30 days or more, at Lender’s discretion, may be added to and become part of the unpaid principal balance of this Note and any reference to “accrued interest” will refer to accrued interest which has not become part of the unpaid principal balance. Any amount added to principal pursuant to the Loan Documents will bear interest at the applicable rate or rates specified in this Note and will be payable with such interest upon demand by Lender and absent such demand, as provided in this Note for the payment of principal and interest. |
(j) | In accordance with Section 16, interest charged under this Note cannot exceed the Maximum Interest Rate. If the Adjustable Interest Rate at any time exceeds the Maximum Interest Rate, resulting in the charging of interest hereunder to be limited to the Maximum Interest Rate, then any subsequent reduction in the Adjustable Interest Rate will not reduce the rate at which interest under this Note accrues below the Maximum Interest Rate until the total amount of interest accrued hereunder equals the amount of interest which would have accrued had the Adjustable Interest Rate at all times been in effect. |
4. | Application of Partial Payments. If at any time Lender receives, from Borrower or otherwise, any amount applicable to the Indebtedness which is less than all amounts due and payable at such time, Lender may apply the amount received to amounts then due and payable in any manner and in any order determined by Lender, in Lender’s discretion. Borrower agrees that neither Lender’s acceptance of a payment from Borrower in an amount that is less than all amounts then due and payable nor Lender’s application of such payment will constitute or be deemed to constitute either a waiver of the unpaid amounts or an accord and satisfaction. |
5. | Security. The Indebtedness is secured by, among other things, the Security Instrument, and reference is made to the Security Instrument and Loan Agreement for other rights of Lender as to collateral for the Indebtedness. |
6. | Acceleration. If an Event of Default has occurred and is continuing, the entire unpaid principal balance, any accrued interest, any prepayment premium payable under Section 10, and all other amounts payable under this Note and any other Loan Document, will at once |
7. | Late Charge. |
(a) | If any monthly installment of interest or principal and interest or other amount payable under this Note or under the Loan Agreement or any other Loan Document is not received in full by Lender within 10 days after the installment or other amount is due, counting from and including the date such installment or other amount is due (unless applicable law requires a longer period of time before a late charge may be imposed, in which event such longer period will be substituted), Borrower must pay to Lender, immediately and without demand by Lender, a late charge equal to 5% of such installment or other amount due (unless applicable law requires a lesser amount be charged, in which event such lesser amount will be substituted). If the Loan is not fully amortizing, the late charge will not be due on the final payment of principal owed on the Maturity Date if such payment is not timely made. |
(b) | Borrower acknowledges that its failure to make timely payments will cause Lender to incur additional expenses in servicing and processing the Loan and that it is extremely difficult and impractical to determine those additional expenses. Borrower agrees that the late charge payable pursuant to this Section represents a fair and reasonable estimate, taking into account all circumstances existing on the date of this Note, of the additional expenses Lender will incur by reason of such late payment. The late charge is payable in addition to, and not in lieu of, any interest payable at the Default Rate pursuant to Section 8. |
8. | Default Rate. |
(a) | So long as (i) any monthly installment under this Note remains past due for 30 days or more or (ii) any other Event of Default has occurred and is continuing, then notwithstanding anything in Section 3 of this Note to the contrary, interest under this Note will accrue on the unpaid principal balance from the Installment Due Date of the first such unpaid monthly installment or the occurrence of such other Event of Default, as applicable, at the Default Rate. |
(b) | From and after the Maturity Date, the unpaid principal balance will continue to bear interest at the Default Rate until and including the date on which the entire principal balance is paid in full. |
(c) | Borrower acknowledges that (i) its failure to make timely payments will cause Lender to incur additional expenses in servicing and processing the Loan, (ii) during |
9. | Limits on Personal Liability. |
(a) | Except as otherwise provided in this Section 9, Borrower will have no personal liability under this Note, the Loan Agreement or any other Loan Document for the repayment of the Indebtedness or for the performance of or compliance with any other obligations of Borrower under the Loan Documents and Lender’s only recourse for the satisfaction of the Indebtedness and the performance of such obligations will be Lender’s exercise of its rights and remedies with respect to the Mortgaged Property and to any other collateral held by Lender as security for the Indebtedness. This limitation on Borrower’s liability will not limit or impair Lender’s enforcement of its rights against any Guarantor of the Indebtedness or any Guarantor of any other obligations of Borrower. |
(b) | Borrower will be personally liable to Lender for the amount of the Base Recourse, plus any other amounts for which Borrower has personal liability under this Section 9. |
(c) | In addition to the Base Recourse, Borrower will be personally liable to Lender for the repayment of a further portion of the Indebtedness equal to any loss or damage suffered by Lender as a result of the occurrence of any of the following events: |
(i) | Borrower fails to pay to Lender upon demand after an Event of Default all Rents to which Lender is entitled under Section 3 of the Security Instrument and the amount of all security deposits collected by Borrower from tenants then in residence. However, Borrower will not be personally liable for any failure described in this Section 9(c)(i) if Borrower is unable to pay to Lender all Rents and security deposits as required by the Security Instrument because of a valid order issued in a bankruptcy, receivership, or similar judicial proceeding. |
(ii) | Borrower fails to apply all Insurance proceeds and Condemnation proceeds as required by the Loan Agreement. However, Borrower will not be personally liable for any failure described in this Section 9(c)(ii) if Borrower is unable to apply Insurance or Condemnation proceeds as required by the Loan Agreement because of a valid order issued in a bankruptcy, receivership, or similar judicial proceeding. |
(iii) | Either of the following occurs: |
(iv) | Borrower fails to pay when due in accordance with the terms of the Loan Agreement the amount of any item below marked “Deferred”; provided however, that if no item is marked “Deferred”, this Section 9(c)(iv) will be of no force or effect. |
[Deferred] | Hazard Insurance premiums or other Insurance premiums, |
[Collect] | Taxes or payments in lieu of taxes (PILOT) |
[Deferred] | water and sewer charges (that could become a lien on the Mortgaged Property) |
[N/A] | Ground Rents |
[Deferred] | assessments or other charges (that could become a lien on the Mortgaged Property) |
(v) | Borrower engages in any willful act of material waste of the Mortgaged Property. |
(vi) | Borrower fails to comply with any provision of Section 6.13(a)(iii) through (xxvi) of the Loan Agreement or any SPE Equity Owner fails to comply with any provision of Section 6.13(b)(iii) through (v) of the Loan Agreement (subject to possible full recourse liability as set forth in Section 9(f)(ii)). |
(vii) | Any of the following Transfers occurs: |
(A) | Any Person that is not an Affiliate creates a mechanic’s lien or other involuntary lien or encumbrance against the Mortgaged Property and |
(B) | A Transfer of property by devise, descent or operation of law occurs upon the death of a natural person and such Transfer does not meet the requirements set forth in the Loan Agreement. |
(C) | Borrower grants an easement that does not meet the requirements set forth in the Loan Agreement. |
(D) | Borrower executes a Lease that does not meet the requirements set forth in the Loan Agreement. |
(d) | In addition to the Base Recourse, Borrower will be personally liable to Lender for all of the following: |
(i) | Borrower will be personally liable for the performance of and compliance with all of Borrower’s obligations under Sections 6.12 and 10.02(b) of the Loan Agreement (relating to environmental matters). |
(ii) | Borrower will be personally liable for the costs of any audit under Section 6.07 of the Loan Agreement. |
(iii) | Borrower will be personally liable for any costs and expenses incurred by Lender in connection with the collection of any amount for which Borrower is personally liable under this Section 9, including Attorneys’ Fees and Costs and the costs of conducting any independent audit of Borrower’s books and records to determine the amount for which Borrower has personal liability. |
(e) | All payments made by Borrower with respect to the Indebtedness and all amounts received by Lender from the enforcement of its rights under the Loan Agreement and the other Loan Documents will be applied first to the portion of the Indebtedness for which Borrower has no personal liability. |
(f) | Notwithstanding the Base Recourse, Borrower will become personally liable to Lender for the repayment of all of the Indebtedness upon the occurrence of any of the following Events of Default: |
(i) | Borrower fails to comply with Section 6.13(a)(i) or (ii) of the Loan Agreement or any SPE Equity Owner fails to comply with Section 6.13(b)(i) or (ii) of the Loan Agreement. |
(ii) | Borrower fails to comply with any provision of Section 6.13(a)(iii) through (xxvi) of the Loan Agreement or any SPE Equity Owner fails to comply with any provision of Section 6.13(b)(iii) through (v) of the Loan Agreement and |
(iii) | A Transfer that is an Event of Default under Section 7.02 of the Loan Agreement occurs other than a Transfer set forth in Section 9(c)(vii) above (for which Borrower will have personal liability for Lender’s loss or damage); provided, however, that Borrower will not have any personal liability for a Transfer consisting solely of the involuntary removal or involuntary withdrawal of a general partner in a limited partnership or a manager in a limited liability company). |
(iv) | There was fraud or written material misrepresentation by Borrower or any officer, director, partner, member or employee of Borrower in connection with the application for or creation of the Indebtedness or there is fraud in connection with any request for any action or consent by Lender. |
(v) | Borrower or any SPE Equity Owner voluntarily files for bankruptcy protection under the Bankruptcy Code. |
(vi) | Borrower or any SPE Equity Owner voluntarily becomes subject to any reorganization, receivership, insolvency proceeding, or other similar proceeding pursuant to any other federal or state law affecting debtor and creditor rights. |
(vii) | The Mortgaged Property or any part of the Mortgaged Property becomes an asset in a voluntary bankruptcy or becomes subject to any voluntary reorganization, receivership, insolvency proceeding, or other similar voluntary proceeding pursuant to any other federal or state law affecting debtor and creditor rights. |
(viii) | An order of relief is entered against Borrower or any SPE Equity Owner pursuant to the Bankruptcy Code or other federal or state law affecting debtor and creditor rights in any involuntary bankruptcy proceeding initiated or joined in by a Related Party. |
(ix) | An involuntary bankruptcy or other involuntary insolvency proceeding is commenced against Borrower or any SPE Equity Owner (by a party other than Lender) but only if Borrower or such SPE Equity Owner has failed to use commercially reasonable efforts to dismiss such proceeding or has consented to such proceeding. “Commercially reasonable efforts” will not require any direct or indirect interest holders in Borrower or any SPE Equity |
(g) | For purposes of Section 9(f), the term “Related Party” will include all of the following: |
(ii) | Any Person that holds, directly or indirectly, any ownership interest (including any shareholder, member or partner) in Borrower, any Guarantor or any SPE Equity Owner or any Person that has a right to manage Borrower, any Guarantor or any SPE Equity Owner. |
(iii) | Any Person in which Borrower, any Guarantor or any SPE Equity Owner has any ownership interest (direct or indirect) or right to manage. |
(iv) | Any Person in which any partner, shareholder or member of Borrower, any Guarantor or any SPE Equity Owner has an ownership interest or right to manage. |
(v) | Any Person in which any Person holding an interest in Borrower, any Guarantor or any SPE Equity Owner also has any ownership interest. |
(vi) | Any creditor of Borrower that is related by blood, marriage or adoption to Borrower, any Guarantor or any SPE Equity Owner. |
(vii) | Any creditor of Borrower that is related to any partner, shareholder or member of, or any other Person holding an interest in, Borrower, any Guarantor or any SPE Equity Owner. |
(h) | If Borrower, Guarantor, any SPE Equity Owner or any Related Party has solicited creditors to initiate or participate in any proceeding referred to in Section 9(f), regardless of whether any of the creditors solicited actually initiates or participates in the proceeding, then such proceeding will be considered as having been initiated by a Related Party. |
(i) | To the extent that Borrower has personal liability under this Section 9, Lender may, to the fullest extent permitted by applicable law, exercise its rights against Borrower personally without regard to whether Lender has exercised any rights against the Mortgaged Property or any other security, or pursued any rights against Guarantor, or pursued any other rights available to Lender under this Note, the Loan Agreement, any other Loan Document or applicable law. To the fullest extent permitted by applicable law, in any action to enforce Borrower’s personal liability under this Section 9, Borrower waives any right to set off the value of the Mortgaged Property against such personal liability. |
10. | Voluntary and Involuntary Prepayments. |
(a) | Any receipt by Lender of principal due under this Note prior to the Maturity Date, other than principal required to be paid in monthly installments pursuant to Section 3, constitutes a prepayment of principal under this Note. Without limiting the foregoing, any application by Lender, prior to the Maturity Date, of any proceeds of collateral or other security to the repayment of any portion of the unpaid principal balance of this Note constitutes a prepayment under this Note. |
(b) | Borrower may not voluntarily prepay any portion of the principal balance of this Note during the Lockout Period, if a Lockout Period is applicable to this Note. However, if any portion of the principal balance of this Note is prepaid during the Lockout Period by reason of the application by Lender of any proceeds of collateral or other security to any portion of the unpaid principal balance of this Note or following a determination that the prohibition on voluntary prepayments during the Lockout Period is in contravention of applicable law, then Borrower must also pay to Lender upon demand by Lender, a prepayment premium equal to 5% of the amount of principal being prepaid. |
(c) | Following the end of the Lockout Period, Borrower may voluntarily prepay all of the unpaid principal balance of this Note on an Installment Due Date so long as Borrower designates the date for such prepayment in a Notice from Borrower to Lender given at least 30 days prior to the date of such prepayment. If an Installment Due Date (as defined in Section 1(a)) falls on a day which is not a Business Day, then with respect to payments made under this Section 10 only, the term “Installment Due Date” will mean the Business Day immediately preceding the scheduled Installment Due Date. |
(d) | Notwithstanding Section 10(c), Borrower may voluntarily prepay all of the unpaid principal balance of this Note on a Business Day other than an Installment Due Date if Borrower provides Lender with the Notice set forth in Section 10(c) and meets the other requirements set forth in this Section 10(d). Borrower acknowledges that Lender has agreed that Borrower may prepay principal on a Business Day other than an Installment Due Date only because Lender will deem any prepayment received by Lender on any day other than an Installment Due Date to have been received on the Installment Due Date immediately following such prepayment and Borrower will be responsible for all interest that would have been due if the prepayment had actually been made on the Installment Due Date immediately following such prepayment. |
(e) | Unless otherwise expressly provided in the Loan Documents, Borrower may not voluntarily prepay less than all of the unpaid principal balance of this Note. In order to voluntarily prepay all or any part of the principal of this Note, Borrower must also pay to Lender, together with the amount of principal being prepaid, (i) all accrued |
(f) | Except as provided in Section 10(g), a prepayment premium will be due and payable by Borrower in connection with any prepayment of principal under this Note during the Prepayment Premium Period. The prepayment premium will be: |
(i) | 5.0% of the amount of principal being prepaid if the prepayment occurs prior to the 12th Installment Due Date under this Note; or |
(ii) | 4.0% of the amount of principal being prepaid if the prepayment occurs on or after the 12th Installment Due Date under this Note and prior to the 24th Installment Due Date under this Note; or |
(iii) | 3.0% of the amount of principal being prepaid if the prepayment occurs on or after the 24th Installment Due Date under this Note and prior to the 36th Installment Due Date under this Note; or |
(iv) | 2.0% of the amount of principal being prepaid if the prepayment occurs on or after the 36th Installment Due Date under this Note and prior to the 48th Installment Due Date under this Note; or |
(v) | 1.0% of the amount of principal being prepaid if the prepayment occurs on or after the 48th Installment Due Date under this Note. |
(g) | Notwithstanding any other provision of this Section 10, no prepayment premium will be payable with respect to any of the following: |
(i) | Any prepayment made during the Window Period. |
(ii) | Any prepayment occurring as a result of the application of any Insurance proceeds or Condemnation award. |
(iii) | Any prepayment required under the terms of the Loan Agreement in connection with a Condemnation proceeding. |
(iv) | Any prepayment of the entire principal balance of this Note that occurs on or after the 60th Installment Due Date under this Note with the proceeds of a fixed interest rate mortgage loan that is the subject of a binding commitment for purchase between Freddie Mac and a Freddie Mac-approved Program Plusࣨ Seller/Servicer. |
(h) | Unless Lender agrees otherwise in writing, a permitted or required prepayment of less than the unpaid principal balance of this Note will not extend or postpone the |
(i) | Borrower recognizes that any prepayment of any of the unpaid principal balance of this Note, whether voluntary or involuntary or resulting from an Event of Default by Borrower, will result in Lender’s incurring loss, including reinvestment loss, additional expense and frustration or impairment of Lender’s ability to meet its commitments to third parties. Borrower agrees to pay to Lender upon demand damages for the detriment caused by any prepayment, and agrees that it is extremely difficult and impractical to ascertain the extent of such damages. Borrower therefore acknowledges and agrees that the formula for calculating prepayment premiums set forth in this Note represents a reasonable estimate of the damages Lender will incur because of a prepayment. Borrower further acknowledges that any lockout and prepayment premium provisions of this Note are a material part of the consideration for the Loan, and that the terms of this Note are in other respects more favorable to Borrower as a result of the Borrower’s voluntary agreement to the prepayment premium provisions. |
11. | INTENTIONALLY DELETED |
12. | INTENTIONALLY DELETED |
13. | Costs and Expenses. To the fullest extent allowed by applicable law, Borrower will pay all expenses and costs, including Attorneys’ Fees and Costs incurred by Lender as a result of any default under this Note or in connection with efforts to collect any amount due under this Note, or to enforce the provisions of any of the other Loan Documents, including those incurred in post-judgment collection efforts and in any bankruptcy proceeding (including any action for relief from the automatic stay of any bankruptcy proceeding) or judicial or non-judicial foreclosure proceeding. Borrower acknowledges and agrees that, in connection with each request by Borrower under this Note or any Loan Document, Borrower will pay all reasonable Attorneys’ Fees and Costs and expenses incurred by Lender, including any fees charged by the Rating Agencies, regardless of whether the matter is approved, denied or withdrawn. |
14. | Forbearance. Any forbearance by Lender in exercising any right or remedy under this Note, the Loan Agreement, or any other Loan Document or otherwise afforded by applicable law, will not be a waiver of or preclude the exercise of that or any other right or remedy. The acceptance by Lender of any payment after the due date of such payment, or in an amount which is less than the required payment, will not be a waiver of Lender’s right to require prompt payment when due of all other payments or to exercise any right or remedy with respect to any failure to make prompt payment. Enforcement by Lender of any security for Borrower’s obligations under this Note will not constitute an election by Lender of remedies so as to preclude the exercise of any other right or remedy available to Lender. |
15. | Waivers. Borrower and all endorsers and Guarantors of this Note and all other third party obligors waive presentment, demand, notice of dishonor, protest, notice of acceleration, notice of intent to demand or accelerate payment or maturity, presentment for payment, notice of nonpayment, grace, and diligence in collecting the Indebtedness. |
16. | Loan Charges (Texas Only). Borrower and Lender intend at all times to comply with the law of the State of Texas governing the Maximum Interest Rate or the maximum amount of interest payable on or in connection with this Note and the Indebtedness (or applicable United States federal law to the extent that it permits Lender to contract for, charge, take, reserve or receive a greater amount of interest than under Texas law). If the applicable law is ever judicially interpreted so as to render usurious any amount payable under this Note or under any other Loan Document, or contracted for, charged, taken, reserved or received with respect to the Indebtedness, or as a result of acceleration of the maturity of this Note, or if any prepayment by Borrower results in Borrower having paid any interest in excess of that permitted by any applicable law, then Borrower and Lender expressly intend that all excess amounts collected by Lender will be applied to reduce the unpaid principal balance of this Note (or, if this Note has been or would thereby be paid in full, will be refunded to Borrower), and the provisions of this Note, the Loan Agreement and any other Loan Documents immediately will be deemed reformed and the amounts thereafter collectible under this Note or any other Loan Document 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 this Note or any other Loan Document. The right to accelerate the Maturity Date of this Note does not include the right to accelerate any interest, which has not otherwise accrued on the date of such acceleration, and Lender does not intend to collect any unearned interest in the event of acceleration. All sums paid or agreed to be paid to Lender for the use, forbearance or detention of the Indebtedness will, to the extent permitted by any applicable law, be amortized, prorated, allocated and spread throughout the full term of the Indebtedness until payment in full so that the rate or amount of interest on account of the Indebtedness does not exceed the applicable usury ceiling. Notwithstanding any provision contained in this Note, the Loan Agreement or any other Loan Document that permits the compounding of interest, including any provision by which any accrued interest is added to the principal amount of this Note, the total amount of interest that Borrower is obligated to pay and Lender is entitled to receive with respect to the Indebtedness will not exceed the amount calculated on a simple (i.e., non-compounded) interest basis at the maximum rate on principal amounts actually advanced to or for the account of Borrower, including all current and prior advances and any advances made pursuant to the Loan Agreement or other Loan Documents (such as for the payment of Taxes, Insurance premiums and similar expenses or costs). |
17. | Commercial Purpose. Borrower represents that Borrower is incurring the Indebtedness solely for the purpose of carrying on a business or commercial enterprise, and not for personal, family, household, or agricultural purposes. |
18. | Counting of Days. Any reference in this Note to a period of “days” means calendar days, not Business Days, except where otherwise specifically provided. |
19. | Governing Law. This Note will be governed by the law of the Property Jurisdiction. |
20. | Captions. The captions of the Sections of this Note are for convenience only and will be disregarded in construing this Note. |
21. | Notices; Written Modifications. |
(a) | All Notices, demands and other communications required or permitted to be given pursuant to this Note will be given in accordance with Section 11.03 of the Loan Agreement. |
(b) | Any modification or amendment to this Note will be ineffective unless in writing signed by the party sought to be charged with such modification or amendment; provided, however, in the event of a Transfer under the terms of the Loan Agreement that requires Lender’s consent, any or some or all of the Modifications to Multifamily Note set forth in Exhibit A to this Note may be modified or rendered void by Lender at Lender’s option, by Notice to Borrower and the transferee, as a condition of Lender’s consent. |
22. | Consent to Jurisdiction and Venue. Borrower agrees that any controversy arising under or in relation to this Note may be litigated in the Property Jurisdiction. The state and federal courts and authorities with jurisdiction in the Property Jurisdiction will have jurisdiction over all controversies that will arise under or in relation to this Note. 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. However, nothing in this Note is intended to limit any right that Lender may have to bring any suit, action or proceeding relating to matters arising under this Note in any court of any other jurisdiction. |
23. | WAIVER OF TRIAL BY JURY. BORROWER AND LENDER EACH (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. |
24. | State-Specific Provisions. N/A. |
26. | Attached Exhibit. The following Exhibit, if marked with an “X” in the space provided, is attached to this Note: |
A. | The following new subsections are added to Section 9(c): |
(viii) | Borrower fails to cause the renewal, continuation, extension or maintenance of all Licenses required to legally operate the Mortgaged Property as a seniors housing Facility; provided however, the failure following an Event of Default to cause the transfer of a License to Lender, through no fault of Borrower, shall not be considered a recourse event under this subsection. |
(ix) | Borrower fails upon and during the continuance of an Event of Default to cooperate, or Borrower otherwise intentionally interferes with, hinders or delays Lender (or its nominee or designee), in connection with the timely and orderly transfer of any and all Licenses. |
B. | In Sections 11(j), 12(b), 12(c) and 12(d), all references to “Section 11.12” are modified to refer to “Section 12.12”. |
(v) | Borrower engages in any willful act of material physical waste of the Mortgaged Property. |
(x) | There was an unintentional written material misrepresentation by Borrower or any officer, director, partner, member or employee of Borrower in connection with the application for or creation of the Indebtedness or any request for any action or consent by Lender. |
(iv) | There was fraud or intentional written material misrepresentation by Borrower or any officer, director, partner, member or employee of Borrower, in either case in connection with the application for or creation of the Indebtedness or there is fraud in connection with any request for any action or consent by Lender; provided that the presumption will be that any written material misrepresentation will be intentional and the burden of proof will be on the Borrower to show that there had been no intent. |
23. | WAIVER OF TRIAL BY JURY. TO THE EXTENT PERMITTED BY APPLICABLE LAW, BORROWER AND LENDER EACH (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 |
1. | Definitions. The following terms, when used in this Instrument (including when used in the above recitals), will have the following meanings and any capitalized term not specifically defined in this Instrument will have the meaning ascribed to that term in the Loan Agreement: |
(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. |
(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. |
(a) | The Land, or, if Borrower’s interest in the Land is pursuant to a Ground Lease, the Ground Lease and the Leasehold Estate. |
(b) | The Improvements. |
(c) | The Fixtures. |
(d) | The Personalty. |
(e) | All 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 benefiting 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. |
(f) | All proceeds paid or to be paid by any insurer of the Land, the Improvements, the Fixtures, the Personalty or any other part of the Mortgaged Property, whether or not Borrower obtained the insurance pursuant to Lender’s requirement. |
(g) | All 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 Fixtures, the Personalty or any other part of the Mortgaged Property, including any awards or settlements resulting from condemnation proceedings or the total or partial taking of the Land, the Improvements, the |
(h) | All contracts, options and other agreements for the sale of the Land, or the Leasehold Estate, as applicable, the Improvements, the Fixtures, 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. |
(i) | All proceeds from the conversion, voluntary or involuntary, of any of the items described in subsections (a) through (h) inclusive into cash or liquidated claims, and the right to collect such proceeds. |
(j) | All Rents and Leases. |
(k) | All 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 loan secured by this Instrument. |
(l) | All Imposition Reserve Deposits. |
(m) | All refunds or rebates of Impositions by Governmental Authority or insurance company (other than refunds applicable to periods before the real property tax year in which this Instrument is dated). |
(n) | All tenant security deposits which have not been forfeited by any tenant under any Lease and any bond or other security in lieu of such deposits. |
(o) | All 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. |
(p) | If required by the terms of Section 4.05 of the Loan Agreement, all rights under the Letter of Credit and the Proceeds, as such Proceeds may increase or decrease from time to time. |
(q) | If the Note provides for interest to accrue at an adjustable or variable rate and there is a Cap Agreement, the Cap Collateral. |
(a) | Accounts (including deposit accounts) of Borrower related to the Mortgaged Property. |
(b) | Equipment and inventory owned by Borrower, which are used now or in the future in connection with the ownership, management or operation of the Land or Improvements or are located on the Land or Improvements, including furniture, furnishings, machinery, building materials, goods, supplies, tools, books, records (whether in written or electronic form) and computer equipment (hardware and software). |
(c) | Other tangible personal property owned by Borrower which is used now or in the future in connection with the ownership, management or operation of the Land or Improvements or is located on the Land or in the Improvements, including ranges, stoves, microwave ovens, refrigerators, dishwashers, garbage disposers, washers, dryers and other appliances (other than Fixtures). |
(d) | Any operating agreements relating to the Land or the Improvements. |
(e) | Any surveys, plans and specifications and contracts for architectural, engineering and construction services relating to the Land or the Improvements. |
(f) | All other intangible property, general intangibles 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 and including subsidy or similar payments received from any sources, including a Governmental Authority. |
(g) | Any rights of Borrower in or under letters of credit. |
2. | Uniform Commercial Code Security Agreement. |
(a) | This Instrument is also a security agreement under the Uniform Commercial Code for any of the Mortgaged Property which, under applicable law, may be subjected to a security interest under the Uniform Commercial Code, for the purpose of securing Borrower’s obligations under this Instrument and to further secure Borrower’s obligations under the Note, this Instrument and other Loan Documents, whether such Mortgaged Property is owned now or acquired in the future, and all products and cash and non-cash proceeds thereof (collectively, “UCC Collateral”), and by this Instrument, Borrower grants to Lender a security interest in the UCC Collateral. To the extent necessary under applicable law, Borrower hereby authorizes Lender to prepare and 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. |
(b) | Unless Borrower gives Notice to Lender within 30 days after the occurrence of any of the following, and executes and delivers to Lender modifications or supplements of this Instrument (and any financing statement which may be filed in connection with this Instrument) as Lender may require, Borrower will not (i) change its name, identity, structure or jurisdiction of organization; (ii) change the location of its place of business (or chief executive office if more than one place of business); or (iii) add to or change any location at which any of the Mortgaged Property is stored, held or located. |
(c) | If an Event of Default has occurred and is continuing, Lender will have the remedies of a secured party under the Uniform Commercial Code, in addition to all remedies provided by this Instrument or existing under applicable law. In exercising any remedies, Lender may exercise its remedies against the UCC Collateral separately or together, and in any order, without in any way affecting the availability of Lender’s other remedies. |
(d) | This Instrument also constitutes a financing statement with respect to any part of the Mortgaged Property that is or may become a Fixture, if permitted by applicable law. |
3. | Assignment of 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 Rents. |
(i) | It is the intention of Borrower to establish a present, absolute and irrevocable transfer and assignment to Lender of all Rents and to authorize and empower Lender to collect and receive all Rents without the necessity of further action on the part of Borrower. |
(ii) | Promptly upon request by Lender, Borrower agrees to execute and deliver such further assignments as Lender may from time to time require. Borrower and Lender intend this assignment of Rents to be immediately effective and to constitute an absolute present assignment and not an assignment for additional security only. |
(iii) | For purposes of giving effect to this absolute assignment of Rents, and for no other purpose, Rents will not be deemed to be a part of the Mortgaged Property. However, if this present, absolute and unconditional assignment of Rents is not enforceable by its terms under the laws of the Property Jurisdiction, then the Rents will be included as a part of the Mortgaged Property and it is the intention of Borrower that in this circumstance this Instrument create and perfect a Lien on Rents in favor of Lender, which Lien will be effective as of the date of this Instrument. |
(b) | (i) Until the occurrence of an Event of Default, Lender hereby grants to Borrower a revocable license 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 installments of interest and principal then due and payable under the Note and the other amounts then due and payable under the other Loan Documents, including Imposition Reserve Deposits, and to pay the current costs and expenses of managing, operating and maintaining the Mortgaged Property, including utilities, Taxes and insurance premiums (to the extent not included in Imposition Reserve Deposits), tenant improvements and other capital expenditures. |
(ii) | So long as no Event of Default has occurred and is continuing, the Rents remaining after application pursuant to the preceding sentence may be retained by Borrower free and clear of, and released from, Lender’s rights with respect to Rents under this Instrument. |
(iii) | After the occurrence of an Event of Default, and during the continuance of such Event of Default, Borrower authorizes Lender to collect, sue for and compromise Rents and directs each tenant of the Mortgaged Property to pay |
(iv) | At any time on or after the date of Lender’s demand for Rents, 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 will be obligated to inquire further as to the occurrence or continuance of an Event of Default. No tenant will be obligated to pay to Borrower any amounts which are actually paid to Lender in response to such a notice. Any such notice by Lender will be delivered to each tenant personally, by mail or by delivering such demand to each rental unit. Borrower will not interfere with and will cooperate with Lender’s collection of such Rents. |
(c) | If an Event of Default has occurred and is continuing, then Lender will have each of the following rights and may take any of the following actions: |
(i) | Lender may, regardless of the adequacy of Lender’s security or the solvency of Borrower and even in the absence of waste, enter upon and take and maintain full control of the Mortgaged Property 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, 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 the assignment of Rents pursuant to Section 3(a), protecting the Mortgaged Property or the security of this Instrument, or for such other purposes as Lender in its discretion may deem necessary or desirable. |
(ii) | Alternatively, if an Event of Default has occurred and is continuing, regardless of the adequacy of Lender’s security, without regard to 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 the preceding sentence. 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 Instrument, expressly consents to the appointment of such receiver, |
(iii) | If Borrower is a housing cooperative corporation or association, Borrower hereby agrees that if a receiver is appointed, the order appointing the receiver may contain a provision requiring the receiver to pay the installments of interest and principal then due and payable under the Note and the other amounts then due and payable under the other Loan Documents, including Imposition Reserve Deposits, it being acknowledged and agreed that the Indebtedness is an obligation of Borrower and must be paid out of maintenance charges payable by Borrower’s tenant shareholders under their proprietary leases or occupancy agreements. |
(iv) | Lender or the receiver, as the case may be, will be entitled to receive a reasonable fee for managing the Mortgaged Property. |
(v) | Immediately upon appointment of a receiver or immediately upon Lender’s entering upon and taking possession and control of the Mortgaged Property, Borrower will surrender possession of the Mortgaged Property to Lender or the receiver, as the case may be, and will deliver to Lender or the receiver, as the case may be, 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. |
(vi) | If Lender takes possession and control of the Mortgaged Property, then Lender may exclude Borrower and its representatives from the Mortgaged Property. |
(d) | If Lender enters the Mortgaged Property, Lender will be liable to account only to Borrower and only for those Rents actually received. Except to the extent of Lender’s gross negligence or willful misconduct, Lender will 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 Section 3(c), and Borrower hereby releases and discharges Lender from any such liability to the fullest extent permitted by law. |
(e) | 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 will become an additional part of the Indebtedness as provided in Section 7. |
(f) | Any entering upon and taking of control of the Mortgaged Property by Lender or the receiver, as the case may be, and any application of Rents as provided in this Instrument will 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 Instrument. |
4. | Assignment of Leases; Leases Affecting the Mortgaged Property. |
(a) | As part of the consideration for the Indebtedness, Borrower absolutely and unconditionally assigns and transfers to Lender all of Borrower’s right, title and interest in, to and under the Leases, including Borrower’s right, power and authority to modify the terms of any such Lease, or extend or terminate any such Lease. |
(i) | It is the intention of Borrower to establish a present, absolute and irrevocable transfer and assignment to Lender of all of Borrower’s right, title and interest in, to and under the Leases. Borrower and Lender intend this assignment of the Leases to be immediately effective and to constitute an absolute present assignment and not an assignment for additional security only. |
(ii) | For purposes of giving effect to this absolute assignment of the Leases, and for no other purpose, the Leases will not be deemed to be a part of the Mortgaged Property. |
(iii) | However, if this present, absolute and unconditional assignment of the Leases is not enforceable by its terms under the laws of the Property Jurisdiction, then the Leases will be included as a part of the Mortgaged Property and it is the intention of Borrower that in this circumstance this Instrument create and perfect a Lien on the Leases in favor of Lender, which Lien will be effective as of the date of this Instrument. |
(b) | Until Lender gives Notice to Borrower of Lender’s exercise of its rights under this Section 4, Borrower will have all rights, power and authority granted to Borrower under any Lease (except as otherwise limited by this Section or any other provision of this Instrument), including the right, power and authority to modify the terms of any Lease or extend or terminate any Lease. Upon the occurrence of an Event of Default, and during the continuance of such Event of Default, the permission given to Borrower pursuant to the preceding sentence to exercise all rights, power and authority under Leases will automatically terminate. Borrower will comply with and observe Borrower’s obligations under all Leases, including Borrower’s obligations pertaining to the maintenance and disposition of tenant security deposits. |
(c) | (i) Borrower acknowledges and agrees that the exercise by Lender, either directly or by a receiver, of any of the rights conferred under this Section 4 will not be construed to make Lender a mortgagee-in-possession of the |
(ii) | The acceptance by Lender of the assignment of the Leases pursuant to Section 4(a) will not at any time or in any event obligate Lender to take any action under this Instrument or to expend any money or to incur any expenses. |
(iii) | Except to the extent of Lender’s gross negligence or willful misconduct, Lender will not be liable in any way for any injury or damage to person or property sustained by any Person or Persons in or about the Mortgaged Property. |
(iv) | Prior to Lender’s actual entry into and taking possession of the Mortgaged Property, Lender will not be obligated for any of the following: |
(A) | Lender will not be obligated to perform any of the terms, covenants and conditions contained in any Lease (or otherwise have any obligation with respect to any Lease). |
(B) | Lender will not be obligated to appear in or defend any action or proceeding relating to the Lease or the Mortgaged Property. |
(C) | Lender will not be responsible for the operation, control, care, management or repair of the Mortgaged Property or any portion of the Mortgaged Property. The execution of this Instrument by Borrower will constitute conclusive evidence that all responsibility for the operation, control, care, management and repair of the Mortgaged Property is and will be that of Borrower, prior to such actual entry and taking of possession. |
(d) | Upon delivery of Notice by Lender to Borrower of Lender’s exercise of Lender’s rights under this Section 4 at any time after the occurrence of an Event of Default, and during the continuance of such Event of Default, and 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, Lender immediately will 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. |
(e) | Borrower will, promptly upon Lender’s request, deliver to Lender an executed copy of each residential Lease then in effect. |
(f) | If Borrower is a cooperative housing corporation or association, notwithstanding anything to the contrary contained in this Instrument, so long as Borrower remains |
(i) | Borrower may execute leases of apartments for a term in excess of 2 years to a tenant shareholder of Borrower, so long as such leases, including proprietary leases, are and will remain subordinate to the Lien of this Instrument. |
(ii) | Borrower may surrender or terminate such leases of apartments where the surrendered or terminated lease is immediately replaced or where Borrower makes its best efforts to secure such immediate replacement by a newly-executed lease of the same apartment to a tenant shareholder of Borrower. However, no consent is given by Lender to any execution, surrender, termination or assignment of a lease under terms that would waive or reduce the obligation of the resulting tenant shareholder under such lease to pay cooperative assessments in full when due or the obligation of the former tenant shareholder to pay any unpaid portion of such assessments. |
5. | Prepayment Premium. Borrower will be required to pay a prepayment premium in connection with certain prepayments of the Indebtedness, including a payment made after Lender’s exercise of any right of acceleration of the Indebtedness, as provided in the Note. |
6. | Application of Payments. If at any time Lender receives, from Borrower or otherwise, any amount applicable to the Indebtedness which is less than all amounts due and payable at such time, then Lender may apply that payment to amounts then due and payable in any manner and in any order determined by Lender, in Lender’s discretion. Neither Lender’s acceptance of an amount that is less than all amounts then due and payable nor Lender’s application of such payment in the manner authorized will constitute or be deemed to constitute either a waiver of the unpaid amounts or an accord and satisfaction. Notwithstanding the application of any such amount to the Indebtedness, Borrower’s obligations under this Instrument, the Note and all other Loan Documents will remain unchanged. |
7. | Protection of Lender’s Security; Instrument Secures Future Advances. |
(a) | If Borrower fails to perform any of its obligations under this Instrument or any other Loan Document, or if any action or proceeding is commenced which purports to affect the Mortgaged Property, Lender’s security or Lender’s rights under this Instrument, including eminent domain, insolvency, code enforcement, civil or criminal forfeiture, enforcement of Hazardous Materials Laws, fraudulent conveyance or reorganizations or proceedings involving a bankrupt or decedent, then Lender at Lender’s option may make such appearances, file such documents, disburse such sums and take such actions as Lender reasonably deems necessary to perform such obligations of Borrower and to protect Lender’s interest, including all of the following: |
(i) | Lender may pay Attorneys’ Fees and Costs. |
(ii) | Lender may pay fees and out-of-pocket expenses of accountants, inspectors and consultants. |
(iii) | Lender may enter upon the Mortgaged Property to make Repairs or secure the Mortgaged Property. |
(iv) | Lender may procure the Insurance required by the Loan Agreement. |
(v) | Lender may pay any amounts which Borrower has failed to pay under the Loan Agreement. |
(vi) | Lender may perform any of Borrower’s obligations under the Loan Agreement. |
(vii) | Lender may make advances to pay, satisfy or discharge any obligation of Borrower for the payment of money that is secured by a Prior Lien. |
(b) | Any amounts disbursed by Lender under this Section 7, or under any other provision of this Instrument that treats such disbursement as being made under this Section 7, will be secured by this Instrument, will be added to, and become part of, the principal component of the Indebtedness, will be immediately due and payable and will bear interest from the date of disbursement until paid at the Default Rate. |
(c) | Nothing in this Section 7 will require Lender to incur any expense or take any action. |
8. | Events of Default. An Event of Default under the Loan Agreement will constitute an Event of Default under this Instrument. |
9. | Remedies Cumulative. Each right and remedy provided in this Instrument is distinct from all other rights or remedies under this Instrument, the Loan Agreement or any other Loan Document or afforded by applicable law or equity, and each will be cumulative and may be exercised concurrently, independently or successively, in any order. Lender’s exercise of any particular right or remedy will not in any way prevent Lender from exercising any other right or remedy available to Lender. Lender may exercise any such remedies from time to time and as often as Lender chooses. |
10. | Waiver of Statute of Limitations, Offsets, and Counterclaims. Borrower waives the right to assert any statute of limitations as a bar to the enforcement of the Lien of this Instrument or to any action brought to enforce any Loan Document. Borrower hereby waives the right to assert a counterclaim, other than a compulsory counterclaim, in any action or proceeding brought against it by Lender or otherwise to offset any obligations to make the payments required by the Loan Documents. No failure by Lender to perform any of its obligations |
11. | Waiver of Marshalling. |
(a) | Notwithstanding the existence of any other security interests in the Mortgaged Property held by Lender or by any other party, Lender will have the right to determine the order in which any or all of the Mortgaged Property will be subjected to the remedies provided in this Instrument, the Note, the Loan Agreement or any other Loan Document or applicable law. Lender will 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. |
(b) | 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 Instrument waives any and all right to require the marshalling 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 Instrument. |
12. | Further Assurances; Lender’s Expenses. |
(a) | Borrower will deliver, at its sole cost and expense, all further acts, deeds, conveyances, assignments, estoppel certificates, financing statements or amendments, transfers and assurances as Lender may 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 Instrument and the Loan Documents or in connection with Lender’s consent rights under Article VII of the Loan Agreement. |
(b) | Borrower acknowledges and agrees that, in connection with each request by Borrower under this Instrument or any Loan Document, Borrower will pay all reasonable Attorneys’ Fees and Costs and expenses incurred by Lender, including any fees payable in accordance with any request for further assurances or an estoppel certificate pursuant to the Loan Agreement, regardless of whether the matter is approved, denied or withdrawn. Any amounts payable by Borrower under this Instrument or under any other Loan Document will be deemed a part of the Indebtedness, will be secured by this Instrument and will bear interest at the Default Rate if not fully paid within 10 days of written demand for payment. |
13. | Governing Law; Consent to Jurisdiction and Venue. This Instrument, and any Loan Document which does not itself expressly identify the law that is to apply to it, will be governed by the laws of the Property Jurisdiction. Borrower agrees that any controversy arising under or in relation to the Note, this Instrument or any other Loan Document may be litigated in the Property Jurisdiction. The state and federal courts and authorities with jurisdiction in the Property Jurisdiction will have jurisdiction over all controversies that may |
14. | Notice. All Notices, demands and other communications under or concerning this Instrument will be governed by the terms set forth in the Loan Agreement. |
15. | Successors and Assigns Bound. This Instrument will bind the respective successors and assigns of Borrower and Lender, and the rights granted by this Instrument will inure to Lender’s successors and assigns. |
16. | Joint and Several Liability. If more than one Person signs this Instrument as Borrower, the obligations of such Persons will be joint and several. |
17. | Relationship of Parties; No Third Party Beneficiary. |
(a) | The relationship between Lender and Borrower will be solely that of creditor and debtor, respectively, and nothing contained in this Instrument will create any other relationship between Lender and Borrower. Nothing contained in this Instrument will 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 creditor of any party to this Instrument and no other Person will be a third party beneficiary of this Instrument or any other Loan Document. Without limiting the generality of the preceding sentence, (i) any arrangement (“Servicing Arrangement”) between Lender and any Loan Servicer for loss sharing or interim advancement of funds will constitute a contractual obligation of such Loan Servicer that is independent of the obligation of Borrower for the payment of the Indebtedness, (ii) Borrower will not be a third party beneficiary of any Servicing Arrangement, and (iii) no payment by the Loan Servicer under any Servicing Arrangement will reduce the amount of the Indebtedness. |
18. | Severability; Amendments. |
(a) | The invalidity or unenforceability of any provision of this Instrument will not affect the validity or enforceability of any other provision, and all other provisions will remain in full force and effect. This Instrument contains the entire agreement among the parties as to the rights granted and the obligations assumed in this Instrument. |
(b) | This Instrument may not be amended or modified except by a writing signed by the party against whom enforcement is sought; provided, however, that in the event of |
19. | Construction. |
(a) | The captions and headings of the Sections of this Instrument are for convenience only and will be disregarded in construing this Instrument. Any reference in this Instrument to a “Section” will, unless otherwise explicitly provided, be construed as referring to a Section of this Instrument. |
(b) | Any reference in this Instrument to a statute or regulation will be construed as referring to that statute or regulation as amended from time to time. |
(c) | Use of the singular in this Instrument includes the plural and use of the plural includes the singular. |
(d) | As used in this Instrument, the term “including” means “including, but not limited to” and the term “includes” means “includes without limitation.” |
(e) | The use of one gender includes the other gender, as the context may require. |
(f) | Unless the context requires otherwise any definition of or reference to any agreement, instrument or other document in this Instrument will be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth in this Instrument). |
(g) | Any reference in this Instrument to any person will be construed to include such person’s successors and assigns. |
20. | Subrogation. If, and to the extent that, the proceeds of the loan evidenced by the Note, or subsequent advances under Section 7, are used to pay, satisfy or discharge a Prior Lien, such loan proceeds or advances will be deemed to have been advanced by Lender at Borrower’s request, and Lender will 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 the Prior Lien, whether or not the Prior Lien is released. |
31. | Acceleration; Remedies. |
(a) | At any time during the existence of an Event of Default, Lender, at Lender’s option, may declare the Indebtedness to be immediately due and payable without further demand, and may invoke the power of sale and any other remedies permitted by Texas law or provided in this Instrument, the Loan Agreement or in any other Loan Document. Borrower acknowledges that the power of sale granted in this Instrument may be exercised by Lender without prior judicial hearing. Lender will be entitled to collect all costs and expenses incurred in pursuing such remedies, including Attorneys’ Fees and Costs, costs of documentary evidence, abstracts and title reports. |
(b) | If Lender invokes the power of sale, Lender may, by and through the Trustee, or otherwise, sell or offer for sale the Mortgaged Property in such portions, order and parcels as Lender may determine, with or without having first taken possession of the Mortgaged Property, to the highest bidder for cash at public auction. Such sale will be made at the courthouse door of the county in which all or any part of the Land to be sold is situated (whether the parts or parcel, if any, situated in different counties are contiguous or not, and without the necessity of having any Personalty present at such sale) on the first Tuesday of any month between the hours of 10:00 a.m. and 4:00 p.m., after advertising the time, place and terms of sale and that portion of the Mortgaged Property to be sold by posting or causing to be posted written or printed notice of sale at least 21 days before the date of the sale at the courthouse door of the county in which the sale is to be made and at the courthouse door of any other county in which a portion of the Land may be situated, and by filing such notice with the County Clerk(s) of the county(s) in which all or a portion of the Land may be situated, which notice may be posted and filed by the Trustee acting, or by any person acting for the Trustee, and Lender has, at least 21 days before the date of the sale, served written or printed notice of the proposed sale by certified mail on each debtor obligated to pay the Indebtedness according to Lender’s records by the deposit of such notice, enclosed in a postpaid wrapper, properly addressed to such debtor at debtor’s most recent address as shown by Lender’s records, in a post office or official depository under the care and custody of the United States Postal Service. The affidavit of any person having knowledge of the facts to the effect that such service was completed will be prima facie evidence of the fact of service. |
(c) | Trustee will deliver to the purchaser at the sale, within a reasonable time after the sale, a deed conveying the Mortgaged Property so sold in fee simple with covenants of general warranty. Borrower covenants and agrees to defend generally the purchaser’s title to the Mortgaged Property against all claims and demands. The recitals in Trustee’s deed will be prima facie evidence of the truth of the statements contained in those recitals. Trustee will apply the proceeds of the sale in the following order: (i) to all reasonable costs and expenses of the sale, including reasonable Trustee’s fees not to exceed 5% of the gross sales price, Attorneys’ Fees and Costs and costs of title evidence; (ii) to the Indebtedness in such order as Lender, in Lender’s discretion, directs; and (iii) the excess, if any, to the person or persons legally entitled to the excess. |
(d) | If all or any part of the Mortgaged Property is sold pursuant to this Section, Borrower will be divested of any and all interest and claim to the Mortgaged Property, including any interest or claim to all insurance policies, utility deposits, bonds, loan commitments and other intangible property included as a part of the Mortgaged Property. Additionally, after a sale of all or any part of the Land, Improvements, Fixtures and Personalty, Borrower will be considered a tenant at sufferance of the purchaser of the same, and the purchaser will be entitled to immediate possession of such property. If Borrower will fail to vacate the Mortgaged Property immediately, the purchaser may and will have the right, without further notice to Borrower, to go into any justice court in any precinct or county in which the Mortgaged Property is located and file an action in forcible entry and detainer, which action will lie against Borrower or its assigns or legal representatives, as a tenant at sufferance. This remedy is cumulative of any and all remedies the purchaser may have under this Instrument or otherwise. |
(e) | In the event an interest in any of the Mortgaged Property is foreclosed upon pursuant to a judicial or nonjudicial foreclosure sale, Borrower agrees as follows: notwithstanding the provisions of Sections 51.003, 51.004, and 51.005 of the Texas Property Code (as the same may be amended from time to time), and to the extent permitted by law, Borrower agrees that Lender will be entitled to seek a deficiency judgment from Borrower and any other party obligated on the Note equal to the difference between the amount owing on the Note and the amount for which the Mortgaged Property was sold pursuant to judicial or nonjudicial foreclosure sale. Borrower expressly recognizes that this Section constitutes a waiver of the above-cited provisions of the Texas Property Code which would otherwise permit Borrower and other persons against whom a recovery of deficiencies is sought or Guarantor independently (even absent the initiation of deficiency proceedings against them) to present competent evidence of the fair market value of the Mortgaged Property as of the date of the foreclosure sale and offset against any deficiency the amount by which the foreclosure sale price is determined to be less than such fair market value. Borrower further recognizes and agrees that this waiver creates an irrebuttable presumption that the foreclosure sale price is equal to the fair market value of the Mortgaged Property for purposes of calculating deficiencies owed by Borrower, Guarantor, and others against whom recovery of a deficiency is sought. Alternatively, in the event the waiver provided for in this Section is determined by a court of competent jurisdiction to be unenforceable, in any action for a deficiency after a foreclosure under this Instrument, if any person against whom recovery is sought requests the court in which the action is pending to determine the fair market value of the Mortgaged Property, as of the date of the foreclosure sale, the following will be the basis of the court’s determination of fair market value: |
(i) | The Mortgaged Property will be valued “as is” and in its condition as of the date of foreclosure, and no assumption of increased value because of post-foreclosure repairs, refurbishment, restorations or improvements will be made. |
(ii) | Any adverse effect on the marketability of title because of the foreclosure or because of any other title condition not existing as of the date of this Instrument will be considered. |
(iii) | The valuation of the Mortgaged Property will be based upon an assumption that the foreclosure purchaser desires a prompt resale of the Mortgaged Property for cash within a 6 month-period after foreclosure. |
(iv) | Although the Mortgaged Property may be disposed of more quickly by the foreclosure purchaser, the gross valuation of the Mortgaged Property as of the date of foreclosure will be discounted for a hypothetical reasonable holding period (not to exceed 6 months) at a monthly rate equal to the average monthly interest rate on the Note for the 12 months before the date of foreclosure. |
(v) | The gross valuation of the Mortgaged Property as of the date of foreclosure will be further discounted and reduced by reasonable estimated costs of disposition, including brokerage commissions, title policy premiums, environmental assessment and clean-up costs, tax and assessment, prorations, costs to comply with legal requirements and Attorneys’ Fees and Costs. |
(vi) | Expert opinion testimony will be considered only from a licensed appraiser certified by the State of Texas and, to the extent permitted under Texas law, a member of the Appraisal Institute, having at least 5 years’ experience in appraising property similar to the Mortgaged Property in the county where the Mortgaged Property is located, and who has conducted and prepared a complete written appraisal of the Mortgaged Property taking into considerations the factors set forth in this Instrument; no expert opinion testimony will be considered without such written appraisal. |
(vii) | Evidence of comparable sales will be considered only if also included in the expert opinion testimony and written appraisal referred to in subsection (vi), above. |
(viii) | An affidavit executed by Lender to the effect that the foreclosure bid accepted by Trustee was equal to or greater than the value of the Mortgaged Property determined by Lender based upon the factors and methods set forth in subsections (i) through (vii) above before the foreclosure will constitute prima facie evidence that the foreclosure bid was equal to or greater than the fair market value of the Mortgaged Property on the foreclosure date. |
(f) | Lender may, at Lender’s option, comply with these provisions in the manner permitted or required by Title 5, Section 51.002 of the Texas Property Code (relating |
(g) | At any such sale, all of the following will be true: |
(i) | Whether made under the power contained in this Instrument, Section 51.002 of the Texas Property Code, Chapter 9 of the Texas Business and Commerce Code, any other legal requirement or by virtue of any judicial proceedings or any other legal right, remedy or recourse, it will not be necessary for Trustee to have physically present, or to have constructive possession of, the Mortgaged Property. Borrower will deliver to Trustee any portion of the Mortgaged Property not actually or constructively possessed by Trustee immediately upon demand by Trustee and the title to and right of possession of any such property will pass to the purchaser as completely as if the property had been actually present and delivered to the purchaser at the sale. |
(ii) | Each instrument of conveyance executed by Trustee will contain a general warranty of title, binding upon Borrower. |
(iii) | The recitals contained in any instrument of conveyance made by Trustee will conclusively establish the truth and accuracy of the matters recited in the Instrument, including nonpayment of the Indebtedness and the advertisement and conduct of the sale in the manner provided in this Instrument and otherwise by law and the appointment of any successor Trustee. |
(iv) | All prerequisites to the validity of the sale will be conclusively presumed to have been satisfied. |
(v) | The receipt of Trustee or of such other party or officer making the sale will be sufficient to discharge to the purchaser or purchasers for such purchaser(s)’ purchase money, and no such purchaser or purchasers, or such purchaser(s)’ assigns or personal representatives, will thereafter be obligated to see to the application of such purchase money or be in any way answerable for any loss, misapplication or nonapplication of such purchase money. |
(vi) | To the fullest extent permitted by law, Borrower will be completely and irrevocably divested of all of Borrower’s right, title, interest, claim and demand whatsoever, either at law or in equity, in and to the property sold, and such sale will be a perpetual bar to any claim to all or any part of the |
(vii) | To the extent and under such circumstances as are permitted by law, Lender may be a purchaser at any such sale. |
32. | Release. Upon payment of the Indebtedness, Lender will release this Instrument. Borrower will pay Lender’s reasonable costs incurred in releasing this Instrument. |
33. | Trustee. |
(a) | Trustee may resign by giving of notice of such resignation in writing to Lender. If Trustee will die, resign or become disqualified from acting under this Instrument or will fail or refuse to act in accordance with this Instrument when requested by Lender or if for any reason and without cause Lender will prefer to appoint a substitute trustee to act instead of the original Trustee named in this Instrument or any prior successor or substitute trustee, Lender will have full power to appoint a substitute trustee and, if preferred, several substitute trustees in succession who will succeed to all the estate, rights, powers and duties of the original Trustee named in this Instrument. Such appointment may be executed by an authorized officer, agent or attorney-in-fact of Lender (whether acting pursuant to a power of attorney or otherwise), and such appointment will be conclusively presumed to be executed with authority and will be valid and sufficient without proof of any action by Lender. |
(b) | Any successor Trustee appointed pursuant to this Section will, without any further act, deed or conveyance, become vested with all the estates, properties, rights, powers and trusts of the predecessor Trustee with like effect as if originally named as Trustee in this Instrument; but, nevertheless, upon the written request of Lender or such successor Trustee, the Trustee ceasing to act will execute and deliver an instrument transferring to such successor Trustee, all the estates, properties, rights, powers and trusts of the Trustee so ceasing to act, and will duly assign, transfer and deliver any of the property and monies held by the Trustee ceasing to act to the successor Trustee. |
(c) | Trustee may authorize one or more parties to act on Trustee’s behalf to perform the ministerial functions required of Trustee under this Instrument, including the transmittal and posting of any notices. |
34. | Vendor’s Lien. To the extent a vendor’s lien is retained in that certain deed conveying the Mortgaged Property to Borrower and dated on or about the date of this Instrument, such vendor’s lien has been assigned to Lender, the Note is primarily secured by said vendor’s lien, and this Instrument is additional security therefore. |
35. | No Fiduciary Duty. Lender owes no fiduciary or other special duty to Borrower. |
36. | Fixture Filing. This Instrument is also a fixture filing under the Uniform Commercial Code of Texas. |
37. | Additional Provisions Regarding Assignment Of Rents. Section 3 will not be construed to require a pro tanto or other reduction of the Indebtedness resulting from the assignment of Rents. If the provisions of Section 3 and the preceding sentence cause the assignment of Rents in Section 3 to be deemed to be an assignment for additional security only, Lender will be entitled to all rights, benefits and remedies attendant to such collateral assignment. The assignment of Rents contained in Section 3 will terminate upon the release of this Instrument. |
38. | Loan Charges. Borrower and Lender intend at all times to comply with the laws of the State of Texas governing the maximum rate or amount of interest payable on or in connection with the Indebtedness (or applicable United States federal law to the extent that it permits Lender to contract for, charge, take, reserve or receive a greater amount of interest than under Texas law). If the applicable law is ever judicially interpreted so as to render usurious any amount payable under the Note, this Instrument or any other Loan Document, or contracted for, charged, taken, reserved or received with respect to the Indebtedness, or if acceleration of the maturity of the Indebtedness, or if any prepayment by Borrower results in Borrower having paid any interest in excess of that permitted by any applicable law, then Borrower and Lender expressly intend that all excess amounts collected by Lender will be applied to reduce the unpaid principal balance of the Indebtedness (or, if the Indebtedness has been or would thereby be paid in full, will be refunded to Borrower), and the provisions of the Note, this Instrument and the other Loan Documents immediately will be deemed reformed and the amounts thereafter collectible under the 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. The right to accelerate the maturity of the Indebtedness does not include the right to accelerate any interest which has not otherwise accrued on the date of such acceleration, and Lender does not intend to collect any unearned interest in the event of acceleration. All sums paid or agreed to be paid to Lender for the use, forbearance or detention of the Indebtedness will, to the extent permitted by any applicable law, be amortized, prorated, allocated and spread throughout the full term of the Indebtedness until payment in full so that the rate or amount of interest on account of the Indebtedness does not exceed the applicable usury ceiling. Notwithstanding any provision contained in the Note, this Instrument or any other Loan Document that permits the compounding of interest, including any provision by which any accrued interest is added to the principal amount of the Indebtedness, the total amount of interest that Borrower is obligated to pay and Lender is entitled to receive with respect to the Indebtedness will not exceed the amount calculated on a simple (i.e., noncompounded) interest basis at the maximum rate on principal amounts actually advanced to or for the account of Borrower, including all current and prior advances and any advances made pursuant to the Instrument or any other Loan Document (such as for the payment of Impositions and similar expenses or costs). |
39. | ENTIRE AGREEMENT. THIS INSTRUMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. |
40. | WAIVER OF TRIAL BY JURY. |
(a) | BORROWER AND LENDER EACH COVENANTS AND AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS INSTRUMENT OR THE RELATIONSHIP BETWEEN THE PARTIES AS BORROWER AND LENDER THAT IS TRIABLE OF RIGHT BY A JURY. |
(b) | BORROWER AND LENDER EACH 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. |
41. | Notice of Additional Provisions Regarding Insurance. Any terms to the contrary contained in this Instrument notwithstanding, the following requirements are hereby imposed pursuant to Section 307.052 of the Texas Finance Code: |
(a) | BORROWER IS REQUIRED TO: (i) KEEP THE MORTGAGED PROPERTY INSURED AGAINST DAMAGE IN AN AMOUNT EQUAL TO THE INDEBTEDNESS, (ii) PURCHASE THE INSURANCE FROM AN INSURER THAT IS AUTHORIZED TO DO BUSINESS IN THE STATE OF TEXAS OR AN ELIGIBLE SURPLUS LINES INSURER, AND (iii) NAME THE LENDER AS THE PERSON TO BE PAID UNDER THE POLICY IN THE EVENT OF LOSS. |
43. | Attached Exhibits. The following Exhibits, if marked with an “X” in the space provided, are attached to this Instrument: |
(a) | All of Borrower’s present and future right, title and interest in and to all of the following that are used now or in the future in connection with the ownership, management or operation of the Land and/or the Improvements on such Land (“Property”), including without limitation, the Facility: machinery, equipment, engines, boilers, incinerators, 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 disposals, 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; and exercise equipment (any of the foregoing that are so attached to the Property as to constitute fixtures under applicable law are referred to below as “Facility Fixtures”). |
(b) | All furniture, furnishings, equipment, machinery, building materials, appliances, goods, supplies, tools, books, records (whether in written or electronic form), computer equipment (hardware and software) healthcare equipment, recreational equipment, pool equipment, dishes, silverware, glassware, kitchen equipment and other tangible personal property (other than Facility Fixtures) that are used now or in the future in connection with the ownership, management or operation of the Property or are located on the Property, and any operating leases relating to the Property, and any surveys, plans and specifications and contracts for architectural, engineering and construction services relating to the Property and all other intangible property and rights relating to the operation of, or used in connection with, the Property, including all governmental permits relating to any activities on the Property (“Facility Personalty”). |
(c) | All 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 |
(d) | All proceeds paid or to be paid by any insurer of the Property, the Facility Fixtures, the Personalty or any other item listed in this Exhibit B. |
(e) | All awards, payments and other compensation made or to be made by any municipal, state or federal authority with respect to the Property, the Facility Fixtures, the Facility Personalty or any other item listed in this Exhibit B, including any awards or settlements resulting from condemnation proceedings or the total or partial taking of the Property, the Facility Fixtures, the Facility Personalty or any other item listed in this Schedule 1 under the power of eminent domain or otherwise and including any conveyance in lieu thereof. |
(f) | All contracts, options and other agreements for the sale of the Property, the Facility |
(g) | All present and future leases, subleases, licenses, concessions or grants or other possessory interests, including master leases or operating leases and agreements, now or hereafter in force, whether oral or written, covering or affecting the Property or its operation, or any portion of the Property (including proprietary leases or occupancy agreements if Borrower is a cooperative housing corporation), and all modifications, extensions or renewals; and all occupancy agreements (including both residential and commercial agreements), patient admissions or resident care agreements (“Facility Leases”). |
(h) | All earnings, royalties, accounts receivable (including accounts receivable for all rents, revenues and other income of the Property), including parking fees, issues and profits from the Property or its operation, or any other item listed in this Schedule 1, and all undisbursed proceeds of the loan secured by the security interests to which this financing statement relates and, if Borrower is a cooperative housing corporation, maintenance charges or assessments payable by shareholders or residents. |
(i) | All refunds or rebates of (a) water and sewer charges, (b) premiums for fire and other hazard insurance, rent loss insurance and any other insurance required by Lender, (c) taxes, assessments, vault rentals, and (d) other charges or expenses required by Lender to protect the Property, to prevent the imposition of liens on the Property, or otherwise to protect Lender’s interests by any municipal, state or federal authority or insurance company; and all refunds of utility deposits. |
(j) | All tenant security deposits which have not been forfeited by any tenant under any Lease. |
(k) | Subject to the terms of the Instrument, all names under or by which the Property or any part of it may be operated or known, and all trademarks, trade names, and goodwill relating to any of the Property or any part of it. |
(l) | All payments received and all rights to receive payments from any source, which payments (or rights thereto) arise from operation of or at the Property, including without limitation, entrance fees, application fees, processing fees, community fees and any other amounts or fees deposited or to be deposited by any resident or tenant, payments received and the right to receive payments of second party charges added to base rental income, base and additional meal sales, payments received and the right to receive payments from commercial operations located on the Property or provided as a service to the occupants of the Facility, rental from guest suites, seasonal lease charges, rental payments under furniture leases, income from healthcare services, income from laundry service, income from vending machines and income and fees from any and all other services provided to residents of the Property. |
(m) | All rights to payments from Medicare, Medicaid or TRICARE programs or similar federal, state or local programs or agencies and rights to payment from private insurers. |
(n) | All Licenses, approvals, permits, accreditations, determinations of need, certificates of need, and other certificates. |
(o) | All operating contracts, franchises, license agreements, healthcare services contracts, food service contracts and other contracts for services related to the Property. |
(q) | All 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 any supporting obligations of any of the above. |
(r) | All interest rate cap agreements, interest rate swap agreements and other interest rate hedging contracts and agreements (collectively, “Cap Agreements”) obtained by Borrower (or obtained by Lender in the name of Borrower) pursuant to (or as permitted by) the Loan Documents or as a condition to Lender’s making the loan that is the subject of the Loan Documents, together with all of the following: |
(i) | Any and all moneys (collectively, “Cap Payments”) payable from time to time pursuant to any Cap Agreement by the interest rate cap provider or other counterparty to a Cap Agreement, or any guarantor of the obligations of any such cap provider or counterparty (a “Cap Provider”). |
(ii) | All rights of Borrower under any Cap Agreement, and all rights of Borrower to all Cap Payments, including contract rights and general intangibles, now existing or hereafter arising. |
(iii) | All rights, liens, and security interests or guarantees now existing or hereafter granted by a Cap Provider or any other person to secure or guaranty payment of any Cap Payment. |
(iv) | All documents, writings, books, files, records and other documents arising from or relating to any of the foregoing, whether now existing or hereafter created. |
(v) | All cash and non-cash proceeds and products of any of the foregoing. |
If to TFG Guarantor: |
c/o The Freshwater Group, Inc. 2020 West Rudasill Road Tucson, Arizona 85704 Attention: David Freshwater Email: david@thefreshwatergroup.com |
with a copy to: |
Cox, Castle & Nicholson LLP 2049 Century Park East, 28th Floor Los Angeles, CA 90067 Attention: Kevin S. Kinigstein Email: kkinigstein@coxcastle.com |
If to NorthStar Reimbursement Party: |
c/o NorthStar Realty Healthcare 2 Bethesda Metro Center, Suite 1300 Bethesda, Maryland 20814 Attention: Doug Bath Email: dbath@nrfc.com |
with a copy to: |
NorthStar Realty Finance 399 Park Avenue New York, New York 10022 Attention: Ronald J. Lieberman Email: rlieberman@nrfc.com |
and a copy to: |
Fried, Frank, Harris, Shriver & Jacobson LLP One New York Plaza New York, New York 10004 Attention: Harry R. Silvera, Esq. Email: harry.silvera@friedfrank.com |
TFG GUARANTOR: | ||
DF GUARANTOR: /s/ David Freshwater David J. Freshwater, an individual DB GUARANTOR: /s/ David Barnes David Barnes, an individual | ||
NORTHSTAR REIMBURSEMENT PARTY: | ||
NORTHSTAR HEALTHCARE INCOME OPERATING PARTNERSHIP, LP, a Delaware limited partnership | ||
NorthStar Healthcare Income, Inc., a Maryland corporation, its general partner | ||
/s/ Ronald J. Lieberman | ||
Name: Ronald J. Lieberman | ||
Title: Executive Vice President, General Counsel and Secretary | ||