UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 26, 2021
RESOURCE REIT, INC.
(Exact name of registrant specified in its charter)
Maryland | 000-55430 | 80-0854717 | ||
(State or other jurisdiction of incorporation or organization) |
(Commission File Number) |
IRS Employer Identification No. |
1845 Walnut Street, 17th Floor
Philadelphia, Pennsylvania 19103
(Address of principal executive offices)
Registrants telephone number, including area code: (215) 231-7050
Resource Real Estate Opportunity REIT II, Inc.
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
None | N/A | N/A |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01 | Entry into a Material Definitive Agreement. |
The information in this Report set forth under Item 2.03 is incorporated herein by reference.
As previously disclosed in the Current Report on Form 8-K of Resource REIT, Inc. (f/k/a Resource Real Estate Opportunity REIT II, Inc.) (the Company) filed with the Securities and Exchange Commission (the SEC) on September 11, 2020 (the Prior 8-K), the Companys board of directors approved an Amended and Restated Limited Partnership Agreement of RRE Opportunity OP II, LP (OP II), the Companys operating partnership, on September 8, 2020 (the OP II Operating Partnership Agreement), to be effective at the time of the merger of Resource Real Estate Opportunity OP, LP (OP I) with and into OP II (the REIT I Partnership Merger). As described below, the REIT I Partnership Merger was effective on January 28, 2021 and the OP II Operating Partnership Agreement was entered into and became effective at that time. A full description of the terms of the OP II Operating Partnership Agreement is included under Item 1.01 in the Prior 8-K and incorporated herein by reference.
Item 2.01 | Completion of Acquisition or Disposition of Assets. |
Merger with Resource Real Estate Opportunity REIT, Inc.
As previously disclosed in the Prior 8-K, the Company, OP II, OP I, Revolution I Merger Sub, LLC, a wholly owned subsidiary of the Company (REIT I Merger Sub), and Resource Real Estate Opportunity REIT, Inc. (REIT I) entered into an Agreement and Plan of Merger on September 8, 2020 (the REIT I Merger Agreement).
The stockholders of REIT I approved the REIT I Merger (as defined below) contemplated by the REIT I Merger Agreement at REIT Is special meeting of stockholders held on January 26, 2021.
On January 28, 2021, pursuant to the REIT I Merger Agreement as amended to date, (i) REIT I merged with and into REIT I Merger Sub, with REIT I Merger Sub surviving as a direct, wholly owned subsidiary of the Company (the REIT I Company Merger) and (ii) OP I merged with and into OP II, with OP II surviving (the REIT I Partnership Merger and, together with the REIT I Company Merger, the REIT I Merger). At such time, in accordance with the applicable provisions of the Maryland General Corporation Law (the MGCL), the Maryland Limited Liability Company Act (the MLLCA) and the Delaware Revised Uniform Limited Partnership Act (DRULPA), the separate existence of REIT I and OP I ceased.
At the effective time of the REIT I Company Merger, (i) each issued and outstanding share of REIT Is common stock (or a fraction thereof), $0.01 par value per share, converted into 1.22423 shares of the common stock of the Company, $0.01 par value per share (Company Common Stock) and (ii) each issued and outstanding share of REIT Is convertible stock, $0.01 par value per share, converted into the right to receive $0.02 in cash, without interest.
At the effective time of the REIT I Partnership Merger, (i) each common unit of partnership interests in OP I outstanding immediately prior to the effective time of the REIT I Partnership Merger converted into the right to receive 1.22423 common units of partnership interest in OP II and (ii) each Series A Cumulative Participating Redeemable Preferred Unit in OP I issued and outstanding immediately prior to the effective time of the REIT I Partnership Merger converted into the right to receive one Series A Cumulative Participating Redeemable Preferred Unit in OP II.
The foregoing description of the REIT I Merger Agreement contained in this Item 2.01 does not purport to be complete and is subject to and qualified in its entirety by reference to the REIT I Merger Agreement, a copy of which is filed as Exhibit 2.1 to this Current Report on Form 8-K.
Merger with Resource Apartment REIT III, Inc.
As previously disclosed in the Prior 8-K, the Company, OP II, Resource Apartment OP III, LP (OP III), Revolution III Merger Sub, LLC, a direct wholly owned subsidiary of the Company (REIT III Merger Sub), and Resource Apartment REIT III, Inc. (REIT III) entered into an Agreement and Plan of Merger on September 8, 2020 (the REIT III Merger Agreement).
The stockholders of REIT III approved the REIT III Merger (as defined below) contemplated by the REIT III Merger Agreement at REIT IIIs special meeting of stockholders held on January 26, 2021.
On January 28, 2021, pursuant to the REIT III Merger Agreement as amended to date, (i) REIT III merged with and into REIT III Merger Sub, with REIT III Merger Sub surviving as a direct, wholly owned subsidiary of the Company (the REIT III Company Merger) and (ii) OP III merged with and into OP II, with OP II surviving (the REIT III Partnership Merger and, together with the REIT III Company Merger, the REIT III Merger). At such time, in accordance with the applicable provisions of the MGCL, the MLLCA and the DRUPA, the separate existence of REIT III and OP III ceased.
At the effective time of the REIT III Company Merger, each issued and outstanding share of REIT IIIs common stock (or a fraction thereof), $0.01 par value per share, converted into 0.925862 shares of Company Common Stock.
At the effective time of the REIT III Partnership Merger, each unit of partnership interests in OP III outstanding immediately prior to the effective time of the REIT III Partnership Merger was retired and ceased to exist. In addition, for each share of Company Common Stock issued in the REIT III Company Merger, a common partnership unit was issued by OP II to the Company.
The foregoing description of the REIT III Merger Agreement contained in this Item 2.01 does not purport to be complete and is subject to and qualified in its entirety by reference to the REIT III Merger Agreement, a copy of which is filed as Exhibit 2.2 to this Current Report on Form 8-K.
Combined Company
Each of the REIT I Merger and the REIT III Merger is intended to qualify as a reorganization under, and within the meaning of, Section 368(a) of the Internal Revenue Code of 1986, as amended.
Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under and Off-Balance Sheet Arrangement of a Registrant |
On January 28, 2021, subsidiaries of the Company (collectively, Borrower) entered into a structured credit facility transaction with CBRE Multifamily Capital, Inc. for delivery of loans and/or advances to Fannie Mae (the Facility) for a term of 15 years (the Facility Termination Date). Pursuant to the terms of the loan documents for the Facility, the lender agreed to make fixed advances and variable advances to Borrower during the term of the Facility provided that Borrower satisfies certain customary conditions as set forth in the Facility loan documents (the Loan Documents), including debt service coverage tests and loan-to-value tests. The fixed advances in the Facility may have terms not less than five or more than 15 years from the closing of such advance and variable advances in the Facility may have terms not less than five or more than 10 years from the closing of such advance. All advances must have maturity dates that do not exceed the Facility Termination Date. Borrower has the option to convert variable advances to fixed advances beginning on the first day of the second year of the variable advance term and ending seven years prior to the Facility Termination Date, subject to the satisfaction of customary requirements set forth in the Loan Documents.
The Facility is non-recourse to the Borrower except for the customary exceptions to non-recourse provisions of the Loan Documents (carve-outs). The Borrowers obligations for the carve-outs are guaranteed solely by the Borrowers. The Company is the key principal under the Facility and as such must continue to indirectly own an interest in each Borrower and is subject to certain transfer restrictions with respect to its ownership interest in each Borrower as provided in the Loan Documents. In addition, the Facility contains customary representations and warranties, financial and other covenants, events of default and remedies typical for this type of facility.
The initial advance of $495,170,000 under the Facility occurred on January 28, 2021 and is secured by the following twelve multifamily properties located in Arizona, Colorado, Georgia, Oregon and Texas: Estates at Johns Creek, Heritage Pointe, Providence in the Park, South Lamar Village, Verona Apartments, Westside, 81 Fifty at West Hills, Adair off Addison I & II, Montclair Terrace, Palmer at Las Colinas, and Uptown Buckhead. The proceeds from the initial advance were used to refinance or pay off $462 million of the Companys debt. Additional information about the initial advance is as follows:
Advance |
Loan Amount | Term (years) | Interest Only | Total Rate | Payments | |||||||
Fixed Advance 1 |
$ | 235,205,000 | 10 | Yes | 2.79 | Monthly | ||||||
Fixed Advance 2 |
$ | 235,205,000 | 7 | Yes | 2.62 | Monthly | ||||||
Variable Advance 1 |
$ | 24,760,000 | 10 | Yes | 2.146 | Monthly |
Item 5.02 | Departure of Directors of Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
Director Appointments and Resignations
On January 27, 2021, upon the closing of the REIT I Merger and the REIT III Merger, Andrew Ceitlin, Robert Lieber and Lee Shlifer became members of the board of directors of the Company (the Board) pursuant to the terms of the merger agreements. Messrs. Shlifer and Ceitlin satisfy the independent director standards applicable to the Company and as independent directors, each will receive the same compensation and reimbursement of expenses that the Company pays to each of its independent directors. In addition, the Company entered into the Companys form indemnification agreement for its independent directors with Messrs. Shlifer and Ceitlin. The form of indemnification agreement was filed as Exhibit 10.1 to the Companys Current Report on Form 8-K filed with the SEC on March 16, 2020.
Information about the appointment of Messrs. Ceitlin, Lieber and Shlifer to the Board, including their biographical information, is included under Item 5.02 in the Prior 8-K and is incorporated herein by reference. As independent directors, Messrs. Shlifer and Ceitlin will serve on the conflicts committee of the Board. As of the filing date of this Current Report on Form 8-K, the Board has not determined additional committee assignments for Messrs. Ceitlin, Lieber and Shlifer. The Company will provide the foregoing information by filing an amendment to this Report after the information is determined or becomes available. In addition, as provided in his letter of resignation tendered on September 8, 2020, as of January 27, 2021, David Spoont will no longer serve as a director of the Company.
Employment Agreements
In connection with the REIT I Merger, the Company assumed from REIT I, the employment agreements dated September 8, 2020 for the following executive officers of the Company: Alan F. Feldman, Chief Executive Officer and President, Thomas C. Elliott, Executive Vice President, Chief Financial Officer and Treasurer, and Michele (Shelle) R. Weisbaum, Senior Vice President and Chief Legal Officer. The Company assumed REIT Is obligations under the employment agreements in their entirety. Information about the REIT I employment agreements is included under Item 5.02 in the Current Report on Form 8-K for Resource Real Estate Opportunity REIT, Inc. as filed with the SEC on September 11, 2020 and incorporated herein by reference. In addition, the employment agreements for Messrs. Feldman and Elliott and Ms. Weisbaum are filed as Exhibits 10.2, 10.3and 10.4 , respectively, to this Current Report on Form 8-K.
2020 Long-Term Incentive Plan
As of January 28, 2021, the effective time of the REIT I Merger, the Company assumed the 2020 Long-Term Incentive Plan of REIT I as amended to replace all references to REIT I to the Company (the 2020 LTIP). The terns of the 2020 LTIP are described under Item 5.02 in the Prior 8-K and incorporated herein by reference. In addition, a copy of the 2020 LTIP is filed as Exhibit 10.5 to this Current Report on Form 8-K.
In addition, upon the effective time of the REIT I Merger, the shares of restricted stock of REIT I granted to Alan F. Feldman, Thomas C. Elliott, Steven R. Saltzman and Michele R. Weisbaum under the 2020 Long-Term Incentive Plan of REIT I were cancelled and converted into the right to receive 1.22423 shares of Company Common Stock. Each such share of Company Common Stock issued has, and is subject to, the same terms and conditions (including with respect to vesting) set forth in the 2020 Long-Term Incentive Plan of REIT I (which has been assumed and adopted by the Company as its own) and the related restricted stock agreements as in effect immediately prior to the REIT I Merger. The terms of the restricted stock are described under Item 5.02 in the Prior 8-K and incorporated herein by reference. In addition, a copy of the form of restricted stock agreement for the Company is filed as Exhibit 10.6 to this Current Report on Form 8-K.
Item 5.03 | Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year. |
On January 27, 2021, the Company filed Articles of Amendment with the State Department of Assessments and Taxation of Maryland changing the Companys name from Resource Real Estate Opportunity REIT II, Inc. to Resource REIT, Inc. The Articles of Amendment became effective following the effective time of the mergers on January 28, 2021.
Item 7.01 | Regulation FD Disclosure. |
Press Release
On January 29, 2021, the Company issued a press release announcing the closing of the REIT I Merger and the REIT III Merger. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein solely for purposes of this Item 7.01 disclosure.
Pursuant to the rules and regulations of the SEC, the information in this Item 7.01 disclosure, including Exhibit 99.1 and information set forth therein, is deemed to have been furnished and shall not be deemed to be filed under the Securities Exchange Act of 1934.
Item 9.01 | Financial Statements and Exhibits. |
(a) Financial Statements of Businesses Acquired.
As permitted by Item 9.01(a)(4) of Form 8-K, the audited financial statements required by this Item will be filed by amendment to this Current Report on Form 8-K within 71 days following the date on which this Current Report is required to be filed.
(b) Pro Forma Financial Information.
As permitted by Item 9.01(a)(4) of Form 8-K, the pro forma financial information required by this Item will be filed by amendment to this Current Report on Form 8-K within 71 days following the date on which this Current Report is required to be filed.
(d) Exhibits
* | Filed herewith |
# | Certain portions of this exhibit have been omitted. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
RESOURCE REIT, INC. (f/k/a Resource Real Estate Opportunity REIT II, Inc.) | ||||||
Dated: January 29, 2021 | By: | /s/ Alan F. Feldman | ||||
Name: | Alan F. Feldman | |||||
Title: | Chief Executive Officer and President |
Exhibit 3.1
ARTICLES OF AMENDMENT
OF
RESOURCE REAL ESTATE OPPORTUNITY REIT II, INC.
THIS IS TO CERTIFY THAT:
FIRST: Pursuant to Section 2-605 of the Maryland General Corporation Law (the MGCL), Resource Real Estate Opportunity REIT II, Inc. (the Corporation) desires to amend its charter as currently in effect and as hereinafter amended.
SECOND: Article I of the Corporations charter shall be amended as follows:
The name of the Corporation is Resource REIT, Inc. (the Corporation).
THIRD: This amendment to the Corporations charter was approved by a majority of the entire Board of Directors of the Corporation. This amendment is limited to a change expressly authorized by Section 2-605(a)(1) of the MGCL to be made without action by the Corporations stockholders.
FOURTH: These Articles of Amendment shall be effective at 12:02 a.m. local time on January 28, 2021 (the Effective Time).
FIFTH: The undersigned President and Chief Executive Officer acknowledges these Articles of Amendment to be the corporate act of the Corporation and as to all matters or facts required to be verified under oath, the undersigned President and Chief Executive Officer acknowledges that to the best of his knowledge, information and belief, these matters and facts are true in all material respects and that this statement is made under the penalties for perjury.
IN WITNESS WHEREOF, the Corporation has caused these Articles to be signed in its name and on its behalf by its President and Chief Executive Officer and attested to by its Chief Legal Officer and Secretary on this 26th day of January, 2021.
RESOURCE REAL ESTATE OPPORTUNITY REIT II, INC. | ||
By: | /s/ Alan F. Feldman | |
Alan F. Feldman | ||
President and Chief Executive Officer |
ATTEST: | ||
By: | /s/ Shelle Weisbaum | |
Shelle Weisbaum | ||
Chief Legal Officer and Secretary |
Exhibit 10.1
AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
OF
RRE OPPORTUNITY OP II, LP
RRE Opportunity OP II, LP (the Partnership) was formed as a limited partnership under the laws of the State of Delaware, pursuant to a Certificate of Limited Partnership filed with the Office of the Secretary of State of the State of Delaware on October 1, 2012. This Amended and Restated Limited Partnership Agreement (Agreement) is entered into effective as of January 28, 2021 among Resource REIT, Inc., a Maryland corporation (the General Partner), the Limited Partners set forth on Exhibit A hereto, and such additional Limited Partners party hereto from time to time. Capitalized terms used herein but not otherwise defined shall have the meanings given them in Article 1.
WHEREAS, the General Partner and RRE Opportunity Holdings II, LLC, as the Initial Limited Partner, entered into a Limited Partnership Agreement of Resource Real Estate Opportunity OP, LP dated as of January 16, 2014, pursuant to which the Partnership was formed (the Original Agreement);
WHEREAS, the General Partner, the Partnership, Revolution I Merger Sub, LLC, a Maryland limited liability company and a wholly owned subsidiary of the General Partner (Merger Sub), Resource Real Estate Opportunity REIT, Inc., a Maryland corporation (REIT I) and Resource Real Estate Opportunity OP, LP, a Delaware limited partnership and the operating partnership of REIT I (REIT I Operating Partnership) have entered an Agreement and Plan of Merger dated as of September 8, 2020 (the Merger Agreement), pursuant to which (i) first, REIT 1 will be merged with and into Merger Sub, with Merger Sub being the surviving company (the REIT Merger), and (ii) second, REIT I Operating Partnership will be merged with and into the Partnership, with the Partnership being the surviving entity (the Partnership Merger);
WHEREAS, on September 8, 2020, before entering into the Merger Agreement, pursuant to that certain Contribution and Exchange Agreement (the Contribution and Exchange Agreement) by and among REIT I Operating Partnership, Resource PM Holdings LLC (PM Holdings), Resource NewCo LLC (Advisor Holdings), C-III Capital Partners LLC (PM Contributor), Resource Real Estate, LLC (Advisor Contributor), and Resource America, Inc., PM Contributor and Advisor Contributor contributed certain assets to the REIT I Operating Partnership, including all of PM Contributors right, title and interest in all of the membership interests in PM Holdings and all of Advisor Contributors right, title and interest in all of the membership interests in Advisor Holdings in exchange for a total of 6,158,759 Common Units of REIT I Operating Partnership, 319,965 Series A Preferred Units of REIT I Operating Partnership and other good and valuable consideration (the Contribution Transaction);
WHEREAS, in connection with the proposed Partnership Merger and in order to preserve the rights and preferences of the minority limited partners of REIT I Operating Partnership, the General Partner now desires to amend and restate the Original Agreement to reflect, among other things, the issuance or existence of the Series A Preferred Units, as specified in Exhibit C hereto, the Common Units and the Convertible Units as contemplated pursuant to the Merger Agreement, and to make other amendments deemed necessary or desirable by the General Partner;
NOW, THEREFORE, in consideration of the foregoing, of mutual covenants between the parties hereto, and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree to amend and restate the Original Agreement in its entirety and continue the Partnership as a limited partnership under the Delaware Revised Uniform Limited Partnership Act, as amended from time to time, as follows:
ARTICLE 1
DEFINED TERMS
The following defined terms used in this Agreement shall have the meanings specified below:
Act means the Delaware Revised Uniform Limited Partnership Act, as it may be amended from time to time.
Additional Funds has the meaning set forth in Section 4.3.
Additional Limited Partner means a Person admitted to the Partnership as a Limited Partner pursuant to Section 10.1 hereof and who is shown as a Limited Partner on Exhibit A hereto.
Additional Securities means any additional REIT Shares (other than REIT Shares issued in connection with an exchange pursuant to Section 8.5 hereof) or other interests in the General Partner, or rights, options, warrants or convertible or exchangeable securities containing the right to subscribe for or purchase REIT Shares or other interests in the General Partner, as set forth in Section 4.2(a)(iii).
Administrative Expenses means (i) all administrative and operating costs and expenses incurred by the Partnership, (ii) those administrative costs and expenses of the General Partner or its Affiliates, including any salaries or other payments to directors, officers or employees of the General Partner or its Affiliates, and any accounting and legal expenses of the General Partner or its Affiliates, which expenses, the Partners have agreed, are expenses of the Partnership and not the General Partner or such Affiliates, and (iii) to the extent not included in clause (ii) above, REIT Expenses.
Advisor Contributor has the meaning provided in the Recitals.
Advisor Holdings has the meaning provided in the Recitals.
Affiliate or Affiliated means, as to any Person, any of the following:
(a) | any other Person directly or indirectly owning, controlling or holding, with power to vote, 10% or more of the outstanding voting securities of such Person; |
(b) | any other Person 10% or more of whose outstanding voting securities are directly or indirectly owned, controlled or held, with power to vote, by such Person; |
(c) | any other Person directly or indirectly controlling, controlled by or under common control with such Person; |
(d) | any executive officer, director, manager, trustee or general partner of such Person; and |
(e) | any legal entity for which such Person acts as an executive officer, director, manager, trustee or general partner. |
Agreed Value means the fair market value of a Partners non-cash Capital Contribution as of the date of contribution as agreed to by such Partner and the General Partner and as booked-up pursuant to the provisions set forth in this Agreement. The names and addresses of the General Partner and the Additional Limited Partners, the number of Partnership Units issued to each of them, their respective Capital Contributions as of the date of contribution and the booked-up value as of the date of this Agreement are set forth on Exhibit A.
Agreement means this Amended and Restated Limited Partnership Agreement, as amended, modified, supplemented or restated from time to time, as the context requires.
Articles of Incorporation means the Amended and Restated Articles of Incorporation of the General Partner filed with the Maryland State Department of Assessments and Taxation, as amended, supplemented or restated from time to time.
Book Value means with respect to any asset of the Partnership, the basis of such asset to the Partnership for federal income tax purposes; provided that if an asset is contributed to the Partnership or revalued in accordance with Regulations Section 1.704-1(b)(2)(iv)(f), the Book Value of such asset shall be its fair market value as subsequently adjusted in accordance with Regulations Section 1.704-1(b)(2)(iv)(g).
Capital Account has the meaning provided in Section 4.4 hereof.
Capital Contribution means the total amount of cash, cash equivalents, and the Agreed Value of any Property or other asset (other than cash), net of liabilities assumed, contributed or agreed to be contributed, as the context requires, to the Partnership by each Partner pursuant to the terms of this Agreement. Any reference to the Capital Contribution of a Partner shall include the Capital Contribution made by a predecessor holder of the Partnership Interest of such Partner.
Cash Amount means an amount of cash equal to the product of the Value of one REIT Share and the REIT Shares Amount on the date of receipt by the General Partner of a Notice of Exchange.
Certificate means any instrument or document that is required under the laws of the State of Delaware, or any other jurisdiction in which the Partnership conducts business, to be signed and sworn to by the Partners of the Partnership (either by themselves or pursuant to the power-of-attorney granted to the General Partner in Section 8.2 hereof) and filed for recording in the appropriate public offices within the State of Delaware or such other jurisdiction to perfect or maintain the Partnership as a limited partnership, to effect the admission, withdrawal, or substitution of any Partner of the Partnership, or to protect the limited liability of the Limited Partners as limited partners under the laws of the State of Delaware or such other jurisdiction.
Code means the Internal Revenue Code of 1986, as amended, and as hereafter amended from time to time. Reference to any particular provision of the Code shall mean that provision in the Code as of the date hereof and any successor provision thereto.
Common Unit means a Partnership Unit that is not a Preferred Unit or a Convertible Unit (unless or until the Convertible Unit is converted into a Common Unit).
Contribution Common Units means the Common Units issued in connection with the Contribution Transaction.
Contribution and Exchange Agreement has the meaning provided in the Recitals.
Contribution Transaction has the meaning provided in the Recitals.
Conversion Factor means 1.0, provided that, subject to Section 4.2(a)(ii), in the event that the General Partner (i) declares or pays a dividend on its outstanding REIT Shares in REIT Shares or makes a Distribution to all holders of its outstanding REIT Shares in REIT Shares, (ii) subdivides its outstanding REIT Shares, or (iii) combines its outstanding REIT Shares into a smaller number of REIT Shares, the Conversion Factor shall be adjusted by multiplying the Conversion Factor by a fraction, the numerator of which shall be the number of REIT Shares issued and outstanding on the record date for such dividend, distribution, subdivision or combination (assuming for such purpose that such dividend, distribution, subdivision or combination has occurred as of such time) and the denominator of which shall be the actual number of REIT Shares (determined without the above assumption) issued and outstanding on such date and, provided further, that in the event that an entity other than an Affiliate of the General Partner shall become General Partner pursuant to any merger, consolidation or combination of the General Partner with or into another entity (the Successor Entity), the Conversion Factor shall be adjusted by multiplying the Conversion Factor by the number of shares of the Successor Entity into which one REIT Share is converted pursuant to such merger, consolidation or combination, determined as of the date of such merger, consolidation or combination. Any adjustment to the Conversion Factor shall become effective immediately after the effective date of such event retroactive to the record date, if any, for such event; provided, however, that if the General Partner receives a Notice of Exchange after the record date, but prior to the effective date of such dividend, distribution, subdivision or combination, the Conversion Factor shall be determined as if the General Partner had received the Notice of Exchange immediately prior to the record date for such dividend, distribution, subdivision or combination.
Convertible Stock has the meaning set forth in Exhibit D hereof.
Convertible Unit has the meaning set forth in Exhibit D hereof.
Defaulting Limited Partner has the meaning provided in Section 5.2(b) hereof.
Distributions means any dividends or other distributions of money or other property paid by the General Partner to the holders of its REIT Shares or preferred stock, including distributions that may constitute a return of capital for federal income tax purposes.
Event of Bankruptcy as to any Person means the filing of a petition for relief as to such Person as debtor or bankrupt under the Bankruptcy Code of 1978 or similar provision of law of any jurisdiction (except if such petition is contested by such Person and has been dismissed within 90 days); insolvency or bankruptcy of such Person as finally determined by a court proceeding; the filing by such Person of a petition or application to accomplish the same or for the appointment of a receiver or a trustee for such Person or a substantial part of his assets; the commencement of any proceedings relating to such Person as a debtor under any other reorganization, arrangement, insolvency, adjustment of debt or liquidation law of any jurisdiction, whether now in existence or hereinafter in effect, either by such Person or by another, provided that if such proceeding is commenced by another, such Person indicates his approval of such proceeding, consents thereto or acquiesces therein, or such proceeding is contested by such Person and has not been finally dismissed within 90 days.
Exchange Right has the meaning provided in Section 8.5(a) hereof.
Exchanging Partner has the meaning provided in Section 8.5(a) hereof.
General Partner means Resource REIT, Inc., a Maryland corporation, and any Person who becomes a substitute or additional General Partner as provided herein, and any of their successors as General Partner.
General Partner Loan has the meaning provided in Section 5.2(b) hereof.
General Partnership Interest means a Partnership Interest held by the General Partner that is a general partnership interest. The number of Common Units held by the General Partner equal to one percent (1%) of all outstanding Common Units from time to time is hereby designated as the General Partnership Interest.
Indemnitee means (i) the General Partner or a director, officer or employee of the General Partner or Partnership, (ii) such other Persons (including Affiliates of the General Partner or the Partnership) as the General Partner may designate from time to time, in its sole and absolute discretion.
Joint Venture or Joint Ventures means those joint venture, general partnership or similar arrangements in which the Partnership is a co-venturer or general partner, and which are established to acquire Properties.
Limited Partner means any Person named as a Limited Partner on Exhibit A attached hereto, and any Person who becomes a Substitute Limited Partner or Additional Limited Partner, in such Persons capacity as a Limited Partner in the Partnership. A Limited Partner may hold Common Units, Preferred Units, or Convertible Units, or all of them.
Limited Partnership Interest means the ownership interest of a Limited Partner in the Partnership at any particular time, including the right of such Limited Partner to any and all benefits to which such Limited Partner may be entitled as provided in this Agreement and in the Act, together with the obligations of such Limited Partner to comply with all the provisions of this Agreement and the Act.
Liquidation Preference means, with respect to any Preferred Unit as of any date of determination, the amount (including distributions accumulated, due, or payable through the date of determination) payable with respect to such Preferred Unit (as established by the instrument designating such Preferred Unit) upon the voluntary or involuntary dissolution or winding up of the Partnership as a preference over distributions to Partnership Units ranking junior to such Preferred Unit.
Listing means the approval of the REIT Shares, issued by the General Partner pursuant to an effective registration statement, on a National Securities Exchange. Upon Listing, the shares shall be deemed Listed.
Loss has the meaning provided in Section 5.1(f) hereof.
Merger Agreement has the meaning provided in the Recitals.
Merger Sub has the meaning provided in the Recitals.
National Securities Exchange means any securities exchange registered with the SEC pursuant to Section 6 of the Securities Exchange Act of 1934, as amended.
Net Asset Value Per REIT Share means the most recently determined net asset value per share of the REIT Shares as determined on a quarterly basis (or more or less frequently) and published by the General Partner in a filing with the SEC pursuant to the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.
Notice of Exchange means the Notice of Exercise of Exchange Right substantially in the form attached as Exhibit B hereto.
Offer has the meaning set forth in Section 7.1(b)(ii) hereof.
Offering means an offering of Stock that is either (a) registered with the SEC, or (b) exempt from such registration, excluding Stock offered under any employee benefit plan.
Opt-Out Election has the meaning set forth in Section 11.5(c) hereof.
Original Agreement has the meaning provided in the Recitals.
Partner means any General Partner or Limited Partner.
Partner Nonrecourse Debt Minimum Gain has the meaning set forth in Regulations Section 1.704-2(i). A Partners share of Partner Nonrecourse Debt Minimum Gain shall be determined in accordance with Regulations Section 1.704-2(i)(5).
Partnership means Resource Real Estate Opportunity OP, LP, a Delaware limited partnership.
Partnership Interest means an ownership interest in the Partnership held by either a Limited Partner or the General Partner and includes any and all benefits to which the holder of such a Partnership Interest may be entitled as provided in this Agreement, together with all obligations of such Person to comply with the terms and provisions of this Agreement.
Partnership Loan has the meaning provided in Section 5.2(b) hereof.
Partnership Merger has the meaning provided in the Recitals.
Partnership Minimum Gain has the meaning set forth in Regulations Section 1.704-2(d). In accordance with Regulations Section 1.704-2(d), the amount of Partnership Minimum Gain is determined by first computing, for each Partnership nonrecourse liability, any gain the Partnership would realize if it disposed of the property subject to that liability for no consideration other than full satisfaction of the liability, and then aggregating the separately computed gains. A Partners share of Partnership Minimum Gain shall be determined in accordance with Regulations Section 1.704-2(g)(1).
Partnership Record Date means the record date established by the General Partner for the distribution of cash pursuant to Section 5.2 hereof, which record date shall be the same as the record date established by the General Partner for a Distribution to the Stockholders of some or all of its portion of such distribution.
Partnership Representative has the meaning set forth in Section 11.5(a) hereof.
Partnership Unit means a fractional, undivided share of the Partnership Interests of all Partners issued hereunder. Without limitation on the authority of the General Partner as set forth in Section 4.2 hereof, the General Partner may designate any Partnership Units, when issued, as Common Units or Preferred Units, may establish any other class of Partnership Units, and may designate one or more series of any class of Partnership Units. The allocation of Partnership Units among the Partners shall be as set forth on Exhibit A, as such Exhibit may be amended from time to time.
Partnership Year means the fiscal year of the Partnership, which shall be the calendar year.
Percentage Interest means, with respect to a Partner, (i) when referring to a specific class or series of Partnership Units, such Partners interest in such class or series of Partnership Units as determined by dividing the number of Partnership Units in such class or series held by such Partner by the total number of Partnership Units in such class or series then outstanding, (ii) when not referring to a specific class of series of Partnership Units, (A) the aggregate number of Common Units, Series A Preferred Units and any other Partnership Units of any class or series having participation rights equivalent to the rights of a Common Unit held by such Partner divided by (B) the total aggregate number of Common Units, Series A Preferred Units and such other Partnership Units of any class or series having participation rights equivalent to the rights of a Common Unit held by such Partner then outstanding. For purposes of determining Percentage Interest, each Series A Preferred Unit outstanding shall count as 1.22423 Partnership Units.
Person means any individual, partnership, limited liability company, corporation, joint venture, trust or other entity.
PM Contributor has the meaning provided in the Recitals.
PM Holdings has the meaning provided in the Recitals.
Preferred Unit means any Partnership Unit issued from time to time pursuant to Section 4.2 hereof that is specifically designated by the General Partner at the time of its issuance as a Preferred Unit. Each class or series of Preferred Units shall have such designations, preferences, and relative, participating, optional, or other special rights, powers, and duties, including rights, powers and duties senior to the Common Units, all as determined by the General Partner, subject to compliance with the requirements of Section 4.2 hereof.
Profit has the meaning provided in Section 5.1(f) hereof.
Property or Properties means the real properties or real estate investments which are acquired by the Partnership either directly or through Joint Ventures, partnerships or other entities.
Push-out Election has the meaning set forth in Section 11.5(c) hereof.
Regulations means the federal income tax regulations promulgated under the Code, as amended and as hereafter amended from time to time. Reference to any particular provision of the Regulations shall mean that provision of the Regulations as of the date hereof and any successor provision of the Regulations.
REIT means a real estate investment trust under Sections 856 through 860 of the Code.
REIT Expenses means (i) costs and expenses relating to the formation and continuity of existence and operation of the General Partner and any Subsidiaries thereof (which Subsidiaries shall, for purposes hereof, be included within the definition of General Partner), including taxes, fees and assessments associated therewith, any and all costs, expenses or fees payable to any director, officer, or employee of the General Partner, (ii) costs and expenses relating to any Offering and registration of securities or exemption from registration by the General Partner and all statements, reports, fees and expenses incidental thereto, including, without limitation, underwriting discounts and sales commissions applicable to any such Offering of securities, and any costs and expenses associated with any claims made by any holders of such securities or any underwriters or placement agents thereof, (iii) costs and expenses associated with any repurchase of any securities by the General Partner, (iv) costs and expenses associated with the preparation and filing of any periodic or other reports and communications by the General Partner under federal, state or local laws or regulations, including filings with the SEC, (v) costs and expenses associated with compliance by the General Partner with laws, rules and regulations promulgated by any regulatory body, including the SEC and any National Securities Exchange, (vi) costs and expenses associated with any 401(k) plan, incentive plan, bonus plan or other plan providing for compensation for the employees of the General Partner, (vii) costs and expenses incurred by the General Partner relating to any issuance or redemption of Partnership Interests or securities of the General Partner, and (viii) all other operating or administrative costs of the General Partner incurred in the ordinary course of its business on behalf of or in connection with the Partnership.
REIT I has the meaning provided in the Recitals.
REIT I Operating Partnership has the meaning provided in the Recitals.
REIT Merger has the meaning provided in the Recitals.
REIT Share means a share of common stock, par value $0.01 per share, in the General Partner (or successor entity, as the case may be), the terms and conditions of which are set forth in the Articles of Incorporation.
REIT Shares Amount means a number of REIT Shares equal to the product of the number of Partnership Units offered for exchange or redemption, multiplied by the Conversion Factor as may be adjusted to and including the Specified Exchange Date or other applicable redemption or exchange date; provided that in the event the General Partner issues to all holders of REIT Shares rights, options, warrants or convertible or exchangeable securities entitling the stockholders to subscribe for or purchase REIT Shares, or any other securities or property (collectively, the rights), and the rights have not expired at the Specified Exchange Date or other applicable redemption or exchange date, then the REIT Shares Amount shall also include the rights issuable to a holder of the REIT Shares Amount of REIT Shares on the record date fixed for purposes of determining the holders of REIT Shares entitled to rights.
SEC means the Securities and Exchange Commission.
Series A Preferred Units has the meaning set forth in Exhibit C hereto.
Service means the Internal Revenue Service.
Specified Exchange Date means the first business day of the month that is at least 60 business days after the receipt by the General Partner of the Notice of Exchange.
Stock means shares of stock of the General Partner of any class or series, including REIT Shares, preferred stock or shares-in-trust.
Stockholders means the registered holders of the General Partners Stock.
Subsidiary means, with respect to any Person, any corporation or other entity of which a majority of (i) the voting power of the voting equity securities or (ii) the outstanding equity interests is owned, directly or indirectly, by such Person.
Subsidiary Partnership means any partnership of which the partnership interests therein are owned by the General Partner or a direct or indirect Subsidiary of the General Partner.
Substitute Limited Partner means any Person admitted to the Partnership as a Limited Partner pursuant to Section 9.3 hereof.
Successor Entity has the meaning set forth in Section 4.2(a)(ii) hereof.
Surviving General Partner has the meaning set forth in Section 7.1(c) hereof.
Transaction has the meaning set forth in Section 7.1(b) hereof.
Transfer has the meaning set forth in Section 9.2(a) hereof.
Value means, with respect to REIT Shares, the average of the daily market price of such REIT Share for the ten (10) consecutive trading days immediately preceding the date of such valuation. The market price for each such trading day shall be: (i) if the REIT Shares are Listed, the sale price, regular way, on such day, or if no such sale takes place on such day, the average of the closing bid and asked prices, regular way, on such day; (ii) if the REIT Shares are not Listed, the Net Asset Value Per REIT Share on such day; provided that if there are no bid and asked prices reported during the ten (10) days prior to the date in question, the value of the REIT Shares shall be determined by the General Partner acting in good faith on the basis of such quotations and other information as it considers, in its reasonable judgment, appropriate. In the event the REIT Shares Amount includes rights that a holder of REIT Shares would be entitled to receive, then the value of such rights shall be determined by the General Partner acting in good faith on the basis of such quotations and other information as it considers, in its reasonable judgment, appropriate.
ARTICLE 2
PARTNERSHIP FORMATION AND IDENTIFICATION
2.1 Formation. The Partnership was formed as a limited partnership pursuant to the Act for the purposes and upon the terms and conditions set forth in this Agreement.
2.2 Name, Office and Registered Agent. The name of the Partnership is RRE Opportunity OP II, LP. The specified office and place of business of the Partnership shall be 1845 Walnut Street, 17th Floor, Philadelphia, Pennsylvania 19103 (telephone number (215) 231-7050). The General Partner may at any time change the location of such office, provided the General Partner gives notice to the Partners of any such change. The name and address of the Partnerships registered agent is The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801. The sole duty of the registered agent as such is to forward to the Partnership any notice that is served on him as registered agent.
2.3 Partners.
(a) The General Partner of the Partnership is Resource REIT, Inc., a Maryland corporation. Its principal place of business is the same as that of the Partnership.
(b) The Limited Partners are those Persons identified as Limited Partners on Exhibit A hereto, as amended from time to time. The parties agree that Exhibit A will be confidential and maintained in the offices of the General Partner.
2.4 Term and Dissolution.
(a) The Partnership shall have perpetual duration, except that the Partnership shall be dissolved upon the first to occur of any of the following events:
(i) The occurrence of an Event of Bankruptcy as to a General Partner or the dissolution, death, removal or withdrawal of a General Partner unless the business of the Partnership is continued pursuant to Section 7.3(b) hereof; provided that if a General Partner is on the date of such occurrence a partnership, the dissolution of such General Partner as a result of the dissolution, death, withdrawal, removal or Event of Bankruptcy of a partner in such partnership shall not be an event of dissolution of the Partnership if the business of such General Partner is continued by the remaining partner or partners, either alone or with additional partners, and such General Partner and such partners comply with any other applicable requirements of this Agreement;
(ii) The passage of 90 days after the sale or other disposition of all or substantially all of the assets of the Partnership (provided that if the Partnership receives an installment obligation as consideration for such sale or other disposition, the Partnership shall continue, unless sooner dissolved under the provisions of this Agreement, until such time as such note or notes are paid in full);
(iii) The exchange of all Limited Partnership Interests (other than any of such interests held by the General Partner or Affiliates of the General Partner) for REIT Shares or the securities of any other entity; or
(iv) The election by the General Partner that the Partnership should be dissolved.
(b) Upon dissolution of the Partnership (unless the business of the Partnership is continued pursuant to Section 7.3(b) hereof), the General Partner (or its trustee, receiver, successor or legal representative) shall amend or cancel the Certificate and liquidate the Partnerships assets and apply and distribute the proceeds thereof in accordance with Section 5.6 hereof. Notwithstanding the foregoing, the General Partner (or such trustee, receiver, successor or legal representative) may either (i) defer liquidation of, or withhold from distribution for a reasonable time, any assets of the Partnership (including those necessary to satisfy the Partnerships debts and obligations), or (ii) distribute the assets of the Partnership to the Partners in kind.
2.5 Filing of Certificate and Perfection of Limited Partnership. The General Partner shall execute, acknowledge, record and file at the expense of the Partnership, the Certificate any and all amendments thereto and all requisite fictitious name statements and notices in such places and jurisdictions as may be necessary to cause the Partnership to be treated as a limited partnership under, and otherwise to comply with, the laws of each state or other jurisdiction in which the Partnership conducts business.
2.6 Certificates Describing Partnership Units. At the request of a Limited Partner, the General Partner, at its option, may issue a certificate summarizing the terms of such Limited Partners interest in the Partnership, including the number and class or series of Partnership Units owned and the Percentage Interest represented by such Partnership Units as of the date of such certificate. Any such certificate (i) shall be in form and substance as approved by the General Partner, (ii) shall not be negotiable and (iii) shall bear a legend to the following effect:
THIS CERTIFICATE IS NOT NEGOTIABLE. THE PARTNERSHIP UNITS REPRESENTED BY THIS CERTIFICATE ARE GOVERNED BY AND TRANSFERABLE ONLY IN ACCORDANCE WITH THE PROVISIONS OF THE AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT OF RESOURCE REAL ESTATE OPPORTUNITY OP, LP, AS AMENDED FROM TIME TO TIME.
ARTICLE 3
BUSINESS OF THE PARTNERSHIP
3.1 Purpose. The purpose and nature of the business to be conducted by the Partnership is (i) to conduct any business that may be lawfully conducted by a limited partnership organized pursuant to the Act, provided, however, that such business shall be limited to and conducted in such a manner as to permit the General Partner at all times to qualify as a REIT and in a manner such that the General Partner will not be subject to any taxes under Sections 856, 857 or 4981 of the Code to the greatest extent commercially reasonably possible, unless the General Partner otherwise ceases to qualify as a REIT, (ii) to enter into any partnership, joint venture or other similar arrangement to engage in any of the foregoing or to own interests in any entity engaged in any of the foregoing, and (iii) to do anything necessary or incidental to the foregoing. In connection with the foregoing, and without limiting the General Partners right in its sole and absolute discretion to cease qualifying as a REIT, the Partners acknowledge that the General Partners current status as a REIT and the avoidance of income and excise taxes on the General Partner inures to the benefit of all the Partners and not solely to the General Partner. Notwithstanding the foregoing, the Limited Partners agree that the General Partner may terminate its status as a REIT under the Code at any time to the full extent permitted under the Articles of Incorporation. The General Partner shall also be empowered to do any and all acts and things necessary or prudent to ensure that the Partnership will not be classified as a publicly traded partnership for purposes of Section 7704 of the Code.
3.2 Powers. The Partnership is empowered to do any and all acts and things necessary, appropriate, proper, advisable, incidental to or convenient for the furtherance and accomplishment of the purposes and business described herein and for the protection and benefit of the Partnership, including, without limitation, full power and authority, directly or through its ownership interest in other entities, to enter into, perform and carry out contracts of any kind, borrow money and issue evidences of indebtedness, whether or not secured by mortgage, deed of trust, pledge or other lien, acquire, own, manage, improve and develop real property, and lease, sell, transfer and dispose of Real Estate Related Assets or other ownership interests; provided, however that nothing in this Section 3.2 is intended to eliminate or limit the rights of the Limited Partners included elsewhere in this Agreement.
3.3 Relationship with Partners. It is expressly acknowledged and agreed by the Partners that the General Partner may, in its sole and absolute discretion, waive or otherwise modify the application with respect to any Partner or assignee of any provision herein restricting, prohibiting or otherwise relating to (i) the transfer of a Limited Partner Interest or the Partnership Units evidencing the same, (ii) the admission of any Limited Partners and (iii) the redemption rights of such Partners, and that such waivers or modifications may be made by the General Partner at any time or from time to time, including, without limitation, concurrently with the issuance of any Partnership Units pursuant to the terms of this Agreement; provided, however that nothing in this Section 3.3 is intended to eliminate or limit the rights of the Limited Partners included elsewhere in this Agreement.
ARTICLE 4
CAPITAL CONTRIBUTIONS AND ACCOUNTS
4.1 Capital Contributions. The General Partner and each Limited Partner has made a Capital Contribution to the Partnership in exchange for the Partnership Units set forth opposite such Partners name on Exhibit A, as amended from time to time by the General Partner to the extent necessary to accurately reflect sales, exchanges or other Transfers, redemptions, Capital Contributions, the issuance of additional Partnership Units or similar events having an effect on a Partners ownership of Partnership Units. The Capital Accounts of the Partners are being booked-up on the date of this Agreement as set forth on Exhibit A.
4.2 Additional Capital Contributions and Issuances of Additional Partnership Units. Except as provided in this Section 4.2 or in Section 4.3, the Partners shall have no right or obligation to make any additional Capital Contributions or loans to the Partnership. The General Partner may contribute additional capital to the Partnership, from time to time, and receive additional Partnership Interests, in the form of Partnership Units, in respect thereof, in the manner contemplated in this Section 4.2.
(a) Issuances of Additional Partnership Units.
(i) General. The General Partner is hereby authorized to cause the Partnership to issue such additional Partnership Interests, in the form of Partnership Units, for any Partnership purpose at any time or from time to time, to the Partners (including the General Partner) or to other Persons for such consideration and on such terms and conditions as shall be established by the General Partner in its sole and absolute discretion, all without the approval of any Limited Partner, including but not limited to, Partnership Units issued in connection with the issuance of REIT Shares or of other interests in the General Partner, Any additional Partnership Interests issued thereby may be issued in one or more classes, or one or more series of any of such classes, with such designations, preferences and relative, participating, optional or other special rights, powers and duties, including rights, powers and duties senior to any Common Units, all as shall be determined by the General Partner in its sole and absolute discretion and without the approval of any Limited Partner (subject to any consent rights expressly provided to holders of Preferred Units), subject to Delaware law, including, without limitation: (i) the allocations of items of Partnership income, gain, loss, deduction and credit to each such class or series of Partnership Units; (ii) the right of each such class or series of Partnership Units to share in Partnership distributions; (iii) the rights of each such class or series of Partnership Units upon dissolution and liquidation of the Partnership; (iv) the voting rights, if any, of each such class or series of Partnership Units and (v) the conversion, redemption or exchange rights applicable to each such class or series of Partnership Units; provided, however, that no additional Partnership Units shall be issued to the General Partner unless:
(1) (A) the additional Partnership Units are issued in connection with an issuance of REIT Shares of, or other interests in, the General Partner, which shares or interests have designations, preferences and other rights, all such that the economic interests are substantially similar to the designations, preferences and other rights of the additional Partnership Units issued to the General Partner by the Partnership in accordance with this Section 4.2 and (B) the General Partner shall make a Capital Contribution to the Partnership in an amount equal to the net proceeds raised in connection with the issuance of such shares of stock of or other interests in the General Partner;
(2) the additional Partnership Units are issued in exchange for property owned by the General Partner with a fair market value, as determined by the General Partner, in good faith, equal to the value of the Partnership Units; or
(3) with respect to the class or series of Partnership Units so issued, additional Partnership Units are issued to all Partners holding Partnership Units in proportion to their respective Percentage Interests.
In addition, the General Partner may acquire Partnership Units from other Partners pursuant to this Agreement. In the event that the Partnership issues Partnership Units pursuant to this Section 4.2(a), the General Partner shall make such revisions to this Agreement, including amending Exhibit A, as are necessary to reflect the issuance of such additional Partnership Units and any special rights, powers, and duties associated therewith.
Without limiting the foregoing, the General Partner is expressly authorized to cause the Partnership to issue Partnership Units (i) upon the conversion, redemption or exchange of any debt or other securities issued by the Partnership, (ii) for less than fair market value, so long as the General Partner concludes in good faith that such issuance is in the best interests of the General Partner and the Partnership and (iii) in connection with any merger of any other entity into the Partnership or any Subsidiary of the Partnership if the applicable merger agreement provides that entity or its owners are to receive Partnership Units in exchange for their interests in the entity merging into the Partnership or any Subsidiary of the Partnership.
(ii) Adjustment Events. In the event the General Partner (i) declares or pays a dividend on outstanding REIT Shares in REIT Shares or makes a distribution to all holders of its outstanding REIT Shares in REIT Shares, (ii) subdivides its outstanding REIT Shares, or (iii) combines its outstanding REIT Shares into a smaller number of REIT Shares, then a corresponding adjustment to the number of outstanding Common Units (or other Partnership Interests for other securities in the General Partner) necessary to maintain the proportionate relationship between the number of outstanding Common Units to the number of outstanding REIT Shares (or other Partnership Interests for other securities in the General Partner) shall automatically be made. Additionally, in the event that any other entity shall become General Partner pursuant to any merger, consolidation, or combination of the General Partner with or into another entity (the Successor Entity), the number of
outstanding Common Units (or other Partnership Interests for other securities in the General Partner) shall be adjusted by multiplying such number by the number of shares of the Successor Entity into which one REIT Share is converted pursuant to such merger, consolidation, or combination, determined as of the date of such merger, consolidation, or combination. Any adjustment to the number of outstanding Common Units (or other Partnership Interests for other securities in the General Partner) shall become effective immediately after the effective date of such event retroactive to the record date, if any, for such event; provided, however, that if the General Partner receives a Notice of Exchange after the record date, but prior to the effective date of such dividend, distribution, subdivision, or combination, or such merger, consolidation, or combination, the number of outstanding Common Units shall be determined as if the General Partner had received the Notice of Exchange immediately prior to the record date for such dividend, distribution, subdivision, or combination or such merger, consolidation, or combination. If the General Partner takes any other action affecting the REIT Shares other than actions specifically described above and, in the opinion of the General Partner such action would require an adjustment to the number of Common Units (or other Partnership Interests for other securities of the General Partner) to maintain the proportionate relationship between the number of outstanding Partnership Units and the number of outstanding REIT Shares, the General Partner shall have the right to make such adjustment to the number of Common Units, to the extent permitted by law, in such manner and at such time as the General Partner, in its sole discretion, may determine to be appropriate under the circumstances. For the avoidance of doubt, to the extent any such adjustment is made pursuant to this Section 4.2(a)(ii), the Conversion Factor shall not be adjusted with respect to such Common Units in any manner that would result in a duplicative adjustment with respect to the relevant event.
(iii) Upon Issuance of Additional Securities. The General Partner shall not issue any Additional Securities other than to all holders of REIT Shares, unless (A) the General Partner shall cause the Partnership to issue to the General Partner, as the General Partner may designate, Partnership Units or rights, options, warrants or convertible or exchangeable securities of the Partnership having designations, preferences and other rights, all such that the economic interests are substantially similar to those of the Additional Securities, and (B) the General Partner contributes the net proceeds from the issuance of such Additional Securities and from any exercise of rights contained in such Additional Securities, directly and through the General Partner, to the Partnership; provided, however, that the General Partner is allowed to issue Additional Securities in connection with an acquisition of Property to be held directly by the General Partner, but if and only if, such direct acquisition and issuance of Additional Securities have been approved and determined to be in the best interests of the General Partner and the Partnership by a majority of the board of directors of the General Partner. Without limiting the foregoing, the General Partner is expressly authorized to issue Additional Securities for less than fair market value, and to cause the Partnership to issue to the General Partner corresponding Partnership Units, so long as (x) the General Partner concludes in good faith that such issuance is in the best interests of the General Partner and the Partnership, including without limitation, the issuance of REIT Shares, stock options, incentive awards and corresponding Partnership Units pursuant to an employee share purchase plan providing for employee purchases of REIT Shares at a discount from fair market value or employee stock options that have an exercise price that is less than the fair market value of the REIT Shares, either at the time of issuance or at the time of exercise, and (y) the General
Partner contributes all proceeds from such issuance to the Partnership. For example, and without limiting the foregoing, in the event the General Partner issues REIT Shares for a cash purchase price and contributes all of the net proceeds of such issuance to the Partnership as required hereunder, the General Partner shall be issued a number of additional Partnership Units equal to the product of (A) the number of such REIT Shares issued by the General Partner, the proceeds of which were so contributed, multiplied by (B) a fraction, the numerator of which is 100%, and the denominator of which is the Conversion Factor in effect on the date of such contribution.
(b) Certain Deemed Contributions of Proceeds of Issuance of Interests in the General Partner. In connection with any and all issuances of REIT Shares, or other interests in the General Partner, the General Partner shall make Capital Contributions to the Partnership of the proceeds therefrom, provided that if the proceeds actually received and contributed by the General Partner are less than the gross proceeds of such issuance as a result of any underwriters discount or other expenses paid or incurred in connection with such issuance, then the General Partner shall be deemed to have made Capital Contributions to the Partnership in the aggregate amount of the gross proceeds of such issuance and the Partnership shall be deemed simultaneously to have paid such offering expenses in accordance with Section 6.5 hereof and in connection with the required issuance of additional Partnership Units to the General Partner for such Capital Contributions pursuant to Section 4.2(a) hereof. In connection with any and all issuances of REIT Shares pursuant to the General Partners distribution reinvestment plan, the General Partner shall be deemed to have made Capital Contributions to the Partnership in the aggregate amount of the distributions that have been reinvested in respect of the REIT Shares issued by the General Partner in return for an equal number of Common Units as the issued REIT Shares.
4.3 Additional Funding. If the General Partner determines that it is in the best interests of the Partnership to provide for additional Partnership funds (Additional Funds) for any Partnership purpose, the General Partner may (i) cause the Partnership to obtain such funds from outside borrowings, or (ii) elect to have the General Partner or any of its Affiliates provide such Additional Funds to the Partnership through loans or otherwise.
4.4 Capital Accounts. A separate capital account (a Capital Account) shall be established and maintained for each Partner in accordance with Regulations Section 1.704-1(b)(2)(iv). If (i) a new or existing Partner acquires an additional Partnership Interest in exchange for more than a de minimis Capital Contribution, (ii) the Partnership distributes to a Partner more than a de minimis amount of Partnership property as consideration for a Partnership Interest, (iii) the Partnership is liquidated within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g) or (iv) a Partnership Interest (other than a de minimis interest) is granted as consideration for the provision of services to or for the benefit of the Partnership by an existing Partner acting in a partner capacity, or by a new Partner acting in a partner capacity in anticipation of being a Partner, the General Partner shall revalue the property of the Partnership to its fair market value (as determined by the General Partner, in its sole and absolute discretion, and taking into account Section 7701(g) of the Code) in accordance with Regulations Section 1.704-1(b)(2)(iv)(f). When the Partnerships property is revalued by the General Partner, the Capital Accounts of the Partners shall be adjusted in accordance with Regulations Sections 1.704-1(b)(2)(iv)(f) and (g), which generally require such Capital Accounts to be adjusted to reflect the manner in which the unrealized gain or loss inherent in such property (that has not been reflected in the Capital Accounts previously) would be allocated among the Partners pursuant to Section 5.1 if there were a taxable disposition of such property for its fair market value (as determined by the General Partner, in its sole and absolute discretion, and taking into account Section 7701(g) of the Code) on the date of the revaluation.
4.5 Percentage Interests. If the number of outstanding Partnership Units increases or decreases during a taxable year, each Partners Percentage Interest shall be adjusted by the General Partner effective as of the effective date of each such increase or decrease to give effect to such increase or decrease. If the Partners Percentage Interests are adjusted pursuant to this Section 4.5, the Profits and Losses for the taxable year in which the adjustment occurs shall be allocated between the part of the year ending on the day when the Partnerships property is revalued by the General Partner and the part of the year beginning on the following day either (i) as if the taxable year had ended on the date of the adjustment or (ii) based on the number of days in each part. The General Partner, in its sole and absolute discretion, shall determine which method shall be used to allocate Profits and Losses for the taxable year in which the adjustment occurs. The allocation of Profits and Losses for the earlier part of the year shall be based on the Percentage Interests before adjustment, and the allocation of Profits and Losses for the later part of the year shall be based on the adjusted Percentage Interests.
4.6 No Interest on Contributions. No Partner shall be entitled to interest on its Capital Contributions.
4.7 Return of Capital Contributions. No Partner shall be entitled to withdraw any part of its Capital Contribution or its Capital Account or to receive any distribution from the Partnership, except as specifically provided in this Agreement. Except as otherwise provided herein, there shall be no obligation to return to any Partner or withdrawn Partner any part of such Partners Capital Contribution for so long as the Partnership continues in existence.
4.8 No Third Party Beneficiary. No creditor or other third party having dealings with the Partnership shall have the right to enforce the right or obligation of any Partner to make Capital Contributions or loans or to pursue any other right or remedy hereunder or at law or in equity, it being understood and agreed that the provisions of this Agreement shall be solely for the benefit of, and may be enforced solely by, the parties hereto and their respective successors and assigns. None of the rights or obligations of the Partners herein set forth to make Capital Contributions or loans to the Partnership shall be deemed an asset of the Partnership for any purpose by any creditor or other third party, nor may such rights or obligations be sold, transferred or assigned by the Partnership or pledged or encumbered by the Partnership to secure any debt or other obligation of the Partnership or of any of the Partners. In addition, it is the intent of the parties hereto that no distribution to any Limited Partner shall be deemed a return of money or other property in violation of the Act. However, if any court of competent jurisdiction holds that, notwithstanding the provisions of this Agreement, any Limited Partner is obligated to return such money or property, such obligation shall be the obligation of such Limited Partner and not of the General Partner. Without limiting the generality of the foregoing, unless otherwise provided in a written agreement between the Partner and the Partnership, a deficit Capital Account of a Partner shall not be deemed to be a liability of such Partner nor an asset or property of the Partnership and upon a liquidation within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g), if any Partner has a deficit Capital Account (after giving effect to all contributions, distributions, allocations and other Capital Account adjustments for all taxable years, including the year during which such liquidation occurs), such Partner shall have no obligation to make any Capital Contribution to reduce or eliminate the negative balance of such Partners Capital Account.
4.10 Treatment of Merger. The parties to the Partnership Merger intend that, for United States federal income tax purposes and, where applicable, state or local income tax purposes, the Partnership Merger shall be treated as a transfer by REIT I Operating Partnership of all of its assets and liabilities to the Partnership in exchange for Partnership Units followed by the distribution of such units to the REIT I Operating Partnerships partners in a complete liquidation of REIT I Operating Partnership, the exchange
and distribution being respectively described in Section 721 of the Code and Section 731 of the Code. Unless otherwise required by a final determination within the meaning of Section 1313(a) of the Code (or a similar determination under applicable state of local Law), all parties to the Partnership Merger shall file all United States federal, state and local tax returns in a manner consistent with the intended tax treatment of the Partnership Merger described in this Section 4.10, and no party to the Partnership Merger shall take a position inconsistent with such treatment.
ARTICLE 5
PROFITS AND LOSSES; DISTRIBUTIONS
5.1 Allocation of Profit and Loss.
(a) General Allocations.
(i) Profits. After making the special allocations set forth in Sections 5.1(b) and 5.1(c) and the priority allocation with respect to the Preferred Units in Section 5.1(d) below and subject to the application of Section 5.1(a)(ii), after adjusting for all Capital Contributions and distributions made during any Partnership Year (or portion thereof), the Partnerships Profits and Losses for such Partnership Year (or portion thereof) shall be allocated among the Partners in a manner such that, after such allocations have been made, the balance of each Partners Capital Account shall, to the extent possible, be equal to an amount that would be distributed to such Partner if (A) the Partnership were to sell its assets for their Book Values, (B) all Partnership liabilities were satisfied (limited with respect to each nonrecourse liability to the Book Value of the assets encumbering such liability), and (C) the Partnership were to distribute the proceeds of sale in accordance with Section 5.6 and dissolve in accordance with Section 2.4, minus the sum of such Partners shares of Partnership Minimum Gain and Partner Nonrecourse Debt Minimum Gain.
(ii) Losses. Losses shall not be allocated to a Limited Partner to the extent that such allocation would cause a deficit in such Partners Capital Account (after reduction to reflect the items described in Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6)) to exceed the sum of such Partners shares of Partnership Minimum Gain and Partner Nonrecourse Debt Minimum Gain. Any Losses in excess of that limitation shall be allocated to the General Partner. After the occurrence of an allocation of Loss to the General Partner in accordance with this Section 5.1(a)(ii), to the extent permitted by Regulations Section 1.704-1(b), Profits shall first be allocated to the General Partner in an amount necessary to offset the Losses previously allocated to the General Partner under this Section 5.01(a)(ii).
(b) Minimum Gain Chargeback. Notwithstanding any provision to the contrary, (i) any expense of the Partnership that is a nonrecourse deduction within the meaning of Regulations Section 1.704-2(b)(1) shall be allocated in accordance with the Partners respective Percentage Interests, (ii) any expense of the Partnership that is a partner nonrecourse deduction within the meaning of Regulations Section 1.704-2(i)(2) shall be allocated to the Partner that bears the economic risk of loss with respect to the partner nonrecourse debt within the meaning of Regulations Section 1.704-2(b)(4) to which such partner nonrecourse deduction is attributable in accordance with Regulations Section 1.704-2(i)(1), (iii) if there is a net decrease in Partnership Minimum Gain within the meaning of Regulations Section 1.704-2(f)(1) for any Partnership Year (or other period), then, subject to the exceptions set forth in Regulations Section 1.704-2(f)(2),(3),
(4) and (5), items of gain and income shall be allocated among the Partners in accordance with Regulations Section 1.704-2(f) and the ordering rules contained in Regulations Section 1.704-2(j), and (iv) if there is a net decrease in Partner Nonrecourse Debt Minimum Gain within the meaning of Regulations Section 1.704-2(i)(4) for any Partnership Year (or other period), then, subject to the exceptions set forth in Regulations Section 1.704-(2)(g), items of gain and income shall be allocated among the Partners in accordance with Regulations Section 1.704-2(i)(4) and the ordering rules contained in Regulations Section 1.704-2(j). A Partners interest in partnership profits for purposes of determining its share of the nonrecourse liabilities of the Partnership within the meaning of Regulations Section 1.752-3(a)(3) shall be such Partners Percentage Interest.
(c) Qualified Income Offset. If a Partner unexpectedly receives in any Partnership Year (or other period) an adjustment, allocation, or distribution described in subparagraphs (4), (5), or (6) of Regulations Section 1.704-1(b)(2)(ii)(d) that causes or increases a deficit balance in such Partners Capital Account that exceeds the sum of such Partners shares of Partnership Minimum Gain and Partner Nonrecourse Debt Minimum Gain, as determined in accordance with Regulations Sections 1.704-2(g) and 1.704-2(i), such Partner shall be allocated specially for such Partnership Year or other period (and, if necessary, later Partnership Years or other periods) items of income and gain in an amount and manner sufficient to eliminate such deficit Capital Account balance as quickly as possible as provided in Regulations Section 1.704-1(b)(2)(ii)(d); provided, that an allocation pursuant to this Section 5.1(c) shall be made only if and to the extent that such Partner would have a deficit Capital Account balance after all other allocations provided for in Article 5 have been tentatively made as if this Section 5.1(c) were not in this Agreement. This Section 5.1(c) is intended to constitute a qualified income offset under Section 1.704-1(b)(2)(ii)(d) of the Regulations and shall be interpreted consistently therewith.
(d) Priority Allocation With Respect to Preferred Units. Profits, and if necessary, items of Partnership gross income or gain for any Partnership Year, shall be specially allocated to Partners that own Series A Preferred Units in an amount equal to the excess, if any, of (i) the cumulative distributions received by such Partner for or with respect to the current Partnership Year and all prior Partnership Years with respect to the Series A Preferred Priority Return on such Series A Preferred Units (with a distribution made in a Partnership Year that relates to a Partnership Record Date occurring at the end of the preceding Partnership Year being treated as made with respect to such preceding Partnership Year) over (ii) the cumulative allocations of Partnership Profits, gross income and gain to such Partner under this Section 5.1(d) for all prior Partnership Years.
(e) Allocations Between Transferor and Transferee. If a Partner transfers any part or all of its Partnership Interest, the distributive shares of the various items of Profit and Loss allocable among the Partners during such Partnership Year shall be allocated between the transferor and the transferee Partner either (i) as if the Partnerships taxable year had ended on the date of the transfer, or (ii) based on the number of days of such taxable year that each was a Partner without regard to the results of Partnership activities in the respective portions of such taxable year in which the transferor and the transferee were Partners. The General Partner, in its sole and absolute discretion, shall determine which method shall be used to allocate the distributive shares of the various items of Profit and Loss between the transferor and the transferee Partner.
(f) Definition of Profit and Loss. Profit and Loss and any items of income, gain, expense, or loss referred to in this Agreement shall be determined in accordance with federal income tax accounting principles, as modified by Regulations Section 1.704-1(b)(2)(iv), except that Profit and Loss shall not include items of income, gain and expense that are specially allocated
pursuant to Sections 5.1(b), 5.1(c), or 5.1(d). All allocations of income, Profit, gain, Loss and expense (and all items contained therein) for federal income tax purposes shall be identical to all allocations of such items set forth in this Section 5.1, except as otherwise required by Section 704(c) of the Code and Regulations Section 1.704-1(b)(4). The General Partner shall have the sole and absolute authority to elect the method to be used by the Partnership for allocating items of income, gain, and expense as required by Section 704(c) of the Code including a method that may result in a Partner receiving a disproportionately larger share of the Partnership tax depreciation deductions, and such election shall be binding on all Partners; provided, however, the Partnership shall allocate items of income, gain, loss and deduction with respect to the assets contributed to REIT I Operating Partnership pursuant to the Contribution and Exchange Agreement using the traditional method under Regulations Section 1.704-3(b).
(g) Curative Allocations. The allocations set forth in Sections 5.1(b) and 5.1(c) of this Agreement (the Regulatory Allocations) are intended to comply with certain requirements of the Regulations. The General Partner is authorized to offset all Regulatory Allocations either with other Regulatory Allocations or with special allocations of other items of Partnership income, gain, loss or deduction pursuant to this Section 5.1(g). Therefore, notwithstanding any other provision of this Section 5.1 (other than the Regulatory Allocations), the General Partner shall make such offsetting special allocations of Partnership income, gain, loss or deduction in whatever manner it deems appropriate so that, after such offsetting allocations are made, each Partners Capital Account is, to the extent possible, equal to the Capital Account balance such Partner would have had if the Regulatory Allocations were not part of this Agreement and all Partnership items were allocated pursuant to Sections 5.1(a), 5.1(d) and 5.1(e).
5.2 Distributions.
(a) Cash Available for Distribution. The Partnership shall distribute cash on a quarterly (or, at the election of the General Partner, more or less frequently) basis, in an amount determined by the General Partner in its sole and absolute discretion, to the Partners who are Partners on the Partnership Record Date with respect to such quarter (or other distribution period) in the following order of priority:
(i) first, to the holders of Preferred Units, in such amounts as is required for the Partnership to pay all distributions and any other amounts with respect to such Preferred Units accumulated, due or payable in accordance with the instruments designating such Preferred Units through the last day of such quarter or other distribution period (such distributions shall be made to such Partners in such order of priority and with such preferences as have been established with respect to such Preferred Units as of the last day of such quarter or other distribution period); and
(ii) thereafter, to the holders of the Common Units, including the General Partner, in amounts proportionate to their respective Percentage Interests in the Common Units on the applicable Partnership Record Date;
provided, however, that if a new or existing Partner acquires additional Partnership Units in exchange for a Capital Contribution on any date other than the next day after a Partnership Record Date, the cash distribution attributable to such additional Partnership Units (other than Partnership Units acquired by the General Partner in connection with the issuance of additional REIT Shares, or other interests in the General Partner) relating to the Partnership Record Date next following the
issuance of such additional Partnership Units (or relating to the Partnership Record Date if such Partnership Units are acquired on a Partnership Record Date) shall be reduced in the proportion to (i) the number of days that such additional Partnership Units are held by such Partner bears to (ii) the number of days between such Partnership Record Date (inclusive of such Partnership Record Date) and the immediately preceding Partnership Record Date (exclusive of such immediately preceding Partnership Record Date).
(b) Withholding; Partnership Loans. Notwithstanding any other provision of this Agreement, the General Partner is authorized to take any action that it determines to be necessary or appropriate to cause the Partnership to comply with any withholding requirements established under the Code or any other federal, state or local law including, without limitation, pursuant to Sections 1441, 1442, 1445 and 1446 of the Code. To the extent that the Partnership is required to withhold and pay over to any taxing authority any amount resulting from the allocation or distribution of income to any Partner or assignee (including by reason of Section 1446 of the Code), either (i) if the actual amount to be distributed to the Partner equals or exceeds the amount required to be withheld by the Partnership, the amount withheld shall be treated as a distribution of cash in the amount of such withholding to such Partner, or (ii) if the actual amount to be distributed to the Partner is less than the amount required to be withheld by the Partnership, the excess of the amount required to be withheld over the actual amount to be distributed shall be treated as a loan (a Partnership Loan) from the Partnership to the Partner on the day the Partnership pays over such amount to a taxing authority. A Partnership Loan shall be repaid through withholding by the Partnership with respect to subsequent distributions to the applicable Partner or assignee. In the event that a Limited Partner (a Defaulting Limited Partner) fails to pay any amount owed to the Partnership with respect to the Partnership Loan within 15 days after demand for payment thereof is made by the Partnership on the Limited Partner, the General Partner, in its sole and absolute discretion, may elect to make the payment to the Partnership on behalf of such Defaulting Limited Partner. In such event, on the date of payment, the General Partner shall be deemed to have extended a loan (a General Partner Loan) to the Defaulting Limited Partner in the amount of the payment made by the General Partner and shall succeed to all rights and remedies of the Partnership against the Defaulting Limited Partner as to that amount. Without limitation, the General Partner shall have the right to receive any distributions that otherwise would be made by the Partnership to the Defaulting Limited Partner until such time as the General Partner Loan has been paid in full, and any such distributions so received by the General Partner shall be treated as having been received by the Defaulting Limited Partner and immediately paid to the General Partner.
Any amounts treated as a Partnership Loan or a General Partner Loan pursuant to this Section 5.2(b) shall bear interest at the lesser of (i) the base rate on corporate loans at large United States money center commercial banks, as published from time to time in The Wall Street Journal, or (ii) the maximum lawful rate of interest on such obligation, such interest to accrue from the date the Partnership or the General Partner, as applicable, is deemed to extend the loan until such loan is repaid in full.
(c) Limitation on Distributions. In no event may a Partner receive a distribution of cash with respect to a Partnership Unit if such Partner is entitled to receive a cash distribution as the holder of record of a REIT Share for which all or part of such Partnership Unit has been or will be exchanged.
5.3 REIT Distribution Requirements. The General Partner shall use its commercially reasonable efforts to cause the Partnership to distribute amounts sufficient to enable the General Partner to
pay stockholder dividends that will allow the General Partner to (i) meet its distribution requirement for qualification as a REIT as set forth in Section 857 of the Code and (ii) avoid any federal income or excise tax liability imposed by the Code.
5.4 No Right to Distributions In Kind. No Partner shall be entitled to demand property other than cash in connection with any distributions by the Partnership.
5.5 Limitations of Return of Capital Contributions. Notwithstanding any of the provisions of this Article 5, no Partner shall have the right to receive and the General Partner shall not have the right to make, a distribution that includes a return of all or part of a Partners Capital Contributions, unless after giving effect to the return of a Capital Contribution, the sum of all Partnership liabilities, other than the liabilities to a Partner for the return of his Capital Contribution, does not exceed the fair market value of the Partnerships assets.
5.6 Distributions Upon Liquidation. Upon liquidation of the Partnership, after payment of, or adequate provision for, debts and obligations of the Partnership, including any Partner loans, any remaining assets of the Partnership shall be distributed to the Partners as follows:
(a) first, to the holders of Preferred Units, in such amounts as is required for them to receive the Liquidation Preference with respect to the Preferred Units held by them in accordance with the instruments designating such Preferred Units (such distributions shall be made to such Partners in such order of priority and with such preferences as have been established with respect to such Preferred Units);
(b) thereafter, to the holders of the Common Units, including the General Partner, in amounts proportionate to their respective Percentage Interests in the Common Units.
To the extent deemed advisable by the General Partner, appropriate arrangements (including the use of a liquidating trust) may be made to assure that adequate funds are available to pay any contingent debts or obligations.
5.7 Substantial Economic Effect. It is the intent of the Partners that the allocations of Profit and Loss under this Agreement have substantial economic effect, or be consistent with the Partners interests in the Partnership, within the meaning of Section 704(b) of the Code as interpreted by the Regulations promulgated pursuant thereto. Article 5 and other relevant provisions of this Agreement shall be interpreted in a manner consistent with such intent.
ARTICLE 6
RIGHTS, OBLIGATIONS AND
POWERS OF THE GENERAL PARTNER
6.1 Management of the Partnership.
(a) Except as otherwise expressly provided in this Agreement, the General Partner shall have full, complete and exclusive discretion to manage and control the business of the Partnership for the purposes herein stated, and shall make all decisions affecting the business and assets of the Partnership. Subject to the restrictions specifically contained in this Agreement, the powers of the General Partner shall include, without limitation, the authority to take the following actions, as deemed necessary or desirable in the sole and absolute discretion of the General Partner, on behalf of the Partnership (or any Subsidiary or Subsidiary Partnership):
(i) to acquire, purchase, own, operate, lease and dispose of (other than in a prohibited transaction within the meaning of Section 857(b)(6)(B)(iii) of the Code) any real property and any other property or assets including, but not limited to, notes and mortgages, that the General Partner determines are necessary or appropriate or in the best interests of the business of the Partnership;
(ii) to construct buildings and make other improvements on the Properties owned or leased by the Partnership;
(iii) to authorize, issue, sell, redeem or otherwise purchase any Partnership Interests or any securities (including secured and unsecured debt obligations of the Partnership, debt obligations of the Partnership convertible into any class or series of Partnership Interests, or options, rights, warrants or appreciation rights relating to any Partnership Interests) of the Partnership;
(iv) to borrow or lend money for the Partnership, issue or receive evidences of indebtedness in connection therewith, refinance, increase the amount of, modify, amend or change the terms of, or extend the time for the payment of, any such indebtedness, and secure such indebtedness by mortgage, deed of trust, pledge or other lien on the Partnerships assets;
(v) to pay, either directly or by reimbursement, for all Administrative Expenses to third parties or to the General Partner or its Affiliates as set forth in this Agreement;
(vi) to guarantee or become a co-maker of indebtedness of the General Partner or any Subsidiary thereof, refinance, increase the amount of, modify, amend or change the terms of, or extend the time for the payment of, any such guarantee or indebtedness, and secure such guarantee or indebtedness by mortgage, deed of trust, pledge or other lien on the Partnerships assets;
(vii) to use assets of the Partnership (including, without limitation, cash on hand) for any purpose consistent with this Agreement, including, without limitation, payment, either directly or by reimbursement, of all Administrative Expenses of the General Partner, the Partnership or any Subsidiary of either, to third parties or to the General Partner as set forth in this Agreement;
(viii) to lease all or any portion of any of the Partnerships assets, whether or not the terms of such leases extend beyond the termination date of the Partnership and whether or not any portion of the Partnerships assets so leased are to be occupied by the lessee, or, in turn, subleased in whole or in part to others, for such consideration and on such terms as the General Partner may determine;
(ix) to prosecute, defend, arbitrate, or compromise any and all claims or liabilities in favor of or against the Partnership, on such terms and in such manner as the General Partner may reasonably determine, and similarly to prosecute, settle or defend litigation with respect to the Partners, the Partnership, or the Partnerships assets;
(x) to file applications, communicate, and otherwise deal with any and all governmental agencies having jurisdiction over, or in any way affecting, the Partnerships assets or any other aspect of the Partnership business;
(xi) to make or revoke any election permitted or required of the Partnership by any taxing authority;
(xii) to maintain such insurance coverage for public liability, fire and casualty, and any and all other insurance for the protection of the Partnership, for the conservation of Partnership assets, or for any other purpose convenient or beneficial to the Partnership, in such amounts and such types, as it shall determine from time to time;
(xiii) to determine whether or not to apply any insurance proceeds for any Property to the restoration of such Property or to distribute the same;
(xiv) to establish one or more divisions of the Partnership, to hire and dismiss employees of the Partnership or any division of the Partnership, and to retain legal counsel, accountants, consultants, real estate brokers, and such other persons, as the General Partner may deem necessary or appropriate in connection with the Partnership business and to pay therefor such reasonable remuneration as the General Partner may deem reasonable and proper;
(xv) to retain other services of any kind or nature in connection with the Partnership business, and to pay therefor such remuneration as the General Partner may deem reasonable and proper;
(xvi) to negotiate and conclude agreements on behalf of the Partnership with respect to any of the rights, powers and authority conferred upon the General Partner;
(xvii) to maintain accurate accounting records and to file promptly all federal, state and local income tax returns on behalf of the Partnership;
(xviii) to distribute Partnership cash or other Partnership assets in accordance with this Agreement;
(xix) to form or acquire an interest in, and contribute property to, any further limited or general partnerships, limited liability companies, joint ventures or other relationships that it deems desirable (including, without limitation, the acquisition of interests in, and the contributions of property to, Subsidiaries of the Partnership and any other Person in which it has an equity interest from time to time);
(xx) to establish Partnership reserves for working capital, capital expenditures, contingent liabilities, or any other valid Partnership purpose;
(xxi) to merge, consolidate or combine the Partnership with or into another Person, subject to any limitations set forth in this Agreement, including those set forth in Articles 7 and 12;
(xxii) to do any and all acts and things necessary or prudent to ensure that the Partnership will not be classified as a publicly traded partnership for purposes of Section 7704 of the Code;
(xxiii) to take any and all actions necessary to adopt or modify any distribution reinvestment plan of the Partnership or the General Partner;
(xxiv) to take any and all actions necessary to maintain the General Partners status as a REIT as set forth in Section 3.1; and
(xxv) to take such other action, execute, acknowledge, swear to or deliver such other documents and instruments, and perform any and all other acts that the General Partner deems necessary or appropriate for the formation, continuation and conduct of the business and affairs of the Partnership (including, without limitation, all actions consistent with allowing the General Partner at all times to qualify as a REIT unless the General Partner voluntarily terminates its REIT status) and to possess and enjoy all of the rights and powers of a general partner as provided by the Act.
(b) Except as otherwise provided herein, to the extent the duties of the General Partner require expenditures of funds to be paid to third parties, the General Partner shall not have any obligations hereunder except to the extent that Partnership funds are reasonably available to it for the performance of such duties, and nothing herein contained shall be deemed to authorize or require the General Partner, in its capacity as such, to expend its individual funds for payment to third parties or to undertake any individual liability or obligation on behalf of the Partnership.
6.2 Delegation of Authority. The General Partner may delegate any or all of its powers, rights and obligations hereunder, and may appoint, employ, contract or otherwise deal with any Person for the transaction of the business of the Partnership, which Person may, under supervision of the General Partner, perform any acts or services for the Partnership as the General Partner may approve.
6.3 Indemnification and Exculpation of Indemnitees.
(a) The Partnership shall indemnify to the fullest extent allowed under applicable law, an Indemnitee from and against any and all losses, claims, damages, liabilities, joint or several, expenses (including reasonable legal fees and expenses), judgments, fines, settlements, and other amounts arising from any and all claims, demands, actions, suits or proceedings, civil, criminal, administrative or investigative, that relate to the operations of the Partnership as set forth in this Agreement in which any Indemnitee may be involved, or is threatened to be involved, as a party or otherwise.
Any indemnification pursuant to this Section 6.3 shall be made only out of the assets of the Partnership.
(b) The indemnification provided by this Section 6.3 shall be in addition to any other rights to which an Indemnitee or any other Person may be entitled under any agreement, pursuant to any vote of the Partners, as a matter of law or otherwise, and shall continue as to an Indemnitee who has ceased to serve in such capacity.
(c) The Partnership may purchase and maintain insurance, on behalf of the Indemnitees and such other Persons as the General Partner shall determine, against any liability that may be asserted against or expenses that may be incurred by such Person in connection with the Partnerships activities, regardless of whether the Partnership would have the power to indemnify such Person against such liability under the provisions of this Agreement.
(d) For purposes of this Section 6.3, the Partnership shall be deemed to have requested an Indemnitee to serve as fiduciary of an employee benefit plan whenever the performance by it of its duties to the Partnership also imposes duties on, or otherwise involves services by, it to the plan or participants or beneficiaries of the plan; excise taxes assessed on an Indemnitee with respect to an employee benefit plan pursuant to applicable law shall constitute fines within the meaning of this Section 6.3; and actions taken or omitted by the Indemnitee with respect to an employee benefit plan in the performance of its duties for a purpose reasonably believed by it to be in the interest of the participants and beneficiaries of the plan shall be deemed to be for a purpose which is not opposed to the best interests of the Partnership.
(e) In no event may an Indemnitee subject the Limited Partners to personal liability by reason of the indemnification provisions set forth in this Agreement.
(f) An Indemnitee shall not be denied indemnification in whole or in part under this Section 6.3 because the Indemnitee had an interest in the transaction with respect to which the indemnification applies if the transaction was otherwise permitted by the terms of this Agreement.
(g) The provisions of this Section 6.3 are for the benefit of the Indemnitees, their heirs, successors, assigns and administrators and shall not be deemed to create any rights for the benefit of any other Persons.
(h) Neither the amendment nor repeal of this Section 6.3, nor the adoption or amendment of any other provision of the Agreement inconsistent with this Section 6.3, shall apply to or affect in any respect the applicability with respect to any act or failure to act which occurred prior to such amendment, repeal or adoption.
6.4 Liability of the General Partner.
(a) Notwithstanding anything to the contrary set forth in this Agreement, the General Partner shall not be liable for monetary damages to the Partnership or any Partners for losses sustained or liabilities incurred as a result of errors in judgment or of any act or omission if the General Partner acted in good faith. The General Partner shall not be in breach of any duty that the General Partner may owe to the Limited Partners or the Partnership or any other Persons under this Agreement or of any duty stated or implied by law or equity provided the General Partner, acting in good faith, abides by the terms of this Agreement.
(b) The Limited Partners expressly acknowledge that the General Partner is acting on behalf of the Partnership, itself and its stockholders collectively, that the General Partner is under no obligation to consider the separate interests of the Limited Partners (including, without limitation, the tax consequences to Limited Partners or the tax consequences of some, but not all,
of the Limited Partners) in deciding whether to cause the Partnership to take (or decline to take) any actions. In the event of a conflict between the interests of its stockholders on one hand and the Limited Partners on the other, the General Partner shall endeavor in good faith to resolve the conflict in a manner not adverse to either its stockholders or the Limited Partners; provided, however, that for so long as the General Partner directly owns a controlling interest in the Partnership, any such conflict that the General Partner, in its sole and absolute discretion, determines cannot be resolved in a manner not adverse to either its stockholders or the Limited Partner shall be resolved in favor of the stockholders. The General Partner shall not be liable for monetary damages for losses sustained, liabilities incurred, or benefits not derived by Limited Partners in connection with such decisions, provided that the General Partner has acted in good faith.
(c) Subject to its obligations and duties as General Partner set forth in Section 6.1 hereof, the General Partner may exercise any of the powers granted to it under this Agreement and perform any of the duties imposed upon it hereunder either directly or by or through its agents. The General Partner shall not be responsible for any misconduct or negligence on the part of any such agent appointed by it in good faith.
(d) Notwithstanding any other provisions of this Agreement or the Act, any action of the General Partner on behalf of the Partnership or any decision of the General Partner to refrain from acting on behalf of the Partnership, undertaken in the good faith belief that such action or omission is necessary or advisable in order (i) to protect the ability of the General Partner to continue to qualify as a REIT or (ii) to prevent the General Partner from incurring any taxes under Section 857, Section 4981, or any other provision of the Code, is expressly authorized under this Agreement and is deemed approved by all of the Limited Partners.
(e) Any amendment, modification or repeal of this Section 6.4 or any provision hereof shall be prospective only and shall not in any way affect the limitations on the General Partners liability to the Partnership and the Limited Partners under this Section 6.4 as in effect immediately prior to such amendment, modification or repeal with respect to matters occurring, in whole or in part, prior to such amendment, modification or repeal, regardless of when claims relating to such matters may arise or be asserted.
6.5 Reimbursement of General Partner.
(a) Except as provided in this Section 6.5 and elsewhere in this Agreement (including the provisions of Articles 5 and 6 regarding distributions, payments, and allocations to which it may be entitled), the General Partner shall not be compensated for its services as general partner of the Partnership.
(b) REIT Expenses and Administrative Expenses shall be obligations of the Partnership and the General Partner shall be entitled to reimbursement for all REIT Expenses and Administrative Expenses incurred by the General Partner on behalf of the Partnership. Reimbursement of REIT Expenses and Administrative Expenses shall be treated as an expense of the Partnership and not as allocations of Partnership income or gain.
(c) The General Partner shall be reimbursed on a monthly basis, or such other basis as the General Partner may determine in its sole and absolute discretion, for all Administrative Expenses.
6.6 Outside Activities. Subject to the Articles of Incorporation and any agreements entered into by the General Partner or its Affiliates with the Partnership or a Subsidiary, any officer, director, employee, agent, trustee, Affiliate or stockholder of the General Partner shall be entitled to and may have business interests and engage in business activities in addition to those relating to the Partnership, including business interests and activities substantially similar or identical to those of the Partnership. Neither the Partnership nor any of the Limited Partners shall have any rights by virtue of this Agreement in any such business ventures, interest or activities. None of the Limited Partners nor any other Person shall have any rights by virtue of this Agreement or the partnership relationship established hereby in any such business ventures, interests or activities, and the General Partner shall have no obligation pursuant to this Agreement to offer any interest in any such business ventures, interests and activities to the Partnership or any Limited Partner, even if such opportunity is of a character which, if presented to the Partnership or any Limited Partner, could be taken by such Person.
6.7 Employment or Retention of Affiliates.
(a) Any Affiliate of the General Partner may be employed or retained by the Partnership and may otherwise deal with the Partnership (whether as a buyer, lessor, lessee, manager, furnisher of goods or services, broker, agent, lender or otherwise) and may receive from the Partnership any compensation, price, or other payment therefor which the General Partner determines to be fair and reasonable.
(b) The Partnership may lend or contribute to its Subsidiaries or other Persons in which it has an equity investment, and such Persons may borrow funds from the Partnership, on terms and conditions established in the sole and absolute discretion of the General Partner. The foregoing authority shall not create any right or benefit in favor of any Subsidiary or any other Person.
(c) The Partnership may transfer assets to joint ventures, other partnerships, corporations or other business entities in which it is or thereby becomes a participant upon such terms and subject to such conditions as the General Partner deems are consistent with this Agreement and applicable law.
(d) Except as expressly permitted by this Agreement, neither the General Partner nor any of its Affiliates shall sell, transfer or convey any property to, or purchase any property from, the Partnership, directly or indirectly, except pursuant to transactions that are on terms that are fair and reasonable to the Partnership.
6.8 General Partner Participation. The General Partner agrees that all business activities of the General Partner, including activities pertaining to the acquisition, development or ownership of Properties, shall be conducted through the Partnership or one or more Subsidiaries of the Partnership (including a taxable REIT subsidiary within the meaning of Section 856(l) of the Code); provided, however, that the General Partner is allowed to make a direct acquisition, but if and only if, such acquisition is made in connection with the issuance of Additional Securities, which direct acquisition and issuance have been approved and determined to be in the best interests of the General Partner and the Partnership by a majority of the board of directors of the General Partner.
6.9 Title to Partnership Assets. Title to Partnership assets, whether real, personal or mixed and whether tangible or intangible, shall be deemed to be owned by the Partnership as an entity, and no Partner, individually or collectively, shall have any ownership interest in such Partnership assets or any portion
thereof. Title to any or all of the Partnership assets may be held in the name of the Partnership, the General Partner or one or more nominees, as the General Partner may determine, including Affiliates of the General Partner. The General Partner hereby declares and warrants that any Partnership assets for which legal title is held in the name of the General Partner or any nominee or Affiliate of the General Partner shall be held by the General Partner for the use and benefit of the Partnership in accordance with the provisions of this Agreement; provided, however, that the General Partner shall use its best efforts to cause beneficial and record title to such assets to be vested in the Partnership as soon as reasonably practicable. All Partnership assets shall be recorded as the property of the Partnership in its books and records, irrespective of the name in which legal title to such Partnership assets is held.
6.10 Miscellaneous. In the event the General Partner redeems any REIT Shares (other than REIT Shares redeemed in accordance with the share redemption program of the General Partner through proceeds received from the General Partners distribution reinvestment plan, which proceeds so used shall not become a Capital Contribution of the General Partner), then the General Partner shall cause the Partnership to purchase from the General Partner an equivalent number of Common Units as determined based on the application of the Conversion Factor on the same terms that the General Partner redeemed such REIT Shares. Moreover, if the General Partner makes a cash tender offer or other offer to acquire REIT Shares, then the General Partner shall cause the Partnership to make a corresponding offer to the General Partner to acquire an equivalent number of Common Units held by the General Partner as determined based on the application of the Conversion Factor. In the event any REIT Shares are exchanged by the General Partner pursuant to such offer, the Partnership shall redeem an equivalent number of the General Partners Common Units as determined based on the application of the Conversion Factor for an equivalent purchase price.
6.11 Reliance by Third Parties. Notwithstanding anything to the contrary in this Agreement, any Person dealing with the Partnership shall be entitled to assume that the General Partner has full power and authority, without consent or approval of any other Partner or Person, to encumber, sell or otherwise use in any manner any and all assets of the Partnership and to enter into any contracts on behalf of the Partnership, and take any and all actions on behalf of the Partnership and such Person shall be entitled to deal with the General Partner as if the General Partner were the Partnerships sole party in interest, both legally and beneficially. Each Limited Partner hereby waives any and all defenses or other remedies which may be available against such Person to contest, negate or disaffirm any action of the General Partner in connection with any such dealing. In no event shall any Person dealing with the General Partner or its representatives be obligated to ascertain that the terms of this Agreement have been complied with or to inquire into the necessity or expedience of any act or action of the General Partner or its representatives. Each and every certificate, document or other instrument executed on behalf of the Partnership by the General Partner or its representatives shall be conclusive evidence in favor of any and every Person relying thereon or claiming thereunder that (i) at the time of the execution and delivery of such certificate, document or instrument, this Agreement was in full force and effect, (ii) the Person executing and delivering such certificate, document or instrument was duly authorized and empowered to do so for and on behalf of the Partnership and (iii) such certificate, document or instrument was duly executed and delivered in accordance with the terms and provisions of this Agreement and is binding upon the Partnership.
ARTICLE 7
CHANGES IN GENERAL PARTNER
7.1 Transfer of the General Partners Partnership Interest.
(a) The General Partner shall not transfer all or any portion of its General Partnership Interest or withdraw as General Partner except as provided in or in connection with a transaction contemplated by Section 7.1(b), (c) or (d).
(b) Except as otherwise provided in Section 7.1(c) or (d) hereof, the General Partner shall not engage in any merger, consolidation or other combination with or into another Person or sale of all or substantially all of its assets, (other than in connection with a change in the General Partners state of incorporation or organizational form) in each case which results in a change of control of the General Partner (a Transaction), unless:
(i) the approval of the holders of a majority of the Common Units is obtained;
(ii) as a result of such Transaction all Limited Partners will receive for each Common Unit an amount of cash, securities, or other property equal to the product of the Conversion Factor and the greatest amount of cash, securities or other property paid in the Transaction to a holder of one REIT Share in consideration of one REIT Share, provided that if, in connection with the Transaction, a purchase, tender or exchange offer (Offer) shall have been made to and accepted by the holders of more than 50% of the outstanding REIT Shares, each holder of Common Units shall be given the option to exchange its Common Units for the greatest amount of cash, securities, or other property which a Limited Partner would have received had it (A) exercised its Exchange Right and (B) sold, tendered or exchanged pursuant to the Offer the REIT Shares received upon exercise of the Exchange Right immediately prior to the expiration of the Offer; or
(iii) the General Partner is the surviving entity in the Transaction and either (A) the holders of REIT Shares do not receive cash, securities, or other property in the Transaction or (B) all Limited Partners (other than the General Partner or any Subsidiary of the General Partner) receive an amount of cash, securities, or other property (expressed as an amount per REIT Share) that is no less than the product of the Conversion Factor and the greatest amount of cash, securities, or other property (expressed as an amount per REIT Share) received in the Transaction by any holder of REIT Shares.
(c) Notwithstanding Section 7.1(b), the General Partner may merge with or into or consolidate with another entity if immediately after such merger or consolidation (i) substantially all of the assets of the successor or surviving entity (the Surviving General Partner), other than Partnership Units held by the General Partner, are contributed, directly or indirectly, to the Partnership as a Capital Contribution in exchange for Partnership Units with a fair market value equal to the value of the assets so contributed as determined by the Surviving General Partner in good faith and (ii) the Surviving General Partner expressly agrees to assume all obligations of the General Partner, as appropriate, hereunder. Upon such contribution and assumption, the Surviving General Partner shall have the right and duty to amend this Agreement as set forth in this Section 7.1(c). The Surviving General Partner shall in good faith arrive at a new method for the calculation of the Cash Amount, the REIT Shares Amount and Conversion Factor for a Partnership Unit after any such merger or consolidation so as to approximate the existing method for such calculation as
closely as reasonably possible. Such calculation shall take into account, among other things, the kind and amount of securities, cash and other property that was receivable upon such merger or consolidation by a holder of REIT Shares or options, warrants or other rights relating thereto, and which a holder of Partnership Units could have acquired had such Partnership Units been exchanged immediately prior to such merger or consolidation. Such amendment to this Agreement shall provide for adjustment to such method of calculation, which shall be as nearly equivalent as may be practicable to the adjustments provided for with respect to the Conversion Factor. The Surviving General Partner also shall in good faith modify the definition of REIT Shares and make such amendments to Section 8.5 hereof so as to approximate the existing rights and obligations set forth in Section 8.5 as closely as reasonably possible. The above provisions of this Section 7.1(c) shall similarly apply to successive mergers or consolidations permitted hereunder.
In respect of any transaction described in the preceding paragraph, the General Partner is required to use its commercially reasonable efforts to structure such transaction to avoid causing the Limited Partners to recognize a gain for federal income tax purposes by virtue of the occurrence of or their participation in such transaction, provided such efforts are consistent with the exercise of the fiduciary duties of the board of directors of the General Partner to the Stockholders under applicable law.
(d) Notwithstanding Section 7.1(b),
(i) a General Partner may transfer all or any portion of its General Partnership Interest to (A) a wholly-owned Subsidiary of such General Partner or (B) the owner of all of the ownership interests of such General Partner, and following a transfer of all of its General Partnership Interest, may withdraw as General Partner; and
(ii) the General Partner may engage in Transactions not required by law or by the rules of any National Securities Exchange on which the REIT Shares are listed to be submitted to the vote of the holders of the REIT Shares.
7.2 Admission of a Substitute or Additional General Partner. A Person shall be admitted as a substitute or additional General Partner of the Partnership only if the following terms and conditions are satisfied:
(a) the Person to be admitted as a substitute or additional General Partner shall have accepted and agreed to be bound by all the terms and provisions of this Agreement by executing a counterpart thereof and such other documents or instruments as may be required or appropriate in order to effect the admission of such Person as a General Partner, and a certificate evidencing the admission of such Person as a General Partner shall have been filed for recordation and all other actions required by Section 2.5 hereof in connection with such admission shall have been performed;
(b) if the Person to be admitted as a substitute or additional General Partner is a corporation or a partnership it shall have provided the Partnership with evidence satisfactory to counsel for the Partnership of such Persons authority to become a General Partner and to be bound by the terms and provisions of this Agreement; and
(c) counsel for the Partnership shall have rendered an opinion (relying on such opinions from other counsel and the state or any other jurisdiction as may be necessary) that the
admission of the person to be admitted as a substitute or additional General Partner is in conformity with the Act, that none of the actions taken in connection with the admission of such Person as a substitute or additional General Partner will cause (i) the Partnership to be classified other than as a partnership for federal income tax purposes, or (ii) the loss of any Limited Partners limited liability.
7.3 Effect of Bankruptcy, Withdrawal, Death or Dissolution of a General Partner.
(a) Upon the occurrence of an Event of Bankruptcy as to a General Partner (and its removal pursuant to Section 7.4(a) hereof) or the death, withdrawal, removal or dissolution of a General Partner (except that, if a General Partner is on the date of such occurrence a partnership, the withdrawal, death, dissolution, Event of Bankruptcy as to, or removal of a partner in, such partnership shall be deemed not to be a dissolution of such General Partner if the business of such General Partner is continued by the remaining partner or partners), the Partnership shall be dissolved and terminated unless the Partnership is continued pursuant to Section 7.3(b) hereof. The merger of the General Partner with or into any entity that is admitted as a substitute or successor General Partner pursuant to Section 7.2 hereof shall not be deemed to be the withdrawal, dissolution or removal of the General Partner.
(b) Following the occurrence of an Event of Bankruptcy as to a General Partner (and its removal pursuant to Section 7.4(a) hereof) or the death, withdrawal, removal or dissolution of a General Partner (except that, if a General Partner is on the date of such occurrence a partnership, the withdrawal, death, dissolution, Event of Bankruptcy as to, or removal of a partner in, such partnership shall be deemed not to be a dissolution of such General Partner if the business of such General Partner is continued by the remaining partner or partners), the holders of Common Units, within 90 days after such occurrence, may elect to continue the business of the Partnership for the balance of the term specified in Section 2.4 hereof by selecting, subject to Section 7.2 hereof and any other provisions of this Agreement, a substitute General Partner by consent of a majority in interest of the Common Units. If the holders of Common Units elect to continue the business of the Partnership and admit a substitute General Partner, the relationship with the Partners and of any Person who has acquired an interest of a Partner in the Partnership shall be governed by this Agreement.
7.4 Removal of a General Partner.
(a) Upon the occurrence of an Event of Bankruptcy as to, or the dissolution of, a General Partner, such General Partner shall be deemed to be removed automatically; provided, however, that if a General Partner is on the date of such occurrence a partnership, the withdrawal, death, dissolution, Event of Bankruptcy as to or removal of a partner in such partnership shall be deemed not to be a dissolution of the General Partner if the business of such General Partner is continued by the remaining partner or partners. The Limited Partners may not remove the General Partner, with or without cause.
(b) If a General Partner has been removed pursuant to this Section 7.4 and the Partnership is continued pursuant to Section 7.3 hereof, such General Partner shall promptly transfer and assign its General Partnership Interest in the Partnership to the substitute General Partner approved by a majority in interest of the Limited Partners in accordance with Section 7.3(b) hereof and otherwise admitted to the Partnership in accordance with Section 7.2 hereof. At the time of assignment, the removed General Partner shall be entitled to receive from the substitute General
Partner the fair market value of the General Partnership Interest of such removed General Partner as reduced by any damages caused to the Partnership by such General Partner. Such fair market value shall be determined by an appraiser mutually agreed upon by the General Partner and a majority in interest of the Limited Partners within 10 days following the removal of the General Partner. In the event that the parties are unable to agree upon an appraiser, the removed General Partner and a majority in interest of the Limited Partners each shall select an appraiser. Each such appraiser shall complete an appraisal of the fair market value of the removed General Partners General Partnership Interest within 30 days of the General Partners removal, and the fair market value of the removed General Partners General Partnership Interest shall be the average of the two appraisals; provided, however, that if the higher appraisal exceeds the lower appraisal by more than 20% of the amount of the lower appraisal, the two appraisers, no later than 40 days after the removal of the General Partner, shall select a third appraiser who shall complete an appraisal of the fair market value of the removed General Partners General Partnership Interest no later than 60 days after the removal of the General Partner. In such case, the fair market value of the removed General Partners General Partnership Interest shall be the average of the two appraisals closest in value.
(c) The General Partnership Interest of a removed General Partner, during the time after default until transfer under Section 7.4(b), shall be converted to that of a special Limited Partner; provided, however, such removed General Partner shall not have any rights to participate in the management and affairs of the Partnership, and shall not be entitled to any portion of the income, expense, profit, gain or loss allocations or cash distributions allocable or payable, as the case may be, to the Limited Partners. Instead, such removed General Partner shall receive and be entitled only to retain distributions or allocations of such items that it would have been entitled to receive in its capacity as General Partner, until the transfer is effective pursuant to Section 7.4(b).
(d) All Partners shall have given and hereby do give such consents, shall take such actions and shall execute such documents as shall be legally necessary and sufficient to effect all the foregoing provisions of this Section.
ARTICLE 8
RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNERS
8.1 Management of the Partnership. The Limited Partners shall not participate in the management or control of Partnership business nor shall they transact any business for or on behalf of the Partnership, nor shall they have the power to sign for or bind the Partnership, such powers being vested solely and exclusively in the General Partner.
8.2 Power of Attorney. Each Limited Partner hereby irrevocably appoints the General Partner its true and lawful attorney-in-fact, who may act for each Limited Partner and in its name, place and stead, and for its use and benefit, to sign, acknowledge, swear to, deliver, file or record, at the appropriate public offices, any and all documents, certificates, and instruments as may be deemed necessary or desirable by the General Partner to carry out fully the provisions of this Agreement and the Act in accordance with their terms, which power of attorney is coupled with an interest and shall survive the death, dissolution or legal incapacity of the Limited Partner, or the transfer by the Limited Partner of any part or all of its Partnership Interest.
8.3 Limitation on Liability of Limited Partners. No Limited Partner shall be liable for any debts, liabilities, contracts or obligations of the Partnership. A Limited Partner shall be liable to the Partnership only to make payments of its Capital Contribution, if any, as and when due hereunder. After its Capital Contribution is fully paid, no Limited Partner shall, except as otherwise required by the Act, be required to make any further Capital Contributions or other payments or lend any funds to the Partnership.
8.4 Ownership by Limited Partner of Corporate General Partner or Affiliate. No Limited Partner shall at any time, either directly or indirectly, own any stock or other interest in the General Partner or in any Affiliate thereof, if such ownership by itself or in conjunction with other stock or other interests owned by other Limited Partners would, in the opinion of counsel for the Partnership, jeopardize the classification of the Partnership as a partnership for federal tax purposes. The General Partner shall be entitled to make such reasonable inquiry of the Limited Partners as is required to establish compliance by the Limited Partners with the provisions of this Section.
8.5 Exchange Right.
(a) Subject to Sections 8.5(b), 8.5(c), 8.5(d), 8.5(e), and 8.5(g) and the provisions of any agreements between the Partnership and one or more holders of Common Units with respect to Common Units held by them, each holder of Common Units shall have the right (the Exchange Right) to require the Partnership to redeem on a Specified Exchange Date all or a portion of the Common Units held by such Limited Partner at an exchange price equal to and in the form of the Cash Amount to be paid by the Partnership, provided that such Common Units shall have been outstanding for at least one year. The Exchange Right shall be exercised pursuant to a Notice of Exchange delivered to the Partnership (with a copy to the General Partner) by the Limited Partner who is exercising the Exchange Right (the Exchanging Partner); provided, however, that the Partnership shall not be obligated to satisfy such Exchange Right if the General Partner elects to purchase the Common Units subject to the Notice of Exchange pursuant to Section 8.5(b); and provided, further, that no holder of Common Units may deliver more than two Notices of Exchange during each calendar year. A Limited Partner may not exercise the Exchange Right for less than 1,000 Common Units or, if such Limited Partner holds less than 1,000 Common Units, all of the Common Units held by such Partner. The Exchanging Partner shall have no right, with respect to any Common Units so exchanged, to receive any distribution paid with respect to Common Units if the record date for such distribution is on or after the Specified Exchange Date.
(b) Notwithstanding the provisions of Section 8.5(a), a Limited Partner that exercises the Exchange Right shall be deemed to have offered to sell the Common Units described in the Notice of Exchange to the General Partner, and the General Partner may, in its sole and absolute discretion, elect to purchase directly and acquire such Common Units by paying to the Exchanging Partner either the Cash Amount or the REIT Shares Amount, as elected by the General Partner (in its sole and absolute discretion), on the Specified Exchange Date, whereupon the General Partner shall acquire the Common Units offered for exchange by the Exchanging Partner and shall be treated for all purposes of this Agreement as the owner of such Common Units. If the General Partner shall elect to exercise its right to purchase Common Units under this Section 8.5(b) with respect to a Notice of Exchange, it shall so notify the Exchanging Partner within five business days after the receipt by the General Partner of such Notice of Exchange. Unless the General Partner (in its sole and absolute discretion) shall exercise its right to purchase Common Units from the Exchanging Partner pursuant to this Section 8.5(b), the General Partner shall have no obligation to the Exchanging Partner or the Partnership with respect to the Exchanging Partners exercise of the Exchange Right. In the event the General Partner shall exercise its right to purchase Common Units with respect to the exercise of an Exchange Right in the manner described in the first sentence of this Section 8.5(b), the Partnership shall have no obligation to pay any amount to the Exchanging Partner with respect to such Exchanging Partners exercise of such Exchange Right, and each of
the Exchanging Partner, the Partnership, and the General Partner, as the case may be, shall treat the transaction between the General Partner, as the case may be, and the Exchanging Partner for federal income tax purposes as a sale of the Exchanging Partners Common Units to the General Partner, as the case may be. Each Exchanging Partner agrees to execute such documents as the General Partner may reasonably require in connection with the issuance of REIT Shares upon exercise of the Exchange Right, including an assignment of the Common Units, and if the General Partner is relying upon the exemption from registration under the Securities Act of 1933, as amended, provided by Regulation D promulgated under the Securities Act of 1933, as amended, or any successor rule, a document pursuant to which the Exchanging Partner makes a representation that it is an accredited investor; provided, however, that if the Exchanging Partner cannot make such representation, then the Exchanging Partner shall have no right to exercise its Exchange Right.
(c) Notwithstanding the provisions of Section 8.5(a) and 8.5(b), a Limited Partner shall not be entitled to exercise the Exchange Right if the delivery of REIT Shares to such Partner on the Specified Exchange Date by the General Partner pursuant to Section 8.5(b) (regardless of whether or not the General Partner would in fact exercise its rights under Section 8.5(b)) would, in the determination of the General Partner (i) result in such Partner or any other person owning, directly or indirectly, shares of stock of the General Partner in excess of the Aggregate Stock Ownership Limit (as defined in the Articles of Incorporation and calculated in accordance therewith) or the Common Stock Ownership Limit (as defined in the Articles of Incorporation and calculated in accordance therewith), except as provided in the Articles of Incorporation, (ii) result in REIT Shares being owned by fewer than 100 persons (determined without reference to any rules of attribution), except as provided in the Articles of Incorporation, (iii) result in the General Partner being closely held within the meaning of Section 856(h) of the Code, (iv) cause the General Partner to own, directly or constructively, 9.9% or more of the ownership interests in a tenant within the meaning of Section 856(d)(2)(B) of the Code, (v) cause a violation of the Securities Act of 1933, as amended, either for the exchange or other securities offerings, (vi) require such REIT Shares to be registered under the Securities Act of 1933, as amended, (vii) cause the General Partner to no longer qualify as a REIT, or (viii) cause the Partnership to be treated as a publicly traded partnership under Section 7704 of the Code. The General Partner, in its sole and absolute discretion, may waive the restriction on exchange set forth in this Section 8.5(c).
(d) Any Cash Amount to be paid to an Exchanging Partner pursuant to this Section 8.5 shall be paid on the Specified Exchange Date; provided, however, that the General Partner may elect to cause the Specified Exchange Date to be delayed for up to an additional 180 days to the extent required for the General Partner to cause additional REIT Shares to be issued to provide financing to be used to make such payment of the Cash Amount. Notwithstanding the foregoing, the General Partner agrees to use its commercially reasonable efforts to cause the closing of the acquisition of exchanged Common Units hereunder to occur as quickly as reasonably possible.
(e) Notwithstanding any other provision of this Agreement, the General Partner shall place appropriate restrictions on the ability of the Limited Partners to exercise their Exchange Rights as and if deemed necessary to ensure that the Partnership does not constitute a publicly traded partnership under Section 7704 of the Code. If and when the General Partner determines that imposing such restrictions is necessary, the General Partner shall give prompt written notice thereof to each of the Limited Partners, which notice shall state the restrictions the General Partner has instituted in order to avoid the Partnership being treated as a publicly traded partnership under Section 7704 of the Code.
(f) Each Limited Partner covenants and agrees with the General Partner that all Common Units delivered for exchange shall be delivered to the Partnership or the General Partner, as the case may be, free and clear of all liens; and, notwithstanding anything contained herein to the contrary, neither the General Partner nor the Partnership shall be under any obligation to acquire Common Units which are or may be subject to any liens. Each Limited Partner further agrees that, if any state or local property transfer tax is payable as a result of the transfer of its Common Units to the Partnership or the General Partner, such Limited Partner shall assume and pay such transfer tax.
(g) With respect to the Contribution Common Units, the Exchange Right provided for in this Article 8 shall not be exercisable or exercised by any holder of Contribution Common Units until such Contribution Common Units have been outstanding for at least two years.
(h) The exercise of an Exchange Right by a Limited Partner will be subject to compliance with securities laws applicable to the exchange and therefore the Exchange Right may not be exercisable in the absence of an effective registration statement or an available exemption from registration.
8.6 Outside Activities of Limited Partners. Subject to (i) any other agreements entered into by a Limited Partner or any of its Affiliates with the General Partner, including the Restrictive Covenants Agreements between PM Contributor, Advisor Contributor, PM Holdings, Advisor Holdings and the General Partner dated as of the date hereof, and (ii) any fiduciary duty owed by a Limited Partner or any officer, director, employee, agent, representative, trustee, Affiliate, manager, member or stockholder of any such Limited Partner or assignee, to the General Partner by virtue of such Persons position as a director of the General Partner, any Limited Partner, any assignee of such Limited Partner admitted pursuant to Section 9.3, or any officer, director, employee, agent, representative, trustee, Affiliate, manager, member or stockholder of any such Limited Partner or assignee, as applicable, shall be entitled to and may have business interests and engage in business activities in addition to those relating to the General Partner, including business interests and activities that are in direct or indirect competition with the General Partner or that are enhanced by the activities of the General Partner. Neither the General Partner nor any Limited Partner shall have any rights by virtue of this Agreement in any business ventures of any Limited Partner or assignee admitted pursuant to Section 9.3. Subject to such agreements, none of the General Partner, Limited Partners nor any other Person shall have any rights by virtue of this Agreement in any business ventures of any other Person (other than to the extent expressly provided herein), and such Person shall have no obligation pursuant to this Agreement, subject to any other agreements entered into by a Limited Partner or its Affiliates with the General Partner or its Affiliates to offer any interest in any such business ventures to the General Partner, any other Limited Partner, or any such other Person, even if such opportunity is of a character that, if presented to the General Partner, any other Limited Partner or such other Person, could be taken by such Person.
8.7 Rights of Limited Partners Relating to the General Partner.
(a) In addition to other rights provided by this Agreement or by the Act, and subject to Section 8.7(c), the General Partner shall deliver to each Limited Partner that is a holder of a Contribution Common Unit a copy of any information mailed to all of the common stockholders of the General Partner as soon as practicable after such mailing.
(b) The General Partner shall notify any Limited Partner, on request, of the then current Conversion Factor or any change made to the Conversion Factor.
(c) Notwithstanding any other provision of this Section 8.7, the General Partner may keep confidential from the Limited Partners (or any of them, individually), for such period of time as the General Partner determines to be reasonable, any information that (i) the General Partner believes to be in the nature of trade secrets or other information the disclosure of which the General Partner in good faith believes is not in its best interests or (ii) the General Partner is required by law or by agreement to keep confidential.
ARTICLE 9
TRANSFERS OF LIMITED PARTNERSHIP INTERESTS
9.1 Purchase for Investment.
(a) Each Limited Partner hereby represents and warrants to the General Partner and to the Partnership that the acquisition of its Partnership Interests is made as a principal for its account for investment purposes only and not with a view to the resale or distribution of such Partnership Interest.
(b) Each Limited Partner agrees that it will not sell, assign or otherwise transfer its Partnership Interest or any fraction thereof, whether voluntarily or by operation of law or at judicial sale or otherwise, to any Person who does not make the representations and warranties to the General Partner set forth in Section 9.1(a) above and similarly agree not to sell, assign or transfer such Partnership Interest or fraction thereof to any Person who does not similarly represent, warrant and agree.
9.2 Restrictions on Transfer of Limited Partnership Interests.
(a) Subject to the provisions of Sections 9.2(b), (c) and (d), no Limited Partner may offer, sell, assign, hypothecate, pledge or otherwise transfer all or any portion of its Limited Partnership Interest, or any of such Limited Partners economic rights as a Limited Partner, whether voluntarily or by operation of law or at judicial sale or otherwise (collectively, a Transfer) without the consent of the General Partner, which consent shall not unreasonably be withheld. Any such purported transfer undertaken without such consent shall be considered to be null and void ab initio and shall not be given effect. The General Partner may require, as a condition of any Transfer to which it consents, that the transferor assume all costs incurred by the Partnership in connection therewith.
(b) No Limited Partner may withdraw from the Partnership other than as a result of a permitted Transfer (i.e., a Transfer consented to as contemplated by clause (a) above or clause (c) below or a Transfer pursuant to Section 9.5 below) of all of its Partnership Units pursuant to this Article 9 or pursuant to an exchange of all of its Partnership Units pursuant to Section 8.5 or any instrument designating a Preferred Unit. Upon the permitted Transfer or redemption of all of a Limited Partners Partnership Interest, such Limited Partner shall cease to be a Limited Partner.
(c) Subject to Sections 9.2(e), (f) and (g) below, a Limited Partner may Transfer, with the consent of the General Partner, which consent shall not be unreasonably withheld, all or a portion of its Partnership Units to (i) its Affiliate; (ii) a parent or parents spouse, natural or adopted descendant or descendants, spouse of such descendant, or brother or sister, or a trust created by such Limited Partner for the benefit of such Limited Partner and/or any such Person(s), of which
trust such Limited Partner or any such Person(s) is a trustee, (iii) a corporation controlled by a Person or Persons named in (i) above, or (iv) if the Limited Partner is an entity, its beneficial owners.
(d) Subject to Sections 9.2(e), (f) and (g) below, a Limited Partner may Transfer, with the consent of the General Partner, which consent may be granted or withheld in its sole and absolute discretion, all or a portion of its Partnership Units to (i) any lender or lenders, or agents acting on their behalf, to whom any Partnership Unit Interest is transferred pursuant to (y) the formation of any secured pledge or (z) the exercise of remedies under a pledge; or (ii) any special purpose entities owned and used by the lenders or agents described in Section 9.2(d)(i) for the purpose of holding any such Partnership Unit.
(d) No Limited Partner may effect a Transfer of its Limited Partnership Interest, in whole or in part, if, in the opinion of legal counsel for the Partnership, such proposed Transfer would otherwise violate any applicable federal or state securities or blue sky law (including investment suitability standards).
(e) No Transfer by a Limited Partner of its Partnership Units, in whole or in part, may be made to any Person if (i) in the opinion of the General Partner based on the advice of legal counsel for the Partnership, the transfer would result in the Partnerships being treated as an association taxable as a corporation (other than a qualified REIT subsidiary within the meaning of Section 856(i) of the Code), (ii) in the opinion of the General Partner based on the advice of legal counsel for the Partnership, it would adversely affect the ability of the General Partner to continue to qualify as a REIT or subject the General Partner to any additional taxes under Section 857 or Section 4981 of the Code, (iii) in the opinion of the General Partner, such transfer would cause any of the Partnership Units to be deemed to be traded on an established securities market or readily tradable on a secondary market (or the substantial equivalent thereof) within the meaning of Section 7704 of the Code and the Regulations promulgated thereunder, (iv) would cause the Partnership to become, with respect to any employee benefit plan subject to Title I of ERISA or to Section 4975 of the Code, a party-in-interest (as defined in Section 3(14) of ERISA) or a disqualified person (as defined in Section 4975(e)(2) of the Code) or (v) would, in the belief of the General Partner, cause any portion of the assets of the Partnership to constitute assets of any employee benefit plan pursuant to 29 CFR Section 2510.3-101.
(f) No transfer of any Partnership Units may be made to a lender to the Partnership or any Person who is related (within the meaning of Regulations Section 1.752-4(b)) to any lender to the Partnership whose loan constitutes a nonrecourse liability (within the meaning of Regulations Section 1.752-1(a)(2)), without the consent of the General Partner, which may be withheld in its sole and absolute discretion, provided that as a condition to such consent the lender will be required to enter into an arrangement with the Partnership and the General Partner to exchange or redeem for the Cash Amount any Partnership Units in which a security interest is held simultaneously with the time at which such lender would be deemed to be a partner in the Partnership for purposes of allocating liabilities to such lender under Section 752 of the Code.
(g) Any Transfer in contravention of any of the provisions of this Article 9 shall be void and ineffectual and shall not be binding upon, or recognized by, the Partnership.
(h) Prior to the consummation of any Transfer under this Article 9, the transferor and/or the transferee shall deliver to the General Partner such opinions, certificates and other documents as the General Partner shall request in connection with such Transfer.
9.3 Admission of Substitute Limited Partner.
(a) Subject to the other provisions of this Article 9, an assignee of the Limited Partnership Interest of a Limited Partner (which shall be understood to include any purchaser, transferee, donee, or other recipient of any disposition of such Limited Partnership Interest) shall be deemed admitted as a Limited Partner of the Partnership only with the consent of the General Partner and upon the satisfactory completion of the following:
(i) The assignee shall have accepted and agreed to be bound by the terms and provisions of this Agreement by executing a counterpart or an amendment thereof, including a revised Exhibit A, and such other documents or instruments as the General Partner may require in order to effect the admission of such Person as a Limited Partner.
(ii) To the extent required, an amended Certificate evidencing the admission of such Person as a Limited Partner shall have been signed, acknowledged and filed for record in accordance with the Act.
(iii) The assignee shall have delivered a letter containing the representation set forth in Section 9.1(a) hereof and the agreement set forth in Section 9.1(b) hereof.
(iv) If the assignee is a corporation, partnership or trust, the assignee shall have provided the General Partner with evidence satisfactory to counsel for the Partnership of the assignees authority to become a Limited Partner under the terms and provisions of this Agreement.
(v) The assignee shall have executed a power of attorney containing the terms and provisions set forth in Section 8.2 hereof.
(vi) The assignee shall have paid all legal fees and other expenses of the Partnership and the General Partner and filing and publication costs in connection with its substitution as a Limited Partner.
(vii) The assignee shall have obtained the prior written consent of the General Partner to its admission as a Substitute Limited Partner, which consent may be given or denied in the exercise of the General Partners sole and absolute discretion.
(b) For the purpose of allocating Profits and Losses and distributing cash received by the Partnership, a Substitute Limited Partner shall be treated as having become, and appearing in the records of the Partnership as, a Partner upon the filing of the Certificate described in Section 9.3(a)(ii) hereof or, if no such filing is required, the later of the date specified in the transfer documents or the date on which the General Partner has received all necessary instruments of transfer and substitution.
(c) The General Partner shall cooperate with the Person seeking to become a Substitute Limited Partner by preparing the documentation required by this Section and making all
official filings and publications. The Partnership shall take all such action as promptly as practicable after the satisfaction of the conditions in this Article 9 to the admission of such Person as a Limited Partner of the Partnership.
9.4 Rights of Assignees of Partnership Interests.
(a) Subject to the provisions of Sections 9.1 and 9.2 hereof, except as required by operation of law, the Partnership shall not be obligated for any purposes whatsoever to recognize the assignment by any Limited Partner of its Partnership Interest until the Partnership has received notice thereof.
(b) Any Person who is the assignee of all or any portion of a Limited Partners Limited Partnership Interest, but does not become a Substitute Limited Partner and desires to make a further assignment of such Limited Partnership Interest, shall be subject to all the provisions of this Article 9 to the same extent and in the same manner as any Limited Partner desiring to make an assignment of its Limited Partnership Interest.
9.5 Effect of Bankruptcy, Death, Incompetence or Termination of a Limited Partner. The occurrence of an Event of Bankruptcy as to a Limited Partner, the death of a Limited Partner or a final adjudication that a Limited Partner is incompetent (which term shall include, but not be limited to, insanity) shall not cause the termination or dissolution of the Partnership, and the business of the Partnership shall continue if an order for relief in a bankruptcy proceeding is entered against a Limited Partner, the trustee or receiver of his estate or, if he dies, his executor, administrator or trustee, or, if he is finally adjudicated incompetent, his committee, guardian or conservator, shall have the rights of such Limited Partner for the purpose of settling or managing his estate property and such power as the bankrupt, deceased or incompetent Limited Partner possessed to assign all or any part of his Partnership Interest and to join with the assignee in satisfying conditions precedent to the admission of the assignee as a Substitute Limited Partner.
9.6 Joint Ownership of Interests. A Partnership Interest may be acquired by two individuals as joint tenants with right of survivorship, provided that such individuals either are married or are related and share the same personal residence. The written consent or vote of both owners of any such jointly held Partnership Interest shall be required to constitute the action of the owners of such Partnership Interest; provided, however, that the written consent of only one joint owner will be required if the Partnership has been provided with evidence satisfactory to the counsel for the Partnership that the actions of a single joint owner can bind both owners under the applicable laws of the state of residence of such joint owners. Upon the death of one owner of a Partnership Interest held in a joint tenancy with a right of survivorship, the Partnership Interest shall become owned solely by the survivor as a Limited Partner and not as an assignee. The Partnership need not recognize the death of one of the owners of a jointly-held Partnership Interest until it shall have received notice of such death. Upon notice to the General Partner from either owner, the General Partner shall cause the Partnership Interest to be divided into two equal Partnership Interests, which shall thereafter be owned separately by each of the former owners.
ARTICLE 10
ADMISSION OF ADDITIONAL LIMITED PARTNERS
10.1 Admission of Additional Limited Partners. No Person shall be admitted as an Additional Limited Partner without the consent of the General Partner, which consent shall be given or withheld in the General Partners sole and absolute discretion. A Person who makes a Capital Contribution to the
Partnership in accordance with this Agreement or who exercises an option to receive Partnership Units shall be admitted to the Partnership as an Additional Limited Partner only with the consent of the General Partner and only upon furnishing to the General Partner (i) evidence of acceptance in form satisfactory to the General Partner of all of the terms and conditions of this Agreement, including, without limitation, the power of attorney granted in Section 8.2 and (ii) such other documents or instruments as may be required in the discretion of the General Partner to effect such Persons admission as an Additional Limited Partner. The admission of any Person as an Additional Limited Partner shall become effective on the date upon which the name of such Person is recorded on the books and records of the Partnership, following the consent of the General Partner to such admission.
10.2 Allocations to Additional Limited Partners. If any Additional Limited Partner is admitted to the Partnership on any day other than the first day of a Partnership Year, then Profits, Losses, each item thereof and all other items allocable among Partners and assignees for such Partnership Year shall be allocated among such Additional Limited Partner and all other Partners and assignees by taking into account their varying interests during the Partnership Year in accordance with Section 706(d) of the Code, using the interim closing of the books method (unless the General Partner, in its sole and absolute discretion, elects to adopt a daily, weekly or monthly proration method, in which event Profits, Losses, and each item thereof would be prorated based upon the applicable period selected by the General Partner). Solely for purposes of making such allocations, each of such item for the calendar month in which an admission of any Additional Limited Partner occurs shall be allocated among all the Partners and assignees including such Additional Limited Partner. All distributions by the Partnership with respect to which the Partnership Record Date is before the date of such admission shall be made solely to Partners and assignees other than the Additional Limited Partner, and all distributions by the Partnership thereafter shall be made to all the Partners and assignees including such Additional Limited Partner.
10.3 Amendment of Agreement and Certificate of Limited Partnership. For the admission to the Partnership of any Partner, the General Partner shall take all steps necessary and appropriate under the Act to amend the records of the Partnership and, if necessary, to prepare as soon as practical an amendment of this Agreement (including an amendment to Exhibit A) and, if required by law, shall prepare and file an amendment to the Certificate and may for this purpose exercise the power of attorney granted pursuant to Section 8.2 hereof.
ARTICLE 11
BOOKS AND RECORDS; ACCOUNTING; TAX MATTERS; REPORTS
11.1 Books and Records. At all times during the continuance of the Partnership, the General Partner shall keep or cause to be kept at the Partnerships specified office true and complete books of account in accordance with generally accepted accounting principles, including: (a) a current list of the full name and last known business address of each Partner, (b) a copy of the Certificate and all certificates of amendment thereto, (c) copies of the Partnerships federal, state and local income tax returns and reports, (d) copies of this Agreement and amendments thereto and any financial statements of the Partnership for the three most recent Partnership Years and (e) all documents and information required under the Act. Any Partner or its duly authorized representative, upon paying the costs of collection, duplication and mailing, shall be entitled to inspect or copy such records during ordinary business hours.
11.2 Custody of Partnership Funds; Bank Accounts.
(a) All funds of the Partnership not otherwise invested shall be deposited in one or more accounts maintained in such banking or brokerage institutions as the General Partner shall determine, and withdrawals shall be made only on such signature or signatures as the General Partner may, from time to time, determine.
(b) All deposits and other funds not needed in the operation of the business of the Partnership may be invested by the General Partner in investment grade instruments (or investment companies whose portfolio consists primarily thereof), government obligations, certificates of deposit, bankers acceptances and municipal notes and bonds, or other investments approved by the board of directors of the General Partner. The funds of the Partnership shall not be commingled with the funds of any other Person except for such commingling as may necessarily result from an investment in those investment companies permitted by this Section 11.2(b).
11.3 Fiscal and Taxable Year. The fiscal and taxable year of the Partnership shall be the calendar year.
11.4 Annual Tax Information and Report. Within 90 days after the end of each Partnership Year, the General Partner shall use commercially reasonable efforts to furnish to each person who was a Limited Partner at any time during such Partnership Year the tax information necessary to file such Limited Partners individual tax returns as shall be reasonably required by law.
11.5 Partnership Representative; Tax Elections; Special Basis Adjustments.
(a) The General Partner is hereby designated as the partnership representative of the Partnership within the meaning of Section 6223(a) of the Code. If any state or local tax law provides for a partnership representative or person having similar rights, powers, authority or obligations, the person designated above shall also serve in such capacity (in any such federal, state or local capacity, the Partnership Representative). The General Partner may name a replacement Partnership Representative at any time; provided, however, that the designated Partnership Representative shall serve as the Partnership Representative until resignation, death, incapacity, or removal. In such capacity, the Partnership Representative shall have all of the rights, authority and power, and shall be subject to all of the obligations, of a partnership representative to the extent provided in the Code and the Regulations, and the Partners hereby agree to be bound by any actions taken by the Partnership Representative in such capacity. The Partnership Representative shall represent the Partnership in all tax matters to the extent allowed by law. Without limiting the foregoing, the Partnership Representative is authorized and required to represent the Partnership (at the Partnerships expense) in connection with all examinations of the Partnerships affairs by tax authorities, including administrative and judicial proceedings, and to expend Partnership funds for professional services and costs associated therewith. Any decisions made by the Partnership Representative, including, without limitation, whether or not to settle or contest any tax matter, and the choice of forum for any such contest, and whether or not to extend the period of limitations for the assessment or collection of any tax, shall be made in the Partnership Representatives sole discretion. The Partnership Representative (i) shall have the sole authority to make any elections on behalf of the Partnership permitted to be made pursuant to the Code or the Regulations promulgated thereunder and (ii) may, in its sole discretion, make an election on behalf of the Partnership under Sections 6221(b) or 6226 of the Code, (iii) may request a modification to any assessment of an imputed underpayment, including a modification for any Partner who is a REIT or regulated investment company as defined in Section 851, based on such Partner making a deficiency dividend pursuant to Section 860, and a modification based on the tax-exempt status of a reviewed year Partner, and (iv) may take all actions the Partnership Representative deems necessary or appropriate in connection with the foregoing. The Partnership Representative shall be
reimbursed and indemnified by the Partnership for all claims, liabilities, losses, costs, damages and expenses, and for reasonable legal and accounting fees, incurred in connection with the performance of its duties as Partnership Representative in accordance with the terms hereof, unless the actions of the Partnership Representative constitute gross negligence or intentional misconduct.
(b) Each Partner hereby covenants to cooperate with the Partnership Representative and to do or refrain from doing any or all things reasonably requested by the Partnership Representative with respect to examinations of the Partnerships affairs by tax authorities (including, without limitation, promptly filing amended tax returns and promptly paying any related taxes, including penalties and interest) and shall provide promptly and update as necessary at any times requested by the Partnership Representative, all information, documents, self-certifications, tax identification numbers, tax forms, and verifications thereof, that the Partnership Representative deems necessary in connection with (1) any information required for the Partnership to determine the application of Sections 6221 through 6235 of the Code to the Partnership; (2) an election by the Partnership under Section 6221(b) or 6226 of the Code, and (3) an audit of the Partnership or a final adjustment of a Partnership item by a tax authority. The Partnership and the Partners hereby agree and acknowledge that (i) the actions of the Partnership Representative in connection with examinations of the Partnerships affairs by tax authorities shall be binding on the Partnership and the Partners; and (ii) neither the Partnership nor the Partners have any right to contact the Service with respect to an examination of the Partnership or participate in an audit of the Partnership or proceedings under Sections 6221 through 6235 of the Code.
(c) The Partners acknowledge that the Partnership may elect the application of Section 6221(b) of the Code (the Opt-Out Election) for any Partnership Year in which it is eligible to make such election. The Partners further acknowledge that the Partnership may elect the application of Section 6226 of the Code (the Push-out Election) for any Partnership Year in which it is not eligible to make the Opt-Out Election. This acknowledgement applies to each Partner whether or not the Partner owns a Partnership Interest in both the reviewed year and the year of the tax adjustment. If the Partnership makes a Push-Out Election, the Partners shall take into account and report to the Service (or any other applicable tax authority) any adjustment to their tax items for the reviewed year of which they are notified by the Partnership in a written statement, in the manner provided in Section 6226(b) of the Code, whether or not any applicable Partner owns a Partnership Interest at such time. Any Partner that fails to report its share of such adjustments on its tax return, shall indemnify and hold harmless the Partnership, the General Partner, the Partnership Representative, and each of their Affiliates from and against any and all liabilities related to taxes (including penalties and interest) imposed on the Partnership as a result of the Partners failure. Each Partner acknowledges and agrees that no Partner shall have any claim against the Partnership, the General Partner, the Partnership Representative, or any of their Affiliates for any tax, penalties or interest resulting from the Partnership making a Push-Out Election.
(d) If the Partnership does not make a Push-Out Election, the amount of any imputed underpayment assessed upon the Partnership, pursuant to Code Section 6232, attributable to a Partner (or former Partner), as reasonably determined by the Partnership Representative, shall be treated as a withholding tax with respect to such Partner. To the extent any portion of such imputed underpayment cannot be withheld from a current distribution, any such Partner (or former Partner) shall be liable to the Partnership for the amount that cannot be withheld and agrees to pay such amount to the Partnership. Any such amount withheld or any such payment shall not be treated as a Capital Contribution for purposes of any provision herein that affects distributions to the Partners and any amount not paid by any such Partner (or former Partner) at the time reasonably requested by the Partnership Representative shall accrue interest at the rate set by the Service for the underpayment of federal taxes, compounded quarterly, until paid.
(e) The provisions of this Section 11 shall survive the termination of the Partnership, the termination of this Agreement and, with respect to any Partner, the transfer or assignment of any portion of such Partners Partnership Interest.
(f) The Partnership Representative shall keep the Partners reasonably informed as to the status of any tax investigations, audits, lawsuits or other judicial or administrative tax proceedings and shall promptly copy all other Partners on any correspondence to or from the Service or applicable state, local or foreign tax authority relating to such proceedings. The Partnership Representative shall inform the Service, as promptly as possible upon the commencement of any examination or proceeding, of the tax-exempt status of any Partners and shall take any actions or refrain from taking any action to the extent necessary to preserve the tax-exempt status of such Partners and shall afford such Partners tax-free treatment, to the extent permissible under the Code. The Partnership Representative has an obligation to perform its duties as the Partnership Representative in good faith and in such manner as will serve the best interests of the Partnership and all of the Partners.
(g) The Partnership shall elect to deduct expenses, if any, incurred by it in organizing the Partnership as provided in Section 709 of the Code.
(h) Notwithstanding anything to the contrary in this Agreement, (i) each Partner hereby agrees to release and hold harmless the Partnership Representative for all decisions and actions made or untaken, as applicable, by the Partnership Representative in its capacity as such, provided that no such Partner shall be required to release and hold harmless the Partnership Representative for any such decisions and actions made or untaken, as applicable, to the extent such decisions or actions give rise to any right of recovery by such Partner under any other agreements entered into by such Partner or any of its Affiliates with the General Partner or any of its Affiliates (including the terms of the Contribution and Exchange Agreement), and (ii) to the fullest extent permitted by law, the Partnership shall indemnify and hold harmless the Partnership Representative for all costs, expenses, claims, liabilities, losses, damages and legal and accounting fees that are incurred by the Partnership Representative in connection with this Section 11.5(h).
11.6 Reports Made Available to Limited Partners.
(a) As soon as practicable, but in no event later than ninety (90) days after the close of each fiscal quarter (other than the last quarter of the Partnership Year), upon written request by a Limited Partner to the General Partner, the General Partner will make available, without cost, to each Limited Partner a quarterly report containing financial statements of the Partnership, or of the General Partner if such statements are prepared solely on a consolidated basis with the General Partner, for such fiscal quarter, presented in accordance with generally accepted accounting principles. As soon as practicable, but in no event later than ninety (90) days after the close of each Partnership Year, upon written request by a Limited Partner to the General Partner, the General Partner will make available, without cost, to each Limited Partner an annual report containing financial statements of the Partnership, or of the General Partner if such statements are prepared solely on a consolidated basis with the General Partner, for such fiscal year, presented in accordance with generally accepted accounting principles.
(b) Any Partner shall further have the right to a private audit of the books and records of the Partnership at the expense of such Partner, provided such audit is made for Partnership purposes and is made during normal business hours.
(c) Notwithstanding the foregoing, the General Partner, in its sole discretion, may restrict receipt of the information identified in Section 11.1, if the General Partner reasonably believes that disclosure of such information is not in the best interest of the Partnership or could damage the Partnership or the General Partner or its business or the requesting Limited Partners reason for obtaining the applicable information is, in the General Partners sole discretion, related to the Limited Partners individual purposes and not for a Partnership purpose.
ARTICLE 12
AMENDMENT OF AGREEMENT; MERGER
12.1 General. The General Partners consent shall be required for any amendment to this Agreement. Subject to any consent rights expressly provided to holders of Preferred Units in this Agreement, or any amendment hereto, the General Partner, without the consent of the Limited Partners, may amend this Agreement in any respect or merge or consolidate the Partnership with or into any other partnership or business entity (as defined in Section 17-211 of the Act) in a transaction pursuant to Section 7.1(b), (c) or (d) hereof; provided, however, that the following amendments and any other merger or consolidation of the Partnership shall require the consent of a majority in interest of the Common Units:
(a) any amendment affecting the operation of the Exchange Right (except as provided in Section 8.5(d) or 7.1(c) hereof) in a manner adverse to the Limited Partners;
(b) any amendment that would adversely affect the rights of the Limited Partners to receive the distributions payable to them hereunder, other than with respect to the issuance of additional Partnership Interests pursuant to Section 4.2 hereof;
(c) any amendment that would alter the Partnerships allocations of Profit and Loss to the Limited Partners, other than with respect to the issuance of additional Partnership Interests pursuant to Section 4.2 hereof; or
(d) any amendment that would impose on the Limited Partners any obligation to make additional Capital Contributions to the Partnership.
12.2 Amendment Without the Consent of the Limited Partners. The ability of the General Partner to amend this Agreement without the consent of the Limited Partners, pursuant to Section 12.1, includes, but is not limited to, any amendment to:
(a) add or modify a distribution reinvestment plan for the General Partner or the Partnership;
(b) modify the allocation provisions of the Agreement to comply with Code Section 704(b) or 704(c);
(c) add to the representations, duties, services or obligations of the General Partner or any Affiliates for the benefit of the Limited Partners;
(d) cure any ambiguity or mistake, correct or supplement any provision in the Agreement that may be inconsistent with any other provision, or make any other provision with respect to matters or questions arising under the Agreement that will not be inconsistent with the provisions of the Agreement;
(e) amend the Agreement to reflect the addition or substitution of Limited Partners or the reduction of the Capital Accounts upon the return of capital to the Limited Partners;
(f) minimize the adverse impact of, or comply with, any plan assets for ERISA purposes;
(g) execute, acknowledge and deliver any and all instruments to effectuate the foregoing, including the execution, acknowledgment and delivery of any such instrument by the attorney-in-fact for the General Partner under a special or limited power of attorney and to take all such actions in connection therewith as the General Partner deems necessary or appropriate with the signature of the General Partner acting alone;
(h) change the name and/or principal place of business of the Partnership;
(i) decrease the rights and powers of the General Partner (so long as such decrease does not impair the ability of the General Partner to manage the Partnership and conduct its business affairs);
(j) sell preferred units and other securities and admit preferred limited partners and other limited partners to the Partnership, subject to any consent rights expressly provided to holders of Preferred Units in this Agreement, or any amendment thereto;
(k) make any changes necessary or advisable to enable the General Partner to qualify or maintain its status as a REIT;
(l) establish or amend exchange rights for the exchange of Units for an equivalent number of REIT Shares;
(m) establish or amend a Unit repurchase program; or
(n) make any changes necessary or advisable to satisfy concerns of the Commission, any state securities regulator or any stock exchange in connection with a securities offering by the General Partner or otherwise.
No amendment will be adopted pursuant to Sections 12.2(j) or 12.2(n) without the consent of the Limited Partners unless the adoption thereof (i) is for the benefit of and not adverse to the interests of the Limited Partners and (ii) does not affect the limited liability of the Limited Partners or the status of the Partnership as a partnership for federal income tax purposes.
ARTICLE 13
GENERAL PROVISIONS
13.1 Notices. All communications required or permitted under this Agreement shall be in writing and shall be deemed to have been given when delivered personally or upon deposit in the United States mail, registered, postage prepaid return receipt requested, to the Partners at the addresses set forth in Exhibit A attached hereto; provided, however, that any Partner may specify a different address by notifying the General Partner in writing of such different address. Notices to the Partnership shall be delivered at or mailed to its specified office.
13.2 Survival of Rights. Subject to the provisions hereof limiting transfers, this Agreement shall be binding upon and inure to the benefit of the Partners and the Partnership and their respective legal representatives, successors, transferees and assigns.
13.3 Additional Documents. Each Partner agrees to perform all further acts and execute, swear to, acknowledge and deliver all further documents which may be reasonable, necessary, appropriate or desirable to carry out the provisions of this Agreement or the Act.
13.4 Severability. If any provision of this Agreement shall be declared illegal, invalid, or unenforceable in any jurisdiction, then such provision shall be deemed to be severable from this Agreement (to the extent permitted by law) and in any event such illegality, invalidity or unenforceability shall not affect the remainder hereof.
13.5 Entire Agreement. This Agreement and exhibits attached hereto constitute the entire Agreement of the Partners and supersede all prior written agreements and prior and contemporaneous oral agreements, understandings and negotiations with respect to the subject matter hereof.
13.6 Pronouns and Plurals. When the context in which words are used in the Agreement indicates that such is the intent, words in the singular number shall include the plural and the masculine gender shall include the neuter or female gender as the context may require.
13.7 Headings. The Article headings or sections in this Agreement are for convenience only and shall not be used in construing the scope of this Agreement or any particular Article.
13.8 Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original copy and all of which together shall constitute one and the same instrument binding on all parties hereto, notwithstanding that all parties shall not have signed the same counterpart.
13.9 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware; provided, however, that causes of action for violations of federal or state securities laws shall not be governed by this Section 13.9.
13.10 Waiver of Jury Trial. EACH PARTNER HEREBY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT.
13.11 Electronic Signatures. Any electronic signature of a party to this Agreement and of a party to take any action related to this Agreement or any agreement entered into by the Partnership shall be valid as an original signature and shall be effective and binding. Any such electronic signature (including the signature(s) to this Agreement) shall be deemed (i) to be written or in writing, (ii) to have been signed and (iii) to constitute a record established and maintained in the ordinary course of business and an original written record when printed from electronic files.
13.12 Side Letter Agreements. Notwithstanding the foregoing or any provision of this Agreement to the contrary, the Partners acknowledge and agree that the authority granted to the General Partner hereunder provides the General Partner with the authority to enter into agreements with any Limited
Partner (a Side Letter) without the consent of any other Person (including, without limitation, any other Limited Partner), in connection with the relationship of such Limited Partner to the Partnership which may affect the terms of this Agreement; provided, however, that the economic terms set forth in any such Side Letter shall not affect the economic rights or obligations of any other Limited Partner under any provision of this Agreement and the terms of such Side Letter shall be determined as to the relationship solely as between such Limited Partner and the General Partner.
IN WITNESS WHEREOF, the parties hereto have hereunder affixed their signatures to this Amended and Restated Limited Partnership Agreement, all as of the 28th day of January, 2021.
GENERAL PARTNER: | ||
RESOURCE REIT, INC. | ||
By: | /s/ Alan Feldman | |
Alan Feldman, Chief Executive Officer and President |
LIMITED PARTNERS:
RRE OPPORTUNITY HOLDINGS II, LLC | ||
BY: REVOLUTION I MERGER SUB, LLC, its sole member | ||
BY: | RESOURCE REIT, INC., its sole member |
By: | /s/ Alan Feldman | |||
Alan Feldman, Chief Executive Officer and President |
RRE OPPORTUNITY HOLDINGS, LLC | ||
BY: | RESOURCE REIT, INC., its sole member |
By: | /s/ Alan Feldman | |||
Alan Feldman, Chief Executive Officer and President |
REVOLUTION I MERGER SUB, LLC | ||
BY: | RESOURCE REIT, INC., its sole member |
By: | /s/ Alan Feldman | |||
Alan Feldman, Chief Executive Officer and President |
C-III CAPITAL PARTNERS LLC |
By: | /s/ Marc W. Levy | |||
Marc W. Levy, Executive Managing Director |
RRE LEGACY CO. LLC |
By: | /s/ Marc W. Levy | |||
Marc W. Levy, Executive Managing Director |
EXHIBIT A
On file with the Partnership
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EXHIBIT B
NOTICE OF EXERCISE OF EXCHANGE RIGHT
In accordance with Section 8.5 of the Amended and Restated Limited Partnership Agreement (the Agreement) of RRE Opportunity OP II, LP, the undersigned hereby irrevocably (i) presents for exchange Common Units in RRE Opportunity OP II, LP in accordance with the terms of the Agreement and the Exchange Right referred to in Section 8.5 thereof, (ii) surrenders such Common Units and all right, title and interest therein, and (iii) directs that the Cash Amount or REIT Shares Amount (as defined in the Agreement) as determined by the General Partner deliverable upon exercise of the Exchange Right be delivered to the address specified below, and if REIT Shares (as defined in the Agreement) are to be delivered, such REIT Shares be registered or placed in the name(s) and at the address(es) specified below.
Dated: , |
|
(Name of Limited Partner) |
|
(Signature of Limited Partner) |
|
(Mailing Address) |
|
(City) (State) (Zip Code) |
Signature Guaranteed by: |
|
If REIT Shares are to be issued, issue to: |
Name: |
|
Social Security or Tax I.D. Number: |
|
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EXHIBIT C
DESIGNATION OF THE RIGHTS, POWERS, PRIVILEGES, RESTRICTIONS, QUALIFICATIONS AND LIMITATIONS OF THE SERIES A CUMULATIVE PARTICIPATING REDEEMABLE PREFERRED UNITS
The following are the terms of the Series A Cumulative Participating Redeemable Preferred Units (the Series A Preferred Units) established pursuant to this Designation of Rights, Powers, Privileges, Restrictions, Qualifications and Limitations of the Series A Cumulative Participating Redeemable Preferred Units (the Designation of Rights). This Designation of Rights includes terms defined in the Agreement in addition to terms defined in this Designation of Rights. The following terms used in this Designation of Rights shall have the meanings specified below:
Original Issuance Date means, with respect to each Series A Preferred Unit, the date on which such Series A Preferred Unit was originally issued by the Partnership.
Redemption Date means, the date on which the Series A Preferred Units shall be redeemed, as set forth in Section 6 hereof.
Redemption Price means, as of any specified date with respect to a Series A Preferred Unit, an amount of cash equal to the sum of (i) the Series A Preferred Stated Value, (ii) the Series A Preferred Distribution Shortfall, and (iii) the product of the Value of 1.22423 REIT Share and the REIT Shares Amount as of such date.
Reset Date means, with respect to each Series A Preferred Unit, the fifth anniversary of the Original Issuance Date of such Series A Preferred Unit.
Series A Preferred Capital means, with respect to each Series A Preferred Unit as of any particular date, an amount equal to the sum of (i) the Series A Preferred Stated Value, and (ii) the Series A Preferred Distribution Shortfall.
Series A Preferred Distribution Date means the 15th day of each January, April, July and October of each year (or, if not a business day, the next succeeding business day).
Series A Preferred Distribution Period means, with respect to each Series A Preferred Unit, the period commencing on and including January 1, April 1, July 1 and October 1 of each year and ending on and including the day preceding the first day of the next succeeding Distribution Period (other than the initial Distribution Period which shall commence on and include the Original Issuance Date of such Series A Preferred Unit and the Distribution Period during which such Series A Preferred Unit is redeemed or otherwise acquired by the Partnership which shall end on and include the date of such redemption or acquisition).
Series A Preferred Distribution Shortfall means, with respect to each Series A Preferred Unit as of any particular date, the excess of (i) the sum of the Series A Preferred Priority Return and the Series A Preferred Return for such Series A Preferred Unit as of such date over (ii) the cumulative amount distributed in respect of such Series A Preferred Unit pursuant to Section 5.2(a)(i) of the Agreement.
Series A Preferred Priority Return means, with respect to each Series A Preferred Unit as of any particular date, an amount equal to (i) 7.00% per annum on the Series A Preferred Stated Value for the
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period commencing on the Original Issuance Date and ending on the day prior to the Reset Date and (ii) 10.00% per annum on the Series A Preferred Stated Value for the period commencing on the Reset Date. For any partial period of less than a year, the amount of the Series A Preferred Priority Return shall be prorated and computed on the basis of a 360-day year consisting of twelve 30-day months.
Series A Preferred Return means, with respect to each Series A Preferred Unit as of any particular date, the amount of distributions to which a holder of such Series A Preferred Unit would be entitled to receive as of such date if the Series A Preferred Units were treated as part of a single class of units with the Common Units and the Series A Preferred Units shared in distributions with the Common Units pursuant to Section 5.2(a)(ii) and Section 5.6(b) proportionately based on the total number of outstanding Series A Preferred Units and Common Units; provided, however for this purpose each Series A Preferred Units shall be treated as 1.22423 Units.
Series A Preferred Stated Value means, with respect to each Series A Preferred Unit, an amount equal to $200 as adjusted pursuant to Section 11 of this Designation of Rights.
(1) Designation and Number. A series of Preferred Units, designated as the Series A Cumulative Participating Redeemable Preferred Units, is hereby established. The number of authorized Series A Preferred Units is 319,965.
(2) Maturity. The Series A Preferred Units have no stated maturity and will not be subject to any sinking fund or mandatory redemption.
(3) Rank. The Series A Preferred Units will, with respect to distribution rights and rights upon liquidation, dissolution or winding up of the Partnership, rank: (a) senior to all classes and series of Common Units of the Partnership, and any other class or series of Preferred Units expressly designated as ranking junior to the Series A Preferred Units as to distribution rights and rights upon liquidation, dissolution or winding up of the Partnership (the Junior Units); (b) on a parity with any other class or series of Preferred Units issued by the Partnership expressly designated as ranking on parity with the Series A Preferred Units as to distribution rights and rights upon liquidation, dissolution or winding up of the Partnership (the Parity Preferred Units); and (c) junior to any class or series of Preferred Units issued by the Partnership expressly designated as ranking senior to the Series A Preferred Units with respect to distribution rights and rights upon liquidation, dissolution or winding up of the Partnership (Senior Preferred Units). The term Preferred Units does not include convertible or exchangeable debt securities of the Partnership, which will rank senior to the Series A Preferred Units prior to conversion or exchange. The Series A Preferred Units will also rank junior in right or payment to the Partnerships existing and future indebtedness.
(4) Distributions.
(a) Pursuant to Section 5.2(a)(i) of the Agreement, and subject to the preferential rights of holders of any class or series of Senior Preferred Units, each holder of Series A Preferred Units shall be entitled to receive, when, as and if authorized by the General Partner and declared by the Partnership, out of funds of the Partnership legally available for payment of distributions, with respect to each Series A Preferred Unit, an amount equal to such Series A Preferred Units Series A Preferred Distribution Shortfall as of the applicable Partnership Record Date for the respective Series A Preferred Distribution Period.
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(b) No distributions on the Series A Preferred Units shall be authorized by the General Partner or declared, paid or set apart for payment by the Partnership at such time as the terms and provisions of any agreement of the General Partner or the Partnership, including any agreement relating to the indebtedness of either of them, prohibits such authorization, declaration, payment or setting apart for payment or provides that such declaration, payment or setting apart for payment would constitute a breach thereof or a default thereunder, or if such declaration or payment shall be restricted or prohibited by law.
(c) Notwithstanding anything to the contrary contained herein, the Series A Preferred Priority Return will accrue and, to the extent not paid in cash, compound quarterly on each Series A Preferred Distribution Date, whether or not the restrictions referred to in Section 4(b) exist, whether or not the Partnership has earnings, whether or not there are funds legally available for the payment of distributions, and whether or not such distributions are authorized or declared. No interest, or sum of money in lieu of interest, will be payable in respect of any distribution on the Series A Preferred Units which may be in arrears. When distributions are not paid in full upon the Series A Preferred Units and any Parity Preferred Units (or a sum sufficient for such full payment is not so set apart), all distributions declared upon the Series A Preferred Units and any Parity Preferred Units shall be declared pro rata so that the amount of distributions declared per Series A Preferred Unit and such Parity Preferred Units shall in all cases bear to each other the same ratio that accumulated distributions per Series A Preferred Unit and such Parity Preferred Units (which shall not include any accrual in respect of unpaid distributions for prior distributions periods if such Parity Preferred Units do not have a cumulative distribution) bear to each other.
(d) Except as provided in the immediately preceding paragraph, unless the Series A Preferred Distribution Shortfall for each Series A Preferred Unit has been or contemporaneously is (i) declared and paid in cash or (ii) declared and a sum sufficient for the payment thereof in cash is set apart for such payment for all past Distribution Periods that have ended, no distributions (other than a distribution in Junior Units or in options, warrants or rights to subscribe for or purchase any such Junior Units) shall be declared and paid or declared and set apart for payment nor shall any other distribution be declared and made upon the Junior Units or any Parity Preferred Units, nor shall any Junior Units or Parity Preferred Units be redeemed, purchased or otherwise acquired for any consideration (or any monies be paid to or made available for a sinking fund for the redemption of any such Units) by the Partnership (except (i) by conversion into or exchange for Junior Units, (ii) the purchase of Junior Units or Parity Preferred Units in connection with a redemption of stock pursuant to the Articles of Incorporation to the extent necessary to preserve the General Partners qualification as a REIT or (iii) the purchase of Parity Preferred Units pursuant to a purchase or exchange offer made on the same terms to holders of all outstanding Series A Preferred Units). Holders of the Series A Preferred Units shall not be entitled to any distribution, whether payable in cash, property or units, in excess of the Series A Preferred Distribution Shortfall for the Series A Preferred Units as provided above.
(5) Liquidation Preference. Pursuant to Section 5.6(b) of the Agreement, upon any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Partnership, the holders of Series A Preferred Units are entitled to be paid out of the assets of the Partnership legally available for distribution to its Partners, after payment of or provision for the Partnerships debts and other liabilities, an amount per Series A Preferred Unit that is equal to such Series A Preferred Units Series A Preferred Capital (the Liquidation Preference) before any distribution of assets is made to holders of Junior Units. If the assets of the Partnership legally available for distribution to Partners are insufficient to pay in full the Liquidation Preference on the Series A Preferred Units and the liquidation preference on any Parity Preferred Units, all
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assets distributed to the holders of the Series A Preferred Units and any Parity Preferred Units shall be distributed pro rata so that the amount of assets distributed per Series A Preferred Unit and per such Parity Preferred Unit shall in all cases bear to each other the same ratio that the Liquidation Preference per Series A Preferred Unit and the liquidation preference per such Parity Preferred Unit bear to each other. Written notice of any distribution in connection with any such liquidation, dissolution or winding up of the affairs of the Partnership, stating the payment date or dates when, and the place or places where, the amounts distributable in such circumstances shall be payable, shall be given by first class mail, postage pre-paid, not less than 30 nor more than 60 days prior to the payment date stated therein, to each record holder of the Series A Preferred Units at the respective addresses of such holders as the same shall appear on the records of the Partnership. After payment of the full amount of the liquidating distributions to which they are entitled, the holders of Series A Preferred Units will have no right or claim to any of the remaining assets of the Partnership. The consolidation or merger of the Partnership with or into another entity, a merger of another entity with or into the Partnership, a statutory exchange by the Partnership or a sale, lease, transfer or conveyance of all or substantially all of the Partnerships property or business shall not be deemed to constitute a liquidation, dissolution or winding up of the affairs of the Partnership. Notwithstanding the above, for purposes of determining the amount each holder of Series A Preferred Units is entitled to receive with respect to a voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Partnership, no effect shall be given to amounts that would be needed, if the Partnership were to be dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of holders of the Series A Preferred Units.
(6) Redemption.
(a) Except as provided for in this Section 6(a) or in Section 6(b) below, the Series A Preferred Units shall not be redeemable by the Partnership prior to the first anniversary of the Original Issuance Date. Following the first anniversary of the Original Issuance Date, the Partnership shall redeem, at the option of a holder of the Series A Preferred Units, a number of Series A Preferred Units as follows: (i) between the first and second anniversary of the Original Issuance Date, up to 25% of the number of Series A Preferred Units issued to the holder thereof on the Original Issuance Date; (ii) between the second and third anniversary of the Original Issuance Date, up to 50% of the number of Series A Preferred Units issued to the holder thereof on the Original Issuance Date (less the number of Series A Preferred Units previously redeemed); (iii) between the third and fourth anniversary of the Original Issuance Date, up to 75% of the number of Series A Preferred Units issued to the holder thereof on the Original Issuance Date (less the number of Series A Preferred Units previously redeemed); and (iv) following the fourth anniversary of the Original Issuance Date, up to 100% of the number of Series A Preferred Units issued to the holder thereof on the Original Issuance Date (less the number of Series A Preferred Units previously redeemed) (the Redemption Right). The Series A Preferred Units redeemed in accordance with this Section 6 shall be redeemed for cash at a per unit redemption amount equal to such Series A Preferred Units Redemption Price as of the Redemption Date; provided, however, that the Redemption Right provided under this Section 6 shall be suspended at such time that the General Partner (or any Successor Entity) applies to list REIT Shares (or the common stock of any Successor Entity) on a National Securities Exchange, and shall be terminated at such time as the National Securities Exchange approves such REIT Shares (or the common stock of any Successor Entity) for listing; provided further, that any payment pursuant to the Redemption Right shall be prohibited if the board of directors of the General Partner (or any Successor Entity) determines, in its reasonable discretion, that such redemption payment shall have a material adverse effect on the General Partner, including without limitation, effects on the General Partners cash available for operations or any restrictions set forth under any credit facility or loan agreements of the General Partner or the Partnership.
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(b) Upon the occurrence of a Listing or a Change of Control (as defined below), the Partnership may at its option redeem for cash the outstanding Series A Preferred Units, in whole or from time to time, in part, at the Redemption Price on the Redemption Date. Any notice sent by the Partnership with respect to a redemption upon a Listing or a Change of Control shall include (i) instructions as to the tender of the Series A Preferred Units, (ii) the Redemption Date; (iii) the place or places where any certificates representing such Series A Preferred Units, if any, are to be surrendered for payment of the Redemption Price; (iv) the amount of the Redemption Price; and (v) in the case of a Change of Control, a description of the transaction or transactions that constitute the Change of Control. For purposes of this Section 6(b), Change of Control shall mean (x) a merger or consolidation of the General Partner with or into any other business entity (except one in which the holders of capital stock or other equity interests of the General Partner immediately prior to such merger or consolidation continue to hold at least a majority of the outstanding voting securities of the surviving entity), or (y) the acquisition by any person or any group of persons (other than the General Partner or any of its direct or indirect subsidiaries) acting together in any transaction or related series of transactions, of such number of shares of the General Partners capital stock or other equity interests as causes such person, or group of persons, to own beneficially, directly or indirectly, as of the time immediately after such transaction or series of transactions, 50% or more of the combined voting securities of the General Partner.
(c) Following the second anniversary of the Original Issuance Date, the Partnership may, at its option, redeem the outstanding Series A Preferred Units, in whole or from time to time, in part, at the Redemption Price on the Redemption Date. The Redemption Date shall be selected by the Partnership and shall be no less than 30 days and no more than 60 days after the date on which the Partnership sends the notice of redemption to the holder or holders of the Series A Preferred Units to be redeemed.
(d) A holder of Series A Preferred Units desiring to exercise its Redemption Right under Section 6(a) hereof must deliver a written redemption notice (the Redemption Exercise Notice) in the form approved by the Partnership, duly completed, to the Partnership by certified or express delivery mail postage prepaid to the Partnerships principal office c/o the General Partner. The Redemption Exercise Notice must state: (i) the number of Series A Preferred Units to be redeemed by the Partnership; and (ii) that the Series A Preferred Units are to be redeemed pursuant to Section 6(a) hereof. The Redemption Date for the Series A Preferred Units properly tendered to the Partnership pursuant a Redemption Exercise Notice shall be the 90th day after receipt of the Redemption Exercise Notice (or, if not a business day, the next succeeding business day). Upon receipt of a Redemption Exercise Notice, the Partnership shall provide the holder of the Series A Preferred Units subject to the Redemption Exercise Notice with the following information: (i) instructions as to the tender of the Series A Preferred Units; (ii) the Redemption Date; (iii) the place or places where any certificates representing such Series A Preferred Units, if any, are to be surrendered for payment of the Redemption Price; and (iv) the amount of the Redemption Price. The Partnership may elect to cause the Redemption Date to be delayed for up to an additional 90 days to the extent required for the General Partner to cause additional REIT Shares to be issued to provide financing to be used to make such payment of the Redemption Price. Notwithstanding the foregoing, the Partnership agrees to use its best efforts to redeem the Series A Preferred Units properly tendered to the Partnership as quickly as reasonably possible.
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(e) On or after a Redemption Date, each holder of Series A Preferred Units to be redeemed must present and surrender the certificates (or an affidavit of loss and indemnity satisfactory to the Partnership), if such units are certificated, representing the Series A Preferred Units to the Partnership to be redeemed at the place designated in the notice from the Partnership referenced in Sections 6(b) or 6(c) above, or the instructions from the Partnership referenced in Section 6(d) above, as the case may be, and thereupon the Redemption Price for such Series A Preferred Units, determined as of the Redemption Date, will be paid to or on the order of such holder by wire transfer pursuant to wire instructions provided by such holder and each surrendered certificate, if any, will be canceled. If the Series A Preferred Units to be redeemed are certificated, then in the event that fewer than all the Series A Preferred Units are to be redeemed, a new certificate will be issued representing the unredeemed Series A Preferred Units.
(e) From and after a Redemption Date, all distributions on the Series A Preferred Units subject to such redemption will cease to accumulate and all rights of the holders thereof, except the right to receive the Redemption Price thereof (and all accumulated and unpaid distributions to but excluding the Redemption Date), will cease and terminate and such Series A Preferred Units shall not be deemed to be outstanding for any purpose whatsoever, other than as provided in clause (f) below.
(f) In the event that the Partnership defaults in the payment of the Redemption Price for any Series A Preferred Units surrendered for redemption pursuant to Section 6(a), such Series A Preferred Units shall continue to be deemed to be outstanding for all purposes and to be owned by the respective holders, and the Partnership shall promptly return any surrendered certificates representing such Series A Preferred Units to such holders (although the failure of the Partnership to return any such certificates to such holders shall in no way affect the ownership of such Series A Preferred Units by such holders or their rights thereunder). Following such default, the Partnership shall remain obligated to deliver payment of the Redemption Price pursuant to clause (d) above as soon as reasonably practicable as determined by the board of directors of the General Partner.
(g) At its election, the Partnership, prior to a Redemption Date, may irrevocably deposit the Redemption Price of the Series A Preferred Units to be redeemed pursuant to this Section 6 in trust for the holders of the Series A Preferred Units with a bank or trust company, in which case the Partnership shall send a notice to the holders of Series A Preferred Units to be redeemed which shall (i) state the date of such deposit, (ii) specify the office of such bank or trust company as the place of payment of the Redemption Price and (iii) require the holder of Series A Preferred Units to be redeemed to surrender the certificates, if any, representing such Series A Preferred Units (or an affidavit of loss and indemnity satisfactory to the Partnership) at such place on or about the date fixed in the redemption notice (which may not be later than the Redemption Date) against payment of the Redemption Price. Any monies so deposited which remain unclaimed at the end of two years after the Redemption Date shall be returned by such bank or trust company to the Partnership.
(h) In the event any Series A Preferred Units have been redeemed by the Partnership pursuant to this Section 6, the Series A Preferred Units so redeemed shall become authorized but unissued Preferred Units without further designation as to class or series, available for future classification or reclassification by the General Partner and issuance by the Partnership.
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(7) Listing Exchange Right.
(a) In the event that the Redemption Right is terminated in accordance with Section 6(a), beginning 180 days after the date that the REIT Shares (or the common stock of any Successor Entity) are listed on a National Exchange (the Listed Shares), each holder of the Series A Preferred Units shall have the right to require the General Partner to purchase all or a portion of such holders Series A Preferred Units (the Listing Exchange Units) in exchange for a number of Listed Shares determined by dividing (i) the number of Listing Exchange Units tendered for purchase multiplied by the Redemption Price as of the Listing Exchange Date (as defined below) by (ii) the volume-weighted average price of the Listed Shares over the 30 day period prior to the Exchange Date (the Listing Exchange Right). In connection with the issuance of Listed Shares pursuant to this Listing Exchange Right, the General Partner shall issue a corresponding number of additional Partnership Units, to be held by the General Partner, as set forth in Section 4.2(a)(i). A holder of Series A Preferred Units desiring to exercise its Listing Exchange Right must deliver a written notice (the Listing Exchange Notice) in the form approved by the Partnership, duly completed, to the Partnership by certified or express delivery mail postage prepaid to the Partnerships principal office c/o the General Partner. The Listing Exchange Notice must state: (i) the number of Listing Exchange Units tendered for purchase by the General Partner; and (ii) that the Listing Exchange Units are to be purchased pursuant to this Section 7(a). The General Partner shall purchase the Listing Exchange Units properly tendered to the General Partner within 30 days after receipt of the Listing Exchange Notice (or, if not a business day, the next succeeding business day) (the Listing Exchange Date). Upon receipt of a Listing Exchange Notice, the General Partner shall provide the holder of the Listing Exchange Units subject to the Listing Exchange Notice with (i) instructions as to the tender of the Listing Exchange Units, (ii) the Listing Exchange Date; (iii) the place or places where any certificates representing such Listing Exchange Units are to be surrendered against payment of the Listed Shares; and (iv) the Redemption Price on the Listing Exchange Date. The Series A Preferred Units are not convertible or exchangeable for any other property or securities of the Partnership except as provided in this Section 7(a).
(b) The Partnership, the General Partner and each holder of Series A Preferred Units that exercises its Listing Exchange Right, as the case may be, shall treat the transaction between the General Partner and such holder of Series A Preferred Units for federal income tax purposes as a sale of such holders Series A Preferred Units to the General Partner. Each holder of Series A Preferred Units that exercises its Listing Exchange Right agrees to execute such documents as the General Partner may reasonably require in connection with the issuance of REIT Shares upon exercise of the Listing Exchange Right.
(c) Notwithstanding the provisions of Section 7(a), a holder of Series A Preferred Units shall not be entitled to exercise the Listing Exchange Right if the delivery of REIT Shares to such Partner on the Listing Exchange Date by the General Partner pursuant to Section 7(a) would (i) result in such Partner or any other person owning, directly or indirectly, REIT Shares in excess of the Aggregate Stock Ownership Limit (as defined in the Articles of Incorporation and calculated in accordance therewith) or the Common Stock Ownership Limit (as defined in the Articles of Incorporation and calculated in accordance therewith), except as provided in the Articles of Incorporation, (ii) result in REIT Shares being owned by fewer than 100 persons (determined without reference to any rules of attribution), except as provided in the Articles of Incorporation, (iii) result in the General Partner being closely held within the meaning of Section 856(h) of the Code, or (iv) cause the General Partner to own, directly or constructively, 9.9% or more of the ownership interests in a tenant within the meaning of Section 856(d)(2)(B) of the Code. The General Partner, in its sole and absolute discretion, may waive the restriction on exchange set forth in this Section 7(c).
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(d) Notwithstanding any other provision of this Designation of Rights, the General Partner shall place appropriate restrictions on the ability of the holders of Series A Preferred Units to exercise their Listing Exchange Rights as and if deemed necessary to ensure that the Partnership does not constitute a publicly traded partnership under Section 7704 of the Code. If and when the General Partner determines that imposing such restrictions is necessary, the General Partner shall give prompt written notice thereof to each holder of Series A Preferred Units, which notice shall be accompanied by a copy of an opinion of counsel to the Partnership which states that, in the opinion of such counsel, restrictions are necessary in order to avoid the Partnership being treated as a publicly traded partnership under Section 7704 of the Code.
(e) Each holder of Series A Preferred Units covenants and agrees with the Partnership and the General Partner that all Series A Preferred Units delivered for redemption or exchange pursuant to Sections 6 and 7 hereof shall be delivered to the Partnership or the General Partner, as the case may be, free and clear of all liens; and, notwithstanding anything contained herein to the contrary, neither the General Partner nor the Partnership shall be under any obligation to acquire Series A Preferred Units which are or may be subject to any liens. Each holder of Series A Preferred Units further agrees that, if any state or local property transfer tax is payable as a result of the transfer of its Series A Preferred Units to the Partnership or the General Partner, such Limited Partner shall assume and pay such transfer tax.
(8) Voting Rights. Except as set forth in Article 12 of the Agreement and as provided in Section 9 of this Designation of Rights, holders of the Series A Preferred Units will not have any voting rights.
(9) Restrictions on New Issuances. Unless (i) fewer than 39,995.625 Series A Preferred Units (as may be adjusted pursuant to Section 12 below) remain issued and outstanding, (ii) the holders of a majority of the then outstanding Series A Preferred Units consent, or (iii) an additional class or series of Preferred Units is being issued in connection with a full redemption of the Series A Preferred Units in accordance with Section 6, the Partnership shall not issue any Senior Preferred Units. The holders of the Series A Preferred Units may deliver a consent in writing or by electronic transmission to the Partnership, and if the holders of the Series A Preferred Units entitled to cast not less than the minimum number of votes that would be necessary to authorize the issuance of the Senior Preferred Units deliver such consent to the Partnership, the Partnership shall not be required to seek the consent of the remaining holders of Series A Preferred Units, if any. The Partnership must give notice of any consent granted pursuant to this Section 8 to each holder of Series A Preferred Units not later than 10 days after the effective time of such action.
(10) Record Holders. The Partnership and the transfer agent for the Series A Preferred Units may deem and treat the record holder of any Series A Preferred Units as the true and lawful owner thereof for all purposes, and neither the Partnership nor the transfer agent shall be affected by any notice to the contrary.
(11) No Preemptive Rights. No holder of the Series A Preferred Units will, as a holder of Series A Preferred Units, have any preemptive rights to purchase or subscribe for Common Units or any other security of the Partnership (whether now or hereafter authorized).
(12) Adjustment. If the number of Common Units is adjusted pursuant to Section 4.2(a)(ii) of the Agreement, then a corresponding adjustment to the number of Series A Preferred Units shall
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automatically be made. The number of issued and outstanding Series A Preferred Units immediately after such adjustment shall be equal to the number of issued and outstanding Series A Preferred Units immediately prior thereto multiplied by a fraction (the Adjustment Factor) the numerator of which is equal to the number of issued and outstanding Common Units as adjusted pursuant to Section 4.2(a)(ii) of the Agreement immediately after the corresponding Adjustment Event and the denominator of which is the number of issued and outstanding Common Units prior to adjustment pursuant to Section 4.2(a)(ii) in connection with such Adjustment Event. In connection with such adjustment to the number of Series A Preferred Units, the Series A Preferred Stated Value per Series A Preferred Unit shall also be adjusted by multiplying the applicable Series A Preferred Stated Value immediately prior to such adjustment by the Adjustment Factor.
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EXHIBIT D
DESIGNATION OF THE RIGHTS, POWERS, PRIVILEGES, RESTRICTIONS,
QUALIFICATIONS AND LIMITATIONS OF THE CONVERTIBLE UNITS
The following are the terms of the Convertible Units established pursuant to this Designation of Rights, Powers, Privileges, Restrictions, Qualifications and Limitations of the Convertible Units (the Designation of Rights). This Designation of Rights includes terms defined in the Agreement in addition to terms defined in this Designation of Rights. The following terms used in this Designation of Rights shall have the meanings specified below:
(1) Convertible Share shall mean the convertible stock issued by the General Partner pursuant to the Articles of Incorporation of the General Partner.
(2) Convertible Units.
(a) Distribution Rights. The holders of the outstanding Convertible Units shall not be entitled to receive distributions on the Convertible Units.
(b) Voting Rights.
(i) Except for the voting rights expressly conferred by this Section 1(b), the holders of the outstanding Convertible Units shall not be entitled (1) to vote on any matter, or (2) to receive notice of, or to participate in, any meeting of the Partnerships Partners at which they are not entitled to vote.
(ii) Except to the extent the holders of the Convertible Stock have consented pursuant to their consent rights, the affirmative vote of the holders of at least two-thirds of the outstanding Convertible Units, voting together as a single class for such purposes with each Convertible Unit entitled to one vote, shall be required to (1) adopt any amendment, alteration or repeal of any provision of the Agreement that materially and adversely changes the preferences, conversion or other rights, voting powers, restrictions, limitations as to distributions, qualifications or terms and conditions of redemption of the Convertible Units and (2) effect or validate a consolidation with or merger of the Partnership into another entity, or a consolidation with or merger of another entity into the Partnership, unless in each such case each Convertible Unit (A) shall remain outstanding without a material and adverse change to its terms and rights or (B) shall be converted into or exchanged for Partnership interests or other ownership interest of the surviving entity having preferences, conversion or other rights, voting powers, restrictions, limitations as to distributions, qualifications and terms or conditions of redemption thereof identical to that of a Convertible Unit (except for changes that do not materially and adversely affect the holders of the Convertible Units); provided, however, that this vote shall be in addition to any other vote or consent of the Partners required by law or by the Agreement.
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(c) Conversion.
(i) In the event that the Convertible Shares convert into REIT Shares pursuant to the terms of the Convertible Shares ast set forth in the Article of Incorporation, the Convertible Units shall convert into Common Units automatically and without any further action required. The conversion shall occur on the same date and time the Convertible Shares convert into REIT Shares. The number of Common Units shall equal the number of REIT Shares the Convertible Shares are converted into.
(ii) The issuance of Common Units on the conversion of the Convertible Shares shall be made by the Partnership without charge for expenses or for any tax in respect of the issuance of the Common Units.
(iii) In the event of any adjustment event described in Section 4.2(a)(ii) or in case of any consolidation or merger to which the Partnership is a party, except a merger in which the Partnership is the surviving Partnership and which does not result in any reclassification or recapitalization, the Partnership or the successor or purchasing business entity shall provide that the holder of each Convertible Unit then outstanding shall thereafter continue to have the right, with as nearly the same economic rights and effects as possible to the Convertible Units to reflect the securities issued to the holders of the Convertible Shares. The provisions of this paragraph (iii) of this Section (2)(c) shall similarly apply to successive reclassifications, recapitalizations, consolidations or mergers.
(iv) Common Units issued on conversion of Convertible Units shall be issued as fully paid Common Units and shall be nonassessable by the Partnership. The Partnership shall, at all times, reserve and keep available, for the purpose of effecting the conversion of the outstanding Convertible Units, the number of its duly authorized Common Units as shall be sufficient to effect the conversion of all of the outstanding Convertible Units.
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Exhibit 10.5
RESOURCE REIT, INC.
2020 LONG-TERM INCENTIVE PLAN
TABLE OF CONTENTS
Page | ||||||||
1. |
Establishment, Purpose and Term of Plan | 1 | ||||||
1.1 | Establishment | 1 | ||||||
1.2 | Purpose | 1 | ||||||
1.3 | Term of Plan | 1 | ||||||
2. |
Definitions and Construction | 1 | ||||||
2.1 | Definitions | 1 | ||||||
2.2 | Construction | 9 | ||||||
3. |
Administration | 9 | ||||||
3.1 | Administration by the Committee | 9 | ||||||
3.2 | Authority of Officers | 9 | ||||||
3.3 | Administration with Respect to Insiders | 10 | ||||||
3.4 | Powers of the Committee | 10 | ||||||
3.5 | Option or SAR Repricing | 11 | ||||||
3.6 | Indemnification | 11 | ||||||
4. |
Shares Subject to Plan | 12 | ||||||
4.1 | Maximum Number of Shares Issuable | 12 | ||||||
4.2 | Share Counting | 12 | ||||||
4.3 | Adjustments for Changes in Capital Structure | 12 | ||||||
4.4 | Assumption or Substitution of Awards | 13 | ||||||
5. |
Eligibility, Participation and Award Limitations | 13 | ||||||
5.1 | Persons Eligible for Awards | 13 | ||||||
5.2 | Participation in the Plan | 13 | ||||||
5.3 | Incentive Stock Option Limitations | 13 | ||||||
5.4 | Nonemployee Director Award Limit | 14 | ||||||
5.5 | Minimum Vesting | 14 | ||||||
6. |
Stock Options | 14 | ||||||
6.1 | Exercise Price | 15 | ||||||
6.2 | Exercisability and Term of Options | 15 | ||||||
6.3 | Payment of Exercise Price | 15 | ||||||
6.4 | Effect of Termination of Service | 16 | ||||||
6.5 | Transferability of Options | 17 |
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TABLE OF CONTENTS
(continued)
Page
7. |
Stock Appreciation Rights | 18 | ||||||
7.1 | Types of SARs Authorized | 18 | ||||||
7.2 | Exercise Price | 18 | ||||||
7.3 | Exercisability and Term of SARs | 18 | ||||||
7.4 | Exercise of SARs | 19 | ||||||
7.5 | Deemed Exercise of SARs | 19 | ||||||
7.6 | Effect of Termination of Service | 19 | ||||||
7.7 | Transferability of SARs | 19 | ||||||
8. |
Restricted Stock Awards | 19 | ||||||
8.1 | Types of Restricted Stock Awards Authorized | 20 | ||||||
8.2 | Purchase Price | 20 | ||||||
8.3 | Purchase Period | 20 | ||||||
8.4 | Payment of Purchase Price | 20 | ||||||
8.5 | Vesting and Restrictions on Transfer | 20 | ||||||
8.6 | Voting Rights; Dividends and Distributions | 21 | ||||||
8.7 | Effect of Termination of Service | 21 | ||||||
8.8 | Nontransferability of Restricted Stock Award Rights | 21 | ||||||
9. |
Restricted Stock Units | 21 | ||||||
9.1 | Grant of Restricted Stock Unit Awards | 22 | ||||||
9.2 | Purchase Price | 22 | ||||||
9.3 | Vesting | 22 | ||||||
9.4 | Voting Rights, Dividend Equivalent Rights and Distributions | 22 | ||||||
9.5 | Effect of Termination of Service | 23 | ||||||
9.6 | Settlement of Restricted Stock Unit Awards | 23 | ||||||
9.7 | Nontransferability of Restricted Stock Unit Awards | 23 | ||||||
10. |
Performance Awards | 23 | ||||||
10.1 | Types of Performance Awards Authorized | 24 | ||||||
10.2 | Initial Value of Performance Shares and Performance Units | 24 |
-ii-
TABLE OF CONTENTS
(continued)
Page
10.3 | Establishment of Performance Period, Performance Goals and Performance Award Formula | 24 | ||||||
10.4 | Measurement of Performance Goals | 24 | ||||||
10.5 | Settlement of Performance Awards | 26 | ||||||
10.6 | Voting Rights; Dividend Equivalent Rights and Distributions | 27 | ||||||
10.7 | Effect of Termination of Service | 28 | ||||||
10.8 | Nontransferability of Performance Awards | 28 | ||||||
11. |
Cash-Based Awards and Other Stock-Based Awards | 28 | ||||||
11.1 | Grant of Cash-Based Awards | 29 | ||||||
11.2 | Grant of Other Stock-Based Awards | 29 | ||||||
11.3 | Value of Cash-Based and Other Stock-Based Awards | 29 | ||||||
11.4 | Payment or Settlement of Cash-Based Awards and Other Stock-Based Awards | 29 | ||||||
11.5 | Voting Rights; Dividend Equivalent Rights and Distributions | 29 | ||||||
11.6 | Effect of Termination of Service | 30 | ||||||
11.7 | Nontransferability of Cash-Based Awards and Other Stock-Based Awards | 30 | ||||||
12. |
Standard Forms of Award Agreement | 30 | ||||||
12.1 | Award Agreements | 30 | ||||||
12.2 | Authority to Vary Terms | 30 | ||||||
13. |
Change in Control | 31 | ||||||
13.1 | Effect of Change in Control on Awards | 31 | ||||||
13.2 | Effect of Change in Control on Nonemployee Director Awards | 32 | ||||||
13.3 | Federal Excise Tax Under Section 4999 of the Code | 33 | ||||||
14. |
Compliance with Securities Law | 33 | ||||||
15. |
Compliance with Section 409A | 34 | ||||||
15.1 | Awards Subject to Section 409A | 34 | ||||||
15.2 | Deferral and/or Distribution Elections | 34 | ||||||
15.3 | Subsequent Elections | 35 | ||||||
15.4 | Payment of Section 409A Deferred Compensation | 35 | ||||||
16. |
Tax Withholding | 37 | ||||||
16.1 | Tax Withholding in General | 37 | ||||||
16.2 | Withholding in or Directed Sale of Shares | 37 |
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TABLE OF CONTENTS
(continued)
Page
17. |
Amendment, Suspension or Termination of Plan | 38 | ||||||
18. |
Miscellaneous Provisions | 38 | ||||||
18.1 | Repurchase Rights | 38 | ||||||
18.2 | Forfeiture Events | 38 | ||||||
18.3 | Provision of Information | 39 | ||||||
18.4 | Rights as Employee, Consultant or Director | 39 | ||||||
18.5 | Rights as a Stockholder | 39 | ||||||
18.6 | Delivery of Title to Shares | 39 | ||||||
18.7 | Fractional Shares | 40 | ||||||
18.8 | Retirement and Welfare Plans | 40 | ||||||
18.9 | Beneficiary Designation | 40 | ||||||
18.10 | Severability | 40 | ||||||
18.11 | No Constraint on Corporate Action | 40 | ||||||
18.12 | Unfunded Obligation | 40 | ||||||
18.13 | Choice of Law | 41 |
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Resource REIT, Inc.
2020 Long-Term Incentive Plan
1. ESTABLISHMENT, PURPOSE AND TERM OF PLAN.
1.1 Establishment. The Resource REIT, Inc. 2020 Long-Term Incentive Plan (the Plan) is hereby established effective as of January 28, 2021 (the Effective Date).
1.2 Purpose. The purpose of the Plan is to advance the interests of the Participating Company Group and its stockholders by providing an incentive to attract, retain and reward persons performing services for the Participating Company Group and by motivating such persons to contribute to the growth and profitability of the Participating Company Group. The Plan seeks to achieve this purpose by providing for Awards in the form of Options, Stock Appreciation Rights, Restricted Stock Awards, Restricted Stock Units, Performance Shares, Performance Units, Cash-Based Awards and Other Stock-Based Awards.
1.3 Term of Plan. The Plan shall continue in effect until its termination by the Committee; provided, however, that all Awards shall be granted, if at all, within ten (10) years from the Effective Date.
2. DEFINITIONS AND CONSTRUCTION.
2.1 Definitions. Whenever used herein, the following terms shall have their respective meanings set forth below:
(a) Affiliate means (i) a parent entity, other than a Parent Corporation, that directly, or indirectly through one or more intermediary entities, controls the Company or (ii) a subsidiary entity, other than a Subsidiary Corporation, that is controlled by the Company directly or indirectly through one or more intermediary entities. For this purpose, the terms parent, subsidiary, control and controlled by shall have the meanings assigned such terms for the purposes of registration of securities on Form S-8 under the Securities Act.
(b) Award means any Option, Stock Appreciation Right, Restricted Stock Purchase Right, Restricted Stock Bonus, Restricted Stock Unit, Performance Share, Performance Unit, Cash-Based Award or Other Stock-Based Award granted under the Plan.
(c) Award Agreement means a written or electronic agreement between the Company and a Participant setting forth the terms, conditions and restrictions applicable to an Award.
(d) Board means the Board of Directors of the Company.
(e) Cash-Based Award means an Award denominated in cash and granted pursuant to Section 11.
(f) Cashless Exercise means a Cashless Exercise as defined in Section 6.3(b)(i).
(g) Cause means, unless such term or an equivalent term is otherwise defined by the applicable Award Agreement or other written agreement between a Participant and a Participating Company applicable to an Award, any of the following: (i) the Participants theft, dishonesty, willful misconduct, breach of fiduciary duty for personal profit, or falsification of any Participating Company documents or records; (ii) the Participants material failure to abide by a Participating Companys code of conduct or other policies (including, without limitation, policies relating to confidentiality and reasonable workplace conduct); (iii) the Participants unauthorized use, misappropriation, destruction or diversion of any tangible or intangible asset or corporate opportunity of a Participating Company (including, without limitation, the Participants improper use or disclosure of a Participating Companys confidential or proprietary information); (iv) any intentional act by the Participant which has a material detrimental effect on a Participating Companys reputation or business; (v) the Participants repeated failure or inability to perform any reasonable assigned duties after written notice from a Participating Company of, and a reasonable opportunity to cure, such failure or inability; (vi) any material breach by the Participant of any employment, service, non-disclosure, non-competition, non-solicitation or other similar agreement between the Participant and a Participating Company, which breach is not cured pursuant to the terms of such agreement; or (vii) the Participants conviction (including any plea of guilty or nolo contendere) of any criminal act involving fraud, dishonesty, misappropriation or moral turpitude, or which impairs the Participants ability to perform his or her duties with a Participating Company.
(h) Change in Control means, unless such term or an equivalent term is otherwise defined by the applicable Award Agreement or other written agreement between the Participant and a Participating Company applicable to an Award, the occurrence of any one or a combination of the following:
(i) any person (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the beneficial owner (as such term is defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing more than fifty percent (50%) of the total Fair Market Value or total combined voting power of the Companys then-outstanding securities entitled to vote generally in the election of Directors; provided, however, that a Change in Control shall not be deemed to have occurred if such degree of beneficial ownership results from any of the following: (A) an acquisition by any person who on the Effective Date is the beneficial owner of more than fifty percent (50%) of such voting power, (B) any acquisition directly from the Company, including, without limitation, pursuant to or in connection with a public offering of securities, (C) any acquisition by the Company, (D) any acquisition by a trustee or other fiduciary under an employee benefit plan of a Participating Company or (E) any acquisition by an entity owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of the voting securities of the Company; or
(ii) an Ownership Change Event or series of related Ownership Change Events (collectively, a Transaction) in which the stockholders of the Company immediately before the Transaction do not retain immediately after the Transaction direct or
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indirect beneficial ownership of more than fifty percent (50%) of the total combined voting power of the outstanding securities entitled to vote generally in the election of Directors or, in the case of an Ownership Change Event described in Section 2.1(gg)(iii), the entity to which the assets of the Company were transferred (the Transferee), as the case may be; or
(iii) a date specified by the Committee following approval by the stockholders of a plan of complete liquidation or dissolution of the Company;
provided, however, that a Change in Control shall be deemed not to include a transaction described in subsections (i) or (ii) of this Section 2.1(h) in which a majority of the members of the board of directors of the continuing, surviving or successor entity, or parent thereof, immediately after such transaction is comprised of Incumbent Directors.
For purposes of the preceding sentence, indirect beneficial ownership shall include, without limitation, an interest resulting from ownership of the voting securities of one or more corporations or other business entities which own the Company or the Transferee, as the case may be, either directly or through one or more subsidiary corporations or other business entities. The Committee shall determine whether multiple events described in subsections (i), (ii) and (iii) of this Section 2.1(h) are related and to be treated in the aggregate as a single Change in Control, and its determination shall be final, binding and conclusive.
(i) Code means the Internal Revenue Code of 1986, as amended, and any applicable regulations and administrative guidelines promulgated thereunder.
(j) Committee means the Compensation Committee and such other committee or subcommittee of the Board, if any, duly appointed to administer the Plan and having such powers in each instance as shall be specified by the Board. If, at any time, there is no committee of the Board then authorized or properly constituted to administer the Plan, the Board shall exercise all of the powers of the Committee granted herein, and, in any event, the Board may in its discretion exercise any or all of such powers.
(k) Company means Resource REIT, Inc., a Maryland corporation, and any successor corporation thereto.
(l) Consultant means a person engaged to provide consulting or advisory services (other than as an Employee or a Director) to a Participating Company, provided that the identity of such person, the nature of such services or the entity to which such services are provided would not preclude the Company from offering or selling securities to such person pursuant to the Plan in reliance on registration on Form S-8 under the Securities Act.
(m) Director means a member of the Board.
(n) Disability means, unless such term or an equivalent term is otherwise defined by the applicable Award Agreement or other written agreement between the Participant and a Participating Company applicable to an Award, the permanent and total disability of the Participant, within the meaning of Section 22(e)(3) of the Code.
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(o) Dividend Equivalent Right means the right of a Participant, granted at the discretion of the Committee or as otherwise provided by the Plan, to receive a credit for the account of such Participant in an amount equal to the cash dividends paid on one share of Stock for each share of Stock represented by an Award held by such Participant.
(p) Employee means any person treated as an employee (including an Officer or a Director who is also treated as an employee) in the records of a Participating Company and, with respect to any Incentive Stock Option granted to such person, who is an employee for purposes of Section 422 of the Code; provided, however, that neither service as a Director nor payment of a Directors fee shall be sufficient to constitute employment for purposes of the Plan. The Company shall determine in good faith and in the exercise of its discretion whether an individual has become or has ceased to be an Employee and the effective date of such individuals employment or termination of employment, as the case may be. For purposes of an individuals rights, if any, under the terms of the Plan as of the time of the Companys determination of whether or not the individual is an Employee, all such determinations by the Company shall be final, binding and conclusive as to such rights, if any, notwithstanding that the Company or any court of law or governmental agency subsequently makes a contrary determination as to such individuals status as an Employee.
(q) Exchange Act means the Securities Exchange Act of 1934, as amended.
(r) Fair Market Value means, as of any date, the value of a share of Stock or other property as determined by the Committee, in its discretion, or by the Company, in its discretion, if such determination is expressly allocated to the Company herein, subject to the following:
(i) Except as otherwise determined by the Committee, if, on such date, the Stock is listed or quoted on a national or regional securities exchange or quotation system, the Fair Market Value of a share of Stock shall be the closing price of a share of Stock as quoted on the national or regional securities exchange or quotation system constituting the primary market for the Stock, as reported in The Wall Street Journal or such other source as the Company deems reliable. If the relevant date does not fall on a day on which the Stock has traded on such securities exchange or quotation system, the date on which the Fair Market Value shall be established shall be the last day on which the Stock was so traded or quoted prior to the relevant date, or such other appropriate day as shall be determined by the Committee, in its discretion.
(ii) Notwithstanding the foregoing, the Committee may, in its discretion, determine the Fair Market Value of a share of Stock on the basis of the opening, closing, or average of the high and low sale prices of a share of Stock on such date or the preceding trading day, the actual sale price of a share of Stock received by a Participant, any other reasonable basis using actual transactions in the Stock as reported on a national or regional securities exchange or quotation system, or on any other basis consistent with the requirements of Section 409A. The Committee may also determine the Fair Market Value upon the average selling price of the Stock during a specified period that is within thirty (30) days before or thirty (30) days after such date, provided that, with respect to the grant of an Option or SAR, the
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commitment to grant such Award based on such valuation method must be irrevocable before the beginning of the specified period. The Committee may vary its method of determination of the Fair Market Value as provided in this Section for different purposes under the Plan to the extent consistent with the requirements of Section 409A.
(iii) If, on such date, the Stock is not listed or quoted on a national or regional securities exchange or quotation system, the Fair Market Value of a share of Stock shall be as determined by the Committee in good faith without regard to any restriction other than a restriction which, by its terms, will never lapse, and in a manner consistent with the requirements of Section 409A.
(s) Full Value Award means any Award settled in Stock, other than (i) an Option, (ii) a Stock Appreciation Right, or (iii) a Restricted Stock Purchase Right or an Other Stock-Based Award under which the Company will receive monetary consideration equal to the Fair Market Value (determined on the effective date of grant) of the shares subject to such Award.
(t) Good Reason means, unless such term or an equivalent term is otherwise defined by the applicable Award Agreement or other written agreement between a Participant and a Participating Company applicable to an Award, any of the following with respect to a particular Participant without the Participants informed written consent: (i) a material diminution of the Participants authority, duties or responsibilities causing the Participants authority, duties or responsibilities to be of materially lesser rank within the Company or an equivalent business unit of its parent, as measured against the Participants authority, duties and responsibilities immediately prior to such diminution; (ii) a material reduction by the Company of the Participants base salary or annual bonus opportunity, other than any such material reduction that occurs in connection with a reduction that is imposed on all Participants at the time of such reduction; (iii) the relocation of the Participants work place for the Company to a location that increases the Participants regular one-way commute distance between the Participants residence and work place by more than thirty-five (35) miles. The existence of Good Reason shall not be affected by the Participants temporary incapacity due to physical or mental illness not constituting a Disability. The Participants continued employment for a period not exceeding six (6) months following the initial occurrence of any condition constituting Good Reason shall not constitute consent to, or a waiver of rights with respect to, such condition.
(u) Incentive Stock Option means an Option intended to be (as set forth in the Award Agreement) and which qualifies as an incentive stock option within the meaning of Section 422(b) of the Code.
(v) Incumbent Director means a director who either (i) is a member of the Board as of the Effective Date or (ii) is elected, or nominated for election, to the Board with the affirmative votes of at least a majority of the Incumbent Directors at the time of such election or nomination (but excluding a director who was elected or nominated in connection with an actual or threatened proxy contest relating to the election of directors of the Company).
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(w) Insider means an Officer, a Director or other person whose transactions in Stock are subject to Section 16 of the Exchange Act.
(x) Involuntary Termination means, as to a particular Participant, the occurrence of any of the following upon or within a period of time established by the Committee (not exceeding twenty-four (24) months) following a Change in Control: (i) the Participants Service is terminated without Cause or (ii) the Participant terminates his or her Service for Good Reason; provided the Participant has given the Company written notice of the existence of a condition constituting Good Reason within sixty (60) days following the initial occurrence of such condition, the Company fails to remedy such condition within thirty (30) days following such written notice, and the Participants resignation from Service is effective no later than six (6) months following the initial occurrence of such condition. Involuntary Termination shall not include any termination of the Participants Service which is (i) for Cause, (ii) a result of the Participants death or Disability, or (iii) a result of the Participants voluntary termination of Service other than for Good Reason.
(y) Net Exercise means a Net Exercise as defined in Section 6.3(b)(iii).
(z) Nonemployee Director means a Director who is not an Employee.
(aa) Nonemployee Director Award means any Award granted to a Nonemployee Director.
(bb) Nonstatutory Stock Option means an Option not intended to be (as set forth in the Award Agreement) or which does not qualify as an incentive stock option within the meaning of Section 422(b) of the Code.
(cc) Officer means any person designated by the Board as an officer of the Company.
(dd) Option means an Incentive Stock Option or a Nonstatutory Stock Option granted pursuant to the Plan.
(ee) Other Stock-Based Award means an Award denominated in shares of Stock and granted pursuant to Section 11.
(ff) Ownership Change Event means the occurrence of any of the following with respect to the Company: (i) the direct or indirect sale or exchange in a single or series of related transactions by the stockholders of the Company of securities of the Company representing more than fifty percent (50%) of the total combined voting power of the Companys then outstanding securities entitled to vote generally in the election of Directors; (ii) a merger or consolidation in which the Company is a party; or (iii) the sale, exchange, or transfer of all or substantially all of the assets of the Company (other than a sale, exchange or transfer to one or more subsidiaries of the Company).
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(gg) Parent Corporation means any present or future parent corporation of the Company, as defined in Section 424(e) of the Code.
(hh) Participant means any eligible person who has been granted one or more Awards.
(ii) Participating Company means the Company or any Parent Corporation, Subsidiary Corporation or Affiliate.
(jj) Participating Company Group means, at any point in time, the Company and all other entities collectively which are then Participating Companies.
(kk) Performance Award means an Award of Performance Shares or Performance Units.
(ll) Performance Award Formula means, for any Performance Award, a formula or table established by the Committee pursuant to Section 10.3 which provides the basis for computing the value of a Performance Award at one or more levels of attainment of the applicable Performance Goal(s) measured as of the end of the applicable Performance Period.
(mm) Performance Goal means a performance goal established by the Committee pursuant to Section 10.3.
(nn) Performance Period means a period established by the Committee pursuant to Section 10.3 at the end of which one or more Performance Goals are to be measured.
(oo) Performance Share means a right granted to a Participant pursuant to Section 10 to receive a payment equal to the value of a Performance Share, as determined by the Committee, based upon attainment of applicable Performance Goal(s).
(pp) Performance Unit means a right granted to a Participant pursuant to Section 10 to receive a payment equal to the value of a Performance Unit, as determined by the Committee, based upon attainment of applicable Performance Goal(s).
(qq) Performance-Vesting Award means an Award granted to a Participant, the vesting or earning of which is conditioned in whole or in part upon the achievement of one or more performance goals (including, without limitation, Performance Goals established pursuant to Section 10.3), notwithstanding that the vesting or earning of such Award may also be conditioned upon the continued Service of the Participant.
(rr) Restricted Stock Award means an Award of a Restricted Stock Bonus or a Restricted Stock Purchase Right.
(ss) Restricted Stock Bonus means Stock granted to a Participant pursuant to Section 8.
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(tt) Restricted Stock Purchase Right means a right to purchase Stock granted to a Participant pursuant to Section 8.
(uu) Restricted Stock Unit means a right granted to a Participant pursuant to Section 9 to receive on a future date or occurrence of a future event a share of Stock or cash in lieu thereof, as determined by the Committee.
(vv) Rule 16b-3 means Rule 16b-3 under the Exchange Act, as amended from time to time, or any successor rule or regulation.
(ww) SAR or Stock Appreciation Right means a right granted to a Participant pursuant to Section 7 to receive payment, for each share of Stock subject to such Award, of an amount equal to the excess, if any, of the Fair Market Value of a share of Stock on the date of exercise of the Award over the exercise price thereof.
(xx) Section 409A means Section 409A of the Code.
(yy) Section 409A Deferred Compensation means compensation provided pursuant to an Award that constitutes nonqualified deferred compensation within the meaning of Section 409A.
(zz) Securities Act means the Securities Act of 1933, as amended.
(aaa) Service means a Participants employment or service with the Participating Company Group, whether as an Employee, a Director or a Consultant. Unless otherwise provided by the Committee, a Participants Service shall not be deemed to have terminated merely because of a change in the capacity in which the Participant renders Service or a change in the Participating Company for which the Participant renders Service, provided that there is no interruption or termination of the Participants Service. Furthermore, a Participants Service shall not be deemed to have been interrupted or terminated if the Participant takes any military leave, sick leave, or other bona fide leave of absence approved by the Company. However, unless otherwise provided by the Committee, if any such leave taken by a Participant exceeds three (3) months, then on the first (1st) day following the end of such three-month period the Participants Service shall be deemed to have terminated, unless the Participants right to return to Service is guaranteed by statute or contract. Notwithstanding the foregoing, unless otherwise designated by the Company or required by law, an unpaid leave of absence shall not be treated as Service for purposes of determining vesting under the Participants Award Agreement. A Participants Service shall be deemed to have terminated either upon an actual termination of Service or upon the business entity for which the Participant performs Service ceasing to be a Participating Company. Subject to the foregoing, the Company, in its discretion, shall determine whether the Participants Service has terminated and the effective date of and reason for such termination.
(bbb) Stock means the common stock of the Company, as adjusted from time to time in accordance with Section 4.3.
(ccc) Stock Tender Exercise means a Stock Tender Exercise as defined in Section 6.3(b)(ii).
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(ddd) Subsidiary Corporation means any present or future subsidiary corporation of the Company, as defined in Section 424(f) of the Code.
(eee) Ten Percent Owner means a Participant who, at the time an Option is granted to the Participant, owns stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of a Participating Company (other than an Affiliate) within the meaning of Section 422(b)(6) of the Code.
(fff) Time-Vesting Award means any Award granted to a Participant, the vesting or earning of which is based solely upon the continued Service of the Participant over a specified period of time.
(ggg) Trading Compliance Policy means the written policy of the Company pertaining to the purchase, sale, transfer or other disposition of the Companys equity securities by Directors, Officers, Employees or other service providers who may possess material, nonpublic information regarding the Company or its securities.
(hhh) Vesting Conditions mean those conditions established in accordance with the Plan prior to the satisfaction of which an Award or shares subject to an Award remain subject to forfeiture or a repurchase option in favor of the Company exercisable for the Participants monetary purchase price, if any, for such shares upon the Participants termination of Service or failure of a performance condition to be satisfied.
2.2 Construction. Captions and titles contained herein are for convenience only and shall not affect the meaning or interpretation of any provision of the Plan. Except when otherwise indicated by the context, the singular shall include the plural and the plural shall include the singular. Use of the term or is not intended to be exclusive, unless the context clearly requires otherwise.
3. ADMINISTRATION.
3.1 Administration by the Committee. The Plan shall be administered by the Committee. All questions of interpretation of the Plan, of any Award Agreement or of any other form of agreement or other document employed by the Company in the administration of the Plan or of any Award shall be determined by the Committee, and such determinations shall be final, binding and conclusive upon all persons having an interest in the Plan or such Award, unless fraudulent or made in bad faith. Any and all actions, decisions and determinations taken or made by the Committee in the exercise of its discretion pursuant to the Plan or Award Agreement or other agreement thereunder (other than determining questions of interpretation pursuant to the preceding sentence) shall be final, binding and conclusive upon all persons having an interest therein. All expenses incurred in connection with the administration of the Plan shall be paid by the Company.
3.2 Authority of Officers. Any Officer shall have the authority to act on behalf of the Company with respect to any matter, right, obligation, determination or election that is the responsibility of or that is allocated to the Company herein, provided that the Officer has apparent authority with respect to such matter, right, obligation, determination or election. To the extent permitted by applicable law, the Committee may, in its discretion, delegate to a
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committee comprised of one or more Officers the authority to grant one or more Awards, without further approval of the Committee, to any Employee, other than a person who, at the time of such grant, is an Insider, and to exercise such other powers under the Plan as the Committee may determine; provided, however, that (a) the Committee shall fix the maximum number of shares subject to Awards that may be granted by such Officers, (b) each such Award shall be subject to the terms and conditions of the appropriate standard form of Award Agreement approved by the Board or the Committee and shall conform to the provisions of the Plan, and (c) each such Award shall conform to such other limits and guidelines as may be established from time to time by the Committee.
3.3 Administration with Respect to Insiders. With respect to participation by Insiders in the Plan, at any time that any class of equity security of the Company is registered pursuant to Section 12 of the Exchange Act, the Plan shall be administered in compliance with the requirements, if any, of Rule 16b-3.
3.4 Powers of the Committee. In addition to any other powers set forth in the Plan and subject to the provisions of the Plan, the Committee shall have the full and final power and authority, in its discretion:
(a) to determine the persons to whom, and the time or times at which, Awards shall be granted and the number of shares of Stock, units or monetary value to be subject to each Award;
(b) to determine the type of Award granted;
(c) to determine the Fair Market Value of shares of Stock or other property;
(d) to determine the terms, conditions and restrictions applicable to each Award (which need not be identical) and any shares acquired pursuant thereto, including, without limitation, (i) the exercise or purchase price of shares pursuant to any Award, (ii) the method of payment for shares purchased pursuant to any Award, (iii) the method for satisfaction of any tax withholding obligation arising in connection with any Award, including by the withholding or delivery of shares of Stock, (iv) the timing, terms and conditions of the exercisability or vesting of any Award or any shares acquired pursuant thereto, (v) the Performance Measures, Performance Period, Performance Award Formula and Performance Goals applicable to any Award and the extent to which such Performance Goals have been attained, (vi) the time of expiration of any Award, (vii) the effect of any Participants termination of Service on any of the foregoing, and (viii) all other terms, conditions and restrictions applicable to any Award or shares acquired pursuant thereto not inconsistent with the terms of the Plan;
(e) to determine whether an Award will be settled in shares of Stock, cash, other property or in any combination thereof;
(f) to approve one or more forms of Award Agreement;
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(g) to amend, modify, extend, cancel or renew any Award or to waive any restrictions or conditions applicable to any Award or any shares acquired pursuant thereto, provided that no such amendment or waiver shall accelerate the vesting of any Award unless the power of the Committee to accelerate the vesting of such Award is expressly provided by another provision of the Plan;
(h) to accelerate, continue, extend or defer the exercisability or vesting of any Award or any shares acquired pursuant thereto, including with respect to the period following a Participants termination of Service;
(i) to prescribe, amend or rescind rules, guidelines and policies relating to the Plan, or to adopt sub-plans or supplements to, or alternative versions of, the Plan, including, without limitation, as the Committee deems necessary or desirable to comply with the laws of, or to accommodate the tax policy, accounting principles or custom of, foreign jurisdictions whose residents may be granted Awards; and
(j) to correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Award Agreement and to make all other determinations and take such other actions with respect to the Plan or any Award as the Committee may deem advisable to the extent not inconsistent with the provisions of the Plan or applicable law.
3.5 Option or SAR Repricing. Without the affirmative vote of holders of a majority of the shares of Stock cast in person or by proxy at a meeting of the stockholders of the Company at which a quorum representing a majority of all outstanding shares of Stock is present or represented by proxy, the Committee shall not approve a program providing for either (a) the cancellation of outstanding Options or SARs having exercise prices per share greater than the then Fair Market Value of a share of Stock (Underwater Awards) and the grant in substitution therefor of new Options or SARs having a lower exercise price, Full Value Awards or payments in cash, or (b) the amendment of outstanding Underwater Awards to reduce the exercise price thereof. This Section shall not be construed to apply to (i) issuing or assuming a stock option in a transaction to which Section 424(a) applies, within the meaning of Section 424 of the Code, (ii) adjustments pursuant to the assumption of or substitution for an Option or SAR in a manner that would comply with Section 409A, or (iii) an adjustment pursuant to Section 4.3.
3.6 Indemnification. In addition to such other rights of indemnification as they may have as members of the Board or the Committee or as officers or employees of the Participating Company Group, to the extent permitted by applicable law, members of the Board or the Committee and any officers or employees of the Participating Company Group to whom authority to act for the Board, the Committee or the Company is delegated shall be indemnified by the Company against all reasonable expenses, including attorneys fees, actually and necessarily incurred in connection with the defense of any action, suit or proceeding, or in connection with any appeal therein, to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan, or any right granted hereunder, and against all amounts paid by them in settlement thereof (provided such settlement is approved by independent legal counsel selected by the Company) or paid by them in satisfaction of a judgment in any such action, suit or proceeding, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such person is liable for gross
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negligence, bad faith or intentional misconduct in duties; provided, however, that within sixty (60) days after the institution of such action, suit or proceeding, such person shall offer to the Company, in writing, the opportunity at its own expense to handle and defend the same.
4. SHARES SUBJECT TO PLAN.
4.1 Maximum Number of Shares Issuable. Subject to adjustment as provided in Sections 4.2, 4.3 and 4.4, the maximum aggregate number of shares of Stock that may be issued under the Plan shall be equal to three million five hundred thousand (3,500,000) shares, and such shares shall consist of authorized but unissued or reacquired shares of Stock or any combination thereof.
4.2 Share Counting. If an outstanding Award for any reason expires or is terminated or canceled without having been exercised or settled in full, or if shares of Stock acquired pursuant to an Award subject to forfeiture or repurchase are forfeited or repurchased by the Company for an amount not greater than the Participants purchase price, the shares of Stock allocable to the terminated portion of such Award or such forfeited or repurchased shares of Stock shall again be available for issuance under the Plan. Shares of Stock shall not be deemed to have been issued pursuant to the Plan with respect to any portion of an Award that is settled in cash or to the extent that shares are withheld or reacquired by the Company in satisfaction of tax withholding obligations pursuant to Section 16.2. Upon payment in shares of Stock pursuant to the exercise of an SAR, the number of shares available for issuance under the Plan shall be reduced by the gross number of shares for which the SAR is exercised. If the exercise price of an Option is paid by tender to the Company, or attestation to the ownership, of shares of Stock owned by the Participant, or by means of a Net Exercise, the number of shares available for issuance under the Plan shall be reduced by the gross number of shares for which the Option is exercised. Shares purchased in the open market with proceeds from the exercise of Options shall not be added to the limit set forth in Section 4.1. Shares withheld or reacquired by the Company in satisfaction of tax withholding obligations pursuant to the exercise or settlement of Options or SARs pursuant to Section 16.2 shall not again be available for issuance under the Plan. Shares withheld or reacquired by the Company in satisfaction of tax withholding obligations pursuant to the vesting or settlement of Full Value Awards pursuant to Section 16.2 shall again become available for issuance under the Plan.
4.3 Adjustments for Changes in Capital Structure. Subject to any required action by the stockholders of the Company and the requirements of Sections 409A and 424 of the Code to the extent applicable, in the event of any change in the Stock effected without receipt of consideration by the Company, whether through merger, consolidation, reorganization, reincorporation, recapitalization, reclassification, stock dividend, stock split, reverse stock split, split-up, split-off, spin-off, combination of shares, exchange of shares, or similar change in the capital structure of the Company, or in the event of payment of a dividend or distribution to the stockholders of the Company in a form other than Stock (excepting regular, periodic cash dividends) that has a material effect on the Fair Market Value of shares of Stock, appropriate and proportionate adjustments shall be made in the number and kind of shares subject to the Plan and to any outstanding Awards, the Award limits set forth in Section 5.3, and in the exercise or purchase price per share under any outstanding Award in order to prevent dilution or enlargement of Participants rights under the Plan. For purposes of the foregoing, conversion of
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any convertible securities of the Company shall not be treated as effected without receipt of consideration by the Company. If a majority of the shares which are of the same class as the shares that are subject to outstanding Awards are exchanged for, converted into, or otherwise become (whether or not pursuant to an Ownership Change Event) shares of another corporation (the New Shares), the Committee may unilaterally amend the outstanding Awards to provide that such Awards are for New Shares. In the event of any such amendment, the number of shares subject to, and the exercise or purchase price per share of, the outstanding Awards shall be adjusted in a fair and equitable manner as determined by the Committee, in its discretion. Any fractional share resulting from an adjustment pursuant to this Section shall be rounded down to the nearest whole number and the exercise or purchase price per share shall be rounded up to the nearest whole cent. In no event may the exercise or purchase price, if any, under any Award be decreased to an amount less than the par value, if any, of the stock subject to such Award. The Committee in its discretion, may also make such adjustments in the terms of any Award to reflect, or related to, such changes in the capital structure of the Company or distributions as it deems appropriate, including modification of Performance Goals, Performance Award Formulas and Performance Periods. The adjustments determined by the Committee pursuant to this Section shall be final, binding and conclusive.
4.4 Assumption or Substitution of Awards. The Committee may, without affecting the number of shares of Stock reserved or available hereunder, authorize the issuance or assumption of benefits under this Plan in connection with any merger, consolidation, acquisition of property or stock, or reorganization upon such terms and conditions as it may deem appropriate, subject to compliance with Section 409A and any other applicable provisions of the Code. In addition, subject to compliance with applicable laws, and listing requirements, shares available for grant under a stockholder approved plan of an acquired company (as appropriately adjusted to reflect the transaction) may be used for awards under the Plan to individuals who were not Employees or Directors of the Participating Company Group prior to the transaction and shall not reduce the number of shares otherwise available for issuance under the Plan.
5. ELIGIBILITY, PARTICIPATION AND AWARD LIMITATIONS.
5.1 Persons Eligible for Awards. Awards may be granted only to Employees, Consultants and Directors.
5.2 Participation in the Plan. Awards are granted solely at the discretion of the Committee. Eligible persons may be granted more than one Award. However, eligibility in accordance with this Section shall not entitle any person to be granted an Award, or, having been granted an Award, to be granted an additional Award.
5.3 Incentive Stock Option Limitations.
(a) Maximum Number of Shares Issuable Pursuant to Incentive Stock Options. Subject to adjustment as provided in Section 4.3, the maximum aggregate number of shares of Stock that may be issued under the Plan pursuant to the exercise of Incentive Stock Options shall not exceed three million five hundred thousand (3,500,000) shares. The maximum aggregate number of shares of Stock that may be issued under the Plan pursuant to all Awards other than Incentive Stock Options shall be the number of shares determined in accordance with Section 4.1, subject to adjustment as provided in Sections 4.2, 4.3 and 4.4.
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(b) Persons Eligible. An Incentive Stock Option may be granted only to a person who, on the effective date of grant, is an Employee of the Company, a Parent Corporation or a Subsidiary Corporation (each being an ISO-Qualifying Corporation). Any person who is not an Employee of an ISO-Qualifying Corporation on the effective date of the grant of an Option to such person may be granted only a Nonstatutory Stock Option.
(c) Fair Market Value Limitation. To the extent that options designated as Incentive Stock Options (granted under all stock plans of the Participating Company Group, including the Plan) become exercisable by a Participant for the first time during any calendar year for stock having a Fair Market Value greater than One Hundred Thousand Dollars ($100,000), the portion of such options which exceeds such amount shall be treated as Nonstatutory Stock Options. For purposes of this Section, options designated as Incentive Stock Options shall be taken into account in the order in which they were granted, and the Fair Market Value of stock shall be determined as of the time the option with respect to such stock is granted. If the Code is amended to provide for a limitation different from that set forth in this Section, such different limitation shall be deemed incorporated herein effective as of the date and with respect to such Options as required or permitted by such amendment to the Code. If an Option is treated as an Incentive Stock Option in part and as a Nonstatutory Stock Option in part by reason of the limitation set forth in this Section, the Participant may designate which portion of such Option the Participant is exercising. In the absence of such designation, the Participant shall be deemed to have exercised the Incentive Stock Option portion of the Option first. Upon exercise of the Option, shares issued pursuant to each such portion shall be separately identified.
5.4 Nonemployee Director Award Limit. Notwithstanding any other provision of the Plan to the contrary, the aggregate grant date fair value (computed as of the date of grant in accordance with generally accepted accounting principles in the United States) of all Awards granted to any Nonemployee Director during any fiscal year of the Company, taken together with any cash compensation paid to such Nonemployee Director during such fiscal year, shall not exceed $250,000.
5.5 Minimum Vesting. Except with respect to five percent (5%) of the maximum aggregate number of shares of Stock that may be issued under the Plan, as provided in Section 4, no Award which vests on the basis of the Participants continued Service shall vest earlier than one year following the date of grant of such Award; provided, however, that such limitations shall not preclude the acceleration of vesting of such Award upon the death or disability of the Participant, or in connection with a Change in Control, as determined by the Committee in its discretion.
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6. STOCK OPTIONS.
Options shall be evidenced by Award Agreements specifying the number of shares of Stock covered thereby, in such form as the Committee shall establish. Such Award Agreements may incorporate all or any of the terms of the Plan by reference and shall comply with and be subject to the following terms and conditions:
6.1 Exercise Price. The exercise price for each Option shall be established in the discretion of the Committee; provided, however, that (a) the exercise price per share shall be not less than the Fair Market Value of a share of Stock on the effective date of grant of the Option and (b) no Incentive Stock Option granted to a Ten Percent Owner shall have an exercise price per share less than one hundred ten percent (110%) of the Fair Market Value of a share of Stock on the effective date of grant of the Option. Notwithstanding the foregoing, an Option (whether an Incentive Stock Option or a Nonstatutory Stock Option) may be granted with an exercise price less than the minimum exercise price set forth above if such Option is granted pursuant to an assumption or substitution for another option in a manner that would qualify under the provisions of Section 409A or Section 424(a) of the Code.
6.2 Exercisability and Term of Options. Subject to the minimum vesting provisions of Section 5.5, Options shall be exercisable at such time or times, or upon such event or events, and subject to such terms, conditions, performance criteria and restrictions as shall be determined by the Committee and set forth in the Award Agreement evidencing such Option; provided, however, that (a) no Option shall be exercisable after the expiration of ten (10) years after the effective date of grant of such Option, (b) no Incentive Stock Option granted to a Ten Percent Owner shall be exercisable after the expiration of five (5) years after the effective date of grant of such Option and (c) no Option granted to an Employee who is a non-exempt employee for purposes of the Fair Labor Standards Act of 1938, as amended, shall be first exercisable until at least six (6) months following the date of grant of such Option (except in the event of such Employees death, disability or retirement, upon a Change in Control, or as otherwise permitted by the Worker Economic Opportunity Act). Subject to the foregoing, unless otherwise specified by the Committee in the grant of an Option, each Option shall terminate ten (10) years after the effective date of grant of the Option, unless earlier terminated in accordance with its provisions.
6.3 Payment of Exercise Price.
(a) Forms of Consideration Authorized. Except as otherwise provided below, payment of the exercise price for the number of shares of Stock being purchased pursuant to any Option shall be made (i) in cash, by check or in cash equivalent; (ii) if permitted by the Committee and subject to the limitations contained in Section 6.3(b), by means of (1) a Cashless Exercise, (2) a Stock Tender Exercise or (3) a Net Exercise; (iii) by such other consideration as may be approved by the Committee from time to time to the extent permitted by applicable law, or (iv) by any combination thereof. The Committee may at any time or from time to time grant Options which do not permit all of the foregoing forms of consideration to be used in payment of the exercise price or which otherwise restrict one or more forms of consideration.
(b) Limitations on Forms of Consideration.
(i) Cashless Exercise. A Cashless Exercise means the delivery of a properly executed notice of exercise together with irrevocable instructions to a broker providing for the assignment to the Company of the proceeds of a sale or loan with
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respect to some or all of the shares being acquired upon the exercise of the Option (including, without limitation, through an exercise complying with the provisions of Regulation T as promulgated from time to time by the Board of Governors of the Federal Reserve System). The Company reserves, at any and all times, the right, in the Companys sole and absolute discretion, to establish, decline to approve or terminate any program or procedures for the exercise of Options by means of a Cashless Exercise, including with respect to one or more Participants specified by the Company notwithstanding that such program or procedures may be available to other Participants.
(ii) Stock Tender Exercise. A Stock Tender Exercise means the delivery of a properly executed exercise notice accompanied by a Participants tender to the Company, or attestation to the ownership, in a form acceptable to the Company of whole shares of Stock owned by the Participant having a Fair Market Value that does not exceed the aggregate exercise price for the shares with respect to which the Option is exercised. A Stock Tender Exercise shall not be permitted if it would constitute a violation of the provisions of any law, regulation or agreement restricting the redemption of the Companys stock. If required by the Company, an Option may not be exercised by tender to the Company, or attestation to the ownership, of shares of Stock unless such shares either have been owned by the Participant for a period of time required by the Company (and not used for another option exercise by attestation during such period) or were not acquired, directly or indirectly, from the Company.
(iii) Net Exercise. A Net Exercise means the delivery of a properly executed exercise notice followed by a procedure pursuant to which (1) the Company will reduce the number of shares otherwise issuable to a Participant upon the exercise of an Option by the largest whole number of shares having a Fair Market Value that does not exceed the aggregate exercise price for the shares with respect to which the Option is exercised, and (2) the Participant shall pay to the Company in cash the remaining balance of such aggregate exercise price not satisfied by such reduction in the number of whole shares to be issued.
6.4 Effect of Termination of Service.
(a) Option Exercisability. Subject to earlier termination of the Option as otherwise provided by this Plan and unless otherwise provided by the Committee, an Option shall terminate immediately upon the Participants termination of Service to the extent that it is then unvested and shall be exercisable after the Participants termination of Service to the extent it is then vested only during the applicable time period determined in accordance with this Section and thereafter shall terminate.
(i) Disability. If the Participants Service terminates because of the Disability of the Participant, the Option, to the extent unexercised and exercisable for vested shares on the date on which the Participants Service terminated, may be exercised by the Participant (or the Participants guardian or legal representative) at any time prior to the expiration of twelve (12) months (or such longer or shorter period provided by the Award Agreement) after the date on which the Participants Service terminated, but in any event no later than the date of expiration of the Options term as set forth in the Award Agreement evidencing such Option (the Option Expiration Date).
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(ii) Death. If the Participants Service terminates because of the death of the Participant, the Option, to the extent unexercised and exercisable for vested shares on the date on which the Participants Service terminated, may be exercised by the Participants legal representative or other person who acquired the right to exercise the Option by reason of the Participants death at any time prior to the expiration of twelve (12) months (or such longer or shorter period provided by the Award Agreement) after the date on which the Participants Service terminated, but in any event no later than the Option Expiration Date. The Participants Service shall be deemed to have terminated on account of death if the Participant dies within three (3) months (or such longer or shorter period provided by the Award Agreement) after the Participants termination of Service.
(iii) Termination for Cause. Notwithstanding any other provision of the Plan to the contrary, if the Participants Service is terminated for Cause or if, following the Participants termination of Service and during any period in which the Option otherwise would remain exercisable, the Participant engages in any act that would constitute Cause, the Option shall terminate in its entirety and cease to be exercisable immediately upon such termination of Service or act.
(iv) Other Termination of Service. If the Participants Service terminates for any reason, except Disability, death or Cause, the Option, to the extent unexercised and exercisable for vested shares on the date on which the Participants Service terminated, may be exercised by the Participant at any time prior to the expiration of three (3) months (or such longer or shorter period provided by the Award Agreement) after the date on which the Participants Service terminated, but in any event no later than the Option Expiration Date.
(b) Extension if Exercise Prevented by Law. Notwithstanding the foregoing, other than termination of Service for Cause, if the exercise of an Option within the applicable time periods set forth in Section 6.4(a) is prevented by the provisions of Section 14 below, the Option shall remain exercisable until the later of (i) thirty (30) days after the date such exercise first would no longer be prevented by such provisions or (ii) the end of the applicable time period under Section 6.4(a), but in any event no later than the Option Expiration Date.
6.5 Transferability of Options. During the lifetime of the Participant, an Option shall be exercisable only by the Participant or the Participants guardian or legal representative. An Option shall not be subject in any manner to anticipation, alienation, sale, exchange, transfer, assignment, pledge, encumbrance, or garnishment by creditors of the Participant or the Participants beneficiary, except transfer by will or by the laws of descent and distribution. Notwithstanding the foregoing, to the extent permitted by the Committee, in its discretion, and set forth in the Award Agreement evidencing such Option, an Option shall be assignable or transferable subject to the applicable limitations, if any, described in the General Instructions to Form S-8 under the Securities Act or, in the case of an Incentive Stock Option, only as permitted by applicable regulations under Section 421 of the Code in a manner that does not disqualify such Option as an Incentive Stock Option. An Option may not be transferred to a third-party financial institution for value without the approval of the stockholders.
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7. STOCK APPRECIATION RIGHTS.
Stock Appreciation Rights shall be evidenced by Award Agreements specifying the number of shares of Stock subject to the Award, in such form as the Committee shall establish. Such Award Agreements may incorporate all or any of the terms of the Plan by reference and shall comply with and be subject to the following terms and conditions:
7.1 Types of SARs Authorized. SARs may be granted in tandem with all or any portion of a related Option (a Tandem SAR) or may be granted independently of any Option (a Freestanding SAR). A Tandem SAR may only be granted concurrently with the grant of the related Option.
7.2 Exercise Price. The exercise price for each SAR shall be established in the discretion of the Committee; provided, however, that (a) the exercise price per share subject to a Tandem SAR shall be the exercise price per share under the related Option and (b) the exercise price per share subject to a Freestanding SAR shall be not less than the Fair Market Value of a share of Stock on the effective date of grant of the SAR. Notwithstanding the foregoing, an SAR may be granted with an exercise price lower than the minimum exercise price set forth above if such SAR is granted pursuant to an assumption or substitution for another stock appreciation right in a manner that would qualify under the provisions of Section 409A of the Code.
7.3 Exercisability and Term of SARs.
(a) Tandem SARs. Tandem SARs shall be exercisable only at the time and to the extent, and only to the extent, that the related Option is exercisable, subject to such provisions as the Committee may specify where the Tandem SAR is granted with respect to less than the full number of shares of Stock subject to the related Option. The Committee may, in its discretion, provide in any Award Agreement evidencing a Tandem SAR that such SAR may not be exercised without the advance approval of the Company and, if such approval is not given, then the Option shall nevertheless remain exercisable in accordance with its terms. A Tandem SAR shall terminate and cease to be exercisable no later than the date on which the related Option expires or is terminated or canceled. Upon the exercise of a Tandem SAR with respect to some or all of the shares subject to such SAR, the related Option shall be canceled automatically as to the number of shares with respect to which the Tandem SAR was exercised. Upon the exercise of an Option related to a Tandem SAR as to some or all of the shares subject to such Option, the related Tandem SAR shall be canceled automatically as to the number of shares with respect to which the related Option was exercised.
(b) Freestanding SARs. Subject to the minimum vesting provisions of Section 5.5, Freestanding SARs shall be exercisable at such time or times, or upon such event or events, and subject to such terms, conditions, performance criteria and restrictions as shall be determined by the Committee and set forth in the Award Agreement evidencing such SAR; provided, however, that (i) no Freestanding SAR shall be exercisable after the expiration of ten (10) years after the effective date of grant of such SAR and (ii) no Freestanding SAR granted to an Employee who is a non-exempt employee for purposes of the Fair Labor Standards Act of 1938, as amended, shall be first exercisable until at least six (6) months following the date of grant of such SAR (except in the event of such Employees death, disability or retirement, upon a
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Change in Control, or as otherwise permitted by the Worker Economic Opportunity Act). Subject to the foregoing, unless otherwise specified by the Committee in the grant of a Freestanding SAR, each Freestanding SAR shall terminate ten (10) years after the effective date of grant of the SAR, unless earlier terminated in accordance with its provisions.
7.4 Exercise of SARs. Upon the exercise (or deemed exercise pursuant to Section 7.5) of an SAR, the Participant (or the Participants legal representative or other person who acquired the right to exercise the SAR by reason of the Participants death) shall be entitled to receive payment of an amount for each share with respect to which the SAR is exercised equal to the excess, if any, of the Fair Market Value of a share of Stock on the date of exercise of the SAR over the exercise price. Payment of such amount shall be made (a) in the case of a Tandem SAR, solely in shares of Stock in a lump sum upon the date of exercise of the SAR and (b) in the case of a Freestanding SAR, in cash, shares of Stock, or any combination thereof as determined by the Committee, in a lump sum upon the date of exercise of the SAR. When payment is to be made in shares of Stock, the number of shares to be issued shall be determined on the basis of the Fair Market Value of a share of Stock on the date of exercise of the SAR. For purposes of Section 7, an SAR shall be deemed exercised on the date on which the Company receives notice of exercise from the Participant or as otherwise provided in Section 7.5.
7.5 Deemed Exercise of SARs. If, on the date on which an SAR would otherwise terminate or expire, the SAR by its terms remains exercisable immediately prior to such termination or expiration and, if so exercised, would result in a payment to the holder of such SAR, then any portion of such SAR which has not previously been exercised shall automatically be deemed to be exercised as of such date with respect to such portion.
7.6 Effect of Termination of Service. Subject to earlier termination of the SAR as otherwise provided herein and unless otherwise provided by the Committee, an SAR shall be exercisable after a Participants termination of Service only to the extent and during the applicable time period determined in accordance with Section 6.4 (treating the SAR as if it were an Option) and thereafter shall terminate.
7.7 Transferability of SARs. During the lifetime of the Participant, an SAR shall be exercisable only by the Participant or the Participants guardian or legal representative. An SAR shall not be subject in any manner to anticipation, alienation, sale, exchange, transfer, assignment, pledge, encumbrance, or garnishment by creditors of the Participant or the Participants beneficiary, except transfer by will or by the laws of descent and distribution. Notwithstanding the foregoing, to the extent permitted by the Committee, in its discretion, and set forth in the Award Agreement evidencing such Award, a Tandem SAR related to a Nonstatutory Stock Option or a Freestanding SAR shall be assignable or transferable subject to the applicable limitations, if any, described in the General Instructions to Form S-8 under the Securities Act.
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8. RESTRICTED STOCK AWARDS.
Restricted Stock Awards shall be evidenced by Award Agreements specifying whether the Award is a Restricted Stock Bonus or a Restricted Stock Purchase Right and the number of shares of Stock subject to the Award, in such form as the Committee shall establish. Such Award Agreements may incorporate all or any of the terms of the Plan by reference and shall comply with and be subject to the following terms and conditions:
8.1 Types of Restricted Stock Awards Authorized. Restricted Stock Awards may be granted in the form of either a Restricted Stock Bonus or a Restricted Stock Purchase Right. Restricted Stock Awards may be granted upon such conditions as the Committee shall determine, including, without limitation, upon the attainment of one or more Performance Goals described in Section 10.4. If either the grant of or satisfaction of Vesting Conditions applicable to a Restricted Stock Award is to be contingent upon the attainment of one or more Performance Goals, the Committee shall follow procedures substantially equivalent to those set forth in Sections 10.3 through 10.5(a).
8.2 Purchase Price. The purchase price for shares of Stock issuable under each Restricted Stock Purchase Right shall be established by the Committee in its discretion. No monetary payment (other than applicable tax withholding) shall be required as a condition of receiving shares of Stock pursuant to a Restricted Stock Bonus, the consideration for which shall be services actually rendered to a Participating Company or for its benefit. Notwithstanding the foregoing, if required by applicable state corporate law, the Participant shall furnish consideration in the form of cash or past services rendered to a Participating Company or for its benefit having a value not less than the par value of the shares of Stock subject to a Restricted Stock Award.
8.3 Purchase Period. A Restricted Stock Purchase Right shall be exercisable within a period established by the Committee, which shall in no event exceed thirty (30) days from the effective date of the grant of the Restricted Stock Purchase Right.
8.4 Payment of Purchase Price. Except as otherwise provided below, payment of the purchase price for the number of shares of Stock being purchased pursuant to any Restricted Stock Purchase Right shall be made (a) in cash, by check or in cash equivalent, (b) by such other consideration as may be approved by the Committee from time to time to the extent permitted by applicable law, or (c) by any combination thereof.
8.5 Vesting and Restrictions on Transfer. Subject to the minimum vesting provisions of Section 5.5, Shares issued pursuant to any Restricted Stock Award may (but need not) be made subject to Vesting Conditions based upon the satisfaction of such Service requirements, conditions, restrictions or performance criteria, including, without limitation, Performance Goals as described in Section 10.4, as shall be established by the Committee and set forth in the Award Agreement evidencing such Award. During any period in which shares acquired pursuant to a Restricted Stock Award remain subject to Vesting Conditions, such shares may not be sold, exchanged, transferred, pledged, assigned or otherwise disposed of other than pursuant to an Ownership Change Event or as provided in Section 8.8. The Committee, in its discretion, may provide in any Award Agreement evidencing a Restricted Stock Award that, if the satisfaction of Vesting Conditions with respect to any shares subject to such Restricted Stock Award would otherwise occur on a day on which the sale of such shares would violate the provisions of the Trading Compliance Policy, then satisfaction of the Vesting Conditions automatically shall be determined on the next trading day on which the sale of such shares would not violate the Trading Compliance Policy. Upon request by the Company, each Participant
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shall execute any agreement evidencing such transfer restrictions prior to the receipt of shares of Stock hereunder and shall promptly present to the Company any and all certificates representing shares of Stock acquired hereunder for the placement on such certificates of appropriate legends evidencing any such transfer restrictions.
8.6 Voting Rights; Dividends and Distributions. Except as provided in this Section, Section 8.5 and any Award Agreement, during any period in which shares acquired pursuant to a Restricted Stock Award remain subject to Vesting Conditions, the Participant shall have all of the rights of a stockholder of the Company holding shares of Stock, including the right to vote such shares and to receive all dividends and other distributions paid with respect to such shares; provided, however, that if so determined by the Committee and provided by the Award Agreement, such dividends and distributions shall be subject to the same Vesting Conditions as the shares subject to the Restricted Stock Award with respect to which such dividends or distributions were paid, and otherwise shall be paid no later than the end of the calendar year in which such dividends or distributions are paid to stockholders (or, if later, the 15th day of the third month following the date such dividends or distributions are paid to stockholders). In the event of a dividend or distribution paid in shares of Stock or other property or any other adjustment made upon a change in the capital structure of the Company as described in Section 4.3, any and all new, substituted or additional securities or other property (other than regular, periodic cash dividends) to which the Participant is entitled by reason of the Participants Restricted Stock Award shall be immediately subject to the same Vesting Conditions as the shares subject to the Restricted Stock Award with respect to which such dividends or distributions were paid or adjustments were made.
8.7 Effect of Termination of Service. If a Participants Service terminates for any reason, whether voluntary or involuntary (other than upon the Participants death or disability or in connection with a Change in Control if so provided by the Committee), then (a) the Company shall have the option to repurchase for the purchase price paid by the Participant any shares acquired by the Participant pursuant to a Restricted Stock Purchase Right which remain subject to Vesting Conditions as of the date of the Participants termination of Service and (b) the Participant shall forfeit to the Company any shares acquired by the Participant pursuant to a Restricted Stock Bonus which remain subject to Vesting Conditions as of the date of the Participants termination of Service. The Company shall have the right to assign at any time any repurchase right it may have, whether or not such right is then exercisable, to one or more persons as may be selected by the Company.
8.8 Nontransferability of Restricted Stock Award Rights. Rights to acquire shares of Stock pursuant to a Restricted Stock Award shall not be subject in any manner to anticipation, alienation, sale, exchange, transfer, assignment, pledge, encumbrance or garnishment by creditors of the Participant or the Participants beneficiary, except transfer by will or the laws of descent and distribution. All rights with respect to a Restricted Stock Award granted to a Participant hereunder shall be exercisable during his or her lifetime only by such Participant or the Participants guardian or legal representative.
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9. RESTRICTED STOCK UNITS.
Restricted Stock Unit Awards shall be evidenced by Award Agreements specifying the number of Restricted Stock Units subject to the Award, in such form as the Committee shall establish. Such Award Agreements may incorporate all or any of the terms of the Plan by reference and shall comply with and be subject to the following terms and conditions:
9.1 Grant of Restricted Stock Unit Awards. Restricted Stock Unit Awards may be granted upon such conditions as the Committee shall determine, including, without limitation, upon the attainment of one or more Performance Goals described in Section 10.4. If either the grant of a Restricted Stock Unit Award or the Vesting Conditions with respect to such Award is to be contingent upon the attainment of one or more Performance Goals, the Committee shall follow procedures substantially equivalent to those set forth in Sections 10.3 through 10.5(a).
9.2 Purchase Price. No monetary payment (other than applicable tax withholding, if any) shall be required as a condition of receiving a Restricted Stock Unit Award, the consideration for which shall be services actually rendered to a Participating Company or for its benefit. Notwithstanding the foregoing, if required by applicable state corporate law, the Participant shall furnish consideration in the form of cash or past services rendered to a Participating Company or for its benefit having a value not less than the par value of the shares of Stock issued upon settlement of the Restricted Stock Unit Award.
9.3 Vesting. Subject to the minimum vesting provisions of Section 5.5, Restricted Stock Unit Awards may (but need not) be made subject to Vesting Conditions based upon the satisfaction of such Service requirements, conditions, restrictions or performance criteria, including, without limitation, Performance Goals as described in Section 10.4, as shall be established by the Committee and set forth in the Award Agreement evidencing such Award.
9.4 Voting Rights, Dividend Equivalent Rights and Distributions. Participants shall have no voting or dividend rights with respect to shares of Stock represented by Restricted Stock Units until the date of the issuance of such shares (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company). However, the Committee, in its discretion, may provide in the Award Agreement evidencing any Restricted Stock Unit Award that the Participant shall be entitled to Dividend Equivalent Rights with respect to the payment of cash dividends on Stock during the period beginning on the date such Award is granted and ending, with respect to each share subject to the Award, on the earlier of the date the Award is settled or the date on which it is terminated. Dividend Equivalent Rights, if any, shall be paid by crediting the Participant with a cash amount or with additional whole Restricted Stock Units as of the date of payment of such cash dividends on Stock, as determined by the Committee. The number of additional Restricted Stock Units (rounded to the nearest whole number), if any, to be credited shall be determined by dividing (a) the amount of cash dividends paid on the dividend payment date with respect to the number of shares of Stock represented by the Restricted Stock Units previously credited to the Participant by (b) the Fair Market Value per share of Stock on such date. If so determined by the Committee and provided by the Award Agreement, such cash amount or additional Restricted Stock Units shall be subject to the same terms and conditions and shall be settled in the same manner and at the same time as
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the Restricted Stock Units originally subject to the Restricted Stock Unit Award. In the event of a dividend or distribution paid in shares of Stock or other property or any other adjustment made upon a change in the capital structure of the Company as described in Section 4.3, appropriate adjustments shall be made in the Participants Restricted Stock Unit Award so that it represents the right to receive upon settlement any and all new, substituted or additional securities or other property (other than regular, periodic cash dividends) to which the Participant would be entitled by reason of the shares of Stock issuable upon settlement of the Award, and all such new, substituted or additional securities or other property shall be immediately subject to the same Vesting Conditions as are applicable to the Award.
9.5 Effect of Termination of Service. If a Participants Service terminates for any reason, whether voluntary or involuntary (other than upon the Participants death or disability or in connection with a Change in Control if so provided by the Committee), then the Participant shall forfeit to the Company any Restricted Stock Units pursuant to the Award which remain subject to Vesting Conditions as of the date of the Participants termination of Service.
9.6 Settlement of Restricted Stock Unit Awards. The Company shall issue to a Participant on the date on which Restricted Stock Units subject to the Participants Restricted Stock Unit Award vest or on such other date determined by the Committee in compliance with Section 409A, if applicable, and set forth in the Award Agreement one (1) share of Stock (and/or any other new, substituted or additional securities or other property pursuant to an adjustment described in Section 9.4) for each Restricted Stock Unit then becoming vested or otherwise to be settled on such date, subject to the withholding of applicable taxes, if any. The Committee, in its discretion, may provide in any Award Agreement evidencing a Restricted Stock Unit Award that if the settlement date with respect to any shares issuable upon vesting of Restricted Stock Units would otherwise occur on a day on which the sale of such shares would violate the provisions of the Trading Compliance Policy, then the settlement date shall be deferred until the next trading day on which the sale of such shares would not violate the Trading Compliance Policy but in any event no later than the 15th day of the third calendar month following the year in which such Restricted Stock Units vest. If permitted by the Committee, the Participant may elect, consistent with the requirements of Section 409A, to defer receipt of all or any portion of the shares of Stock or other property otherwise issuable to the Participant pursuant to this Section, and such deferred issuance date(s) and amount(s) elected by the Participant shall be set forth in the Award Agreement. Notwithstanding the foregoing, the Committee, in its discretion, may provide for settlement of any Restricted Stock Unit Award by payment to the Participant in cash of an amount equal to the Fair Market Value on the payment date of the shares of Stock or other property otherwise issuable to the Participant pursuant to this Section.
9.7 Nontransferability of Restricted Stock Unit Awards. The right to receive shares pursuant to a Restricted Stock Unit Award shall not be subject in any manner to anticipation, alienation, sale, exchange, transfer, assignment, pledge, encumbrance, or garnishment by creditors of the Participant or the Participants beneficiary, except transfer by will or by the laws of descent and distribution. All rights with respect to a Restricted Stock Unit Award granted to a Participant hereunder shall be exercisable during his or her lifetime only by such Participant or the Participants guardian or legal representative.
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10. PERFORMANCE AWARDS.
Performance Awards shall be evidenced by Award Agreements in such form as the Committee shall establish. Such Award Agreements may incorporate all or any of the terms of the Plan by reference and shall comply with and be subject to the following terms and conditions:
10.1 Types of Performance Awards Authorized. Performance Awards may be granted in the form of either Performance Shares or Performance Units. Each Award Agreement evidencing a Performance Award shall specify the number of Performance Shares or Performance Units subject thereto, the Performance Award Formula, the Performance Goal(s) and Performance Period applicable to the Award, and the other terms, conditions and restrictions of the Award.
10.2 Initial Value of Performance Shares and Performance Units. Unless otherwise provided by the Committee in granting a Performance Award, each Performance Share shall have an initial monetary value equal to the Fair Market Value of one (1) share of Stock, subject to adjustment as provided in Section 4.3, on the effective date of grant of the Performance Share, and each Performance Unit shall have an initial monetary value established by the Committee at the time of grant. The final value payable to the Participant in settlement of a Performance Award determined on the basis of the applicable Performance Award Formula will depend on the extent to which Performance Goals established by the Committee are attained within the applicable Performance Period established by the Committee.
10.3 Establishment of Performance Period, Performance Goals and Performance Award Formula. In granting each Performance Award, the Committee shall establish in writing the applicable Performance Period (subject to the minimum vesting provisions of Section 5.5), Performance Award Formula and one or more Performance Goals which, when measured at the end of the Performance Period, shall determine on the basis of the Performance Award Formula the final value of the Performance Award to be paid to the Participant. The Company shall notify each Participant granted a Performance Award of the terms of such Award, including the Performance Period, Performance Goal(s) and Performance Award Formula.
10.4 Measurement of Performance Goals. Performance Goals shall be established by the Committee on the basis of targets to be attained (Performance Targets) with respect to one or more measures of business or financial performance or other criteria established by the Committee (each, a Performance Measure), subject to the following:
(a) Performance Measures. Performance Measures based on objective criteria shall be calculated in accordance with the Companys financial statements, or, if such measures are not reported in the Companys financial statements, they shall be calculated in accordance with generally accepted accounting principles, a method used generally in the Companys industry, or in accordance with a methodology established by the Committee prior to the grant of the Performance Award. Performance Measures based on subjective criteria shall be determined on the basis established by the Committee in granting the Award. As specified by the Committee, Performance Measures may be calculated with respect to the Company and each
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Subsidiary Corporation consolidated therewith for financial reporting purposes, one or more Subsidiary Corporations or such division or other business unit of any of them selected by the Committee. Unless otherwise determined by the Committee prior to the grant of the Performance Award, the Performance Measures applicable to the Performance Award shall be calculated prior to the accrual of expense for any Performance Award for the same Performance Period and excluding the effect (whether positive or negative) on the Performance Measures of any change in accounting standards or any unusual or infrequently occurring event or transaction, as determined by the Committee, occurring after the establishment of the Performance Goals applicable to the Performance Award. Each such adjustment, if any, shall be made solely for the purpose of providing a consistent basis from period to period for the calculation of Performance Measures in order to prevent the dilution or enlargement of the Participants rights with respect to a Performance Award. Performance Measures may be based upon one or more of the following, without limitation, as determined by the Committee:
(i) revenue;
(ii) sales;
(iii) expenses;
(iv) operating income;
(v) gross margin;
(vi) operating margin;
(vii) earnings before any one or more of: stock-based compensation expense, interest, taxes, depreciation and amortization;
(viii) pre-tax profit;
(ix) net operating income;
(x) net income;
(xi) economic value added;
(xii) free cash flow;
(xiii) operating cash flow;
(xiv) balance of cash, cash equivalents and marketable securities;
(xv) stock price;
(xvi) earnings per share;
(xvii) return on stockholder equity;
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(xviii) return on capital;
(xix) return on assets;
(xx) return on investment;
(xxi) total stockholder return;
(xxii) employee satisfaction;
(xxiii) employee retention;
(xxiv) market share;
(xxv) customer satisfaction;
(xxvi) product development;
(xxvii) research and development expenses;
(xxviii) completion of an identified special project;
(xxix) completion of a joint venture or other corporate transaction and
(xxx) personal performance objectives established for an individual Participant or group of Participants.
(b) Performance Targets. Performance Targets may include a minimum, maximum, target level and intermediate levels of performance, with the final value of a Performance Award determined under the applicable Performance Award Formula by the Performance Target level attained during the applicable Performance Period. A Performance Target may be stated as an absolute value, an increase or decrease in a value, or as a value determined relative to an index, budget or other standard selected by the Committee.
10.5 Settlement of Performance Awards.
(a) Determination of Final Value. As soon as practicable following the completion of the Performance Period applicable to a Performance Award, the Committee shall determine the extent to which the applicable Performance Goals have been attained and the resulting final value of the Award earned by the Participant and to be paid upon its settlement in accordance with the applicable Performance Award Formula.
(b) Discretionary Adjustment of Award Formula. In its discretion, the Committee may, either at the time it grants a Performance Award or at any time thereafter, provide for the positive or negative adjustment of the Performance Award Formula applicable to a Performance Award to reflect such Participants individual performance in his or her position with the Company or such other factors as the Committee may determine.
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(c) Effect of Leaves of Absence. Unless otherwise required by law or a Participants Award Agreement, payment of the final value, if any, of a Performance Award held by a Participant who has taken in excess of thirty (30) days in unpaid leaves of absence during a Performance Period shall be prorated on the basis of the number of days of the Participants Service during the Performance Period during which the Participant was not on an unpaid leave of absence.
(d) Notice to Participants. As soon as practicable following the Committees determination in accordance with Sections 10.5(a) and (b), the Company shall notify each Participant of the determination of the Committee.
(e) Payment in Settlement of Performance Awards. As soon as practicable following the Committees determination in accordance with Sections 10.5(a) and (b), but in any event within the Short-Term Deferral Period described in Section 15.1 (except as otherwise provided below or consistent with the requirements of Section 409A), payment shall be made to each eligible Participant (or such Participants legal representative or other person who acquired the right to receive such payment by reason of the Participants death) of the final value of the Participants Performance Award. Payment of such amount shall be made in cash, shares of Stock, or a combination thereof as determined by the Committee. Unless otherwise provided in the Award Agreement evidencing a Performance Award, payment shall be made in a lump sum. If permitted by the Committee, the Participant may elect, consistent with the requirements of Section 409A, to defer receipt of all or any portion of the payment to be made to the Participant pursuant to this Section, and such deferred payment date(s) elected by the Participant shall be set forth in the Award Agreement. If any payment is to be made on a deferred basis, the Committee may, but shall not be obligated to, provide for the payment during the deferral period of Dividend Equivalent Rights or interest.
(f) Provisions Applicable to Payment in Shares. If payment is to be made in shares of Stock, the number of such shares shall be determined by dividing the final value of the Performance Award by the Fair Market Value of a share of Stock determined by the method specified in the Award Agreement. Shares of Stock issued in payment of any Performance Award may be fully vested and freely transferable shares or may be shares of Stock subject to Vesting Conditions as provided in Section 8.5. Any shares subject to Vesting Conditions shall be evidenced by an appropriate Award Agreement and shall be subject to the provisions of Sections 8.5 through 8.8 above.
10.6 Voting Rights; Dividend Equivalent Rights and Distributions. Participants shall have no voting or dividend rights with respect to shares of Stock represented by Performance Share Awards until the date of the issuance of such shares, if any (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company). However, the Committee, in its discretion, may provide in the Award Agreement evidencing any Performance Share Award that the Participant shall be entitled to Dividend Equivalent Rights with respect to the payment of cash dividends on Stock during the period beginning on the date the Award is granted and ending, with respect to each share subject to the Award, on the earlier of the date on which the Performance Shares are settled or the date on which they are forfeited. Such Dividend Equivalent Rights, if any, shall be credited to the Participant either in cash or in the form of additional whole Performance Shares as of the date of
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payment of such cash dividends on Stock, as determined by the Committee. The number of additional Performance Shares (rounded to the nearest whole number), if any, to be so credited shall be determined by dividing (a) the amount of cash dividends paid on the dividend payment date with respect to the number of shares of Stock represented by the Performance Shares previously credited to the Participant by (b) the Fair Market Value per share of Stock on such date. Dividend Equivalent Rights, if any, shall be accumulated and paid to the extent that the related Performance Shares become nonforfeitable. Settlement of Dividend Equivalent Rights may be made in cash, shares of Stock, or a combination thereof as determined by the Committee, and may be paid on the same basis as settlement of the related Performance Share as provided in Section 10.5. Dividend Equivalent Rights shall not be paid with respect to Performance Units. In the event of a dividend or distribution paid in shares of Stock or other property or any other adjustment made upon a change in the capital structure of the Company as described in Section 4.3, appropriate adjustments shall be made in the Participants Performance Share Award so that it represents the right to receive upon settlement any and all new, substituted or additional securities or other property (other than regular, periodic cash dividends) to which the Participant would be entitled by reason of the shares of Stock issuable upon settlement of the Performance Share Award, and all such new, substituted or additional securities or other property shall be immediately subject to the same Performance Goals as are applicable to the Award.
10.7 Effect of Termination of Service. Unless otherwise provided by the Committee and set forth in the Award Agreement evidencing a Performance Award, the effect of a Participants termination of Service on the Performance Award shall be as follows:
(a) Death or Disability. If the Participants Service terminates because of the death or Disability of the Participant before the completion of the Performance Period applicable to the Performance Award, the final value of the Participants Performance Award shall be determined by the extent to which the applicable Performance Goals have been attained with respect to the entire Performance Period and shall be prorated based on the number of months of the Participants Service during the Performance Period. Payment shall be made following the end of the Performance Period in any manner permitted by Section 10.5.
(b) Other Termination of Service. If the Participants Service terminates for any reason except death or Disability before the completion of the Performance Period applicable to the Performance Award, such Award shall be forfeited in its entirety; provided, however, that in the event of an involuntary termination of the Participants Service, the Committee, in its discretion, may waive the automatic forfeiture of all or any portion of any such Award and determine the final value of the Performance Award in the manner provided by Section 10.7(a). Payment of any amount pursuant to this Section shall be made following the end of the Performance Period in any manner permitted by Section 10.5.
10.8 Nontransferability of Performance Awards. Prior to settlement in accordance with the provisions of the Plan, no Performance Award shall be subject in any manner to anticipation, alienation, sale, exchange, transfer, assignment, pledge, encumbrance, or garnishment by creditors of the Participant or the Participants beneficiary, except transfer by will or by the laws of descent and distribution. All rights with respect to a Performance Award granted to a Participant hereunder shall be exercisable during his or her lifetime only by such Participant or the Participants guardian or legal representative.
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11. CASH-BASED AWARDS AND OTHER STOCK-BASED AWARDS.
Cash-Based Awards and Other Stock-Based Awards shall be evidenced by Award Agreements in such form as the Committee shall establish. Such Award Agreements may incorporate all or any of the terms of the Plan by reference and shall comply with and be subject to the following terms and conditions:
11.1 Grant of Cash-Based Awards. Subject to the provisions of the Plan, the Committee, at any time and from time to time, may grant Cash-Based Awards to Participants in such amounts and upon such terms and conditions, including the achievement of performance criteria, as the Committee may determine.
11.2 Grant of Other Stock-Based Awards. The Committee may grant other types of equity-based or equity-related Awards not otherwise described by the terms of this Plan (including the grant or offer for sale of unrestricted securities, stock-equivalent units, stock appreciation units, securities or debentures convertible into common stock or other forms determined by the Committee) in such amounts and subject to such terms and conditions as the Committee shall determine. Other Stock-Based Awards may be made available as a form of payment in the settlement of other Awards or as payment in lieu of compensation to which a Participant is otherwise entitled. Other Stock-Based Awards may involve the transfer of actual shares of Stock to Participants, or payment in cash or otherwise of amounts based on the value of Stock and may include, without limitation, Awards designed to comply with or take advantage of the applicable local laws of jurisdictions other than the United States.
11.3 Value of Cash-Based and Other Stock-Based Awards. Each Cash-Based Award shall specify a monetary payment amount or payment range as determined by the Committee. Each Other Stock-Based Award shall be expressed in terms of shares of Stock or units based on such shares of Stock, as determined by the Committee. Subject to the minimum vesting provisions of Section 5.5, the Committee may require the satisfaction of such Service requirements, conditions, restrictions or performance criteria, including, without limitation, Performance Goals as described in Section 10.4, as shall be established by the Committee and set forth in the Award Agreement evidencing such Award. If the Committee exercises its discretion to establish performance criteria, the final value of Cash-Based Awards or Other Stock-Based Awards that will be paid to the Participant will depend on the extent to which the performance criteria are met.
11.4 Payment or Settlement of Cash-Based Awards and Other Stock-Based Awards. Payment or settlement, if any, with respect to a Cash-Based Award or an Other Stock-Based Award shall be made in accordance with the terms of the Award, in cash, shares of Stock or other securities or any combination thereof as the Committee determines. To the extent applicable, payment or settlement with respect to each Cash-Based Award and Other Stock-Based Award shall be made in compliance with the requirements of Section 409A.
11.5 Voting Rights; Dividend Equivalent Rights and Distributions. Participants shall have no voting or dividend rights with respect to shares of Stock represented by Other Stock-Based Awards until the date of the issuance of such shares of Stock (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer
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agent of the Company), if any, in settlement of such Award. However, the Committee, in its discretion, may provide in the Award Agreement evidencing any Other Stock-Based Award that the Participant shall be entitled to Dividend Equivalent Rights with respect to the payment of cash dividends on Stock during the period beginning on the date such Award is granted and ending, with respect to each share subject to the Award, on the earlier of the date the Award is settled or the date on which it is terminated. Such Dividend Equivalent Rights, if any, shall be paid in accordance with the provisions set forth in Section 9.4. Dividend Equivalent Rights shall not be granted with respect to Cash-Based Awards. In the event of a dividend or distribution paid in shares of Stock or other property or any other adjustment made upon a change in the capital structure of the Company as described in Section 4.3, appropriate adjustments shall be made in the Participants Other Stock-Based Award so that it represents the right to receive upon settlement any and all new, substituted or additional securities or other property (other than regular, periodic cash dividends) to which the Participant would be entitled by reason of the shares of Stock issuable upon settlement of such Award, and all such new, substituted or additional securities or other property shall be immediately subject to the same Vesting Conditions and performance criteria, if any, as are applicable to the Award.
11.6 Effect of Termination of Service. Each Award Agreement evidencing a Cash-Based Award or Other Stock-Based Award shall set forth the extent to which the Participant shall have the right to retain such Award following termination of the Participants Service. Such provisions shall be determined in the discretion of the Committee, need not be uniform among all Cash-Based Awards or Other Stock-Based Awards, and may reflect distinctions based on the reasons for termination, subject to the requirements of Section 409A, if applicable.
11.7 Nontransferability of Cash-Based Awards and Other Stock-Based Awards. Prior to the payment or settlement of a Cash-Based Award or Other Stock-Based Award, the Award shall not be subject in any manner to anticipation, alienation, sale, exchange, transfer, assignment, pledge, encumbrance, or garnishment by creditors of the Participant or the Participants beneficiary, except transfer by will or by the laws of descent and distribution. The Committee may impose such additional restrictions on any shares of Stock issued in settlement of Cash-Based Awards and Other Stock-Based Awards as it may deem advisable, including, without limitation, minimum holding period requirements, restrictions under applicable federal securities laws, under the requirements of any stock exchange or market upon which such shares of Stock are then listed and/or traded, or under any state securities laws or foreign law applicable to such shares of Stock.
12. STANDARD FORMS OF AWARD AGREEMENT.
12.1 Award Agreements. Each Award shall comply with and be subject to the terms and conditions set forth in the appropriate form of Award Agreement approved by the Committee and as amended from time to time. No Award or purported Award shall be a valid and binding obligation of the Company unless evidenced by a fully executed Award Agreement, which execution may be evidenced by electronic means.
12.2 Authority to Vary Terms. The Committee shall have the authority from time to time to vary the terms of any standard form of Award Agreement either in connection
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with the grant or amendment of an individual Award or in connection with the authorization of a new standard form or forms; provided, however, that the terms and conditions of any such new, revised or amended standard form or forms of Award Agreement are not inconsistent with the terms of the Plan.
13. CHANGE IN CONTROL.
13.1 Effect of Change in Control on Awards. In the event of a Change in Control, outstanding Awards shall be subject to the definitive agreement entered into by the Company in connection with the Change in Control. Subject to the requirements and limitations of Section 409A, if applicable, the Committee may provide pursuant to such agreement for any one or more of the following:
(a) Assumption, Continuation or Substitution. In the event of a Change in Control, the surviving, continuing, successor, or purchasing corporation or other business entity or parent thereof, as the case may be (the Acquiror), may, without the consent of any Participant, assume or continue the Companys rights and obligations under each or any Award or portion thereof outstanding immediately prior to the Change in Control or substitute for each or any such outstanding Award or portion thereof a substantially equivalent award with respect to the Acquirors stock, as applicable. For purposes of this Section, if so determined by the Committee in its discretion, an Award denominated in shares of Stock shall be deemed assumed if, following the Change in Control, the Award confers the right to receive, subject to the terms and conditions of the Plan and the applicable Award Agreement, for each share of Stock subject to the Award immediately prior to the Change in Control, the consideration (whether stock, cash, other securities or property or a combination thereof) to which a holder of a share of Stock on the effective date of the Change in Control was entitled (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares of Stock); provided, however, that if such consideration is not solely common stock of the Acquiror, the Committee may, with the consent of the Acquiror, provide for the consideration to be received upon the exercise or settlement of the Award, for each share of Stock subject to the Award, to consist solely of common stock of the Acquiror equal in Fair Market Value to the per share consideration received by holders of Stock pursuant to the Change in Control. Any Award or portion thereof which is neither assumed or continued by the Acquiror in connection with the Change in Control nor exercised or settled as of the time of consummation of the Change in Control shall terminate and cease to be outstanding effective as of the time of consummation of the Change in Control.
(b) Cash-Out of Outstanding Stock-Based Awards. The Committee may, in its discretion and without the consent of any Participant, determine that, upon the occurrence of a Change in Control, each or any Award denominated in shares of Stock or portion thereof outstanding immediately prior to the Change in Control and not previously exercised or settled shall be canceled in exchange for a payment with respect to each vested share of Stock subject to such canceled Award in (i) cash, (ii) stock of the Company or of a corporation or other business entity a party to the Change in Control, or (iii) other property which, in any such case, shall be in an amount having a Fair Market Value equal to the Fair Market Value of the consideration to be paid per share of Stock in the Change in Control, reduced (but not below zero) by the exercise or purchase price per share, if any, under such Award. In the event such
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determination is made by the Committee, an Award having an exercise or purchase price per share equal to or greater than the Fair Market Value of the consideration to be paid per share of Stock in the Change in Control may be canceled without payment of consideration to the holder thereof. Payment pursuant to this Section (reduced by applicable withholding taxes, if any) shall be made to Participants in respect of the vested portions of their canceled Awards as soon as practicable following the date of the Change in Control.
(c) Accelerated Vesting of Time-Vesting Awards. The Committee may, in its discretion, provide that if either:
(i) the Acquiror will not assume or continue the Time-Vesting Award or substitute a substantially equivalent award pursuant to Section 13.1(b), in each case for equity securities of the Acquiror which are or promptly will be registered under the Securities Act and tradable on an established United States securities exchange, or
(ii) the Acquiror has so assumed, continued or substituted for the Time-Vesting Award, but the Participants Service terminates as a result of Involuntary Termination,
then the exercisability, vesting and/or settlement of the Time-Vesting Award and shares acquired pursuant thereto will accelerate in full or in part to such extent as the Committee determines.
(d) Accelerated or Pro Rata Settlement of Performance-Vesting Awards. The Committee may, in its discretion, provide that if either:
(i) the Acquiror will not assume or continue the Performance-Vesting Award or substitute a substantially equivalent award pursuant to Section 13.1(b), in each case for equity securities of the Acquiror which are or promptly will be registered under the Securities Act and tradable on an established United States securities exchange, or
(ii) the Acquiror has so assumed, continued or substituted for the Performance-Vesting Award, but the Participants Service terminates as a result of Involuntary Termination,
then the exercisability, vesting and/or settlement of the Performance-Vesting Award and shares acquired pursuant thereto will be determined, as specified by the Committee, either (A) based upon the actual achievement of the applicable performance goals(s) under the terms of the Performance-Vesting Award through the date of the Change in Control or the Involuntary Termination, as applicable or (B) to such extent as would occur under the terms of the Performance-Vesting Award had 100% of the target level of the applicable performance goals(s) been achieved but with the result prorated based on the period of the Participants actual Service during the applicable full performance period.
13.2 Effect of Change in Control on Nonemployee Director Awards. Subject to the requirements and limitations of Section 409A, if applicable, including as provided by Section 15.4(f), in the event of a Change in Control, each outstanding Nonemployee Director
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Award shall become immediately exercisable and vested in full and, except to the extent assumed, continued or substituted for pursuant to Section 13.1(b), shall be settled effective immediately prior to the time of consummation of the Change in Control.
13.3 Federal Excise Tax Under Section 4999 of the Code.
(a) Excess Parachute Payment. If any acceleration of vesting pursuant to an Award and any other payment or benefit received or to be received by a Participant would subject the Participant to any excise tax pursuant to Section 4999 of the Code due to the characterization of such acceleration of vesting, payment or benefit as an excess parachute payment under Section 280G of the Code, then, provided such election would not subject the Participant to taxation under Section 409A, the Participant may elect to reduce the amount of any acceleration of vesting called for under the Award in order to avoid such characterization.
(b) Determination by Tax Firm. To aid the Participant in making any election called for under Section 13.4(a), no later than the date of the occurrence of any event that might reasonably be anticipated to result in an excess parachute payment to the Participant as described in Section 13.4(a), the Company shall request a determination in writing by the professional firm engaged by the Company for general tax purposes, or, if the tax firm so engaged by the Company is serving as accountant or auditor for the Acquiror, the Company will appoint a nationally recognized tax firm to make the determinations required by this Section (the Tax Firm). As soon as practicable thereafter, the Tax Firm shall determine and report to the Company and the Participant the amount of such acceleration of vesting, payments and benefits which would produce the greatest after-tax benefit to the Participant. For the purposes of such determination, the Tax Firm may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code. The Company and the Participant shall furnish to the Tax Firm such information and documents as the Tax Firm may reasonably request in order to make its required determination. The Company shall bear all fees and expenses the Tax Firm charges in connection with its services contemplated by this Section.
14. COMPLIANCE WITH SECURITIES LAW.
The grant of Awards and the issuance of shares of Stock pursuant to any Award shall be subject to compliance with all applicable requirements of federal, state and foreign law with respect to such securities and the requirements of any stock exchange or market system upon which the Stock may then be listed. In addition, no Award may be exercised or shares issued pursuant to an Award unless (a) a registration statement under the Securities Act shall at the time of such exercise or issuance be in effect with respect to the shares issuable pursuant to the Award, or (b) in the opinion of legal counsel to the Company, the shares issuable pursuant to the Award may be issued in accordance with the terms of an applicable exemption from the registration requirements of the Securities Act. The inability of the Company to obtain from any regulatory body having jurisdiction the authority, if any, deemed by the Companys legal counsel to be necessary to the lawful issuance and sale of any shares under the Plan shall relieve the Company of any liability in respect of the failure to issue or sell such shares as to which such requisite authority shall not have been obtained. As a condition to issuance of any Stock, the
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Company may require the Participant to satisfy any qualifications that may be necessary or appropriate, to evidence compliance with any applicable law or regulation and to make any representation or warranty with respect thereto as may be requested by the Company.
15. COMPLIANCE WITH SECTION 409A.
15.1 Awards Subject to Section 409A. The Company intends that Awards granted pursuant to the Plan shall either be exempt from or comply with Section 409A, and the Plan shall be so construed. The provisions of this Section 15 shall apply to any Award or portion thereof that constitutes or provides for payment of Section 409A Deferred Compensation. Such Awards may include, without limitation:
(a) A Nonstatutory Stock Option or SAR that includes any feature for the deferral of compensation other than the deferral of recognition of income until the later of (i) the exercise or disposition of the Award or (ii) the time the stock acquired pursuant to the exercise of the Award first becomes substantially vested.
(b) Any Restricted Stock Unit Award, Performance Award, Cash-Based Award or Other Stock-Based Award that either (i) provides by its terms for settlement of all or any portion of the Award at a time or upon an event that will or may occur later than the end of the Short-Term Deferral Period (as defined below) or (ii) permits the Participant granted the Award to elect one or more dates or events upon which the Award will be settled after the end of the Short-Term Deferral Period.
Subject to the provisions of Section 409A, the term Short-Term Deferral Period means the 21⁄2 month period ending on the later of (i) the 15th day of the third month following the end of the Participants taxable year in which the right to payment under the applicable portion of the Award is no longer subject to a substantial risk of forfeiture or (ii) the 15th day of the third month following the end of the Companys taxable year in which the right to payment under the applicable portion of the Award is no longer subject to a substantial risk of forfeiture. For this purpose, the term substantial risk of forfeiture shall have the meaning provided by Section 409A.
15.2 Deferral and/or Distribution Elections. Except as otherwise permitted or required by Section 409A, the following rules shall apply to any compensation deferral and/or payment elections (each, an Election) that may be permitted or required by the Committee pursuant to an Award providing Section 409A Deferred Compensation:
(a) Elections must be in writing and specify the amount of the payment in settlement of an Award being deferred, as well as the time and form of payment as permitted by this Plan.
(b) Elections shall be made by the end of the Participants taxable year prior to the year in which services commence for which an Award may be granted to the Participant.
(c) Elections shall continue in effect until a written revocation or change in Election is received by the Company, except that a written revocation or change in Election must be received by the Company prior to the last day for making the Election determined in accordance with paragraph (b) above or as permitted by Section 15.3.
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15.3 Subsequent Elections. Except as otherwise permitted or required by Section 409A, any Award providing Section 409A Deferred Compensation which permits a subsequent Election to delay the payment or change the form of payment in settlement of such Award shall comply with the following requirements:
(a) No subsequent Election may take effect until at least twelve (12) months after the date on which the subsequent Election is made.
(b) Each subsequent Election related to a payment in settlement of an Award not described in Section 15.4(a)(ii), 15.4(a)(iii) or 15.4(a)(vi) must result in a delay of the payment for a period of not less than five (5) years from the date on which such payment would otherwise have been made.
(c) No subsequent Election related to a payment pursuant to Section 15.4(a)(iv) shall be made less than twelve (12) months before the date on which such payment would otherwise have been made.
(d) Subsequent Elections shall continue in effect until a written revocation or change in the subsequent Election is received by the Company, except that a written revocation or change in a subsequent Election must be received by the Company prior to the last day for making the subsequent Election determined in accordance the preceding paragraphs of this Section 15.3.
15.4 Payment of Section 409A Deferred Compensation.
(a) Permissible Payments. Except as otherwise permitted or required by Section 409A, an Award providing Section 409A Deferred Compensation must provide for payment in settlement of the Award only upon one or more of the following:
(i) The Participants separation from service (as defined by Section 409A);
(ii) The Participants becoming disabled (as defined by Section 409A);
(iii) The Participants death;
(iv) A time or fixed schedule that is either (i) specified by the Committee upon the grant of an Award and set forth in the Award Agreement evidencing such Award or (ii) specified by the Participant in an Election complying with the requirements of Section 15.2 or 15.3, as applicable;
(v) A change in the ownership or effective control or the Company or in the ownership of a substantial portion of the assets of the Company determined in accordance with Section 409A; or
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(vi) The occurrence of an unforeseeable emergency (as defined by Section 409A).
(b) Installment Payments. It is the intent of this Plan that any right of a Participant to receive installment payments (within the meaning of Section 409A) shall, for all purposes of Section 409A, be treated as a right to a series of separate payments.
(c) Required Delay in Payment to Specified Employee Pursuant to Separation from Service. Notwithstanding any provision of the Plan or an Award Agreement to the contrary, except as otherwise permitted by Section 409A, no payment pursuant to Section 15.4(a)(i) in settlement of an Award providing for Section 409A Deferred Compensation may be made to a Participant who is a specified employee (as defined by Section 409A) as of the date of the Participants separation from service before the date (the Delayed Payment Date) that is six (6) months after the date of such Participants separation from service, or, if earlier, the date of the Participants death. All such amounts that would, but for this paragraph, become payable prior to the Delayed Payment Date shall be accumulated and paid on the Delayed Payment Date.
(d) Payment Upon Disability. All distributions of Section 409A Deferred Compensation payable pursuant to Section 15.4(a)(ii) by reason of a Participant becoming disabled shall be paid in a lump sum or in periodic installments as established by the Participants Election. If the Participant has made no Election with respect to distributions of Section 409A Deferred Compensation upon becoming disabled, all such distributions shall be paid in a lump sum upon the determination that the Participant has become disabled.
(e) Payment Upon Death. If a Participant dies before complete distribution of amounts payable upon settlement of an Award subject to Section 409A, such undistributed amounts shall be distributed to his or her beneficiary under the distribution method for death established by the Participants Election upon receipt by the Committee of satisfactory notice and confirmation of the Participants death. If the Participant has made no Election with respect to distributions of Section 409A Deferred Compensation upon death, all such distributions shall be paid in a lump sum upon receipt by the Committee of satisfactory notice and confirmation of the Participants death.
(f) Payment Upon Change in Control. Notwithstanding any provision of the Plan or an Award Agreement to the contrary, to the extent that any amount constituting Section 409A Deferred Compensation would become payable under this Plan by reason of a Change in Control, such amount shall become payable only if the event constituting a Change in Control would also constitute a change in ownership or effective control of the Company or a change in the ownership of a substantial portion of the assets of the Company within the meaning of Section 409A. Any Award which constitutes Section 409A Deferred Compensation and which would vest and otherwise become payable upon a Change in Control as a result of the failure of the Acquiror to assume, continue or substitute for such Award in accordance with Section 13.1(b) shall vest to the extent provided by such Award but shall be converted automatically at the effective time of such Change in Control into a right to receive, in cash on the date or dates such award would have been settled in accordance with its then existing settlement schedule (or as required by Section 15.4(c)), an amount or amounts equal in the aggregate to the intrinsic value of the Award at the time of the Change in Control.
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(g) Payment Upon Unforeseeable Emergency. The Committee shall have the authority to provide in the Award Agreement evidencing any Award providing for Section 409A Deferred Compensation for payment pursuant to Section 15.4(a)(vi) in settlement of all or a portion of such Award in the event that a Participant establishes, to the satisfaction of the Committee, the occurrence of an unforeseeable emergency. In such event, the amount(s) distributed with respect to such unforeseeable emergency cannot exceed the amounts reasonably necessary to satisfy the emergency need plus amounts necessary to pay taxes reasonably anticipated as a result of such distribution(s), after taking into account the extent to which such emergency need is or may be relieved through reimbursement or compensation by insurance or otherwise, by liquidation of the Participants assets (to the extent the liquidation of such assets would not itself cause severe financial hardship) or by cessation of deferrals under the Award. All distributions with respect to an unforeseeable emergency shall be made in a lump sum upon the Committees determination that an unforeseeable emergency has occurred. The Committees decision with respect to whether an unforeseeable emergency has occurred and the manner in which, if at all, the payment in settlement of an Award shall be altered or modified, shall be final, conclusive, and not subject to approval or appeal.
(h) Prohibition of Acceleration of Payments. Notwithstanding any provision of the Plan or an Award Agreement to the contrary, this Plan does not permit the acceleration of the time or schedule of any payment under an Award providing Section 409A Deferred Compensation, except as permitted by Section 409A.
(i) No Representation Regarding Section 409A Compliance. Notwithstanding any other provision of the Plan, the Company makes no representation that Awards shall be exempt from or comply with Section 409A. No Participating Company shall be liable for any tax, penalty or interest imposed on a Participant by Section 409A.
16. TAX WITHHOLDING.
16.1 Tax Withholding in General. The Company shall have the right to deduct from any and all payments made under the Plan, or to require the Participant, through payroll withholding, cash payment or otherwise, to make adequate provision for, the federal, state, local and foreign taxes (including social insurance), if any, required by law to be withheld by any Participating Company with respect to an Award or the shares acquired pursuant thereto. The Company shall have no obligation to deliver shares of Stock, to release shares of Stock from an escrow established pursuant to an Award Agreement, or to make any payment in cash under the Plan until the Participating Company Groups tax withholding obligations have been satisfied by the Participant.
16.2 Withholding in or Directed Sale of Shares. The Company shall have the right, but not the obligation, to deduct from the shares of Stock issuable to a Participant upon the exercise or settlement of an Award, or to accept from the Participant the tender of, a number of whole shares of Stock having a Fair Market Value, as determined by the Company, equal to all or any part of the tax withholding obligations of any Participating Company. The Fair Market
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Value of any shares of Stock withheld or tendered to satisfy any such tax withholding obligations shall not exceed the amount determined by the applicable minimum statutory withholding rates (or the maximum individual statutory withholding rates for the applicable jurisdiction if use of such rates would not result in adverse accounting consequences or cost). The Company may require a Participant to direct a broker, upon the vesting, exercise or settlement of an Award, to sell a portion of the shares subject to the Award determined by the Company in its discretion to be sufficient to cover the tax withholding obligations of any Participating Company and to remit an amount equal to such tax withholding obligations to such Participating Company in cash.
17. AMENDMENT, SUSPENSION OR TERMINATION OF PLAN.
The Committee may amend, suspend or terminate the Plan at any time. However, without the approval of the Companys stockholders, there shall be (a) no increase in the maximum aggregate number of shares of Stock that may be issued under the Plan (except by operation of the provisions of Sections 4.2, 4.3 and 4.4), (b) no change in the class of persons eligible to receive Incentive Stock Options, and (c) no other amendment of the Plan that would require approval of the Companys stockholders under any applicable law, regulation or rule, including the rules of any stock exchange or quotation system upon which the Stock may then be listed or quoted. No amendment, suspension or termination of the Plan shall affect any then outstanding Award unless expressly provided by the Committee. Except as provided by the next sentence, no amendment, suspension or termination of the Plan may have a materially adverse effect on any then outstanding Award without the consent of the Participant. Notwithstanding any other provision of the Plan or any Award Agreement to the contrary, the Committee may, in its sole and absolute discretion and without the consent of any Participant, amend the Plan or any Award Agreement, to take effect retroactively or otherwise, as it deems necessary or advisable for the purpose of conforming the Plan or such Award Agreement to any present or future law, regulation or rule applicable to the Plan, including, but not limited to, Section 409A.
18. MISCELLANEOUS PROVISIONS.
18.1 Repurchase Rights. Shares issued under the Plan may be subject to one or more repurchase options, or other conditions and restrictions as determined by the Committee in its discretion at the time the Award is granted. The Company shall have the right to assign at any time any repurchase right it may have, whether or not such right is then exercisable, to one or more persons as may be selected by the Company. Upon request by the Company, each Participant shall execute any agreement evidencing such transfer restrictions prior to the receipt of shares of Stock hereunder and shall promptly present to the Company any and all certificates representing shares of Stock acquired hereunder for the placement on such certificates of appropriate legends evidencing any such transfer restrictions.
18.2 Forfeiture Events.
(a) The Committee may specify in an Award Agreement that the Participants rights, payments, and benefits with respect to an Award shall be subject to reduction, cancellation, forfeiture, or recoupment upon the occurrence of specified events, in addition to any otherwise applicable vesting or performance conditions of an Award. Such
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events may include, but shall not be limited to, termination of Service for Cause or any act by a Participant, whether before or after termination of Service, that would constitute Cause for termination of Service, or any accounting restatement due to material noncompliance of the Company with any financial reporting requirements of securities laws as a result of which, and to the extent that, such reduction, cancellation, forfeiture, or recoupment is required by applicable securities laws. In addition, to the extent that claw-back or similar provisions applicable to Awards are required by applicable law, listing standards and/or policies adopted by the Company, Awards granted under the Plan shall be subject to such provisions.
(b) If the Company is required to prepare an accounting restatement due to the material noncompliance of the Company, as a result of misconduct, with any financial reporting requirement under the securities laws, any Participant who knowingly or through gross negligence engaged in the misconduct, or who knowingly or through gross negligence failed to prevent the misconduct, and any Participant who is one of the individuals subject to automatic forfeiture under Section 304 of the Sarbanes-Oxley Act of 2002, shall reimburse the Company for (i) the amount of any payment in settlement of an Award received by such Participant during the twelve- (12-) month period following the first public issuance or filing with the United States Securities and Exchange Commission (whichever first occurred) of the financial document embodying such financial reporting requirement, and (ii) any profits realized by such Participant from the sale of securities of the Company during such twelve- (12-) month period.
18.3 Provision of Information. Each Participant shall be given access to information concerning the Company equivalent to that information generally made available to the Companys common stockholders.
18.4 Rights as Employee, Consultant or Director. No person, even though eligible pursuant to Section 5, shall have a right to be selected as a Participant, or, having been so selected, to be selected again as a Participant. Nothing in the Plan or any Award granted under the Plan shall confer on any Participant a right to remain an Employee, Consultant or Director or interfere with or limit in any way any right of a Participating Company to terminate the Participants Service at any time. To the extent that an Employee of a Participating Company other than the Company receives an Award under the Plan, that Award shall in no event be understood or interpreted to mean that the Company is the Employees employer or that the Employee has an employment relationship with the Company.
18.5 Rights as a Stockholder. A Participant shall have no rights as a stockholder with respect to any shares covered by an Award until the date of the issuance of such shares (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company). No adjustment shall be made for dividends, distributions or other rights for which the record date is prior to the date such shares are issued, except as provided in Section 4.3 or another provision of the Plan.
18.6 Delivery of Title to Shares. Subject to any governing rules or regulations, the Company shall issue or cause to be issued the shares of Stock acquired pursuant to an Award and shall deliver such shares to or for the benefit of the Participant by means of one or more of the following: (a) by delivering to the Participant evidence of book entry shares of Stock credited to the account of the Participant, (b) by depositing such shares of Stock for the benefit of the Participant with any broker with which the Participant has an account relationship, or (c) by delivering such shares of Stock to the Participant in certificate form.
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18.7 Fractional Shares. The Company shall not be required to issue fractional shares upon the exercise or settlement of any Award.
18.8 Retirement and Welfare Plans. Neither Awards made under this Plan nor shares of Stock or cash paid pursuant to such Awards may be included as compensation for purposes of computing the benefits payable to any Participant under any Participating Companys retirement plans (both qualified and non-qualified) or welfare benefit plans unless such other plan expressly provides that such compensation shall be taken into account in computing a Participants benefit. In addition, unless a written employment agreement or other service agreement specifically references Awards, a general reference to benefits or a similar term in such agreement shall not be deemed to refer to Awards granted hereunder.
18.9 Beneficiary Designation. Subject to local laws and procedures, each Participant may file with the Company a written designation of a beneficiary who is to receive any benefit under the Plan to which the Participant is entitled in the event of such Participants death before he or she receives any or all of such benefit. Each designation will revoke all prior designations by the same Participant, shall be in a form prescribed by the Company, and will be effective only when filed by the Participant in writing with the Company during the Participants lifetime. If a married Participant designates a beneficiary other than the Participants spouse, the effectiveness of such designation may be subject to the consent of the Participants spouse. If a Participant dies without an effective designation of a beneficiary who is living at the time of the Participants death, the Company will pay any remaining unpaid benefits to the Participants legal representative.
18.10 Severability. If any one or more of the provisions (or any part thereof) of this Plan shall be held invalid, illegal or unenforceable in any respect, such provision shall be modified so as to make it valid, legal and enforceable, and the validity, legality and enforceability of the remaining provisions (or any part thereof) of the Plan shall not in any way be affected or impaired thereby.
18.11 No Constraint on Corporate Action. Nothing in this Plan shall be construed to: (a) limit, impair, or otherwise affect the Companys or another Participating Companys right or power to make adjustments, reclassifications, reorganizations, or changes of its capital or business structure, or to merge or consolidate, or dissolve, liquidate, sell, or transfer all or any part of its business or assets; or (b) limit the right or power of the Company or another Participating Company to take any action which such entity deems to be necessary or appropriate.
18.12 Unfunded Obligation. Participants shall have the status of general unsecured creditors of the Company. Any amounts payable to Participants pursuant to the Plan shall be considered unfunded and unsecured obligations for all purposes, including, without limitation, Title I of the Employee Retirement Income Security Act of 1974. No Participating Company shall be required to segregate any monies from its general funds, or to create any trusts, or establish any special accounts with respect to such obligations. The Company shall
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retain at all times beneficial ownership of any investments, including trust investments, which the Company may make to fulfill its payment obligations hereunder. Any investments or the creation or maintenance of any trust or any Participant account shall not create or constitute a trust or fiduciary relationship between the Committee or any Participating Company and a Participant, or otherwise create any vested or beneficial interest in any Participant or the Participants creditors in any assets of any Participating Company. The Participants shall have no claim against any Participating Company for any changes in the value of any assets which may be invested or reinvested by the Company with respect to the Plan.
18.13 Choice of Law. Except to the extent governed by applicable federal law, the validity, interpretation, construction and performance of the Plan and each Award Agreement shall be governed by the laws of the State of Maryland, without regard to its conflict of law rules.
IN WITNESS WHEREOF, the undersigned Secretary of the Company certifies that the foregoing sets forth the Resource REIT, Inc. 2020 Long-Term Incentive Plan as duly adopted by the Board on September 8, 2020 to be effective as of the effective time of the merger of Resource Real Estate Opportunity REIT, Inc. with and into a wholly owned subsidiary of the Company.
/s/ Shelle Weisbaum |
Shelle Weisbaum, Secretary |
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PLAN HISTORY AND NOTES TO COMPANY
, 2020 | Board adopts Plan with a reserve of shares (subject to increases and other adjustments as provided by the Plan), subject to approval by the stockholders of the Company. | |
, 2020 |
Plan approved by the stockholders of the Company. |
Exhibit 10.6
RESOURCE REIT, INC.
RESTRICTED STOCK AGREEMENT TIME VESTED
(For U.S. Participants)
Resource REIT, Inc. (the Company) has granted to the Participant named in the Notice of Grant of Restricted Stock (the Grant Notice) to which this Restricted Stock Agreement (the Agreement) is attached an Award consisting of Shares subject to the terms and conditions set forth in the Grant Notice and this Agreement. The Award has been granted pursuant to and shall in all respects be subject to the terms and conditions of the Resource REIT, Inc. 2021 Long-Term Incentive Plan (the Plan), as amended to the Date of Grant, the provisions of which are incorporated herein by reference. By signing the Grant Notice, the Participant: (a) acknowledges receipt of and represents that the Participant has read and is familiar with the Grant Notice, this Agreement, and the Plan and a prospectus for the Plan prepared in connection with the registration with the Securities and Exchange Commission of the Shares (the Plan Prospectus), (b) accepts the Award subject to all of the terms and conditions of the Grant Notice, this Agreement and the Plan and (c) agrees to accept as binding, conclusive and final all decisions or interpretations of the Committee upon any questions arising under the Grant Notice, this Agreement or the Plan.
1. DEFINITIONS AND CONSTRUCTION.
1.1 Definitions. Unless otherwise defined herein, capitalized terms shall have the meanings assigned to such terms in the Grant Notice or the Plan.
1.2 Construction. Captions and titles contained herein are for convenience only and shall not affect the meaning or interpretation of any provision of this Agreement. Except when otherwise indicated by the context, the singular shall include the plural and the plural shall include the singular. Use of the term or is not intended to be exclusive, unless the context clearly requires otherwise.
2. ADMINISTRATION.
All questions of interpretation concerning the Grant Notice, this Agreement, the Plan or any other form of agreement or other document employed by the Company in the administration of the Plan or the Award shall be determined by the Committee. All such determinations by the Committee shall be final, binding and conclusive upon all persons having an interest in the Award, unless fraudulent or made in bad faith. Any and all actions, decisions and determinations taken or made by the Committee in the exercise of its discretion pursuant to the Plan or the Award or other agreement thereunder (other than determining questions of interpretation pursuant to the preceding sentence) shall be final, binding and conclusive upon all persons having an interest in the Award. Any Officer shall have the authority to act on behalf of the Company with respect to any matter, right, obligation, or election which is the responsibility of or which is allocated to the Company herein, provided the Officer has apparent authority with respect to such matter, right, obligation, or election.
3. THE AWARD.
3.1 Grant and Issuance of Shares. On the Date of Grant, the Participant shall acquire and the Company shall issue, subject to the provisions of this Agreement, a number of Shares equal to the Total Number of Shares, subject to adjustment as provided in Section 9. As a condition to the issuance of the Shares, the Participant shall execute and deliver the Grant Notice to the Company, and, if required by the Company, an Assignment Separate from Certificate duly endorsed (with date and number of shares blank) in the form provided by the Company.
3.2 No Monetary Payment Required. The Participant is not required to make any monetary payment (other than to satisfy applicable tax withholding, if any, with respect to the issuance or vesting of the Shares) as a condition to receiving the Shares, the consideration for which shall be past services actually rendered or future services to be rendered to a Participating Company or for its benefit. Notwithstanding the foregoing, if required by applicable law, the Participant shall furnish consideration in the form of cash or past services rendered to a Participating Company or for its benefit having a value not less than the par value of the Shares issued pursuant to the Award.
3.3 Beneficial Ownership of Shares; Certificate Registration. To the extent certificated, the Participant hereby authorizes the Company, in its sole discretion, to deposit the Shares with the Companys transfer agent, including any successor transfer agent, to be held in book entry form during the term of the Escrow pursuant to Section 6. Furthermore, the Participant hereby authorizes the Company, in its sole discretion, to deposit, following the term of such Escrow, for the benefit of the Participant with any broker with which the Participant has an account relationship of which the Company has notice any or all Shares which are no longer subject to such Escrow. Except as provided by the foregoing and to the extent certificated, a certificate for the Shares shall be registered in the name of the Participant, or, if applicable, in the names of the heirs of the Participant. Uncertificated Shares shall be deemed delivered for all purposes when the Company or the Companys transfer agent shall have given to the participant by electronic mail (with proof of receipt) or by United States mail, addressed to the participant, at the participants last known address on file with the Company, notice of issuance and recorded the issuance in its records (which may include electronic book entry records).
3.4 Issuance of Shares in Compliance with Law. The issuance of the Shares shall be subject to compliance with all applicable requirements of federal, state or foreign law with respect to such securities. No Shares shall be issued hereunder if their issuance would constitute a violation of any applicable federal, state or foreign securities laws or other law or regulations or the requirements of any stock exchange or market system upon which the Stock may then be listed. The inability of the Company to obtain from any regulatory body having jurisdiction the authority, if any, deemed by the Companys legal counsel to be necessary to the lawful issuance of any Shares shall relieve the Company of any liability in respect of the failure to issue such Shares as to which such requisite authority shall not have been obtained. As a condition to the issuance of the Shares, the Company may require the Participant to satisfy any qualifications that may be necessary or appropriate, to evidence compliance with any applicable law or regulation and to make any representation or warranty with respect thereto as may be requested by the Company. Uncertificated Shares shall be accompanied by a notation on the records of the Company or the transfer agent to the effect that they are subject to forfeiture until such Shares are vested as provided herein.
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4. VESTING OF SHARES.
Shares acquired pursuant to this Agreement shall become Vested Shares as provided in the Grant Notice. For purposes of determining the number of Vested Shares following an Ownership Change Event, credited Service shall include all Service with any corporation which is a Participating Company at the time the Service is rendered, whether or not such corporation is a Participating Company both before and after the Ownership Change Event.
5. COMPANY REACQUISITION RIGHT.
5.1 Grant of Company Reacquisition Right. Except to the extent otherwise provided by the Superseding Agreement, if any, in the event that (a) the Participants Service terminates for any reason or no reason, with or without cause, or (b) the Participant, the Participants legal representative, or other holder of the Shares, attempts to sell, exchange, transfer, pledge, or otherwise dispose of (other than pursuant to an Ownership Change Event), including, without limitation, any transfer to a nominee or agent of the Participant, any Shares which are not Vested Shares (Unvested Shares), the Participant shall forfeit and the Company shall automatically reacquire the Unvested Shares, and the Participant shall not be entitled to any payment therefor (the Company Reacquisition Right).
5.2 Ownership Change Event, Non-Cash Dividends, Distributions and Adjustments. Upon the occurrence of an Ownership Change Event, a dividend or distribution to the stockholders of the Company paid in shares of Stock or other property, or any other adjustment upon a change in the capital structure of the Company as described in Section 9, any and all new, substituted or additional securities or other property (other than regular, periodic cash dividends paid on Stock pursuant to the Companys dividend policy) to which the Participant is entitled by reason of the Participants ownership of Unvested Shares shall be immediately subject to the Company Reacquisition Right and included in the terms Shares, Stock and Unvested Shares for all purposes of the Company Reacquisition Right with the same force and effect as the Unvested Shares immediately prior to the Ownership Change Event, dividend, distribution or adjustment, as the case may be. For purposes of determining the number of Vested Shares following an Ownership Change Event, dividend, distribution or adjustment, credited Service shall include all Service with any corporation which is a Participating Company at the time the Service is rendered, whether or not such corporation is a Participating Company both before and after any such event.
5.3 Cash Dividends. The Participant shall have the right to receive all dividends and other distributions paid with respect to the Shares, including Unvested Shares, which shall be paid no later than the end of the calendar year in which such dividends or distributions are paid to stockholders (or, if later, the 15th day of the third month following the date such dividends or distributions are paid to stockholders).
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6. ESCROW.
6.1 Appointment of Agent. To ensure that Shares subject to the Company Reacquisition Right will be available for reacquisition, the Participant and the Company hereby appoint the Secretary of the Company, or any other person designated by the Company, as their agent and as attorney-in-fact for the Participant (the Agent) to hold any and all Unvested Shares and to sell, assign and transfer to the Company any such Unvested Shares reacquired by the Company pursuant to the Company Reacquisition Right. The Participant understands that appointment of the Agent is a material inducement to make this Agreement and that such appointment is coupled with an interest and is irrevocable. The Agent shall not be personally liable for any act the Agent may do or omit to do hereunder as escrow agent, agent for the Company, or attorney in fact for the Participant while acting in good faith and in the exercise of the Agents own good judgment, and any act done or omitted by the Agent pursuant to the advice of the Agents own attorneys shall be conclusive evidence of such good faith. The Agent may rely upon any letter, notice or other document executed by any signature purporting to be genuine and may resign at any time.
6.2 Establishment of Escrow. The Participant authorizes the Company to deposit the Unvested Shares with the Companys transfer agent to be held in book entry form, as provided in Section 3.3, and the Participant agrees to deliver to and deposit with the Agent each certificate, if any, evidencing the Shares and, if required by the Company, an Assignment Separate from Certificate with respect to such book entry shares and each such certificate duly endorsed (with date and number of Shares blank) in the form attached to this Agreement, to be held by the Agent under the terms and conditions of this Section 6 (the Escrow). Upon the occurrence of an Ownership Change Event, a dividend or distribution to the stockholders of the Company paid in shares of Stock or other property (other than regular, periodic dividends paid on Stock pursuant to the Companys dividend policy) or any other adjustment upon a change in the capital structure of the Company, as described in Section 9, any and all new, substituted or additional securities or other property to which the Participant is entitled by reason of his or her ownership of the Shares that remain, following such Ownership Change Event, dividend, distribution or change described in Section 9, subject to the Company Reacquisition Right shall be immediately subject to the Escrow to the same extent as the Shares immediately before such event. The Company shall bear the expenses of the Escrow.
6.3 Delivery of Shares to Participant. The Escrow shall continue with respect to any Shares for so long as such Shares remain subject to the Company Reacquisition Right. Upon termination of the Company Reacquisition Right with respect to Shares, the Company shall so notify the Agent and direct the Agent to deliver such number of Shares (and any related cash dividends or distributions payable with respect to such Shares) to the Participant. As soon as practicable after receipt of such notice, the Agent shall cause the Shares (and any related cash dividends or distributions payable with respect to such Shares) specified by such notice to be delivered to the Participant, and the Escrow shall terminate with respect to such Shares.
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7. TAX MATTERS.
7.1 Tax Withholding.
(a) In General. At the time the Grant Notice is executed, or at any time thereafter as requested by a Participating Company, the Participant hereby authorizes withholding from payroll and any other amounts payable to the Participant, and otherwise agrees to make adequate provision for, any sums required to satisfy the federal, state, local and foreign tax (including any social insurance) withholding obligations of the Participating Company, if any, which arise in connection with the Award, including, without limitation, obligations arising upon (a) the transfer of Shares to the Participant, (b) the lapsing of any restriction with respect to any Shares, (c) the filing of an election to recognize tax liability, or (d) the transfer by the Participant of any Shares. The Company shall have no obligation to deliver the Shares or to release any Shares from the Escrow established pursuant to Section 6 until the tax withholding obligations of the Participating Company have been satisfied by the Participant.
(b) Assignment of Sale Proceeds. Subject to compliance with applicable law and the Companys Trading Compliance Policy, if permitted by the Company, the Participant may satisfy the Participating Companys tax withholding obligations in accordance with procedures established by the Company providing for delivery by the Participant to the Company or a broker approved by the Company of properly executed instructions, in a form approved by the Company, providing for the assignment to the Company of the proceeds of a sale with respect to some or all of the shares becoming Vested Shares on a Vesting Date as provided in the Grant Notice.
(c) Withholding in Shares. The Company shall have the right, but not the obligation, to require the Participant to satisfy all or any portion of a Participating Companys tax withholding obligations by withholding a number of whole, Vested Shares otherwise deliverable to the Participant or by the Participants tender to the Company of a number of whole, Vested Shares or vested shares acquired otherwise than pursuant to the Award having, in any such case, a fair market value, as determined by the Company as of the date on which the tax withholding obligations arise, not in excess of the amount of such tax withholding obligations determined by the applicable minimum statutory withholding rates if required to avoid liability classification of the Award under generally accepted accounting principles in the United States.
7.2 Election Under Section 83(b) of the Code.
(a) The Participant understands that Section 83 of the Code taxes as ordinary income the difference between the amount paid for the Shares, if anything, and the fair market value of the Shares as of the date on which the Shares are substantially vested, within the meaning of Section 83. In this context, substantially vested means that the right of the Company to reacquire the Shares pursuant to the Company Reacquisition Right has lapsed. The Participant understands that he or she may elect to have his or her taxable income determined at the time he or she acquires the Shares rather than when and as the Company Reacquisition Right lapses by filing an election under Section 83(b) of the Code with the Internal Revenue Service no later than thirty (30) days after the date of acquisition of the Shares. The Participant understands that failure to make a timely filing under Section 83(b) will result in his or her recognition of
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ordinary income, as the Company Reacquisition Right lapses, on the difference between the purchase price, if anything, and the fair market value of the Shares at the time such restrictions lapse. The Participant further understands, however, that if Shares with respect to which an election under Section 83(b) has been made are forfeited to the Company pursuant to its Company Reacquisition Right, such forfeiture will be treated as a sale on which there is realized a loss equal to the excess (if any) of the amount paid (if any) by the Participant for the forfeited Shares over the amount realized (if any) upon their forfeiture. If the Participant has paid nothing for the forfeited Shares and has received no payment upon their forfeiture, the Participant understands that he or she will be unable to recognize any loss on the forfeiture of the Shares even though the Participant incurred a tax liability by making an election under Section 83(b).
(b) The Participant understands that he or she should consult with his or her tax advisor regarding the advisability of filing with the Internal Revenue Service an election under Section 83(b) of the Code, which must be filed no later than thirty (30) days after the date of the acquisition of the Shares pursuant to this Agreement. Failure to file an election under Section 83(b), if appropriate, may result in adverse tax consequences to the Participant. The Participant acknowledges that he or she has been advised to consult with a tax advisor regarding the tax consequences to the Participant of the acquisition of Shares hereunder. ANY ELECTION UNDER SECTION 83(b) THE PARTICIPANT WISHES TO MAKE MUST BE FILED NO LATER THAN 30 DAYS AFTER THE DATE ON WHICH THE PARTICIPANT ACQUIRES THE SHARES. THIS TIME PERIOD CANNOT BE EXTENDED. THE PARTICIPANT ACKNOWLEDGES THAT TIMELY FILING OF A SECTION 83(b) ELECTION IS THE PARTICIPANTS SOLE RESPONSIBILITY, EVEN IF THE PARTICIPANT REQUESTS THE COMPANY OR ITS REPRESENTATIVE TO FILE SUCH ELECTION ON HIS OR HER BEHALF.
(c) The Participant will notify the Company in writing if the Participant files an election pursuant to Section 83(b) of the Code. The Company intends, in the event it does not receive from the Participant evidence of such filing, to claim a tax deduction for any amount which would otherwise be taxable to the Participant in the absence of such an election.
8. EFFECT OF CHANGE IN CONTROL.
In the event of a Change in Control, the Award shall be subject to the definitive agreement entered into by the Company in connection with the Change in Control. Except to the extent that the Committee determines to cash out the Award in accordance with Section 13.1(b) of the Plan, the surviving, continuing, successor, or purchasing corporation or other business entity or parent thereof, as the case may be (the Acquiror), may, without the consent of the Participant, assume or continue in full force and effect the Companys rights and obligations under the Award or substitute for the Award a substantially equivalent award for the Acquirors stock. For purposes of this Section, the Award shall be deemed assumed if, following the Change in Control, the Award confers the right to receive, subject to the terms and conditions of the Plan and this Agreement, for each Share subject to the Award immediately prior to the Change in Control, the consideration (whether stock, cash, other securities or property or a combination thereof) to which a holder of a share of Stock on the effective date of the Change in Control was entitled. Notwithstanding the foregoing, Shares acquired pursuant to the Award prior to the Change in Control and any consideration received pursuant to the Change in Control with respect to such shares shall continue to be subject to all applicable provisions of this Agreement except as otherwise provided herein.
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9. ADJUSTMENTS FOR CHANGES IN CAPITAL STRUCTURE.
Subject to any required action by the stockholders of the Company, in the event of any change in the Stock effected without receipt of consideration by the Company, whether through merger, consolidation, reorganization, reincorporation, recapitalization, reclassification, stock dividend, stock split, reverse stock split, split-up, split-off, spin-off, combination of shares, exchange of shares, or similar change in the capital structure of the Company, or in the event of payment of a dividend or distribution to the stockholders of the Company in a form other than Stock (other than regular, periodic cash dividends paid on Stock pursuant to the Companys dividend policy) that has a material effect on the Fair Market Value of shares of Stock, appropriate and proportionate adjustments shall be made in the number and kind of shares of stock or other property subject to the Award, in order to prevent dilution or enlargement of the Participants rights under the Award. For purposes of the foregoing, conversion of any convertible securities of the Company shall not be treated as effected without receipt of consideration by the Company. Any and all new, substituted or additional securities or other property (other than regular, periodic cash dividends paid on Stock pursuant to the Companys dividend policy, subject to Section 5.3) to which Participant is entitled by reason of ownership of shares acquired pursuant to this Award will be immediately subject to the provisions of this Award on the same basis as all shares originally acquired hereunder. Any fractional share resulting from an adjustment pursuant to this Section shall be rounded down to the nearest whole number. Such adjustments shall be determined by the Committee, and its determination shall be final, binding and conclusive.
10. RIGHTS AS A STOCKHOLDER, DIRECTOR, EMPLOYEE OR CONSULTANT.
The Participant shall have no rights as a stockholder with respect to any Shares subject to the Award until the date of the issuance of the Shares (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company). No adjustment shall be made for dividends, distributions or other rights for which the record date is prior to the date the Shares are issued, except as provided in Section 9. Subject to the provisions of this Agreement, the Participant shall exercise all rights and privileges of a stockholder of the Company with respect to Shares deposited in the Escrow pursuant to Section 6, including the right to vote such Shares and to receive all dividends and other distributions paid with respect to such Shares. If the Participant is an Employee, the Participant understands and acknowledges that, except as otherwise provided in a separate, written employment agreement between a Participating Company and the Participant, the Participants employment is at will and is for no specified term. Nothing in this Agreement shall confer upon the Participant any right to continue in the Service of a Participating Company or interfere in any way with any right of the Participating Company Group to terminate the Participants Service at any time.
11. LEGENDS.
The Company may at any time place legends referencing the Company Reacquisition Right and any applicable federal, state or foreign securities law restrictions on all certificates representing the Shares. The Participant shall, at the request of the Company, promptly present to the Company any and all certificates representing the Shares in the possession of the
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Participant in order to carry out the provisions of this Section. Unless otherwise specified by the Company, legends placed on such certificates may include, but shall not be limited to, the following:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS SET FORTH IN AN AGREEMENT BETWEEN THIS CORPORATION AND THE REGISTERED HOLDER, OR HIS PREDECESSOR IN INTEREST, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THIS CORPORATION.
12. TRANSFERS IN VIOLATION OF AGREEMENT.
No Shares may be sold, exchanged, transferred, assigned, pledged, hypothecated or otherwise disposed of, including by operation of law, in any manner which violates any of the provisions of this Agreement and, except pursuant to an Ownership Change Event, until the date on which such shares become Vested Shares, and any such attempted disposition shall be void. The Company shall not be required (a) to transfer on its books any Shares which will have been transferred in violation of any of the provisions set forth in this Agreement or (b) to treat as owner of such Shares or to accord the right to vote as such owner or to pay dividends to any transferee to whom such Shares will have been so transferred. In order to enforce its rights under this Section, the Company shall be authorized to give a stop transfer instruction with respect to the Shares to the Companys transfer agent.
13. MISCELLANEOUS PROVISIONS.
13.1 Termination or Amendment. The Committee may terminate or amend the Plan or this Agreement at any time; provided, however, that no such termination or amendment may have a materially adverse effect on the Participants rights under this Agreement without the consent of the Participant unless such termination or amendment is necessary to comply with applicable law or government regulation. No amendment or addition to this Agreement shall be effective unless in writing.
13.2 Nontransferability of the Award. The right to acquire Shares pursuant to the Award shall not be subject in any manner to anticipation, alienation, sale, exchange, transfer, assignment, pledge, encumbrance, or garnishment by creditors of the Participant or the Participants beneficiary, except transfer by will or by the laws of descent and distribution. All rights with respect to the Award shall be exercisable during the Participants lifetime only by the Participant or the Participants guardian or legal representative.
13.3 Further Instruments. The parties hereto agree to execute such further instruments and to take such further action as may reasonably be necessary to carry out the intent of this Agreement.
13.4 Binding Effect. This Agreement shall inure to the benefit of the successors and assigns of the Company and, subject to the restrictions on transfer set forth herein, be binding upon the Participant and the Participants heirs, executors, administrators, successors and assigns.
13.5 Delivery of Documents and Notices. Any document relating to participation in the Plan or any notice required or permitted hereunder shall be given in writing
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and shall be deemed effectively given (except to the extent that this Agreement provides for effectiveness only upon actual receipt of such notice) upon personal delivery, electronic delivery at the e-mail address, if any, provided for the Participant by a Participating Company, or upon deposit in the U.S. Post Office or foreign postal service, by registered or certified mail, or with a nationally recognized overnight courier service, with postage and fees prepaid, addressed to the other party at the address of such party set forth in the Grant Notice or at such other address as such party may designate in writing from time to time to the other party.
(a) Description of Electronic Delivery and Signature. The Plan documents, which may include but do not necessarily include: the Plan, the Grant Notice, this Agreement, the Plan Prospectus, and any reports of the Company provided generally to the Companys stockholders, may be delivered to the Participant electronically. In addition, if permitted by the Company, the parties may deliver electronically any notices called for in connection with the Escrow and the Participant may deliver electronically the Grant Notice to the Company or to such third party involved in administering the Plan as the Company may designate from time to time. Such means of electronic delivery may include but do not necessarily include the delivery of a link to a Company intranet or the Internet site of a third party involved in administering the Plan, the delivery of the document via e-mail or such other means of electronic delivery specified by the Company. Any and all such documents and notices may be electronically signed.
(b) Consent to Electronic Delivery and Signature. The Participant acknowledges that the Participant has read Section 13.5(a) of this Agreement and consents to the electronic delivery of the Plan documents and, if permitted by the Company, the delivery of the Grant Notice and notices in connection with the Escrow, as described in Section 13.5(a). The Participant agrees that any and all such documents requiring a signature may be electronically signed and that such electronic signature shall have the same effect as handwritten signature for the purposes of validity, enforceability and admissibility. The Participant acknowledges that he or she may receive from the Company a paper copy of any documents delivered electronically at no cost to the Participant by contacting the Company by telephone or in writing. The Participant further acknowledges that the Participant will be provided with a paper copy of any documents if the attempted electronic delivery of such documents fails. Similarly, the Participant understands that the Participant must provide the Company or any designated third party administrator with a paper copy of any documents if the attempted electronic delivery of such documents fails. The Participant may revoke his or her consent to the electronic delivery of documents described in Section 13.5(a) or may change the electronic mail address to which such documents are to be delivered (if Participant has provided an electronic mail address) at any time by notifying the Company of such revoked consent or revised e-mail address by telephone, postal service or electronic mail. Finally, the Participant understands that he or she is not required to consent to electronic delivery of documents described in Section 13.5(a).
13.6 Integrated Agreement. The Grant Notice, this Agreement and the Plan, together with the Superseding Agreement, if any, shall constitute the entire understanding and agreement of the Participant and the Participating Company Group with respect to the subject matter contained herein or therein and supersede any prior agreements, understandings, restrictions, representations, or warranties among the Participant and the Participating Company Group with respect to such subject matter. To the extent contemplated herein or therein, the provisions of the Grant Notice, this Agreement and the Plan shall survive any settlement of the Award and shall remain in full force and effect.
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13.7 Applicable Law. This Agreement shall be governed by the laws of the State of Maryland as such laws are applied to agreements between Maryland residents entered into and to be performed entirely within the State of Maryland.
13.8 Counterparts. The Grant Notice may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
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ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED the undersigned does hereby sell, assign and transfer unto ( ) shares of the Capital Stock of Resource REIT, Inc. standing in the undersigneds name on the books of said corporation represented by Certificate No. herewith and does hereby irrevocably constitute and appoint Attorney to transfer the said stock on the books of said corporation with full power of substitution in the premises.
Dated: |
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Signature | ||||||
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Print Name |
Instructions: Please do not fill in any blanks other than the signature line. The purpose of this assignment is to enable the Company to exercise its Company Reacquisition Right set forth in the Restricted Stock Agreement without requiring additional signatures on the part of the Participant.
SAMPLE
Internal Revenue Service
[IRS Service Center where Form 1040 is Filed]
Re: | Section 83(b) Election |
Dear Sir or Madam:
The following information is submitted pursuant to section 1.83-2 of the Treasury Regulations in connection with this election by the undersigned under section 83(b) of the Internal Revenue Code of 1986, as amended (the Code).
1. | The name, address and taxpayer identification number of the taxpayer are: |
Name: | ||
Address: | ||
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Social Security Number: |
2. | The following is a description of each item of property with respect to which the election is made: |
shares of common stock of Resource REIT, Inc. (the Shares), acquired from Resource REIT, Inc. (the Company) pursuant to a restricted stock grant.
3. | The property was transferred to the undersigned on: |
Restricted stock grant date:
The taxable year for which the election is made is:
Calendar Year
4. | The nature of the restriction to which the property is subject: |
The Shares are subject to automatic forfeiture to the Company upon the occurrence of certain events. This forfeiture provision lapses with regard to a portion of the Shares based upon the continued performance of services by the taxpayer over time.
5. | The following is the fair market value at the time of transfer (determined without regard to any restriction other than a restriction which by its terms will never lapse) of the property with respect to which the election is made: |
$ ( Shares at $ per Share).
The property was transferred to the taxpayer pursuant to the grant of an award of restricted stock.
6. | The following is the amount paid for the property: |
No monetary consideration was provided in exchange for the Shares.
7. | A copy of this election has been furnished to the Company, the corporation for which the services were performed by the undersigned. |
Please acknowledge receipt of this election by date or received-stamping the enclosed copy of this letter and returning it to the undersigned. A self-addressed stamped envelope is provided for your convenience.
Very truly yours, | ||||||
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Date: |
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Enclosures | ||||||
cc: Resource REIT, Inc. |
Exhibit 10.7
RESOURCE REIT, INC.
RESTRICTED STOCK AGREEMENT PERFORMANCE
(For U.S. Participants)
Resource REIT, Inc. (the Company) has granted to the Participant named in the Notice of Grant of Restricted Stock (the Grant Notice) to which this Restricted Stock Agreement (the Agreement) is attached an Award consisting of Shares subject to the terms and conditions set forth in the Grant Notice and this Agreement. The Award has been granted pursuant to and shall in all respects be subject to the terms and conditions of the Resource REIT, Inc. 2021 Long-Term Incentive Plan (the Plan), as amended to the Date of Grant, the provisions of which are incorporated herein by reference. By signing the Grant Notice, the Participant: (a) acknowledges receipt of and represents that the Participant has read and is familiar with the Grant Notice, this Agreement, and the Plan and a prospectus for the Plan prepared in connection with the registration with the Securities and Exchange Commission of the Shares (the Plan Prospectus), (b) accepts the Award subject to all of the terms and conditions of the Grant Notice, this Agreement and the Plan and (c) agrees to accept as binding, conclusive and final all decisions or interpretations of the Committee upon any questions arising under the Grant Notice, this Agreement or the Plan.
1. DEFINITIONS AND CONSTRUCTION.
1.1 Definitions. Unless otherwise defined herein, capitalized terms shall have the meanings assigned to such terms in the Grant Notice or the Plan.
1.2 Construction. Captions and titles contained herein are for convenience only and shall not affect the meaning or interpretation of any provision of this Agreement. Except when otherwise indicated by the context, the singular shall include the plural and the plural shall include the singular. Use of the term or is not intended to be exclusive, unless the context clearly requires otherwise.
2. ADMINISTRATION.
All questions of interpretation concerning the Grant Notice, this Agreement, the Plan or any other form of agreement or other document employed by the Company in the administration of the Plan or the Award shall be determined by the Committee. All such determinations by the Committee shall be final, binding and conclusive upon all persons having an interest in the Award, unless fraudulent or made in bad faith. Any and all actions, decisions and determinations taken or made by the Committee in the exercise of its discretion pursuant to the Plan or the Award or other agreement thereunder (other than determining questions of interpretation pursuant to the preceding sentence) shall be final, binding and conclusive upon all persons having an interest in the Award. Any Officer shall have the authority to act on behalf of the Company with respect to any matter, right, obligation, or election which is the responsibility of or which is allocated to the Company herein, provided the Officer has apparent authority with respect to such matter, right, obligation, or election.
3. THE AWARD.
3.1 Grant and Issuance of Shares. On the Date of Grant, the Participant shall acquire and the Company shall issue, subject to the provisions of this Agreement, a number of Shares equal to the Total Number of Shares, subject to adjustment as provided in Section 9. As a condition to the issuance of the Shares, the Participant shall execute and deliver the Grant Notice to the Company, and, if required by the Company, an Assignment Separate from Certificate duly endorsed (with date and number of shares blank) in the form provided by the Company.
3.2 No Monetary Payment Required. The Participant is not required to make any monetary payment (other than to satisfy applicable tax withholding, if any, with respect to the issuance or vesting of the Shares) as a condition to receiving the Shares, the consideration for which shall be past services actually rendered or future services to be rendered to a Participating Company or for its benefit. Notwithstanding the foregoing, if required by applicable law, the Participant shall furnish consideration in the form of cash or past services rendered to a Participating Company or for its benefit having a value not less than the par value of the Shares issued pursuant to the Award.
3.3 Beneficial Ownership of Shares; Certificate Registration. To the extent certificated, the Participant hereby authorizes the Company, in its sole discretion, to deposit the Shares with the Companys transfer agent, including any successor transfer agent, to be held in book entry form during the term of the Escrow pursuant to Section 6. Furthermore, the Participant hereby authorizes the Company, in its sole discretion, to deposit, following the term of such Escrow, for the benefit of the Participant with any broker with which the Participant has an account relationship of which the Company has notice any or all Shares which are no longer subject to such Escrow. Except as provided by the foregoing and to the extent certificated, a certificate for the Shares shall be registered in the name of the Participant, or, if applicable, in the names of the heirs of the Participant. Uncertificated Shares shall be deemed delivered for all purposes when the Company or the Companys transfer agent shall have given to the participant by electronic mail (with proof of receipt) or by United States mail, addressed to the participant, at the participants last known address on file with the Company, notice of issuance and recorded the issuance in its records (which may include electronic book entry records).
3.4 Issuance of Shares in Compliance with Law. The issuance of the Shares shall be subject to compliance with all applicable requirements of federal, state or foreign law with respect to such securities. No Shares shall be issued hereunder if their issuance would constitute a violation of any applicable federal, state or foreign securities laws or other law or regulations or the requirements of any stock exchange or market system upon which the Stock may then be listed. The inability of the Company to obtain from any regulatory body having jurisdiction the authority, if any, deemed by the Companys legal counsel to be necessary to the lawful issuance of any Shares shall relieve the Company of any liability in respect of the failure to issue such Shares as to which such requisite authority shall not have been obtained. As a condition to the issuance of the Shares, the Company may require the Participant to satisfy any qualifications that may be necessary or appropriate, to evidence compliance with any applicable law or regulation and to make any representation or warranty with respect thereto as may be requested by the Company. Uncertificated Shares shall be accompanied by a notation on the records of the Company or the transfer agent to the effect that they are subject to forfeiture until such Shares are vested as provided herein.
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4. VESTING OF SHARES.
Shares acquired pursuant to this Agreement shall become Vested Shares as provided in the Grant Notice. For purposes of determining the number of Vested Shares following an Ownership Change Event, credited Service shall include all Service with any corporation which is a Participating Company at the time the Service is rendered, whether or not such corporation is a Participating Company both before and after the Ownership Change Event.
5. COMPANY REACQUISITION RIGHT.
5.1 Grant of Company Reacquisition Right. Except to the extent otherwise provided by the Superseding Agreement, if any, in the event that (a) the Participants Service terminates for any reason or no reason, with or without cause, or (b) the Participant, the Participants legal representative, or other holder of the Shares, attempts to sell, exchange, transfer, pledge, or otherwise dispose of (other than pursuant to an Ownership Change Event), including, without limitation, any transfer to a nominee or agent of the Participant, any Shares which are not Vested Shares (Unvested Shares), the Participant shall forfeit and the Company shall automatically reacquire the Unvested Shares, and the Participant shall not be entitled to any payment therefor (the Company Reacquisition Right).
5.2 Ownership Change Event, Non-Cash Dividends, Distributions and Adjustments. Upon the occurrence of an Ownership Change Event, a dividend or distribution to the stockholders of the Company paid in shares of Stock or other property, or any other adjustment upon a change in the capital structure of the Company as described in Section 9, any and all new, substituted or additional securities or other property (other than regular, periodic cash dividends paid on Stock pursuant to the Companys dividend policy) to which the Participant is entitled by reason of the Participants ownership of Unvested Shares shall be immediately subject to the Company Reacquisition Right and included in the terms Shares, Stock and Unvested Shares for all purposes of the Company Reacquisition Right with the same force and effect as the Unvested Shares immediately prior to the Ownership Change Event, dividend, distribution or adjustment, as the case may be. For purposes of determining the number of Vested Shares following an Ownership Change Event, dividend, distribution or adjustment, credited Service shall include all Service with any corporation which is a Participating Company at the time the Service is rendered, whether or not such corporation is a Participating Company both before and after any such event.
5.3 Cash Dividends. The Participant shall have the right to receive all dividends and other distributions paid with respect to the Shares, including Unvested Shares, which shall be paid no later than the end of the calendar year in which such dividends or distributions are paid to stockholders (or, if later, the 15th day of the third month following the date such dividends or distributions are paid to stockholders).
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6. ESCROW.
6.1 Appointment of Agent. To ensure that Shares subject to the Company Reacquisition Right will be available for reacquisition, the Participant and the Company hereby appoint the Secretary of the Company, or any other person designated by the Company, as their agent and as attorney-in-fact for the Participant (the Agent) to hold any and all Unvested Shares and to sell, assign and transfer to the Company any such Unvested Shares reacquired by the Company pursuant to the Company Reacquisition Right. The Participant understands that appointment of the Agent is a material inducement to make this Agreement and that such appointment is coupled with an interest and is irrevocable. The Agent shall not be personally liable for any act the Agent may do or omit to do hereunder as escrow agent, agent for the Company, or attorney in fact for the Participant while acting in good faith and in the exercise of the Agents own good judgment, and any act done or omitted by the Agent pursuant to the advice of the Agents own attorneys shall be conclusive evidence of such good faith. The Agent may rely upon any letter, notice or other document executed by any signature purporting to be genuine and may resign at any time.
6.2 Establishment of Escrow. The Participant authorizes the Company to deposit the Unvested Shares with the Companys transfer agent to be held in book entry form, as provided in Section 3.3, and the Participant agrees to deliver to and deposit with the Agent each certificate, if any, evidencing the Shares and, if required by the Company, an Assignment Separate from Certificate with respect to such book entry shares and each such certificate duly endorsed (with date and number of Shares blank) in the form attached to this Agreement, to be held by the Agent under the terms and conditions of this Section 6 (the Escrow). Upon the occurrence of an Ownership Change Event, a dividend or distribution to the stockholders of the Company paid in shares of Stock or other property (other than regular, periodic dividends paid on Stock pursuant to the Companys dividend policy) or any other adjustment upon a change in the capital structure of the Company, as described in Section 9, any and all new, substituted or additional securities or other property to which the Participant is entitled by reason of his or her ownership of the Shares that remain, following such Ownership Change Event, dividend, distribution or change described in Section 9, subject to the Company Reacquisition Right shall be immediately subject to the Escrow to the same extent as the Shares immediately before such event. The Company shall bear the expenses of the Escrow.
6.3 Delivery of Shares to Participant. The Escrow shall continue with respect to any Shares for so long as such Shares remain subject to the Company Reacquisition Right. Upon termination of the Company Reacquisition Right with respect to Shares, the Company shall so notify the Agent and direct the Agent to deliver such number of Shares (and any related cash dividends or distributions payable with respect to such Shares) to the Participant. As soon as practicable after receipt of such notice, the Agent shall cause the Shares (and any related cash dividends or distributions payable with respect to such Shares) specified by such notice to be delivered to the Participant, and the Escrow shall terminate with respect to such Shares.
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7. TAX MATTERS.
7.1 Tax Withholding.
(a) In General. At the time the Grant Notice is executed, or at any time thereafter as requested by a Participating Company, the Participant hereby authorizes withholding from payroll and any other amounts payable to the Participant, and otherwise agrees to make adequate provision for, any sums required to satisfy the federal, state, local and foreign tax (including any social insurance) withholding obligations of the Participating Company, if any, which arise in connection with the Award, including, without limitation, obligations arising upon (a) the transfer of Shares to the Participant, (b) the lapsing of any restriction with respect to any Shares, (c) the filing of an election to recognize tax liability, or (d) the transfer by the Participant of any Shares. The Company shall have no obligation to deliver the Shares or to release any Shares from the Escrow established pursuant to Section 6 until the tax withholding obligations of the Participating Company have been satisfied by the Participant.
(b) Assignment of Sale Proceeds. Subject to compliance with applicable law and the Companys Trading Compliance Policy, if permitted by the Company, the Participant may satisfy the Participating Companys tax withholding obligations in accordance with procedures established by the Company providing for delivery by the Participant to the Company or a broker approved by the Company of properly executed instructions, in a form approved by the Company, providing for the assignment to the Company of the proceeds of a sale with respect to some or all of the shares becoming Vested Shares on a Vesting Date as provided in the Grant Notice.
(c) Withholding in Shares. The Company shall have the right, but not the obligation, to require the Participant to satisfy all or any portion of a Participating Companys tax withholding obligations by withholding a number of whole, Vested Shares otherwise deliverable to the Participant or by the Participants tender to the Company of a number of whole, Vested Shares or vested shares acquired otherwise than pursuant to the Award having, in any such case, a fair market value, as determined by the Company as of the date on which the tax withholding obligations arise, not in excess of the amount of such tax withholding obligations determined by the applicable minimum statutory withholding rates if required to avoid liability classification of the Award under generally accepted accounting principles in the United States.
7.2 Election Under Section 83(b) of the Code.
(a) The Participant understands that Section 83 of the Code taxes as ordinary income the difference between the amount paid for the Shares, if anything, and the fair market value of the Shares as of the date on which the Shares are substantially vested, within the meaning of Section 83. In this context, substantially vested means that the right of the Company to reacquire the Shares pursuant to the Company Reacquisition Right has lapsed. The Participant understands that he or she may elect to have his or her taxable income determined at the time he or she acquires the Shares rather than when and as the Company Reacquisition Right lapses by filing an election under Section 83(b) of the Code with the Internal Revenue Service no later than thirty (30) days after the date of acquisition of the Shares. The Participant understands that failure to make a timely filing under Section 83(b) will result in his or her recognition of
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ordinary income, as the Company Reacquisition Right lapses, on the difference between the purchase price, if anything, and the fair market value of the Shares at the time such restrictions lapse. The Participant further understands, however, that if Shares with respect to which an election under Section 83(b) has been made are forfeited to the Company pursuant to its Company Reacquisition Right, such forfeiture will be treated as a sale on which there is realized a loss equal to the excess (if any) of the amount paid (if any) by the Participant for the forfeited Shares over the amount realized (if any) upon their forfeiture. If the Participant has paid nothing for the forfeited Shares and has received no payment upon their forfeiture, the Participant understands that he or she will be unable to recognize any loss on the forfeiture of the Shares even though the Participant incurred a tax liability by making an election under Section 83(b).
(b) The Participant understands that he or she should consult with his or her tax advisor regarding the advisability of filing with the Internal Revenue Service an election under Section 83(b) of the Code, which must be filed no later than thirty (30) days after the date of the acquisition of the Shares pursuant to this Agreement. Failure to file an election under Section 83(b), if appropriate, may result in adverse tax consequences to the Participant. The Participant acknowledges that he or she has been advised to consult with a tax advisor regarding the tax consequences to the Participant of the acquisition of Shares hereunder. ANY ELECTION UNDER SECTION 83(b) THE PARTICIPANT WISHES TO MAKE MUST BE FILED NO LATER THAN 30 DAYS AFTER THE DATE ON WHICH THE PARTICIPANT ACQUIRES THE SHARES. THIS TIME PERIOD CANNOT BE EXTENDED. THE PARTICIPANT ACKNOWLEDGES THAT TIMELY FILING OF A SECTION 83(b) ELECTION IS THE PARTICIPANTS SOLE RESPONSIBILITY, EVEN IF THE PARTICIPANT REQUESTS THE COMPANY OR ITS REPRESENTATIVE TO FILE SUCH ELECTION ON HIS OR HER BEHALF.
(c) The Participant will notify the Company in writing if the Participant files an election pursuant to Section 83(b) of the Code. The Company intends, in the event it does not receive from the Participant evidence of such filing, to claim a tax deduction for any amount which would otherwise be taxable to the Participant in the absence of such an election.
8. EFFECT OF CHANGE IN CONTROL.
In the event of a Change in Control, the Award shall be subject to the definitive agreement entered into by the Company in connection with the Change in Control. Except to the extent that the Committee determines to cash out the Award in accordance with Section 13.1(b) of the Plan, the surviving, continuing, successor, or purchasing corporation or other business entity or parent thereof, as the case may be (the Acquiror), may, without the consent of the Participant, assume or continue in full force and effect the Companys rights and obligations under the Award or substitute for the Award a substantially equivalent award for the Acquirors stock. For purposes of this Section, the Award shall be deemed assumed if, following the Change in Control, the Award confers the right to receive, subject to the terms and conditions of the Plan and this Agreement, for each Share subject to the Award immediately prior to the Change in Control, the consideration (whether stock, cash, other securities or property or a combination thereof) to which a holder of a share of Stock on the effective date of the Change in Control was entitled. Notwithstanding the foregoing, Shares acquired pursuant to the Award prior to the Change in Control and any consideration received pursuant to the Change in Control with respect to such shares shall continue to be subject to all applicable provisions of this Agreement except as otherwise provided herein.
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9. ADJUSTMENTS FOR CHANGES IN CAPITAL STRUCTURE.
Subject to any required action by the stockholders of the Company, in the event of any change in the Stock effected without receipt of consideration by the Company, whether through merger, consolidation, reorganization, reincorporation, recapitalization, reclassification, stock dividend, stock split, reverse stock split, split-up, split-off, spin-off, combination of shares, exchange of shares, or similar change in the capital structure of the Company, or in the event of payment of a dividend or distribution to the stockholders of the Company in a form other than Stock (other than regular, periodic cash dividends paid on Stock pursuant to the Companys dividend policy) that has a material effect on the Fair Market Value of shares of Stock, appropriate and proportionate adjustments shall be made in the number and kind of shares of stock or other property subject to the Award, in order to prevent dilution or enlargement of the Participants rights under the Award. For purposes of the foregoing, conversion of any convertible securities of the Company shall not be treated as effected without receipt of consideration by the Company. Any and all new, substituted or additional securities or other property (other than regular, periodic cash dividends paid on Stock pursuant to the Companys dividend policy, subject to Section 5.3) to which Participant is entitled by reason of ownership of shares acquired pursuant to this Award will be immediately subject to the provisions of this Award on the same basis as all shares originally acquired hereunder. Any fractional share resulting from an adjustment pursuant to this Section shall be rounded down to the nearest whole number. Such adjustments shall be determined by the Committee, and its determination shall be final, binding and conclusive.
10. RIGHTS AS A STOCKHOLDER, DIRECTOR, EMPLOYEE OR CONSULTANT.
The Participant shall have no rights as a stockholder with respect to any Shares subject to the Award until the date of the issuance of the Shares (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company). No adjustment shall be made for dividends, distributions or other rights for which the record date is prior to the date the Shares are issued, except as provided in Section 9. Subject to the provisions of this Agreement, the Participant shall exercise all rights and privileges of a stockholder of the Company with respect to Shares deposited in the Escrow pursuant to Section 6, including the right to vote such Shares and to receive all dividends and other distributions paid with respect to such Shares. If the Participant is an Employee, the Participant understands and acknowledges that, except as otherwise provided in a separate, written employment agreement between a Participating Company and the Participant, the Participants employment is at will and is for no specified term. Nothing in this Agreement shall confer upon the Participant any right to continue in the Service of a Participating Company or interfere in any way with any right of the Participating Company Group to terminate the Participants Service at any time.
11. LEGENDS.
The Company may at any time place legends referencing the Company Reacquisition Right and any applicable federal, state or foreign securities law restrictions on all certificates representing the Shares. The Participant shall, at the request of the Company, promptly present to the Company any and all certificates representing the Shares in the possession of the
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Participant in order to carry out the provisions of this Section. Unless otherwise specified by the Company, legends placed on such certificates may include, but shall not be limited to, the following:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS SET FORTH IN AN AGREEMENT BETWEEN THIS CORPORATION AND THE REGISTERED HOLDER, OR HIS PREDECESSOR IN INTEREST, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THIS CORPORATION.
12. TRANSFERS IN VIOLATION OF AGREEMENT.
No Shares may be sold, exchanged, transferred, assigned, pledged, hypothecated or otherwise disposed of, including by operation of law, in any manner which violates any of the provisions of this Agreement and, except pursuant to an Ownership Change Event, until the date on which such shares become Vested Shares, and any such attempted disposition shall be void. The Company shall not be required (a) to transfer on its books any Shares which will have been transferred in violation of any of the provisions set forth in this Agreement or (b) to treat as owner of such Shares or to accord the right to vote as such owner or to pay dividends to any transferee to whom such Shares will have been so transferred. In order to enforce its rights under this Section, the Company shall be authorized to give a stop transfer instruction with respect to the Shares to the Companys transfer agent.
13. MISCELLANEOUS PROVISIONS.
13.1 Termination or Amendment. The Committee may terminate or amend the Plan or this Agreement at any time; provided, however, that no such termination or amendment may have a materially adverse effect on the Participants rights under this Agreement without the consent of the Participant unless such termination or amendment is necessary to comply with applicable law or government regulation. No amendment or addition to this Agreement shall be effective unless in writing.
13.2 Nontransferability of the Award. The right to acquire Shares pursuant to the Award shall not be subject in any manner to anticipation, alienation, sale, exchange, transfer, assignment, pledge, encumbrance, or garnishment by creditors of the Participant or the Participants beneficiary, except transfer by will or by the laws of descent and distribution. All rights with respect to the Award shall be exercisable during the Participants lifetime only by the Participant or the Participants guardian or legal representative.
13.3 Further Instruments. The parties hereto agree to execute such further instruments and to take such further action as may reasonably be necessary to carry out the intent of this Agreement.
13.4 Binding Effect. This Agreement shall inure to the benefit of the successors and assigns of the Company and, subject to the restrictions on transfer set forth herein, be binding upon the Participant and the Participants heirs, executors, administrators, successors and assigns.
13.5 Delivery of Documents and Notices. Any document relating to participation in the Plan or any notice required or permitted hereunder shall be given in writing
8
and shall be deemed effectively given (except to the extent that this Agreement provides for effectiveness only upon actual receipt of such notice) upon personal delivery, electronic delivery at the e-mail address, if any, provided for the Participant by a Participating Company, or upon deposit in the U.S. Post Office or foreign postal service, by registered or certified mail, or with a nationally recognized overnight courier service, with postage and fees prepaid, addressed to the other party at the address of such party set forth in the Grant Notice or at such other address as such party may designate in writing from time to time to the other party.
(a) Description of Electronic Delivery and Signature. The Plan documents, which may include but do not necessarily include: the Plan, the Grant Notice, this Agreement, the Plan Prospectus, and any reports of the Company provided generally to the Companys stockholders, may be delivered to the Participant electronically. In addition, if permitted by the Company, the parties may deliver electronically any notices called for in connection with the Escrow and the Participant may deliver electronically the Grant Notice to the Company or to such third party involved in administering the Plan as the Company may designate from time to time. Such means of electronic delivery may include but do not necessarily include the delivery of a link to a Company intranet or the Internet site of a third party involved in administering the Plan, the delivery of the document via e-mail or such other means of electronic delivery specified by the Company. Any and all such documents and notices may be electronically signed.
(b) Consent to Electronic Delivery and Signature. The Participant acknowledges that the Participant has read Section 13.5(a) of this Agreement and consents to the electronic delivery of the Plan documents and, if permitted by the Company, the delivery of the Grant Notice and notices in connection with the Escrow, as described in Section 13.5(a). The Participant agrees that any and all such documents requiring a signature may be electronically signed and that such electronic signature shall have the same effect as handwritten signature for the purposes of validity, enforceability and admissibility. The Participant acknowledges that he or she may receive from the Company a paper copy of any documents delivered electronically at no cost to the Participant by contacting the Company by telephone or in writing. The Participant further acknowledges that the Participant will be provided with a paper copy of any documents if the attempted electronic delivery of such documents fails. Similarly, the Participant understands that the Participant must provide the Company or any designated third party administrator with a paper copy of any documents if the attempted electronic delivery of such documents fails. The Participant may revoke his or her consent to the electronic delivery of documents described in Section 13.5(a) or may change the electronic mail address to which such documents are to be delivered (if Participant has provided an electronic mail address) at any time by notifying the Company of such revoked consent or revised e-mail address by telephone, postal service or electronic mail. Finally, the Participant understands that he or she is not required to consent to electronic delivery of documents described in Section 13.5(a).
13.6 Integrated Agreement. The Grant Notice, this Agreement and the Plan, together with the Superseding Agreement, if any, shall constitute the entire understanding and agreement of the Participant and the Participating Company Group with respect to the subject matter contained herein or therein and supersede any prior agreements, understandings, restrictions, representations, or warranties among the Participant and the Participating Company Group with respect to such subject matter. To the extent contemplated herein or therein, the provisions of the Grant Notice, this Agreement and the Plan shall survive any settlement of the Award and shall remain in full force and effect.
9
13.7 Applicable Law. This Agreement shall be governed by the laws of the State of Maryland as such laws are applied to agreements between Maryland residents entered into and to be performed entirely within the State of Maryland.
13.8 Counterparts. The Grant Notice may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
10
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED the undersigned does hereby sell, assign and transfer unto ( ) shares of the Capital Stock of Resource REIT, Inc. standing in the undersigneds name on the books of said corporation represented by Certificate No. herewith and does hereby irrevocably constitute and appoint Attorney to transfer the said stock on the books of said corporation with full power of substitution in the premises.
Dated: |
|
|||||
| ||||||
Signature | ||||||
| ||||||
Print Name |
Instructions: Please do not fill in any blanks other than the signature line. The purpose of this assignment is to enable the Company to exercise its Company Reacquisition Right set forth in the Restricted Stock Agreement without requiring additional signatures on the part of the Participant.
SAMPLE
Internal Revenue Service
[IRS Service Center where Form 1040 is Filed]
Re: | Section 83(b) Election |
Dear Sir or Madam:
The following information is submitted pursuant to section 1.83-2 of the Treasury Regulations in connection with this election by the undersigned under section 83(b) of the Internal Revenue Code of 1986, as amended (the Code).
1. | The name, address and taxpayer identification number of the taxpayer are: |
Name: |
Address: |
|
Social Security Number: |
2. | The following is a description of each item of property with respect to which the election is made: |
shares of common stock of Resource REIT, Inc. (the Shares), acquired from Resource REIT, Inc. (the Company) pursuant to a restricted stock grant.
3. | The property was transferred to the undersigned on: |
Restricted stock grant date:
The taxable year for which the election is made is:
Calendar Year
4. | The nature of the restriction to which the property is subject: |
The Shares are subject to automatic forfeiture to the Company upon the occurrence of certain events. This forfeiture provision lapses with regard to a portion of the Shares based upon the continued performance of services by the taxpayer over time.
5. | The following is the fair market value at the time of transfer (determined without regard to any restriction other than a restriction which by its terms will never lapse) of the property with respect to which the election is made: |
$ ( Shares at $ per Share).
The property was transferred to the taxpayer pursuant to the grant of an award of restricted stock.
6. | The following is the amount paid for the property: |
No monetary consideration was provided in exchange for the Shares.
7. | A copy of this election has been furnished to the Company, the corporation for which the services were performed by the undersigned. |
Please acknowledge receipt of this election by date or received-stamping the enclosed copy of this letter and returning it to the undersigned. A self-addressed stamped envelope is provided for your convenience.
Very truly yours,
|
Date: |
| ||||
Enclosures | ||||||
cc: Resource REIT, Inc. |
Exhibit 10.8
MASTER CREDIT FACILITY AGREEMENT
BY AND BETWEEN
BORROWER SIGNATORY HERETO
AND
CBRE MULTIFAMILY CAPITAL, INC.
DATED AS OF
JANUARY 28, 2021
NOTE: Certain information identified by [***] in Schedule 6 to this Exhibit
has been excluded from this exhibit because it is (i) not material
and (ii) would likely cause competitive harm to the registrant if publicly disclosed
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS; SUMMARY OF TERMS |
2 | |||||
Section 1.01 |
Defined Terms |
2 | ||||
Section 1.02 |
Schedules, Exhibits, and Attachments Incorporated |
2 | ||||
ARTICLE 2 ADVANCES; COLLATERAL EVENTS |
2 | |||||
Section 2.01 |
Advance Types |
2 | ||||
(a) |
Variable Advance | 3 | ||||
(b) |
Fixed Advance | 3 | ||||
(c) |
Protective Advances | 3 | ||||
Section 2.02 |
Advances Generally |
3 | ||||
(a) |
Request | 3 | ||||
(b) |
Limitations on Executions | 3 | ||||
(c) |
Making Advances | 4 | ||||
Section 2.03 |
Advance Terms and Payments on Advances |
5 | ||||
(a) |
Debt Service Payments | 5 | ||||
(b) |
Capitalization of Accrued But Unpaid Interest | 10 | ||||
(c) |
Late Charges | 10 | ||||
(d) |
Default Rate | 11 | ||||
(e) |
Address for Payments | 12 | ||||
(f) |
Application of Payments | 12 | ||||
Section 2.04 |
Prepayment; Prepayment Lockout; Prepayment Premium |
12 | ||||
Section 2.05 |
Acceleration of Advances |
13 | ||||
Section 2.06 |
Application of Collateral |
14 | ||||
Section 2.07 |
Casualty and Condemnation |
14 | ||||
Section 2.08 |
No Effect on Payment Obligations |
14 | ||||
Section 2.09 |
Loss Resulting from Prepayment |
14 | ||||
Section 2.10 |
Collateral Events |
15 | ||||
(a) |
Conversion from Variable Note to Fixed Note | 15 | ||||
(b) |
Right to Obtain Releases of Mortgaged Property | 15 | ||||
(c) |
Right to Add Additional Mortgaged Properties as Collateral | 15 | ||||
(d) |
Right to Substitutions | 15 | ||||
(e) |
Limitation on Collateral Events | 16 | ||||
(f) |
Intentionally Deleted. | 16 | ||||
(g) |
Elected Coverage and LTV Tests | 16 |
Master Credit Facility Agreement | Form 6001.MCFA | Page i | ||
Fannie Mae | 11-20 | © 2020 Fannie Mae | ||
[Resources/ CBRE 2021] |
Section 2.11 |
Termination of Master Agreement |
16 | ||||
(a) |
Request | 16 | ||||
(b) |
Conditions Precedent | 17 | ||||
(c) |
Closing | 17 | ||||
ARTICLE 3 PERSONAL LIABILITY |
17 | |||||
Section 3.01 |
Non-Recourse Liability; Exceptions |
17 | ||||
Section 3.02 |
Personal Liability of Borrower |
18 | ||||
(a) |
Personal Liability Based on Lenders Loss (Partial Recourse) | 18 | ||||
(b) |
Full Personal Liability (Full Recourse) | 19 | ||||
Section 3.03 |
Personal Liability for Indemnity Obligations |
21 | ||||
Section 3.04 |
Lenders Right to Forego Rights Against Mortgaged Property |
21 | ||||
Section 3.05 |
Borrower Agency Provisions |
21 | ||||
Section 3.06 |
Joint and Several Obligation; Cross-Guaranty |
22 | ||||
Section 3.07 |
Waivers With Respect to Other Borrower Secured Obligation |
22 | ||||
Section 3.08 |
No Impairment |
27 | ||||
Section 3.09 |
Election of Remedies |
27 | ||||
Section 3.10 |
Subordination of Other Obligations |
27 | ||||
Section 3.11 |
Insolvency and Liability of Other Borrower |
28 | ||||
Section 3.12 |
Preferences, Fraudulent Conveyances, Etc. |
29 | ||||
Section 3.13 |
Maximum Liability of Each Borrower |
29 | ||||
Section 3.14 |
Liability Cumulative |
|
30 |
| ||
ARTICLE 4 BORROWER STATUS |
30 | |||||
Section 4.01 |
Representations and Warranties |
30 | ||||
(a) |
Due Organization and Qualification; Organizational Agreements | 30 | ||||
(b) |
Location | 31 | ||||
(c) |
Power and Authority | 31 | ||||
(d) |
Due Authorization | 32 | ||||
(e) |
Valid and Binding Obligations | 32 | ||||
(f) |
Effect of Master Agreement on Financial Condition | 32 | ||||
(g) |
Economic Sanctions, Anti-Money Laundering, and Anti-Corruption | 33 | ||||
(h) |
Single Purpose Status | 33 | ||||
(i) |
No Bankruptcies or Judgments | 36 |
Master Credit Facility Agreement | Form 6001.MCFA | Page ii | ||
Fannie Mae | 11-20 | © 2020 Fannie Mae | ||
[Resources/ CBRE 2021] |
(j) |
No Actions or Litigation | 36 | ||||
(k) |
Payment of Taxes, Assessments, and Other Charges | 37 | ||||
(l) |
Not a Foreign Person | 37 | ||||
(m) |
ERISA | 37 | ||||
(n) |
Default Under Other Obligations | 38 | ||||
(o) |
Prohibited Person | 38 | ||||
(p) |
No Contravention | 38 | ||||
(q) |
Lockbox Arrangement | 39 | ||||
(r) |
No Reliance | 39 | ||||
(s) |
Investment Company Act | 40 | ||||
Section 4.02 |
Covenants |
40 | ||||
(a) |
Maintenance of Existence; Organizational Documents | 40 | ||||
(b) |
Economic Sanctions, Anti-Money Laundering, and Anti-Corruption | 41 | ||||
(c) |
Payment of Taxes, Assessments, and Other Charges | 41 | ||||
(d) |
Single Purpose Status | 42 | ||||
(e) |
ERISA | 45 | ||||
(f) |
Notice of Litigation or Insolvency | 45 | ||||
(g) |
Payment of Costs, Fees, and Expenses | 45 | ||||
(h) |
Restrictions on Distributions | 46 | ||||
(i) |
Lockbox Arrangement | 46 | ||||
(j) |
Confidentiality of Certain Information | 47 | ||||
ARTICLE 5 THE ADVANCES |
47 | |||||
Section 5.01 |
Representations and Warranties |
47 | ||||
(a) |
Receipt and Review of Loan Documents | 47 | ||||
(b) |
No Default | 47 | ||||
(c) |
No Defenses | 48 | ||||
(d) |
Loan Document Taxes | 48 | ||||
Section 5.02 |
Covenants |
48 | ||||
(a) |
Ratification of Covenants; Estoppels; Certifications | 48 | ||||
(b) |
Further Assurances | 49 | ||||
(c) |
Sale of Advances | 50 | ||||
(d) |
Limitations on Further Acts of Borrower | 51 | ||||
(e) |
Financing Statements; Record Searches | 51 | ||||
(f) |
Loan Document Taxes | 51 |
Master Credit Facility Agreement | Form 6001.MCFA | Page iii | ||
Fannie Mae | 11-20 | © 2020 Fannie Mae | ||
[Resources/ CBRE 2021] |
Section 5.03 |
Administrative Matters Regarding Advances |
52 | ||||
(a) |
Determination of Allocable Facility Amount and Valuations | 52 | ||||
ARTICLE 6 PROPERTY USE, PRESERVATION, AND MAINTENANCE |
53 | |||||
Section 6.01 |
Representations and Warranties |
53 | ||||
(a) |
Compliance with Law; Permits and Licenses | 53 | ||||
(b) |
Property Characteristics | 54 | ||||
(c) |
Property Ownership | 54 | ||||
(d) |
Condition of the Mortgaged Property | 54 | ||||
(e) |
Personal Property | 54 | ||||
Section 6.02 |
Covenants |
55 | ||||
(a) |
Use of Property | 55 | ||||
(b) |
Property Maintenance | 55 | ||||
(c) |
Property Preservation | 58 | ||||
(d) |
Property Inspections | 59 | ||||
(e) |
Compliance with Laws | 59 | ||||
(f) |
Alterations to any Mortgaged Property | 60 | ||||
Section 6.03 |
Administration Matters Regarding the Property |
61 | ||||
(a) |
Property Management | 61 | ||||
(b) |
Subordination of Fees to Affiliated Property Managers | 62 | ||||
(c) |
Property Condition Assessment | 62 | ||||
ARTICLE 7 LEASES AND RENTS |
62 | |||||
Section 7.01 |
Representations and Warranties |
62 | ||||
(a) |
Prior Assignment of Rents | 62 | ||||
(b) |
Prepaid Rents | 63 | ||||
Section 7.02 |
Covenants |
63 | ||||
(a) |
Leases | 63 | ||||
(b) |
Commercial Leases | 64 | ||||
(c) |
Payment of Rents | 65 | ||||
(d) |
Assignment of Rents | 66 | ||||
(e) |
Further Assignments of Leases and Rents | 66 | ||||
(f) |
Options to Purchase by Tenants | 66 |
Master Credit Facility Agreement | Form 6001.MCFA | Page iv | ||
Fannie Mae | 11-20 | © 2020 Fannie Mae | ||
[Resources/ CBRE 2021] |
Section 7.03 |
Administration Regarding Leases and Rents | 66 | ||||
(a) |
Material Commercial Lease Requirements | 66 | ||||
(b) |
Residential Lease Form | 67 | ||||
ARTICLE 8 BOOKS AND RECORDS; FINANCIAL REPORTING |
67 | |||||
Section 8.01 |
Representations and Warranties |
67 | ||||
(a) |
Financial Information | 67 | ||||
(b) |
No Change in Facts or Circumstances | 68 | ||||
Section 8.02 |
Covenants |
68 | ||||
(a) |
Obligation to Maintain Accurate Books and Records; Access; Discussions with Officers and Accountants | 68 | ||||
(b) |
Items to Furnish to Lender | 69 | ||||
(c) |
Audited Financials | 71 | ||||
(d) |
Delivery of Books and Records | 71 | ||||
Section 8.03 |
Administration Matters Regarding Books and Records and Financial Reporting |
72 | ||||
(a) |
Lenders Right to Obtain Audited Books and Records | 72 | ||||
(b) |
Credit Reports; Credit Score | 72 | ||||
ARTICLE 9 INSURANCE |
73 | |||||
Section 9.01 |
Representations and Warranties |
73 | ||||
(a) |
Compliance with Insurance Requirements | 73 | ||||
(b) |
Property Condition | 73 | ||||
Section 9.02 |
Covenants |
73 | ||||
(a) |
Insurance Requirements | 73 | ||||
(b) |
Delivery of Policies, Renewals, Notices, and Proceeds | 74 | ||||
Section 9.03 |
Administration Matters Regarding Insurance |
75 | ||||
(a) |
Lenders Ongoing Insurance Requirements | 75 | ||||
(b) |
Application of Proceeds on Event of Loss | 76 | ||||
(c) |
Payment Obligations Unaffected | 78 | ||||
(d) |
Foreclosure Sale | 78 | ||||
(e) |
Appointment of Lender as Attorney-In-Fact | 78 | ||||
ARTICLE 10 CONDEMNATION |
78 | |||||
Section 10.01 |
Representations and Warranties |
78 | ||||
(a) |
Prior Condemnation Action | 78 | ||||
(b) |
Pending Condemnation Actions | 79 |
Master Credit Facility Agreement | Form 6001.MCFA | Page v | ||
Fannie Mae | 11-20 | © 2020 Fannie Mae | ||
[Resources/ CBRE 2021] |
Section 10.02 |
Covenants |
79 | ||||
(a) |
Notice of Condemnation | 79 | ||||
(b) |
Condemnation Proceeds | 79 | ||||
Section 10.03 |
Administration Matters Regarding Condemnation |
79 | ||||
(a) |
Application of Condemnation Awards | 79 | ||||
(b) |
Payment Obligations Unaffected | 80 | ||||
(c) |
Appointment of Lender as Attorney-In-Fact | 80 | ||||
(d) |
Preservation of Mortgaged Property | 80 | ||||
ARTICLE 11 LIENS, TRANSFERS, AND ASSUMPTIONS |
81 | |||||
Section 11.01 |
Representations and Warranties |
81 | ||||
(a) |
No Labor or Materialmens Claims | 81 | ||||
(b) |
No Other Interests | 82 | ||||
Section 11.02 |
Covenants |
82 | ||||
(a) |
Liens; Encumbrances | 82 | ||||
(b) |
Transfers | 83 | ||||
(c) |
No Other Indebtedness | 89 | ||||
(d) |
No Mezzanine Financing or Preferred Equity | 89 | ||||
Section 11.03 |
Administration Matters Regarding Liens, Transfers, and Assumptions |
89 | ||||
(a) |
Transfer of Collateral Pool | 89 | ||||
(b) |
Transfers to Key Principal-Owned Affiliates or Guarantor-Owned Affiliates | 91 | ||||
(c) |
Estate Planning | 92 | ||||
(d) |
Termination or Revocation of Trust | 92 | ||||
(e) |
Death of Key Principal or Guarantor; Restricted Ownership Interest/Controlling Interest Transfer Due to Death | 93 | ||||
(f) |
[Intentionally Deleted.] | 94 | ||||
(g) |
Further Conditions on Transfers Requiring Lenders Consent | 94 | ||||
(h) |
Additional Mortgaged Property | 95 | ||||
(i) |
Permitted Transfers | 96 | ||||
ARTICLE 12 IMPOSITIONS |
100 | |||||
Section 12.01 |
Representations and Warranties |
100 | ||||
(a) |
Payment of Taxes, Assessments, and Other Charges | 100 | ||||
Section 12.02 |
Covenants |
101 | ||||
(a) |
Imposition Deposits, Taxes, and Other Charges | 101 |
Master Credit Facility Agreement | Form 6001.MCFA | Page vi | ||
Fannie Mae | 11-20 | © 2020 Fannie Mae | ||
[Resources/ CBRE 2021] |
Section 12.03 |
Administration Matters Regarding Impositions |
101 | ||||
(a) |
Maintenance of Records by Lender | 101 | ||||
(b) |
Imposition Accounts | 102 | ||||
(c) |
Payment of Impositions; Sufficiency of Imposition Deposits | 102 | ||||
(d) |
Imposition Deposits Upon Event of Default | 103 | ||||
(e) |
Contesting Impositions | 103 | ||||
(f) |
Release to Borrower | 103 | ||||
ARTICLE 13 REPLACEMENTS, REPAIRS, AND RESTORATION |
104 | |||||
Section 13.01 |
Covenants |
104 | ||||
(a) |
Initial Deposits to Replacement Reserve Account, Repairs Escrow Account, and Restoration Reserve Account | 104 | ||||
(b) |
Monthly Replacement Reserve Deposits | 104 | ||||
(c) |
Payment and Deliverables for Replacements, Repairs, and Restoration | 104 | ||||
(d) |
Assignment of Contracts for Replacements, Repairs, and Restoration | 105 | ||||
(e) |
Indemnification | 105 | ||||
(f) |
Amendments to Loan Documents | 105 | ||||
(g) |
Administration Fees and Expenses | 106 | ||||
Section 13.02 |
Administration Matters Regarding Reserves |
106 | ||||
(a) |
Accounts, Deposits, and Disbursements | 106 | ||||
(b) |
Approvals of Contracts; Assignment of Claims | 114 | ||||
(c) |
Delays and Workmanship | 115 | ||||
(d) |
Appointment of Lender as Attorney-In-Fact | 115 | ||||
(e) |
No Lender Obligation | 115 | ||||
(f) |
No Lender Warranty | 116 | ||||
ARTICLE 14 DEFAULTS/REMEDIES |
116 | |||||
Section 14.01 |
Events of Default |
116 | ||||
(a) |
Automatic Events of Default | 116 | ||||
(b) |
Events of Default Subject to a Specified Cure Period | 118 | ||||
(c) |
Events of Default Subject to Extended Cure Period or Release | 118 | ||||
Section 14.02 |
Remedies |
119 | ||||
(a) |
Acceleration; Foreclosure | 119 | ||||
(b) |
Loss of Right to Disbursements from Collateral Accounts | 120 | ||||
(c) |
Remedies Cumulative | 121 |
Master Credit Facility Agreement | Form 6001.MCFA | Page vii | ||
Fannie Mae | 11-20 | © 2020 Fannie Mae | ||
[Resources/ CBRE 2021] |
Section 14.03 |
Additional Lender Rights; Forbearance |
121 | ||||
(a) |
No Effect Upon Obligations | 121 | ||||
(b) |
No Waiver of Rights or Remedies | 122 | ||||
(c) |
Appointment of Lender as Attorney-In-Fact | 122 | ||||
(d) |
Borrower Waivers | 124 | ||||
Section 14.04 |
Waiver of Marshaling |
124 | ||||
Section 14.05 |
Severed Loan Documents |
125 | ||||
ARTICLE 15 MISCELLANEOUS |
126 | |||||
Section 15.01 |
Choice of Law; Consent to Jurisdiction |
126 | ||||
Section 15.02 |
Waiver of Jury Trial |
127 | ||||
Section 15.03 |
Notice |
127 | ||||
(a) |
Process of Serving Notice | 127 | ||||
(b) |
Change of Address | 128 | ||||
(c) |
Default Method of Notice | 128 | ||||
(d) |
Receipt of Notices | 128 | ||||
Section 15.04 |
Successors and Assigns Bound; Sale of Advances |
128 | ||||
(a) |
Binding Agreement | 128 | ||||
(b) |
Sale of Advances; Change of Servicer | 128 | ||||
Section 15.05 |
Counterparts |
129 | ||||
Section 15.06 |
[Intentionally Deleted.] |
129 | ||||
Section 15.07 |
Relationship of Parties; No Third Party Beneficiary |
129 | ||||
(a) |
Solely Creditor and Debtor | 129 | ||||
(b) |
No Third Party Beneficiaries | 129 | ||||
Section 15.08 |
Severability; Entire Agreement; Amendments |
130 | ||||
Section 15.09 |
Construction |
130 | ||||
Section 15.10 |
Loan Servicing |
131 | ||||
Section 15.11 |
Disclosure of Information |
131 | ||||
Section 15.12 |
Waiver; Conflict |
131 | ||||
Section 15.13 |
No Reliance |
131 | ||||
Section 15.14 |
Subrogation |
132 | ||||
Section 15.15 |
Counting of Days |
132 | ||||
Section 15.16 |
Revival and Reinstatement of Indebtedness |
132 | ||||
Section 15.17 |
Time is of the Essence |
133 | ||||
Section 15.18 |
Final Agreement |
133 |
Master Credit Facility Agreement | Form 6001.MCFA | Page viii | ||
Fannie Mae | 11-20 | © 2020 Fannie Mae | ||
[Resources/ CBRE 2021] |
Section 15.19 |
Survival |
133 | ||||
Section 15.20 |
Assignments; Third Party Rights |
133 | ||||
Section 15.21 |
Interpretation |
134 |
Master Credit Facility Agreement | Form 6001.MCFA | Page ix | ||
Fannie Mae | 11-20 | © 2020 Fannie Mae | ||
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MASTER CREDIT FACILITY AGREEMENT
This MASTER CREDIT FACILITY AGREEMENT is made as of January 28, 2021, by and between (i) the entities identified as Borrower on the Summary of Master Terms, as Borrower, and (ii) CBRE Multifamily Capital, Inc., a Delaware corporation, as Lender.
RECITALS
A. Borrower owns one (1) or more Multifamily Residential Properties as more particularly described in Exhibit A to this Master Agreement.
B. Borrower has requested that Lender make a loan in favor of Borrower, comprised of a $24,760,000 Variable Advance and aggregate Fixed Advances of $470,410,000. Future Advances may be made by Lender to Borrower in accordance with the terms of this Master Agreement.
C. To secure the obligations of Borrower under this Master Agreement and the other Loan Documents, Borrower shall create a Collateral Pool in favor of Lender. The Collateral Pool shall be comprised of (i) the Multifamily Residential Properties listed on Exhibit A and (ii) any other collateral pledged to Lender from time to time by Borrower pursuant to this Master Agreement or any other Loan Documents.
D. Each Note and Security Document shall be cross-defaulted (i.e., a default under any Note, Security Document or this Master Agreement shall constitute a default under each other Note and Security Document and under this Master Agreement) and cross-collateralized (i.e., each Security Instrument shall secure all of Borrowers obligations under each Note, this Master Agreement, and the other Loan Documents). It is the intent of the parties to this Master Agreement that, after an Event of Default, Lender may accelerate any Note without the obligation but with the right to accelerate any other Note and that in the exercise of its rights and remedies under the Loan Documents, Lender may exercise and perfect any and all of its rights and remedies in and under the Loan Documents with regard to any Mortgaged Property without the obligation but with the right to exercise and perfect its rights and remedies with respect to any other Mortgaged Property. Any such exercise shall be without regard to the Allocable Facility Amount assigned to such Mortgaged Property. Lender may recover an amount equal to the full amount Outstanding in respect of any of the Notes in connection with such exercise and any such amount shall be applied to the Indebtedness as determined by Lender pursuant to the terms of this Master Agreement, the Notes, and the other Loan Documents.
E. It is the intent of the parties that, notwithstanding anything to the contrary herein or the existence of any cash management system maintained by Borrower, and/or Guarantor or Borrower Affiliates or the provision by Guarantor of the Guaranty, Lender is making Advances to Borrower (not to Guarantor or Borrower Affiliates). Lender has underwritten the making of the Advances based on its analysis of the value of the Collateral. In making the Advances, Lender is relying on each Borrower being and maintaining itself as a Single Purpose entity whose sole asset is its Mortgaged Property and ancillary property related thereto. Lender acknowledges that it views its credit risk as the performance and value of the Mortgaged Properties and it views the Guaranty as independent supplemental support in the event that one of the exceptions to the non-recourse events occurs.
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F. Subject to the terms, conditions, and limitations of this Master Agreement, Lender has agreed to make the Advances.
G. It is anticipated that Lender shall assign each Advance made hereunder to Fannie Mae; however Fannie Mae shall not assume (i) any of the obligations of Lender, if any, under this Master Agreement to make Future Advances, or (ii) any of the obligations of Lender which are servicing obligations delegated to Lender as servicer of the Advances.
NOW, THEREFORE, in consideration of Borrower and Lender entering into this Master Agreement and other good and valuable consideration, the receipt and adequacy of which are hereby conclusively acknowledged, the parties hereby covenant, agree, represent, and warrant as follows:
AGREEMENTS
Article 1
DEFINITIONS; SUMMARY OF TERMS
Section 1.01 Defined Terms.
Capitalized terms not otherwise defined in the body of this Master Agreement shall have the meanings set forth in the Definitions Schedule attached to this Master Agreement.
Section 1.02 Schedules, Exhibits, and Attachments Incorporated.
The schedules, exhibits, and any other addenda or attachments are incorporated fully into this Master Agreement by this reference and each constitutes a substantive part of this Master Agreement.
Article 2
ADVANCES; COLLATERAL EVENTS
Section 2.01 Advance Types.
Subject to the terms, conditions, and limitations of this Master Agreement:
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(a) Variable Advance.
Lender agrees to make Variable Advances to Borrower in accordance with the terms and provisions of this Master Agreement. Future Advances may be made pursuant to Section 2.02(c)(2) (Future Advances). Pursuant to the terms of Section 2.10(a) (Conversion from Variable Note to Fixed Note), Borrower may convert a Variable Note to a Fixed Note.
(b) Fixed Advance.
Lender agrees to make Fixed Advances to Borrower in accordance with the terms and provisions of this Master Agreement. Future Advances may be made pursuant to Section 2.02(c)(2) (Future Advances).
(c) Protective Advances.
As provided in the Security Instrument, Lender may take such actions or disburse such funds as Lender reasonably deems necessary to perform the obligations of Borrower under this Master Agreement and the other Loan Documents and to protect Lenders interest in the Mortgaged Property.
Section 2.02 Advances Generally.
(a) Request.
Assuming Advances are available to Borrower under this Master Agreement and this Section 2.02 (Advances Generally), Borrower shall request a Future Advance by giving Lender a Future Advance Request. The Future Advance Request shall indicate whether the Request is for a Fixed Advance or Variable Advance or more than one type of Advance.
(b) Limitations on Executions.
Notwithstanding anything in this Master Agreement or any other Loan Document to the contrary, any Future Advance (whether a Variable Advance or a Fixed Advance) and any Conversion of an Advance shall be subject to the precondition that Lender must confirm with Fannie Mae that Fannie Mae is generally offering to purchase in the marketplace advances of the
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execution type requested by Borrower at the time of the Request and at the time the rate for such Advance is locked. In the event Fannie Mae is not purchasing advances of the type requested by Borrower, Lender agrees to offer, to the extent available from Fannie Mae, alternative advance executions based on the types of executions Fannie Mae is generally offering to purchase in the marketplace at that time. Any alternative execution offered would be subject to mutually agreeable documentation necessary to implement the terms and conditions of such alternative execution.
(c) Making Advances.
(1) Initial Advances.
Assuming conditions of Lender have been met prior to or as of the date of this Master Agreement, Lender shall make the Initial Advance(s) to Borrower.
(2) Future Advances.
(A) Subject to Section 2.02(b) (Limitations on Executions) and satisfaction of the terms in the Future Advance Schedule, Borrower may request a Future Advance. Lender is not committing in this Master Agreement to make a Future Advance and any Future Advance will be at the option of Lender except for a Borrow Up provided in the proviso of Section 2.02(c)(2)(B) (Future Advances) below, subject to the requirements of such proviso and this Master Agreement. Once made, any Future Advance shall be subject to this Master Agreement in all respects and shall be secured by the Security Instruments encumbering the Mortgaged Properties.
(B) Any Future Advance shall be made in connection with the Addition of Additional Mortgaged Properties; provided, however, so long as there are at least two (2) Mortgaged Properties in the Collateral Pool, Borrower may request that one or more Future Advances made pursuant to Section 2.02(c)(2)(A) (Future Advances) above be made without the Addition of Additional Mortgaged Property (each a Borrow Up) based on compliance with the terms of the Future Advance Schedule and the Underwriting and Servicing Requirements subject to the terms of this Section 2.02(c)(2) (Future Advances) and Section 2.02(b) (Limitations on Executions). Such Borrow Up shall be made during the Borrow Up Availability Period, but not more than one (1) time per Facility Year.
(C) All Future Advances must satisfy the terms of the Future Advance Schedule and any addition of Additional Mortgaged Property shall satisfy the terms of the Mortgaged Property Addition Schedule.
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(3) Closing of Future Advance.
If the conditions set forth in this Section 2.02 (Advances Generally) and the Future Advance Schedule are satisfied (and, if applicable, all conditions set forth on the Mortgaged Property Addition Schedule are satisfied), Lender shall make the requested Future Advance on an Effective Date selected by Lender (or on such other date as Borrower and Lender may agree).
Section 2.03 Advance Terms and Payments on Advances.
(a) Debt Service Payments.
(1) Short Month Interest.
If the date the proceeds of an Advance are disbursed is any day other than the first day of the month, interest for the period beginning on the disbursement date and ending on and including the last day of the month in which the disbursement occurs shall be payable by Borrower on the date the Advance proceeds are disbursed. In the event that the disbursement date is not the same as the Effective Date, then:
(A) the disbursement date and the Effective Date must be in the same month, and
(B) the Effective Date shall not be the first day of the month.
(2) Interest Accrual and Computation; Amortization; Interest Rate Cap.
(A) Except as provided in Section 2.03(a)(1) (Short Month Interest), interest shall be paid in arrears. Except as otherwise provided in this Master Agreement, for Fixed Advances, interest shall accrue at the Interest Rate until fully paid; and for Variable Structured ARM Advances, interest shall accrue at the Adjustable Rate until fully paid. If the Interest Accrual Method is Actual/360, Borrower acknowledges and agrees that the amount allocated to interest for each month will vary depending on the actual number of calendar days during such month.
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(B) With respect to any Variable Structured ARM Advances, the following provisions shall apply:
(i) Adjustable Rate; Index Replacement.
The Initial Adjustable Rate shall be effective until the first Rate Change Date. Thereafter, the Adjustable Rate shall change on each Rate Change Date based on fluctuations in the Current Index as determined by Lender, which determination shall be conclusive absent manifest error.
(1) Index Replacement Date.
Notwithstanding anything to the contrary herein or in any other Loan Document, if an Index Transition Event and its related Index Replacement Date have occurred with respect to the Current Index, then the Index Replacement will replace the Current Index on such Index Replacement Date and all subsequent dates. The Index Replacement will become effective on the Index Replacement Date without any amendment or further action or consent of any other party to the Master Agreement or any other Loan Document.
(2) Index Replacement Conforming Changes.
(i) In connection with the implementation of an Index Replacement, Lender shall have the right to make Index Replacement Conforming Changes from time to time. Notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such Index Replacement Conforming Changes shall become effective without any further action or consent of Borrower.
(ii) Lender shall notify Borrower of (A) the occurrence of any Index Transition Event and its related Index Replacement Date, (B) the Index Replacement determined by Lender, and (C) any required Index Replacement Conforming Changes. Any determination, decision, or election made by Lender pursuant to this Section 2.03(a)(2)(B) (Interest Accrual and Computation; Amortization; Interest Rate Cap), including any determination by Lender with respect to tenor, rate, or
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adjustment, or of the occurrence or non-occurrence of an event, circumstance, or date, and any decision to take or refrain from taking any action or any selection, shall be conclusive and binding absent manifest error and may be made in Lenders sole discretion and without consent from Borrower.
(3) Federal Income Tax Treatment.
For federal income tax purposes, Lender intends to effect the replacement of the Current Index with the Index Replacement in connection with an Index Transition Event such that the replacement will not result in a tax realization event under Section 1001 of the Internal Revenue Code and relevant Treasury Regulations promulgated thereunder.
(ii) Fixed Monthly Principal Component.
Each amortizing Monthly Debt Service Payment shall include a principal payment equal to the Fixed Monthly Principal Component, which shall be determined using the Fixed Rate Amortization Factor.
(iii) Notification of Interest Rate Change and Monthly Debt Service Payment.
Before each Payment Change Date, Lender shall notify Borrower of any change in the Adjustable Rate and the amount of the next Monthly Debt Service Payment.
(iv) Correction to Monthly Debt Service Payments.
If Lender determines at any time that it has miscalculated the amount of a Monthly Debt Service Payment (whether because of a miscalculation of the Adjustable Rate or otherwise), then Lender shall give notice to Borrower of the corrected amount of the Monthly Debt Service Payment (and the corrected Adjustable Rate, if applicable) and (a) if the corrected amount of the Monthly Debt Service Payment represents an increase, then Borrower shall, within thirty (30) calendar days thereafter, pay to Lender
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any sums that Borrower would have otherwise been obligated to pay to Lender had the amount of the Monthly Debt Service Payment not been miscalculated, or (b) if the corrected amount of the Monthly Debt Service Payment represents a decrease and Borrower is not otherwise in default under any of the Loan Documents, then Borrower shall thereafter be paid the sums that Borrower would not have otherwise been obligated to pay to Lender had the amount of the Monthly Debt Service Payment not been miscalculated.
(v) Interest Rate Cap.
If required by Lender, to protect against fluctuations in interest rates during the Term of this Master Agreement, Borrower shall enter into the Cap Security Agreement. Pursuant to the terms of the Cap Security Agreement, Borrower shall make arrangements for a SOFR-based interest rate cap in form and substance satisfactory to Lender with a counterparty satisfactory to Lender (Interest Rate Cap) to be in place and maintained at all times with respect to any Variable Advance which has been funded and remains Outstanding. The seller of the Interest Rate Cap (seller and its transferees and assigns, the Counterparty) shall be a financial institution meeting the minimum requirements for hedge counterparties acceptable to Lender. The Interest Rate Cap shall have a minimum initial term of three (3) years. Borrower shall be required to make Monthly Deposits (as defined in the Cap Security Agreement) to be held in an Interest Rate Cap Reserve Escrow Account (as defined in the Cap Security Agreement). As set forth in the Cap Security Agreement, Borrower agrees to pledge its right, title, and interest in the Interest Rate Cap to Lender as additional collateral for the Indebtedness.
(C) The amortization and payment of interest (and principal, if applicable) for each Advance shall be determined at the Effective Date of each Advance.
(3) Monthly Debt Service Payments.
Consecutive monthly debt service installments (comprised of either interest only or principal and interest, depending on the Amortization Type), each in the amount of the applicable Monthly Debt Service Payment for an Advance, shall be due and payable on the First Payment Date, and on each Payment Date thereafter until the Maturity Date of such Advance, at which time all Indebtedness relating to such Advance shall be due. Any regularly scheduled Monthly Debt Service Payment that is received by Lender before the applicable Payment Date shall be deemed to have been received on such Payment Date solely for the purpose of calculating interest due. All payments made by Borrower under this Master Agreement shall be made without set-off, counterclaim, or other defense.
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(4) Payment at Maturity.
(A) The unpaid principal balance of an Advance, any Accrued Interest thereon, and all other Indebtedness relating to such Advance shall be due and payable on the applicable Maturity Date for such Advance.
(B) Except in connection with a complete repayment of all Advance(s), if Borrower pays any Advances at maturity of such Advance and requests a Release of any Mortgaged Property, such Release shall be subject to the Release Price and release tests in the Mortgaged Property Release Schedule.
(5) Maturity Dates.
(A) The Maturity Date of each Variable Advance shall be specified by Borrower for such Variable Advance, provided that such Maturity Date shall be no earlier than the date that is the first day of the month following the date five (5) years after the Effective Date of such Variable Advance and no later than the date that is the first day of the month following the date ten (10) years after the Effective Date of such Variable Advance provided no Maturity Date shall be after the Latest Facility Termination Date.
(B) The Maturity Date of each Fixed Advance shall be specified by Borrower for such Fixed Advance, provided that such Maturity Date shall be no earlier than the date that is the first day of the month following the date five (5) years after the Effective Date for such Fixed Advance and no later than the date that is the first day of the month following the date fifteen (15) years after the Effective Date of such Fixed Advance provided no Maturity Date shall be after the Latest Facility Termination Date. Notwithstanding the foregoing, unless otherwise agreed to by Lender, the Maturity Date of any Fixed Advance that is converted from a SARM Advance pursuant to the terms of the Conversion Schedule shall be no earlier than the date seven (7) years after the Conversion Effective Date and no later than the Latest Facility Termination Date.
(6) Interest Rate Type; Notes.
(A) The obligation of Borrower to repay each Variable Advance shall be evidenced by one or more separate Variable Notes. Each Variable Note shall be payable to the order of Lender and shall be made in the original principal amount of such Variable Advance.
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(B) The obligation of Borrower to repay each Fixed Advance shall be evidenced by one or more separate Fixed Notes. The Fixed Note shall be payable to the order of Lender and shall be made in the original principal amount of such Fixed Advance.
(b) Capitalization of Accrued But Unpaid Interest.
Any accrued and unpaid interest on an Advance remaining past due for thirty (30) days or more may, at Lenders election, be added to and become part of the unpaid principal balance of such Advance.
(c) Late Charges.
(1) If any Monthly Debt Service Payment due hereunder is not received by Lender within ten (10) days after the applicable Payment Date, or any amount payable under this Master Agreement (other than the payment due on the applicable Maturity Date for repayment of an Advance in full) or any other Loan Document is not received by Lender within ten (10) days after the date such amount is due, inclusive of the date on which such amount is due, Borrower shall pay to Lender, immediately without demand by Lender, the Late Charge.
(2) The Late Charge is payable in addition to, and not in lieu of, any interest payable at the Default Rate pursuant to Section 2.03(d) (Default Rate).
(3) Borrower acknowledges and agrees that:
(A) its failure to make timely payments will cause Lender to incur additional expenses in servicing and processing the Advances;
(B) it is extremely difficult and impractical to determine those additional expenses;
(C) Lender is entitled to be compensated for such additional expenses; and
(D) the Late Charge represents a fair and reasonable estimate, taking into account all circumstances existing on the date hereof, of the additional expenses Lender will incur by reason of any such late payment.
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(d) Default Rate.
(1) Default interest shall be paid as follows:
(A) If any amount due in respect of an Advance (other than amounts due on the Maturity Date) remains past due for thirty (30) days or more, interest on such unpaid amount(s) shall accrue from the date payment is due at the Default Rate until the same is fully paid and shall be payable upon demand by Lender.
(B) If any Indebtedness due is not paid in full on the applicable Maturity Date, then interest shall accrue at the Default Rate on all such unpaid amounts from such Maturity Date until fully paid and shall be payable upon demand by Lender.
Absent a demand by Lender, any such amounts shall be payable by Borrower in the same manner as provided for the payment of Monthly Debt Service Payments. To the extent permitted by Applicable Law, interest shall also accrue at the Default Rate on any judgment obtained by Lender against Borrower in connection with the Advances. To the extent Borrower or any other Person is vested with a right of redemption, interest shall continue to accrue at the Default Rate during any redemption period until such time as the Mortgaged Property has been redeemed.
(2) Borrower acknowledges and agrees that:
(A) its failure to make timely payments will cause Lender to incur additional expenses in servicing and processing the Advances; and
(B) in connection with any failure to timely pay all amounts due in respect of an Advance on the applicable Maturity Date, or during the time that any amount due in respect of an Advance is delinquent for more than thirty (30) days:
(i) Lenders risk of nonpayment of the Advance will be materially increased;
(ii) Lenders ability to meet its other obligations and to take advantage of other investment opportunities will be adversely impacted;
(iii) Lender will incur additional costs and expenses arising from its loss of the use of the amounts due;
(iv) it is extremely difficult and impractical to determine such additional costs and expenses;
(v) Lender is entitled to be compensated for such additional risks, costs, and expenses; and
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(vi) the increase from the Interest Rate to the Default Rate represents a fair and reasonable estimate of the additional risks, costs, and expenses Lender will incur by reason of Borrowers delinquent payment and the additional compensation Lender is entitled to receive for the increased risks of nonpayment associated with a delinquency on the Advance (taking into account all circumstances existing on the applicable Effective Date).
(e) Address for Payments.
All payments due pursuant to the Loan Documents shall be payable at Lenders Payment Address, or such other place and in such manner as may be designated from time to time by written notice to Borrower by Lender.
(f) Application of Payments.
Subject to the terms of Section (d) (Application of Release Price) of the Mortgaged Property Release Schedule, if at any time Lender receives, from Borrower or otherwise, any payment in respect of the Indebtedness that is less than all amounts due and payable at such time, then Lender may apply such payment to amounts then due and payable in any manner and in any order determined by Lender or hold in suspense and not apply such payment at Lenders election, provided, however, if requested by Borrower, Lender shall notify Borrower of the manner in which Lender has elected to apply or suspend such payment. Neither Lenders acceptance of a payment that is less than all amounts then due and payable, nor Lenders application of, or suspension of the application of, such payment, shall constitute or be deemed to constitute either a waiver of the unpaid amounts or an accord and satisfaction. Notwithstanding the application of any such payment to the Indebtedness, Borrowers obligations under this Master Agreement and the other Loan Documents shall remain unchanged.
Section 2.04 Prepayment; Prepayment Lockout; Prepayment Premium.
(a) Subject to the terms and conditions of the applicable Prepayment Premium Schedule and the requirements relating to application of the Release Price set forth in the Mortgaged Property Release Schedule, Notes are prepayable in whole or in part, provided that Borrower shall not make a voluntary full or partial prepayment of a Note during any Prepayment Lockout Period, if any. Except as expressly provided in this Master Agreement (including as provided in the Prepayment Premium Schedule applicable to such Note), a Prepayment Premium calculated in accordance with the Prepayment Premium Schedule applicable to such Note shall be payable in connection with any prepayment of such Note.
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(b) If a Prepayment Lockout Period applies to the applicable Note, and during such Prepayment Lockout Period Lender accelerates the unpaid principal balance of such Note or otherwise applies collateral held by Lender to the repayment of any portion of the unpaid principal balance of such Note, the Prepayment Premium shall be due and payable and equal to the amount obtained by multiplying the percentage indicated (if at all) in the Prepayment Premium Schedule for such Note by the amount of principal being prepaid at the time of such acceleration or application.
(c) In connection with any such voluntary prepayment, Borrower acknowledges and agrees that interest shall always be calculated and paid through the last day of the month in which the prepayment occurs (even if the Permitted Prepayment Date for such month is not the last day of such month, or if Lender approves prepayment on an Intended Prepayment Date that is not a Permitted Prepayment Date). Borrower further acknowledges that Lender is not required to accept a voluntary prepayment of a Note on any day other than a Permitted Prepayment Date. However, if Lender does approve an Intended Prepayment Date that is not a Permitted Prepayment Date and accepts a prepayment on such Intended Prepayment Date, such prepayment shall be deemed to be received on the immediately following Permitted Prepayment Date. If Borrower fails to prepay the applicable Note (or such portion of the Note as is intended to be prepaid) on the Intended Prepayment Date for any reason (including on any Intended Prepayment Date that is approved by Lender) and such failure either continues for five (5) Business Days, or into the following month, Lender shall have the right to recalculate the payoff amount. If Borrower prepays a Note either in the following month or more than five (5) Business Days after the Intended Prepayment Date that was approved by Lender, Lender shall also have the right to recalculate the payoff amount based upon the amount of such payment and the date such payment was received by Lender. Borrower shall immediately pay to Lender any additional amounts required by any such recalculation.
(d) After receipt of a partial prepayment, Lender shall re-calculate the Monthly Debt Service Payment based upon the remaining unpaid principal balance of the applicable Note for each subsequent monthly debt service installment due under such Note. For amortizing Advances, the subsequent Monthly Debt Service Payments shall be calculated by amortizing the remaining unpaid principal balance of the applicable Note over the Remaining Amortization Period (1) (A) for Fixed Advances, utilizing the Fixed Rate, and (B) for Variable Advances, utilizing the then current Adjustable Rate and including a principal payment determined using the Fixed Rate Amortization Factor, and (2) utilizing the Interest Accrual Method, each as set forth in the applicable Schedule of Advance Terms. Lender shall notify Borrower of the new required Monthly Debt Service Payment following receipt of a partial prepayment and Borrower shall execute any amendment requested by Lender to evidence such new required monthly installment(s).
Section 2.05 Acceleration of Advances.
Upon acceleration of any Advance, Borrower shall pay to Lender:
(a) the entire unpaid principal balance of the Advances;
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(b) all Accrued Interest (calculated through the last day of the month in which the acceleration occurs);
(c) the Prepayment Premium; and
(d) all other Indebtedness.
Section 2.06 Application of Collateral.
Any application by Lender of any collateral or other security to the repayment of all or any portion of the unpaid principal balance of the Advances prior to the Maturity Date in accordance with the Loan Documents shall be deemed to be a prepayment by Borrower. Any such prepayment shall require the payment to Lender by Borrower of the Prepayment Premium calculated on the amount being prepaid in accordance with this Master Agreement and applied in accordance with Section (d) (Application of Release Price) of the Mortgaged Property Release Schedule.
Section 2.07 Casualty and Condemnation.
Notwithstanding any provision of this Master Agreement to the contrary, no Prepayment Premium shall be payable with respect to any prepayment occurring as a result of the application of any insurance proceeds or amounts received in connection with a Condemnation Action in accordance with this Master Agreement.
Section 2.08 No Effect on Payment Obligations.
Unless otherwise expressly provided in this Master Agreement, any prepayment required by any Loan Document of less than the entire unpaid principal balance of the Advance(s) shall not extend or postpone the due date of any subsequent Monthly Debt Service Payments, Monthly Replacement Reserve Deposit, or other payment.
Section 2.09 Loss Resulting from Prepayment.
In any circumstance in which a Prepayment Premium is due under this Master Agreement, Borrower acknowledges that:
(a) any prepayment of the unpaid principal balance of any Advance, whether voluntary or involuntary, or following the occurrence of an Event of Default by Borrower, will result in Lenders incurring loss, including reinvestment loss, additional risk, expense, and frustration or impairment of Lenders ability to meet its commitments to third parties;
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(b) it is extremely difficult and impractical to ascertain the extent of such losses, risks and damages;
(c) the formula for calculating the Prepayment Premium represents a reasonable estimate of the losses, risks, and damages Lender will incur as a result of a prepayment; and
(d) the provisions regarding the Prepayment Premium contained in this Master Agreement are a material part of the consideration for this Master Agreement, and that the terms of this Master Agreement are in other respects more favorable to Borrower as a result of Borrowers voluntary agreement to such prepayment provisions.
Section 2.10 Collateral Events.
(a) Conversion from Variable Note to Fixed Note.
Subject to and in accordance with the terms and conditions of the Conversion Schedule, Borrower shall have the right, from time to time during the Conversion Period, to convert all or any portion of a Variable Note to a Fixed Note.
(b) Right to Obtain Releases of Mortgaged Property.
Subject to and in accordance with the terms and conditions of the Mortgaged Property Release Schedule, Borrower shall have the right from time to time to obtain a release of one or more Mortgaged Properties (a Release) from the Collateral Pool.
(c) Right to Add Additional Mortgaged Properties as Collateral.
Subject to and in accordance with the terms and conditions of the Mortgaged Property Addition Schedule, Borrower shall have the right, from time to time to add one or more Additional Mortgaged Properties (an Addition) to the Collateral Pool.
(d) Right to Substitutions.
Subject to and in accordance with the terms and conditions of the Mortgaged Property Release Schedule and the Mortgaged Property Addition Schedule, Borrower shall have the right to obtain the release of one or more Mortgaged Properties by replacing such Mortgaged Property with one (1) or more Additional Mortgaged Properties that meet the requirements of this Master Agreement thereby effecting a Substitution of Collateral.
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(e) Limitation on Collateral Events.
Notwithstanding anything to the contrary in this Master Agreement, no Collateral Event shall be permitted unless immediately after such Collateral Event the Advances then Outstanding will not exceed one hundred percent (100%) of the aggregate fair market value of all real property securing such Advances (where fair market value is determined for these purposes based upon a current Appraisal or some other commercially reasonable valuation method as determined by Lender).
(f) Intentionally Deleted.
(g) Elected Coverage and LTV Tests.
At any time during the Term of this Master Agreement, by giving prior written notice to Lender, Borrower shall have the one-time right to permanently change the loan to value and debt service coverage tests for the Collateral Pool (the Elected Coverage and LTV Tests). On and after the date Borrower exercises the Elected Coverage and LTV Tests, the loan to value and debt service coverage tests shall be revised as set forth in the definition of Coverage and LTV Tests.
Section 2.11 Termination of Master Agreement.
Subject to the terms and conditions set forth below, Borrower shall have the right to terminate this Master Agreement and receive a Release of all of the Collateral.
(a) Request.
To terminate this Master Agreement, Borrower shall deliver a Termination Request to Lender, provided that this Master Agreement shall automatically terminate upon repayment of the Indebtedness.
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(b) Conditions Precedent.
The right of Borrower to terminate this Master Agreement and to receive a Release of all of the Collateral from the Collateral Pool and Lenders obligation to execute and deliver the Termination Documents on the Effective Date are subject to the following conditions precedent:
(1) receipt by Lender of the fully executed Termination Request;
(2) payment by Borrower in full of each Note Outstanding on the Effective Date, including any associated Prepayment Premiums or other amounts due under each Note and all of the other amounts owing by Borrower to Lender under this Master Agreement and the Other Loan Documents; and
(3) payment by Borrower of Lenders and Fannie Maes reasonable third party out-of-pocket fees and expenses payable in accordance with this Master Agreement, including Lenders and Fannie Maes legal fees and expenses. No Release Fee shall be due in connection with a Termination of the Master Agreement.
(c) Closing.
If all conditions precedent contained in this Section 2.11 (Termination of Master Agreement) are satisfied, this Master Agreement shall terminate, and Lender shall cause all of the Collateral to be Released on an Effective Date selected by Lender, within thirty (30) Business Days after all of the conditions with respect to such Termination Request have been satisfied (or on such other date as Borrower and Lender may agree), and all applicable parties shall execute and deliver, all at the sole cost and expense of Borrower, the Termination Documents.
Article 3
PERSONAL LIABILITY
Section 3.01 Non-Recourse Liability; Exceptions.
Except as otherwise provided in this Article 3 (Personal Liability) or in any other Loan Document, none of Borrower, or any director, officer, manager, member, partner, shareholder, agent, trustee, trust beneficiary, affiliate or employee of Borrower, shall have personal liability under this Master Agreement or any other Loan Document for the repayment of the Indebtedness or for the performance of any other obligations of Borrower under the Loan Documents, and Lenders only recourse for the satisfaction of such Indebtedness and the performance of such obligations shall be Lenders exercise of its rights and remedies with respect to the Mortgaged Properties and any other Collateral held by Lender as security for the Indebtedness. This limitation on Borrowers liability shall not limit or impair Lenders enforcement of its rights against Guarantor under any Loan Document.
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Section 3.02 Personal Liability of Borrower.
(a) Personal Liability Based on Lenders Loss (Partial Recourse).
Borrower shall be personally liable to Lender for the repayment of the portion of the Indebtedness equal to any loss or damage suffered by Lender as a result of, subject to any notice and cure period, if any, or in any manner relating to:
(1) failure to pay as directed by Lender upon demand after an Event of Default (to the extent actually received by Borrower):
(A) all Rents to which Lender is entitled under the Loan Documents; and
(B) the amount of all security deposits then held or thereafter collected by Borrower from tenants and not properly applied pursuant to the applicable Leases;
(2) failure to maintain all insurance policies required by the Loan Documents, except to the extent Lender has the obligation to pay the premiums pursuant to Section 12.03(c) (Payment of Impositions; Sufficiency of Imposition Deposits);
(3) failure to apply all insurance proceeds received by Borrower or any amounts received by Borrower in connection with a Condemnation Action as required by the Loan Documents;
(4) failure to comply with any provision of this Master Agreement or any other Loan Document relating to the delivery of books and records, statements, schedules, and reports;
(5) except to the extent directed otherwise by Lender pursuant to Section 3.02(a)(1) (Personal Liability Based on Lenders Loss (Partial Recourse)), failure to apply Rents to the ordinary and necessary expenses of owning and operating the Mortgaged Properties prior to delinquency and Debt Service Amounts, as and when due and payable, except that Borrower will not be personally liable with respect to Rents that are distributed by Borrower in any Calendar Year if Borrower has paid all ordinary and necessary expenses of owning and operating the Mortgaged Properties and Debt Service Amounts for such Calendar Year;
(6) waste or abandonment of any Mortgaged Property;
(7) grossly negligent or reckless unintentional written material misrepresentation or omission by Borrower, Guarantor, Key Principal, or any officer, director, partner, manager, member, shareholder, or trustee of Borrower, Guarantor, or Key Principal in connection with ongoing financial or other reporting required by the Loan Documents, or any request for action or consent by Lender; or
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(8) failure to comply with each of the Single Purpose requirements of Section 4.02(d)(3), (4), (7)-(12), and (14)-(17) (Borrower Status Covenants Single Purpose Status) of this Master Agreement (subject to possible full recourse liability as set forth in Section 3.02(b)(1) (Full Personal Liability (Full Recourse)); provided, however, no such recourse liability shall arise until the expiration of the cure periods set forth in this Section 3.02(a)(8) (Personal Liability Based on Lenders Loss (Partial Recourse)). Borrower must deliver on an annual basis or upon Lenders written request, a certification as to compliance with the covenants set forth in Section 4.02(d) (Borrower Status Covenants Single Purpose Status). If Borrower breaches a covenant set forth in Section 4.02(d) (Borrower Status Covenants Single Purpose Status), then, if such breach can be cured, Borrower shall have thirty (30) days from the earlier of (A) the date of delivery of the annual Officers Certificate set forth in Section 8.02(b)(5) (Items to Furnish to Lender) indicating such breach, (B) the date Lender notices Borrower of such breach, or (C) the date Borrower discovers such breach, to cure such breach, provided that if such breach can be cured but cannot reasonably be cured within such thirty (30) day period and Borrower shall have commenced to cure such breach within such thirty (30) day period and thereafter diligently and expeditiously proceeds to cure the same, such thirty (30) day period shall be extended for so long as it shall require Borrower in the exercise of due diligence to cure such breach, it being agreed that no such extension shall be for a period in excess of sixty (60) days for any individual breach.
(9) failure of Borrower to purchase an Interest Rate Cap if required pursuant to Section 2.03(a)(2) (Interest Accrual and Computation; Amortization; Interest Rate Cap).
Notwithstanding the foregoing, Borrower shall not have personal liability under clauses (1), (3), or (5) above to the extent that Borrower lacks the legal right to direct the disbursement of the applicable funds due to an involuntary Bankruptcy Event with respect to Borrower or SPE Owner that occurs without the consent, encouragement, or active participation of Borrower, SPE Owner, Guarantor, Key Principal or any Borrower Affiliate (which consent, encouragement, or active participation shall not be deemed to include any consent, encouragement, or active participation required by Applicable Law or any bankruptcy court or compiled by any applicable bankruptcy court).
(b) Full Personal Liability (Full Recourse).
Borrower shall be personally liable to Lender for the repayment of all of the Indebtedness, and the Advances shall be fully recourse to Borrower, upon the occurrence of any of the following:
(1) failure to comply with each of the Single Purpose requirements of:
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(A) Section 4.02(d)(1), (2), (5), (6) and (13) (Borrower Status Covenants Single Purpose Status) of this Master Agreement; and
(B) Section 4.02(d)(3), (4), (7)-(12), and (14)-(17) (Borrower Status Covenants Single Purpose Status) of this Master Agreement and, pursuant to a final non-appealable court order, a court of competent jurisdiction holds or determines that such failure or combination of failures is the basis, in whole or in part, for the substantive consolidation of the assets and liabilities of Borrower, Borrowers general partner, sole member, or managing member, or SPE Owner with the assets and liabilities of a debtor pursuant to Title 11 of the Bankruptcy Code;
(2) a Transfer (other than a conveyance of a Mortgaged Property at a Foreclosure Event pursuant to the Security Instrument and this Master Agreement) that is not permitted under this Master Agreement or any other Loan Document;
(3) the occurrence of any Bankruptcy Event with respect to Borrower, Borrowers general partner, sole member, or managing member, or SPE Owner (other than an acknowledgement in writing as described in clause (b) of the definition of Bankruptcy Event); provided, however, in the event of an involuntary Bankruptcy Event with respect to Borrower, Borrowers general partner, sole member, or managing member, or SPE Owner, Borrower shall only be personally liable if such involuntary Bankruptcy Event occurs with the consent, encouragement or active participation of Borrower, Guarantor, Key Principal, SPE Owner, or any Borrower Affiliate (which consent, encouragement, or active participation shall not be deemed to include any consent, encouragement, or active participation required by Applicable Law or any bankruptcy court or compiled by any applicable bankruptcy court);
(4) fraud, written material misrepresentation, or material omission by Borrower, Guarantor, Key Principal, or any officer, director, partner, manager, member, shareholder, or trustee of Borrower, Guarantor, or Key Principal in connection with any application for or creation of the Indebtedness;
(5) fraud, written intentional material misrepresentation or intentional material omission by Borrower, Guarantor, Key Principal, or any officer, director, partner, manager, member, shareholder, or trustee of Borrower, Guarantor, or Key Principal in connection with ongoing financial or other reporting required by the Loan Documents, or any request for action or consent by Lender; or
(6) a Division that is not permitted under this Master Agreement or any other Loan Document.
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Section 3.03 Personal Liability for Indemnity Obligations.
Borrower shall be personally and fully liable to Lender for Borrowers indemnity obligations under Section 13.01(e) (Indemnification) of this Master Agreement, the Environmental Indemnity Agreement and any other express indemnity obligations provided by Borrower under any Loan Document. Borrowers liability for such indemnity obligations shall not be limited by the amount of the Indebtedness, the repayment of the Indebtedness, or otherwise, provided that Borrowers liability for such indemnities shall not include any loss caused by the gross negligence or willful misconduct of Lender as determined by a court of competent jurisdiction pursuant to a final non-appealable court order.
Section 3.04 Lenders Right to Forego Rights Against Mortgaged Property.
To the extent that Borrower has personal liability under this Master Agreement or any other Loan Document, Lender may exercise its rights against Borrower personally to the fullest extent permitted by Applicable Law without regard to whether Lender has exercised any rights against any Mortgaged Property, the UCC Collateral, or any other security, or pursued any rights against Guarantor, or pursued any other rights available to Lender under this Master Agreement, any other Loan Document, or Applicable Law. For purposes of this Section 3.04 (Lenders Right to Forego Rights Against Mortgaged Property) only, the term Mortgaged Property shall not include any funds that have been applied by Borrower as required or permitted by this Master Agreement prior to the occurrence of an Event of Default, or that Borrower was unable to apply as required or permitted by this Master Agreement because of a Bankruptcy Event with respect to Borrower. To the fullest extent permitted by Applicable Law, in any action to enforce Borrowers personal liability under this Article 3 (Personal Liability), Borrower waives any right to set off the value of a Mortgaged Property against such personal liability.
Section 3.05 Borrower Agency Provisions.
(a) Each Borrower shall irrevocably designate Borrower Agent to be its agent and in such capacity to receive on behalf of Borrower all proceeds, receive all notices on behalf of Borrower under this Master Agreement, make all requests under this Master Agreement, and execute, deliver, and receive all instruments, certificates, requests, documents, amendments, writings, and further assurances now or hereafter required hereunder, on behalf of such Borrower, and hereby authorizes Lender to pay over all proceeds hereunder in accordance with the request of Borrower Agent. Each Borrower hereby acknowledges that all notices required to be delivered by Lender to any Borrower shall be delivered to Borrower Agent and thereby shall be deemed to have been received by such Borrower.
(b) The handling of this Master Agreement as a co-borrowing facility with a Borrower Agent in the manner set forth in this Master Agreement is solely as an accommodation to each of Borrower and Guarantor and is at their mutual request. Lender shall not incur liability to Borrower or Guarantor as a result thereof. To induce Lender to do so and in consideration thereof, each Borrower hereby indemnifies Lender and holds Lender harmless from and against any and all
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liabilities, expenses, losses, damages, and claims of damage or injury asserted against Lender by any Person arising from or incurred by reason of Borrower Agent handling of the financing arrangements of Borrower as provided herein, reliance by Lender on any request or instruction from Borrower Agent or any other action taken by Lender with respect to this Section 3.05 (Borrower Agency Provisions) except due to willful misconduct or gross negligence of the indemnified party as determined by a court of competent jurisdiction pursuant to a final, non-appealable court order.
Section 3.06 Joint and Several Obligation; Cross-Guaranty.
Notwithstanding anything contained in this Master Agreement or the other Loan Documents to the contrary (but subject to the provisions of Section 3.01 (Non-Recourse Liability; Exceptions), Section 3.02(a) (Personal Liability Based on Lenders Loss (Partial Recourse)) and Section 3.02(b) (Full Personal Liability (Full Recourse)), the last sentence of this Section 3.06 (Joint and Several Obligation; Cross-Guaranty) and the provisions of Section 3.13 (Maximum Liability of Each Borrower), each Borrower shall have joint and several liability for the Indebtedness. Notwithstanding the intent of all of the parties to this Master Agreement that the Indebtedness of each Borrower under this Master Agreement and the other Loan Documents shall be joint and several obligations of each Borrower, each Borrower, on a joint and several basis, hereby irrevocably guarantees on a non-recourse basis, subject to the exceptions to non-recourse provisions of Section 3.01 (Non-Recourse Liability; Exceptions), Section 3.02(a) (Personal Liability Based on Lenders Loss (Partial Recourse)) and Section 3.02(b) (Full Personal Liability (Full Recourse)), to Lender and its successors and assigns, the full and prompt payment (whether at stated maturity, by acceleration or otherwise) and performance of, all Indebtedness owed or hereafter owing to Lender by each other Borrower. Each Borrower agrees that its non-recourse guaranty obligation hereunder is an unconditional guaranty of payment and performance and not merely a guaranty of collection. The Indebtedness of each Borrower under this Master Agreement shall not be subject to any counterclaim, set-off, recoupment, deduction, cross-claim, or defense based upon any claim any Borrower may have against Lender or any other Borrower.
Section 3.07 Waivers With Respect to Other Borrower Secured Obligation.
To the extent that a Security Instrument or any other Loan Document executed by one Borrower secures an Obligation of another Borrower (the Other Borrower Secured Obligation), or to the extent that a Borrower has guaranteed the debt of another Borrower pursuant to Article 3 (Personal Liability), Borrower who executed such Loan Document or guaranteed such debt (the Waiving Borrower) hereby agrees to the extent permitted by law, to the provisions of this Section 3.07 (Waivers With Respect to Other Borrower Secured Obligation). To the extent that any Mortgaged Properties are located in California, and to the extent permitted by law, the references to the California statutes below shall apply to this Master Agreement and any California Security Instrument securing or encumbering a Mortgaged Property located in California; otherwise the California statutes referenced below shall have no effect on this Master Agreement or any other Loan Document. All references in Article 3 (Personal Liability) to California law are only applicable if any Mortgaged Property is located in California. To the maximum extent permitted by Applicable Law:
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(a) the Waiving Borrower hereby waives any right it may now or hereafter have to require the beneficiary, assignee, or other secured party under such Loan Document, as a condition to the exercise of any remedy or other right against it thereunder or under any other Loan Document executed by the Waiving Borrower in connection with the Other Borrower Secured Obligation: (1) to proceed against any other Borrower or any other Person, or against any other collateral assigned to Lender by any Borrower or any other Person; (2) to pursue any other right or remedy in Lenders power; (3) to give notice of the time, place, or terms of any public or private sale of real or personal property collateral assigned to Lender by any other Borrower or any other Person, or otherwise to comply with Section 9615 of the California Commercial Code (as modified or recodified from time to time) with respect to any such personal property collateral located in the State of California; or (4) to make or give (except as otherwise expressly provided in the Security Documents) any presentment, demand, protest, notice of dishonor, notice of protest, or other demand or notice of any kind in connection with the Other Borrower Secured Obligation or any collateral for the Other Borrower Secured Obligation;
(b) the Waiving Borrower hereby waives any defense it may now or hereafter have that relates to: (1) any disability or other defense of any other Borrower or any other Person; (2) the cessation, from any cause other than full performance, of the Other Borrower Secured Obligation; (3) the application of the proceeds of the Other Borrower Secured Obligation, by any other Borrower or any other Person, for purposes other than the purposes represented to the Waiving Borrower by any other Borrower or any other Person, or otherwise intended or understood by the Waiving Borrower or any other Borrower; (4) any act or omission by Lender which directly or indirectly results in or contributes to the release of any other Borrower or any other Person or any collateral for any Other Borrower Secured Obligation; (5) the unenforceability or invalidity of any Security Document or Loan Document (other than the Security Instrument executed by the Waiving Borrower that secures the Other Borrower Secured Obligation) or guaranty with respect to any Other Borrower Secured Obligation, or the lack of perfection or continuing perfection or lack of priority of any Lien (other than the Lien of the Security Instrument executed by the Waiving Borrower that secures the Other Borrower Secured Obligation) which secures any Other Borrower Secured Obligation; (6) any failure of Lender to marshal assets in favor of the Waiving Borrower or any other Person; (7) any modification of any Other Borrower Secured Obligation, including any renewal, extension, acceleration, or increase in interest rate; (8) any and all rights and defenses arising out of an election of remedies by Lender, even though that election of remedies, such as a nonjudicial foreclosure with respect to security for a guaranteed obligation, has destroyed the Waiving Borrowers rights of subrogation and reimbursement against the principal by the operation of Section 580d of the California Code of Civil Procedure or otherwise; (9) any law which provides that the obligation of a surety or guarantor must neither be larger in amount nor in other respects more burdensome than that of the principal or which reduces a suretys or guarantors obligation in proportion to the principal obligation; (10) any failure of Lender to file or enforce a claim in any bankruptcy or other proceeding with respect to any Person; (11) the election by Lender, in any bankruptcy proceeding of any Person, of the application or non-
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application of Section 1111(b)(2) of the Bankruptcy Code; (12) any extension of credit or the grant of any lien under Section 364 of the Bankruptcy Code; (13) any use of cash collateral under Section 363 of the Bankruptcy Code; or (14) any agreement or stipulation with respect to the provision of adequate protection in any bankruptcy proceeding of any Person. The Waiving Borrower further waives any and all rights and defenses that it may have because the Other Borrower Secured Obligation is secured by real property; this means, among other things, that: (A) Lender may collect from the Waiving Borrower without first foreclosing on any real or personal property collateral pledged by any other Borrower; (B) if Lender forecloses on any real property collateral pledged by any other Borrower, then (i) the amount of the Other Borrower Secured Obligation may be reduced only by the price for which that collateral is sold at the foreclosure sale, even if the collateral is worth more than the sale price, and (ii) Lender may foreclose on the real property encumbered by the Security Instrument executed by the Waiving Borrower and securing the Other Borrower Secured Obligation, or otherwise collect from the Waiving Borrower, even if Lender, by foreclosing on the real property collateral of any one or more of the other Borrowers, has destroyed any right the Waiving Borrower may have to collect from such other Borrowers. Subject to the last sentence of Section 3.06 (Joint and Several Obligation; Cross-Guaranty), the foregoing sentence is an unconditional and irrevocable waiver of any rights and defenses the Waiving Borrower may have because the Other Borrower Secured Obligation is secured by real property. These rights and defenses being waived by the Waiving Borrower include, but are not limited to, any rights or defenses based upon Section 580a, 580b, 580d, or 726 of the California Code of Civil Procedure. Without limiting the generality of the foregoing or any other provision hereof, the Waiving Borrower further expressly waives, except as provided in Section 3.07(g) (Waivers With Respect to Other Borrower Secured Obligation) below, to the extent permitted by law any and all rights and defenses that might otherwise be available to it under California Civil Code Sections 2787 to 2855, inclusive, 2899 and 3433, or under California Code of Civil Procedure Sections 580a, 580b, 580d, and 726, or any of such sections;
(c) the Waiving Borrower hereby waives any and all benefits and defenses under California Civil Code Section 2810 and agrees that by doing so the Security Instrument executed by the Waiving Borrower and securing the Other Borrower Secured Obligation shall be and remain in full force and effect even if one or more of the other Borrowers had no liability at the time of incurring the Other Borrower Secured Obligation, or thereafter ceases to be liable. The Waiving Borrower hereby waives any and all benefits and defenses under California Civil Code Section 2809 and agrees that by doing so the Waiving Borrowers liability may be larger in amount and more burdensome than that of any one or more of the other Borrowers. The Waiving Borrower hereby waives the benefit of all principles or provisions of law that are or might be in conflict with the terms of any of its waivers, and agrees that the Waiving Borrowers waivers shall not be affected by any circumstances that might otherwise constitute a legal or equitable discharge of a surety or a guarantor. The Waiving Borrower hereby waives the benefits of any right of discharge and all other rights and defenses under any and all statutes or other laws relating to guarantors or sureties, to the fullest extent permitted by law, diligence in collecting the Other Borrower Secured Obligation, presentment, demand for payment, protest, all notices with respect to the Other Borrower Secured Obligation that may be required by statute, rule of law, or otherwise to preserve Lenders rights against the Waiving Borrower hereunder, including notice of acceptance, notice of
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any amendment of the Loan Documents evidencing the Other Borrower Secured Obligation, notice of the occurrence of any default or Event of Default, notice of intent to accelerate, notice of acceleration, notice of dishonor, notice of foreclosure, notice of protest, notice of the incurring by the other Borrower of any obligation or indebtedness and all rights to require Lender to (1) proceed against the other Borrower, (2) proceed against any general partner of the other Borrower, (3) proceed against or exhaust any collateral held by Lender to secure the Other Borrower Secured Obligation, or (4) if the other Borrower is a partnership, pursue any other remedy it may have against the other Borrower, or any general partner of the other Borrower, including any and all benefits under California Civil Code Sections 2845, 2849, and 2850;
(d) the Waiving Borrower understands that the exercise by Lender of certain rights and remedies contained in a Security Instrument executed by any other Borrower (such as a nonjudicial foreclosure sale) may affect or eliminate the Waiving Borrowers right of subrogation against such other Borrower and that the Waiving Borrower may therefore incur a partially or totally nonreimburseable liability. Nevertheless, the Waiving Borrower hereby authorizes and empowers Lender to exercise, in its sole and absolute discretion, any right or remedy, or any combination thereof, that may then be available, since it is the intent and purpose of the Waiving Borrower that its waivers shall be absolute, independent and unconditional under any and all circumstances;
(e) in accordance with Section 2856 of the California Civil Code, the Waiving Borrower also waives any right or defense based upon an election of remedies by Lender, even though such election (e.g., nonjudicial foreclosure with respect to any collateral held by Lender to secure repayment of the Other Borrower Secured Obligation) destroys or otherwise impairs the subrogation rights of the Waiving Borrower to any right to proceed against one or more of the other Borrowers for reimbursement by operation of Section 580d of the California Code of Civil Procedure or otherwise;
(f) subject to the last sentence of Section 3.06 (Joint and Several Obligation; Cross-Guaranty), in accordance with Section 2856 of the California Civil Code, the Waiving Borrower waives any and all other rights and defenses available to the Waiving Borrower by reason of Sections 2787 through 2855, inclusive, of the California Civil Code, including any and all rights or defenses the Waiving Borrower may have by reason of protection afforded to one or more of the other Borrowers with respect to the applicable Other Borrower Secured Obligation pursuant to the antideficiency or other laws of the State of California limiting or discharging such Other Borrower Secured Obligation, including Sections 580a, 580b, 580d, and 726 of the California Code of Civil Procedure;
(g) in accordance with Section 2856 of the California Civil Code and pursuant to any other Applicable Law, the Waiving Borrower agrees to withhold the exercise of any and all subrogation, contribution, and reimbursement rights against all other Borrowers, against any other Person, and against any collateral or security for the Other Borrower Secured Obligation, including any such rights pursuant to Sections 2847 and 2848 of the California Civil Code, until the Other Borrower Secured Obligation has been indefeasibly paid and satisfied in full, all obligations owed to Lender under the Loan Documents have been fully performed, and Lender has released, transferred or disposed of all of its right, title, and interest in such collateral or security;
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(h) each Borrower hereby irrevocably and unconditionally agrees that, notwithstanding Section 3.07(g) (Waivers With Respect to Other Borrower Secured Obligation) hereof, in the event, and to the extent, that its agreement and waiver set forth in Section 3.07(g) (Waivers With Respect to Other Borrower Secured Obligation) is found by a court of competent jurisdiction to be void or voidable for any reason and such Borrower has any subrogation or other rights against any other Borrower, any such claims, direct or indirect, that such Borrower may have by subrogation rights or other form of reimbursement, contribution, or indemnity, against any other Borrower or to any security or any such Borrower, shall be, and such rights, claims, and indebtedness are hereby, deferred, postponed, and fully subordinated in time and right of payment to the prior payment, performance, and satisfaction in full of the Indebtedness. Until payment and performance in full with interest (including post-petition interest in any case under any chapter of the Bankruptcy Code) of the Indebtedness, each Borrower agrees not to accept any payment or satisfaction of any kind of Indebtedness of any other Borrower in respect of any such subrogation rights arising by virtue of payments made pursuant to this Article 3 (Personal Liability), and hereby assigns such rights or indebtedness to Lender, including (1) the right to file proofs of claim and to vote thereon in connection with any case under any chapter of the Bankruptcy Code and (2) the right to vote on any plan of reorganization. In the event that any payment on account of any such subrogation rights shall be received by any Borrower in violation of the foregoing, such payment shall be held in trust for the benefit of Lender, and any amount so collected must be turned over to Lender for, at Lenders option, application to the Indebtedness;
(i) at any time without notice to the Waiving Borrower, and without affecting or prejudicing the right of Lender to proceed against the Collateral described in any Loan Document executed by the Waiving Borrower and securing the Other Borrower Secured Obligation, (1) the time for payment of the principal of or interest on, or the performance of, the Other Borrower Secured Obligation may be extended or the Other Borrower Secured Obligation may be renewed in whole or in part; (2) the time for any other Borrowers performance of or compliance with any covenant or agreement contained in the Loan Documents evidencing the Other Borrower Secured Obligation, whether presently existing or hereinafter entered into, may be extended or such performance or compliance may be waived; (3) the maturity of the Other Borrower Secured Obligation may be accelerated as provided in the related Note or any other related Loan Document; (4) the related Note or any other related Loan Document may be modified or amended by Lender and the applicable other Borrower in any respect, including an increase in the principal amount; and (5) any security for the Other Borrower Secured Obligation may be modified, exchanged, surrendered or otherwise dealt with or additional security may be pledged or mortgaged for the Other Borrower Secured Obligation; and
(j) it is agreed among each Borrower and Lender that all of the foregoing waivers are of the essence of the transaction contemplated by this Master Agreement and the Loan Documents and that but for the provisions of this Article 3 (Personal Liability) and such waivers Lender would decline to enter into this Master Agreement.
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Section 3.08 No Impairment.
Each Borrower agrees that the provisions of this Article 3 (Personal Liability) are for the benefit of Lender and its successors and assigns, and nothing herein contained shall impair, as between any other Borrower and Lender, the obligations of such other Borrower under the Loan Documents.
Section 3.09 Election of Remedies.
(a) Lender, in its discretion, may (1) bring suit against any one or more Borrowers, jointly and severally, without any requirement that Lender first proceed against any other Borrower or any other Person; (2) compromise or settle with any one or more Borrowers, or any other Person, for such consideration as Lender may deem proper; (3) release one or more Borrowers, or any other Person, from liability; and (4) otherwise deal with any Borrower and any other Person, or any one or more of them, in any manner, or resort to any of the Collateral at any time held by it for performance of the Indebtedness or any other source or means of obtaining payment of the Indebtedness, and no such action shall impair the rights of Lender to collect from any Borrower any amount guaranteed by any Borrower under this Article 3 (Personal Liability).
(b) If, in the exercise of any of its rights and remedies, Lender shall forfeit any of its rights or remedies, including its rights to enter a deficiency judgment against any Borrower or any other Person, whether because of any Applicable Law pertaining to election of remedies or the like, each Borrower hereby consents to such action by Lender and waives any claim based upon such action, even if such action by Lender shall result in a full or partial loss of any rights of subrogation that each Borrower might otherwise have had but for such action by Lender. Any election of remedies that results in the denial or impairment of the right of Lender to seek a deficiency judgment against any Borrower shall not impair any other Borrowers obligation to pay the full amount of the Indebtedness. In the event Lender shall bid at any foreclosure or trustees sale or at any private sale permitted by law or any of the Loan Documents, Lender may bid all or less than the amount of the Indebtedness and the amount of such bid need not be paid by Lender but shall be credited against the Indebtedness. The amount of the successful bid at any such sale, whether Lender or any other party is the successful bidder, shall be conclusively deemed to be the fair market value of the Collateral and the difference between such bid amount and the remaining balance of the Indebtedness shall be conclusively deemed to be the amount of the Indebtedness guaranteed under this Article 3 (Personal Liability), notwithstanding that any present or future law or court decision or ruling may have the effect of reducing the amount of any deficiency claim to which Lender might otherwise be entitled but for such bidding at any such sale.
Section 3.10 Subordination of Other Obligations.
(a) Each Borrower hereby irrevocably and unconditionally agrees that all amounts payable from time to time to such Borrower by any other Borrower pursuant to any agreement, whether secured or unsecured, whether of principal, interest, or otherwise, other than the amounts referred to in this Article 3 (Personal Liability) (collectively, the Subordinated Obligations),
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shall be and such rights, claims, and indebtedness are, hereby deferred, postponed, and fully subordinated in time and right of payment to the prior payment, performance, and satisfaction in full of the Indebtedness; provided, however, that payments may be received by any Borrower in accordance with, and only in accordance with, the provisions of Section 3.10 (Subordination of Other Obligations) hereof.
(b) Until the Indebtedness has been finally paid in full or fully performed and all the Loan Documents have been terminated, each Borrower irrevocably and unconditionally agrees it will not ask, demand, sue for, take, or receive, directly or indirectly, by set-off, redemption, purchase, or in any other manner whatsoever, any payment with respect to, or any security or guaranty for, the whole or any part of the Subordinated Obligations, and in issuing documents, instruments, or agreements of any kind evidencing the Subordinated Obligations, each Borrower hereby agrees that it will not receive any payment of any kind on account of the Subordinated Obligations, so long as any of the Indebtedness is outstanding or any of the terms and conditions of any of the Loan Documents are in effect; provided, however, that, notwithstanding anything to the contrary contained herein, if no Potential Event of Default or Event of Default has occurred and is continuing under any of the Loan Documents, then payments may be received by such Borrower in respect of the Subordinated Obligations in accordance with the stated terms thereof. Except as aforesaid, each Borrower agrees not to accept any payment or satisfaction of any kind of indebtedness of any other Borrower in respect of the Subordinated Obligations and hereby assigns such rights or indebtedness to Lender, including the right to file proofs of claim and to vote thereon in connection with any case under any chapter of the Bankruptcy Code, including the right to vote on any plan of reorganization. In the event that any payment on account of Subordinated Obligations shall be received by any Borrower in violation of the foregoing, such payment shall be held in trust for the benefit of Lender, and any amount so collected shall be turned over to Lender upon demand.
Section 3.11 Insolvency and Liability of Other Borrower.
So long as any of the Indebtedness is Outstanding, if a petition under any chapter of the Bankruptcy Code is filed by or against any Borrower (the Subject Borrower), each other Borrower (each, an Other Borrower) agrees to file all claims against the Subject Borrower in any bankruptcy or other proceeding in which the filing of claims is required by law in connection with indebtedness owed by the Subject Borrower to such Other Borrower and to assign to Lender all rights thereunder up to the amount of such indebtedness; provided, however, no Other Borrower should be required to file any claims against the Subject Borrower in connection with an involuntary case or proceeding against the Subject Borrower until the ninetieth (90th) day after such filing unless such involuntary case or proceeding is dismissed earlier. In all such cases, the Person or Persons authorized to pay such claims shall pay to Lender the full amount thereof and Lender agrees to pay such Other Borrower any amounts received in excess of the amount necessary to pay the Indebtedness. Each Other Borrower hereby assigns to Lender all of such Other Borrowers rights to all such payments to which such Other Borrower would otherwise be entitled but not to exceed the full amount of the Indebtedness. In the event that, notwithstanding the
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foregoing, any such payment shall be received by any Other Borrower before the Indebtedness shall have been finally paid in full, such payment shall be held in trust for the benefit of and shall be paid over to Lender upon demand. Furthermore, notwithstanding the foregoing, the liability of each Borrower hereunder shall in no way be affected by:
(a) the release or discharge of any Other Borrower in any creditors receivership, bankruptcy, or other proceedings; or
(b) the impairment, limitation, or modification of the liability of any Other Borrower or the estate of any Other Borrower in bankruptcy resulting from the operation of any present or future provisions of any chapter of the Bankruptcy Code or other statute or from the decision in any court.
Section 3.12 Preferences, Fraudulent Conveyances, Etc.
If Lender is required to refund, or voluntarily refunds, any payment received from any Borrower because such payment is or may be avoided, invalidated, declared fraudulent, set aside, or determined to be void or voidable as a preference, fraudulent conveyance, impermissible setoff, or a diversion of trust funds under the Insolvency Laws or for any similar reason, including any judgment, order, or decree of any court or administrative body having jurisdiction over any Borrower or any of its property, or upon or as a result of the appointment of a receiver, intervenor, custodian, or conservator of, or trustee or similar officer for, any Borrower or any substantial part of its property, or otherwise, or any statement or compromise of any claim effected by Lender with any Borrower or any other claimant (a Rescinded Payment), then each Other Borrowers liability to Lender shall continue in full force and effect, or each Other Borrowers liability to Lender shall be reinstated and renewed, as the case may be, with the same effect and to the same extent as if the Rescinded Payment had not been received by Lender, notwithstanding the cancellation or termination of any of the Loan Documents, and regardless of whether Lender contested the order requiring the return of such payment. In addition, each Other Borrower shall pay, or reimburse Lender for, all expenses (including all reasonable attorneys fees, court costs, and related disbursements) incurred by Lender in the defense of any claim that a payment received by Lender in respect of all or any part of the Indebtedness must be refunded. The provisions of this Section 3.12 (Preferences, Fraudulent Conveyances, Etc.) shall survive the termination of the Loan Documents and any satisfaction and discharge of any Borrower by virtue of any payment, court order, or any federal or state law.
Section 3.13 Maximum Liability of Each Borrower.
Notwithstanding anything contained in this Master Agreement or any other Loan Document to the contrary, if the obligations of any Borrower under this Master Agreement or any of the other Loan Documents or any Security Instruments granted by any Borrower are determined to exceed the reasonably equivalent value received by such Borrower in exchange for such
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obligations or grant of such Security Instruments under any Fraudulent Transfer Law (as hereinafter defined), then the liability of such Borrower shall be limited to a maximum aggregate amount equal to the largest amount that would not render its obligations under this Master Agreement or all the other Loan Documents subject to avoidance as a fraudulent transfer or conveyance under Section 548 of Title 11 of the United States Code or any applicable provisions of comparable state law (collectively, the Fraudulent Transfer Laws), in each case after giving effect to all other liabilities of such Borrower, contingent or otherwise, that are relevant under the Fraudulent Transfer Laws (specifically excluding, however, any liabilities of such Borrower in respect of Indebtedness to any other Borrower or any other Person that is an affiliate of the other Borrower to the extent that such Indebtedness would be discharged in an amount equal to the amount paid by such Borrower in respect of the Indebtedness) and after giving effect (as assets) to the value (as determined under the applicable provisions of the Fraudulent Transfer Laws) of any rights to subrogation, reimbursement, indemnification, or contribution of such Borrower pursuant to Applicable Law or pursuant to the terms of any agreement including the Contribution Agreement.
Section 3.14 Liability Cumulative.
The liability of each Borrower under this Article 3 (Personal Liability) is in addition to and shall be cumulative with all liabilities of such Borrower to Lender under this Master Agreement and all the other Loan Documents to which such Borrower is a party or in respect of any Indebtedness of any other Borrower.
Article 4
BORROWER STATUS
Section 4.01 Representations and Warranties.
The representations and warranties made by Borrower to Lender in this Section 4.01 (Borrower Status Representations and Warranties) are made as of each Effective Date and are true and correct except as disclosed on the Exceptions to Representations and Warranties Schedule.
(a) Due Organization and Qualification; Organizational Agreements.
(1) Each Borrower is validly existing and qualified to transact business and is in good standing in (A) the state in which it is formed or organized, (B) the Property Jurisdiction and (C) each other jurisdiction that qualification or good standing is required according to Applicable Law to conduct its business with respect to the Mortgaged Property, owned by such Borrower, in each case, where the failure to be so qualified or in good standing would adversely affect Borrowers operation of its Mortgaged Property or
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the validity, enforceability or the ability of Borrower to perform its obligations under this Master Agreement or any other Loan Document. The managing member, sole member, non-member manager, or general partner of Borrower, as applicable, is validly existing and qualified to transact business and is in good standing in the state in which it is organized and in each other jurisdiction in which such qualification and/or standing is necessary to the conduct of its business.
(2) Borrowers Organizational Documents prohibit a Division of Borrower.
(3) True, correct and complete in all material respects Organizational Documents of each Borrower Entity and each Identified Party have been delivered to Lender prior to each Effective Date. The Ownership Interests Schedule attached hereto sets forth:
(A) the direct owners of Borrower and their respective interests;
(B) the indirect owners (and any non-member managers) of Borrower that Control Borrower and their respective interests (excluding any Publicly-Held Corporations or Publicly-Held Trusts); and
(C) the indirect owners of Borrower that hold twenty-five percent (25%) or more of the ownership interests in Borrower and their respective interests (excluding any Publicly-Held Corporations or Publicly-Held Trusts).
(4) The Organizational Documents of Borrower and SPE Owner, if any, require Borrower and SPE Owner, if any, to comply with the SPE Requirements and the provisions of Section 4.02(d) (Borrower Status Covenants Single Purpose Status) of this Master Agreement.
(b) Location.
Borrowers General Business Address is Borrowers principal place of business and principal office. Guarantors General Business Address is Guarantors principal place of business and principal office. Key Principals General Business Address is Key Principals principal place of business and principal office.
(c) Power and Authority.
Each Borrower has the requisite power and authority:
(1) to own its Mortgaged Property and to carry on its business as now conducted and as contemplated to be conducted in connection with the performance of its obligations under this Master Agreement and under the other Loan Documents to which it is a party; and
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(2) to execute and deliver this Master Agreement and the other Loan Documents to which it is a party, and to carry out the transactions contemplated by this Master Agreement and the other Loan Documents to which it is a party.
(d) Due Authorization.
The execution, delivery, and performance of this Master Agreement and the other Loan Documents to which it is a party have been duly authorized by all necessary action and proceedings by or on behalf of Borrower, and no further approvals or filings of any kind, including any approval of or filing with any Governmental Authority, are required by or on behalf of Borrower as a condition to the valid execution, delivery, and performance by Borrower of this Master Agreement or any of the other Loan Documents to which it is a party, except filings required to perfect and maintain the liens to be granted under the Loan Documents and routine filings to maintain good standing and its existence.
(e) Valid and Binding Obligations.
This Master Agreement and the other Loan Documents to which it is a party have been duly executed and delivered by Borrower and constitute the legal, valid, and binding obligations of Borrower, enforceable against Borrower in accordance with their respective terms, except as such enforceability may be limited by applicable Insolvency Laws or by the exercise of discretion by any court.
(f) Effect of Master Agreement on Financial Condition.
Borrower, Borrowers general partner or sole member, and any SPE Owner will not be rendered Insolvent by the transactions contemplated by the provisions of this Master Agreement and the other Loan Documents. Borrower has sufficient working capital, including proceeds from the Advances, cash flow from the Mortgaged Properties currently, or other sources, not only to adequately maintain the Mortgaged Properties, but also to pay all of Borrowers outstanding debts as they come due, including all Debt Service Amounts, exclusive of Borrowers ability to refinance or pay in full any Advance on its Maturity Date. In connection with the execution and delivery of this Master Agreement, the Security Instruments and the other Loan Documents (and the delivery to, or for the benefit of, Lender of any collateral contemplated thereunder), and the incurrence by Borrower of the obligations under this Master Agreement and the other Loan Documents, Borrower did not receive less than reasonably equivalent value in exchange for the incurrence of the obligations of Borrower under this Master Agreement and the other Loan Documents.
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(g) Economic Sanctions, Anti-Money Laundering, and Anti-Corruption.
(1) No Borrower Entity, or to Borrowers knowledge, any Identified Party, or any Person Controlled by Borrower Entity that also has a direct or indirect Ownership Interest in any Borrower Entity, is in violation of any applicable civil or criminal laws or regulations, including those requiring internal controls, intended to prohibit, prevent, or regulate money laundering, drug trafficking, terrorism, or corruption, of the United States and the jurisdiction where the Mortgaged Property is located or where the Person resides, is domiciled, or has its principal place of business.
(2) No Borrower Entity, or to Borrowers knowledge, any Identified Party, or any Person Controlled by Borrower Entity that also has a direct or indirect Ownership Interest in any Borrower Entity, is a Person:
(A) against whom proceedings are pending for any alleged violation of any laws described in Section 4.01(g)(1) (Borrower Status Representations and Warranties Economic Sanctions, Anti-Money Laundering, and Anti-Corruption);
(B) that has been convicted of any violation of, has been subject to civil penalties or Economic Sanctions pursuant to, or had any of its property seized or forfeited under, any laws described in Section 4.01(g)(1) (Borrower Status Representations and Warranties Economic Sanctions, Anti-Money Laundering, and Anti-Corruption);
(C) with whom any United States Person, any entity organized under the laws of the United States or its constituent states or territories, or any entity, regardless of where organized, having its principal place of business within the United States or any of its territories, is prohibited from transacting business of the type contemplated by this Master Agreement and the other Loan Documents under any other Applicable Law; or
(D) that is deemed a Sanctioned Person.
(3) Each Borrower Entity is in compliance with all applicable Economic Sanctions.
(h) Single Purpose Status.
Each Borrower and SPE Owner at all times since its formation:
(1) has not acquired, held, owned, leased, developed, or improved, and does not own or lease any real property, personal property, or assets other than the Mortgaged Property or, for any SPE Owner, equity interests in a Person that owns the Mortgaged Property;
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(2) has not acquired or owned and does not own, operate, or participate in any business other than the leasing, ownership, management, operation, and maintenance of the Mortgaged Property or, for any SPE Owner, equity interests in a Person that owns the Mortgaged Property;
(3) has no material financial obligation under or secured by any indenture, mortgage, deed of trust, deed to secure debt, loan agreement, or other agreement or instrument to which Borrower is a party, or by which Borrower is otherwise bound, or to which the Mortgaged Property is subject or by which it is otherwise encumbered, other than:
(A) unsecured trade payables incurred in the ordinary course of the operation of the Mortgaged Property (exclusive of amounts (1) for rehabilitation, restoration, repairs, or replacements of the Mortgaged Property, (2) to the extent not excluded in subclause (1), relating to claims for work, labor, or materials affecting any Mortgaged Property and that (i) consists of current trade liabilities incurred for work commissioned in the ordinary course of Borrowers business, (ii) is payable in accordance with customary practices, and (iii) is unsecured, and (3) for real estate taxes which Borrower is contesting pursuant to the terms and conditions of the Loan Documents) that (i) are not evidenced by a promissory note, (ii) are payable within sixty (60) days of the date due, and (iii) as of the Effective Date such Mortgaged Property is added to the Collateral Pool, do not exceed the lesser of (x) four percent (4%) of the Allocable Facility Amount for such Mortgaged Property and (y) in the aggregate, when added to unsecured trade payables for all other Mortgaged Properties in the Collateral Pool, four percent (4%) of the principal balance of the Advances Outstanding;
(B) if the Security Instrument grants a lien on a leasehold estate, Borrowers obligations as lessee under the ground lease creating such leasehold estate; and
(C) obligations under the Loan Documents and obligations secured by the Mortgaged Property to the extent permitted by the Loan Documents;
(4) has maintained its financial statements, accounting records, and other partnership, real estate investment trust, limited liability company, or corporate documents, as the case may be, separate from those of any other Person and has not listed its assets on the financial statement of any other Person (unless Borrowers assets have been included in a consolidated financial statement prepared in accordance with generally accepted accounting principles);
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(5) has not commingled its assets or funds with those of any other Person, and has held all its assets or funds under its own name, unless such assets or funds can easily be segregated and identified in the ordinary course of business and in such a manner that it will not be costly or difficult to segregate, ascertain, or identify its individual assets from those of any other Person;
(6) has been adequately capitalized in light of its contemplated business operations; provided, however, nothing in this Section 4.01(h)(6) will require any member or partner of Borrower to make any equity contribution to Borrower or provide other monetary or non-monetary considerations;
(7) has not assumed, guaranteed, or become obligated for the liabilities or obligations of any other Person or pledged its assets for the benefit of any other Person (except in connection with this Master Agreement or other mortgage loans that have been paid in full or collaterally assigned to Lender, including in connection with any Consolidation, Extension and Modification Agreement (for Mortgaged Properties in New York) or similar instrument), or held out its credit as being available to satisfy the obligations of any other Person;
(8) has not made loans or advances to any other Person except those advances in connection with the Contribution Agreement or as permitted by the Loan Documents;
(9) has not entered into and is not a party to any transaction with any Borrower Affiliate, except in the ordinary course of business and on terms which are no more favorable to such Borrower Affiliate than would be obtained in a comparable arms-length transaction with an unrelated third party;
(10) has not acquired obligations or securities of any other Person;
(11) has paid its own liabilities, including the salaries of its own employees, if any, from its own funds and maintained a sufficient number of employees in light of its contemplated business operations except payments that may have been made pursuant to a cash management system operated in the same manner as the Cash Management System;
(12) has not failed to hold itself out to the public as a legal entity separate and distinct from any other Person or to conduct its business solely in its own name or failed to correct any known misunderstanding regarding its separate identity;
(13) has allocated fairly and reasonably any overhead for shared expenses;
(14) has maintained its existence as an entity duly organized, validly existing, and in good standing (if applicable) under the laws of the jurisdiction of its formation or organization and has done all things necessary to observe organizational formalities;
(15) has not, other than SPE Owners Ownership Interest in Borrower, owned any subsidiary or made any investment in, any Person without the prior written consent of Lender;
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(16) without the prior written consent of Lender or unless otherwise required or permitted by a Cap Security Agreement, has not entered into or guaranteed, provided security for, or otherwise undertaken any form of contingent obligation with respect to any Hedging Arrangement; and
(17) has not sought and has no plans to Divide at any time during the Term of this Master Agreement.
Lender acknowledges and agrees that Borrower may become party to a cash management system as described in Section 4.01(q) (Lockbox Agreement).
(i) No Bankruptcies or Judgments.
None of Borrower, Borrowers general partner, managing member, or sole member, any SPE Owner, or Key Principal, or to Borrowers knowledge, any other Identified Party is currently:
(1) the subject of or a party to any completed or pending bankruptcy, reorganization, including any receivership or other insolvency proceeding;
(2) preparing or intending to be the subject of a Bankruptcy Event;
(3) the subject of any judgment unsatisfied of record or docketed in any court, provided that with respect to Key Principal, either individually or as an Identified Party, cannot be the subject of any judgment unsatisfied of record or docketed in any court in excess of $100,000; or
(4) Insolvent.
(j) No Actions or Litigation.
(1) Other than residential eviction actions in the ordinary course of business, there are no claims, actions, suits, or proceedings at law or in equity by or before any Governmental Authority now pending against or, to Borrowers knowledge, threatened in writing against or affecting Borrower or any Mortgaged Property not otherwise covered by insurance (except claims, actions, suits, or proceedings regarding fair housing, anti-discrimination, or equal opportunity, in each case related to housing or tenants, which shall always be disclosed); and
(2) there are no claims, actions, suits, or proceedings at law or in equity by or before any Governmental Authority now pending or, to Borrowers knowledge, threatened against or affecting Guarantor or Key Principal, which claims, actions, suits, or proceedings, if adversely determined (individually or in the aggregate) reasonably would be expected to materially adversely affect the financial condition or business of Borrower,
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Guarantor, or Key Principal or the condition, operation, or ownership of the Mortgaged Property (except claims, actions, suits, or proceedings regarding fair housing which relate to two (2) or more properties owned directly or indirectly by a Key Principal, anti-discrimination, or equal opportunity, in each case related to housing or tenants, which shall always be deemed material).
(k) Payment of Taxes, Assessments, and Other Charges.
Borrower confirms that:
(1) it has filed all federal, state, county, and municipal tax returns and reports required to have been filed by Borrower;
(2) it has paid, before any fine, penalty interest, lien, or costs may be added thereto, all taxes, governmental charges, and assessments due and payable with respect to such returns and reports;
(3) there is no controversy or objection pending, or to the knowledge of Borrower, threatened in respect of any tax returns of Borrower; and
(4) it has made adequate reserves on its books and records for all taxes that have accrued but which are not yet due and payable.
(l) Not a Foreign Person.
Borrower is not a foreign person within the meaning of Section 1445(f)(3) of the Internal Revenue Code.
(m) ERISA.
Borrower represents and warrants that:
(1) Borrower is not an Employee Benefit Plan;
(2) no asset of Borrower constitutes plan assets (within the meaning of Section 3(42) of ERISA and Department of Labor Regulation Section 2510.3 101) of an Employee Benefit Plan;
(3) no asset of Borrower is subject to any laws of any Governmental Authority governing the assets of an Employee Benefit Plan; and
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(4) neither Borrower nor any ERISA Affiliate is subject to any obligation or liability with respect to any ERISA Plan.
(n) Default Under Other Obligations.
(1) The execution, delivery, and performance of the obligations imposed on Borrower under this Master Agreement and the Loan Documents to which it is a party will not cause Borrower to be in default under the provisions of any agreement, judgment or order to which Borrower is a party or by which Borrower is bound.
(2) There are no defaults by Borrower or, to the knowledge of Borrower, by any other Person under any contract to which Borrower is a party, including any management, rental, service, supply, security, maintenance or similar contract, other than defaults which do not have, and are not reasonably expected to have, a Material Adverse Effect. No Borrower Entity is in default under any obligation under the Loan Documents to Lender.
(o) Prohibited Person.
No Borrower Entity has received written notice that such Borrower Entity is a Prohibited Person. To Borrowers knowledge, none of the following is a Prohibited Person:
(1) any Person Controlling any Borrower Entity; or
(2) any Person Controlled by and having a direct or indirect Ownership Interest in any Borrower Entity.
(p) No Contravention.
None of the (1) execution and delivery of this Master Agreement and the other Loan Documents to which Borrower is a party, (2) fulfillment of or compliance with the terms and conditions of this Master Agreement and the other Loan Documents to which Borrower is a party, or (3) performance of the obligations of Borrower under this Master Agreement and the other Loan Documents:
(A) does or will conflict with or result in any breach or violation of, or constitute a default under, any of the terms, conditions or provisions of Borrowers Organizational Documents, any indenture, existing agreement or other instrument to which Borrower is a party or to which Borrower, the Mortgaged Properties or any other portion of the Collateral or other assets of Borrower are subject; or
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(B) does or will require the consent or approval of any creditor of Borrower, any Governmental Authority or any other Person except such consents or approvals which have already been obtained.
(q) Lockbox Arrangement.
Borrower is not party to any type of lockbox agreement or similar cash management arrangement that has not been approved by Lender in writing, and no direct or indirect owner of Borrower is party to any type of lockbox agreement or similar cash management arrangement with respect to Rents or other income from the Mortgaged Property that has not been approved by Lender in writing; provided however, that revenue derived from the Mortgaged Property may be commingled, managed, administered and accounted for in a concentration account with funds from Property Manager and other Borrowers hereunder (the Concentration Account) pursuant to a centralized cash management system so long as: (i) all costs and expenses incurred by or on behalf of each Borrower in connection with the ownership and operation of its respective Mortgaged Property will be paid from the Concentration Account from funds attributable to such Borrower, and (ii) the revenue derived from each Mortgaged Property will be separately identified or annotated and will not be difficult to ascertain and segregate (the Cash Management System). If Borrower wishes to commingle, manage, administer or account revenue derived from the Mortgaged Property in a concentration account with an affiliate of Key Principal with funds from affiliates of Borrower, Property Manager and other Borrowers hereunder, then Borrower shall request approval from Lender for such actions, which approval shall not be unreasonably withheld.
(r) No Reliance.
Borrower acknowledges, represents, and warrants that it understands the nature and structure of the transactions contemplated by this Master Agreement and the other Loan Documents to which Borrower is a party (including the cross-collateralization and cross-default of the Indebtedness); that it is familiar with the provisions of all of the documents and instruments relating to such transactions; that it understands the risks inherent in such transactions, including the risk of loss of all or any of the Mortgaged Properties; with respect to the cross-collateralization and cross-default of the Indebtedness, that it has obtained all consents required pursuant to the Organizational Documents of each Borrower Entity and Identified Party and any owners thereof; and that it has not relied on Lender, Fannie Mae or their counsel for any guidance or expertise in analyzing the financial or other consequences of the transactions contemplated by this Master Agreement or any other Loan Document to which Borrower is a party or otherwise relied on Lender, Fannie Mae or their counsel in any manner in connection with interpreting, entering into or otherwise in connection with this Master Agreement, any other Loan Document or any of the matters contemplated hereby or thereby.
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(s) Investment Company Act.
Borrower is not (1) an investment company or a company controlled by an investment company, within the meaning of the Investment Company Act of 1940, as amended; (2) a holding company or a subsidiary company of a holding company or an affiliate of either a holding company or a subsidiary company within the meaning of the Energy Policy Act of 2005, as amended; or (3) to Borrowers knowledge subject to any other federal or state law or regulation which purports to restrict or regulate its ability to borrow money.
Section 4.02 Covenants.
(a) Maintenance of Existence; Organizational Documents.
(1) Each of Borrower, its general partner, sole member, non-managing member, or managing member (as applicable), SPE Owner, Guarantor and Key Principal shall maintain its existence, its entity status, franchises, rights, and privileges under the laws of the state of its formation or organization (as applicable). Borrower shall continue to be duly qualified and in good standing to transact business in each jurisdiction in which qualification or standing is required according to Applicable Law to conduct its business with respect to its Mortgaged Property and where the failure to do so would adversely affect Borrowers operation of its Mortgaged Property or the validity, enforceability, or the ability of Borrower to perform its obligations under this Master Agreement or any other Loan Document. Neither Borrower nor any partner, member, manager, officer, or director of Borrower shall:
(A) make or allow any material change to the Organizational Documents or organizational structure of Borrower (except as provided in the last paragraph of Section 11.03(i)), including changes relating to the Control of Borrower or changes that are in noncompliance with the SPE Requirements or the provisions of Section 4.02(d) (Borrower Status Covenants Single Purpose Status), or
(B) file any action, complaint, petition, or other claim to:
(i) divide, partition, or otherwise compel the sale of any Mortgaged Property, or
(ii) otherwise change the Control of Borrower.
(2) Intentionally Omitted.
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(b) Economic Sanctions, Anti-Money Laundering, and Anti-Corruption.
(1) Each Borrower Entity, any Identified Party, or any Person Controlled by Borrower Entity that also has a direct or indirect Ownership Interest in any Borrower Entity shall remain in compliance with any applicable civil or criminal laws or regulations (including those requiring internal controls) intended to prohibit, prevent, or regulate money laundering, drug trafficking, terrorism, or corruption, of the United States and the jurisdiction where the Mortgaged Property is located or where the Person resides, is domiciled, or has its principal place of business.
(2) At no time shall any Borrower Entity or any Identified Party, or any Person Controlled by Borrower Entity that also has a direct or indirect Ownership Interest in any Borrower Entity, be a Person:
(A) against whom proceedings are pending for any alleged violation of any laws described in Section 4.02(b)(1) (Borrower Status Covenants Economic Sanctions, Anti-Money Laundering, and Anti-Corruption);
(B) that has been convicted of any violation of, has been subject to civil penalties or Economic Sanctions pursuant to, or had any of its property seized or forfeited under, any laws described in Section 4.02(b)(1) (Borrower Status Covenants Economic Sanctions, Anti-Money Laundering, and Anti-Corruption); or
(C) with whom any United States Person, any entity organized under the laws of the United States or its constituent states or territories, or any entity, regardless of where organized, having its principal place of business within the United States or any of its territories, is prohibited from transacting business of the type contemplated by this Master Agreement and the other Loan Documents under any other Applicable Law; or
(D) that is deemed a Sanctioned Person.
(3) Borrower, Guarantor, and Key Principal shall at all times remain in compliance with any applicable Economic Sanctions.
(c) Payment of Taxes, Assessments, and Other Charges.
Borrower shall file all federal, state, county, and municipal tax returns and reports required to be filed by Borrower and shall pay, before any fine, penalty interest, or cost may be added thereto, all taxes payable with respect to such returns and reports, subject to the right of Borrower to contest payment of Taxes, assessments and other charges pursuant to the terms of this Master Agreement.
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(d) Single Purpose Status.
Until the Indebtedness is fully paid (or Borrower is otherwise Released from this Master Agreement), Borrower and SPE Owner:
(1) shall not acquire, hold, develop, lease, or improve any real property, personal property, or assets other than (A) the Mortgaged Property or (B) for any SPE Owner, equity interests in a Person that owns the Mortgaged Property;
(2) shall not acquire, own, operate, or participate in any business other than the leasing, ownership, management, operation, and maintenance of the Mortgaged Property or, for any SPE Owner, equity interests in a Person that owns the Mortgaged Property;
(3) shall not commingle its assets or funds with those of any other Person, unless such assets or funds can easily be segregated and identified in the ordinary course of business from those of any other Person;
(4) shall maintain its financial statements, accounting records, and other partnership, real estate investment trust, limited liability company, or corporate documents, as the case may be, separate from those of any other Person (unless Borrowers assets are included in a consolidated financial statement prepared in accordance with generally accepted accounting principles);
(5) shall have no material financial obligation under any indenture, mortgage, deed of trust, deed to secure debt, loan agreement, or other agreement or instrument to which Borrower is a party or by which Borrower is otherwise bound, or to which the Mortgaged Property is subject or by which it is otherwise encumbered, other than:
(A) unsecured trade payables incurred in the ordinary course of the operation of the Mortgaged Property (exclusive of amounts (1) for rehabilitation, restoration, repairs, or replacements of the Mortgaged Property, (2) to the extent not excluded in subclause (1), relating to claims for work, labor, or materials affecting any Mortgaged Property and that (i) consists of current trade liabilities incurred for work commissioned in the ordinary course of Borrowers business, (ii) is payable in accordance with customary practices, and (iii) is unsecured, and (3) for real estate taxes which Borrower is contesting pursuant to the terms and conditions of the Loan Documents) that (i) are not evidenced by a promissory note, (ii) are payable within sixty (60) days of the date due, and (iii) as of the Effective Date such Mortgaged Property is added to the Collateral Pool, do not exceed, the lesser of (x) four percent (4%) of the Allocable Facility Amount for such Mortgaged Property and (y) in the aggregate, when added to unsecured trade payables for all other Mortgaged Properties in the Collateral Pool, four percent (4%) of the principal balance of the Advances Outstanding;
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(B) if the Security Instrument grants a lien on a leasehold estate, Borrowers obligations as lessee under the ground lease creating such leasehold estate; and
(C) obligations under the Loan Documents and the Contribution Agreement and obligations secured by the Mortgaged Property to the extent permitted by the Loan Documents;
(6) shall not assume, guaranty, or become obligated for the liabilities or obligations of any other Person, or pledge its assets for the benefit of any other Person (except in connection with this Master Agreement or other mortgage loans that have been paid in full or collaterally assigned to Lender, including in connection with any Consolidation, Extension and Modification Agreement (for Mortgaged Properties in New York) or similar instrument) or hold out its credit as being available to satisfy the obligations of any other Person;
(7) other than as set forth in the Contribution Agreement, shall not make loans or advances to any other Person except for those advances permitted under the Loan Documents;
(8) shall not enter into or become a party to, any transaction with any Borrower Affiliate, except in the ordinary course of business and on terms which are no more favorable to such Borrower Affiliate than would be obtained in a comparable arms-length transaction with an unrelated third party;
(9) shall not acquire obligations or securities of any other Person;
(10) shall pay (or shall cause Property Manager, Key Principal, the sole member or general partner of Borrower or any other affiliate of Key Principal to pay on behalf of Borrower from Borrowers own funds, in accordance with the Cash Management System, for so long as Borrower participated in the Cash Management System) its own liabilities, including the salaries of its own employees, if any, from its own funds and maintain a sufficient number of employees in light of its contemplated business operations;
(11) shall not fail to hold itself out to the public as a legal entity separate and distinct from any other Person or to conduct its business solely in its own name or fail to correct any known misunderstanding regarding its separate identity;
(12) shall allocate fairly and reasonably any overhead for shared expenses;
(13) shall maintain its existence as an entity duly organized and validly existing, under the laws of the jurisdiction of its formation or organization;
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(14) shall be in good standing (if applicable) under the laws of the jurisdiction of its formation or organization;
(15) shall not, other than SPE Owners Ownership Interest in Borrower, own any subsidiary or make any investment in, any Person without the prior written consent of Lender;
(16) without the prior written consent of Lender or unless otherwise required or permitted by a Cap Security Agreement, shall not enter into or guarantee, provide security for, or otherwise undertake any form of contingent obligation with respect to any Hedging Arrangement;
(17) shall not Divide; and
(18) (A) if a limited liability company Borrower or any limited liability company SPE Owner has only one member as of the Effective Date the applicable Borrower becomes party to this Master Agreement, any such Borrower and any such SPE Owner shall maintain Organizational Documents that provide that upon the occurrence of any event that causes its sole member to cease to be a member while the Advances are Outstanding, (i) at least one of two special members (if such special members are natural persons) or the sole special member (if such special member is an entity) will automatically be admitted as the sole member of such Borrower and/or such SPE Owner, as applicable, and (ii) such admittance will preserve and continue the existence of such Borrower and any such SPE Owner without dissolution, and (B) if a limited liability company Borrower or any limited liability company SPE Owner has two or more members as of the Effective Date the applicable Borrower becomes party to this Master Agreement, Borrower and any such SPE Owner shall maintain at least two members at all times and at no time shall become a single-member limited liability company.
Notwithstanding the foregoing, the foregoing provisions of this Section 4.02(d) (Single Purpose Status) shall not apply to any Borrower that does not own a Mortgaged Property unless and until such Borrower becomes the owner of a Mortgaged Property; and shall not be deemed to obligate or require any direct or indirect member, partner or shareholder of Borrower or SPE Owner, as applicable, to make any equity infusions, capital contributions or loans to Borrower or to Borrowers sole member or general partner, as applicable.
Lender acknowledges and agrees that Borrower is party to a Cash Management System as described in Section 4.02(i) (Lockbox Agreement).
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(e) ERISA.
Borrower covenants that:
(1) no asset of Borrower shall constitute plan assets (within the meaning of Section 3(42) of ERISA and Department of Labor Regulation Section 2510.3 101) of an Employee Benefit Plan;
(2) no asset of Borrower shall be subject to the laws of any Governmental Authority governing the assets of an Employee Benefit Plan; and
(3) neither Borrower nor any ERISA Affiliate shall incur any obligation or liability with respect to any ERISA Plan.
(f) Notice of Litigation or Insolvency.
Borrower shall give immediate written notice to Lender of any claims, actions, suits, or proceedings at law or in equity (including any insolvency, bankruptcy, or receivership proceeding) by or before any Governmental Authority pending or, to Borrowers knowledge, threatened in writing against or affecting any Borrower Entity or Identified Party or the Mortgaged Property, which claims, actions, suits or proceedings, if adversely determined reasonably would be expected to materially adversely affect the financial condition or business of any Borrower Entity or Identified Party or the condition, operation, or ownership of the Mortgaged Property (including with respect to Borrower or the Mortgaged Property any claims, actions, suits, or proceedings regarding fair housing (and with respect to Borrower or the Mortgaged Property only, anti-discrimination, or equal opportunity, which shall always be deemed material)).
(g) Payment of Costs, Fees, and Expenses.
In addition to the payments specified in this Master Agreement, Borrower shall pay, on demand, all of Lenders and Fannie Maes out-of-pocket fees, costs, charges, or expenses (including the reasonable fees and expenses of attorneys, accountants, and other experts) incurred by Lender and Fannie Mae in connection with:
(1) any amendment to, consent, or waiver required under, or Request made pursuant to, this Master Agreement or any of the Loan Documents (whether or not any such amendment, consent, waiver, or Request is entered into);
(2) defending or participating in any litigation arising from actions by third parties and brought against or involving Lender with respect to (unless arising from Lenders or Fannie Maes or either of their respective agents, employees or contractors gross negligence or willful misconduct as determined by a court of competent jurisdiction pursuant to a final non-appealable court order):
(A) any Mortgaged Property;
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(B) any event, act, condition, or circumstance in connection with any Mortgaged Property; or
(C) the relationship between or among Lender, Fannie Mae, Borrower, Key Principal, and Guarantor in connection with this Master Agreement or any of the transactions contemplated by this Master Agreement;
(3) the administration or enforcement of, or preservation of rights or remedies under, this Master Agreement or any other Loan Documents including or in connection with any litigation or appeals, any Foreclosure Event or other disposition of any collateral granted pursuant to the Loan Documents; and
(4) any Bankruptcy Event of any Borrower, Borrowers general partner, sole member, or managing member, SPE Owner, or Guarantor.
(h) Restrictions on Distributions.
No distributions or dividends of any nature with respect to Rents or other income from the Mortgaged Property shall be made to any Person having direct Ownership Interest in Borrower or SPE Owner if, at the time of such distribution, (1) Borrower has knowledge that after such distribution it will be unable to make monetary payments as and when such payments become due and payable, (2) an Event of Default has occurred and is continuing, or (3) a Bankruptcy Event has occurred with respect to any Borrower Entity or any Person having a direct Ownership Interest in any Borrower Entity (other than any direct and/or indirect owner in Key Principal).
(i) Lockbox Arrangement.
Borrower shall not enter into any type of lockbox agreement or similar cash management arrangement that has not been approved by Lender in writing, and no direct or indirect owner of Borrower shall enter into any type of lockbox agreement or similar cash management arrangement with respect to Rents or other income from the Mortgaged Property that has not been approved by Lender in writing. Lenders approval of any such cash management arrangement may be conditioned upon requiring Borrower to enter into a lockbox agreement or similar cash management arrangement with Lender in form and substance acceptable to Lender with regard to Rents and other income from the Mortgaged Property; provided, however, that revenue derived from the Mortgaged Property may be managed and accounted for pursuant to the Cash Management System.
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(j) Confidentiality of Certain Information.
Borrower shall not disclose, and shall not permit to be disclosed, any terms, conditions, underwriting requirements, or underwriting procedures of this Master Agreement or any of the Loan Documents; provided, however, that such information may be disclosed (1) as required by law or pursuant to GAAP, (2) to officers, directors, employees, agents, partners, attorneys, accountants, engineers, and other consultants of such Borrower Entity or Identified Party who need to know such information, provided such Persons are instructed to treat such information confidentially, (3) to any regulatory authority having jurisdiction over such Borrower Entity or Identified Party, (4) in connection with any filings with the Securities and Exchange Commission or other Governmental Authorities, (5) to any other Person to which such delivery or disclosure may be necessary or appropriate (A) in compliance with any law, rule, regulation, or order applicable to such Borrower Entity or Identified Party, or (B) in response to any subpoena or other legal process or information investigative demand, or (6) in connection with Key Principals or any successor permitted pursuant to Section 11.03(i) (Permitted Transfer Provisions), or any of their affiliates corporate debt and/or actual or potential upper-tier transfers (i.e., mergers, reverse mergers, acquisitions, investments, and/or dispositions).
Article 5
THE ADVANCES
Section 5.01 Representations and Warranties.
The representations and warranties made by Borrower to Lender in this Section 5.01 (The Advances Representations and Warranties) are made as of each Effective Date and are true and correct except as disclosed on the Exceptions to Representations and Warranties Schedule.
(a) Receipt and Review of Loan Documents.
Borrower has received and reviewed this Master Agreement and all of the other Loan Documents.
(b) No Default.
No default exists under any of the Loan Documents.
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(c) No Defenses.
The Loan Documents are not currently subject to any right of rescission, set-off, counterclaim, or defense by either Borrower or Guarantor, including the defense of usury, nor would the operation of any of the terms of the Loan Documents, or the exercise of any right thereunder, render the Loan Documents unenforceable (subject to principles of equity and bankruptcy, Insolvency Laws, and other laws generally affecting creditors rights and the enforcement of debtors obligations), and neither Borrower nor Guarantor has asserted any right of rescission, set-off, counterclaim, or defense with respect thereto.
(d) Loan Document Taxes.
All mortgage, mortgage recording, stamp, intangible, or any other similar taxes required to be paid by any Person under Applicable Law currently in effect in connection with the execution, delivery, recordation, filing, registration, perfection, or enforcement of any of the Loan Documents, including the Security Instrument, have been paid or will be paid in the ordinary course of the closing of any Advance.
Section 5.02 Covenants.
(a) Ratification of Covenants; Estoppels; Certifications.
Borrower shall:
(1) promptly notify Lender in writing upon any violation of any covenant set forth in any Loan Document of which Borrower has notice or knowledge; provided, however, any such written notice by Borrower to Lender shall not relieve Borrower of, or result in a waiver of, any obligation under this Master Agreement or any other Loan Document; and
(2) within ten (10) days after a request from Lender, provide a written statement, signed and acknowledged by Borrower, certifying to Lender or any Person designated by Lender, as of the date of such statement:
(A) that the Loan Documents are unmodified and in full force and effect (or, if there have been modifications, that the Loan Documents are in full force and effect as modified and setting forth such modifications);
(B) the unpaid principal balance of the Advances Outstanding;
(C) the date to which interest on the Advances Outstanding has been paid;
(D) that Borrower is not in default in paying the Advances Outstanding or to its knowledge in performing or observing any of the covenants or agreements contained in this Master Agreement or any of the other Loan Documents (or, if Borrower is in default, describing such default in reasonable detail);
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(E) whether or not there are then existing any setoffs or defenses known to Borrower against the enforcement of any right or remedy of Lender under the Loan Documents; and
(F) any additional facts reasonably requested in writing by Lender.
(b) Further Assurances.
(1) Other Documents As Lender May Require.
Within ten (10) days after request by Lender, Borrower shall, subject to Section 5.02(d) (Limitations on Further Acts of Borrower) below, execute, acknowledge, deliver, and, if necessary, file or record, at its cost and expense, all further acts, deeds, conveyances, assignments, financing statements, transfers, documents, agreements, assurances, and such other instruments as Lender may reasonably require from time to time in order to better assure, grant, and convey to Lender the rights intended to be granted, now or in the future, to Lender under this Master Agreement and the other Loan Documents and take such further action as Lender from time to time may reasonably request as reasonably necessary, desirable, or proper to carry out more effectively the purposes of this Master Agreement or any of the other Loan Documents.
(2) Corrective Actions.
Within ten (10) days after request by Lender, Borrower shall provide, or cause to be provided, to Lender, at Borrowers cost and expense, such further documentation or information reasonably deemed necessary or appropriate by Lender in the exercise of its rights under the related commitment letter between Borrower and Lender or to correct patent mistakes in the Loan Documents, the Title Policy, or the funding of the Advances.
(3) Compliance with Investor Requirements.
Without limiting the generality of subsections (1) and (2) above, Borrower shall, subject to Section 5.02(d) (Limitations on Further Acts of Borrower) below, take all reasonable actions necessary to comply with the requirements of Lender to enable Lender to sell any MBS backed by an Advance or achieve or preserve the expected federal income tax treatment of any MBS trust that directly or indirectly holds an Advance and issues MBS as a fixed investment trust or real estate mortgage investment conduit, as the case may be, within the meaning of the Treasury Regulations.
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(c) Sale of Advances.
Borrower shall, subject to Section 5.02(d) (Limitations on Further Acts of Borrower) below:
(1) comply with the reasonable requirements of Lender or any Investor or provide, or cause to be provided, to Lender or any Investor within ten (10) days after the request, at Borrowers cost and expense, such further documentation or information in Borrowers possession or control as Lender or Investor may reasonably require in order to:
(A) enable Lender to sell the Advance to such Investor;
(B) enable Lender to obtain a refund of any commitment fee from any such Investor;
(C) enable any such Investor to further sell or securitize the Advance; or
(D) achieve or preserve the expected federal income tax treatment of any MBS trust that directly or indirectly holds an Advance and issues MBS as a fixed investment trust or real estate mortgage investment conduit, as the case may be, within the meaning of the Treasury Regulations.
(2) ratify and affirm in writing the representations and warranties set forth in any Loan Document as of such date specified by Lender modified as necessary to reflect changes that have occurred subsequent to the Effective Date;
(3) confirm that Borrower is not in default in paying the Indebtedness or to Borrowers knowledge in performing or observing any of the covenants or agreements contained in this Master Agreement or any of the other Loan Documents (or, if Borrower is in default, describing such default in reasonable detail); and
(4) execute and deliver to Lender and/or any Investor such other documentation, including any amendments, corrections, deletions, or additions to this Master Agreement or other Loan Document(s) as is reasonably required by Lender or such Investor.
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(d) Limitations on Further Acts of Borrower.
Nothing in Section 5.02(b) (Further Assurances) or Section 5.02(c) (Sale of Advances) shall require Borrower to do any further act that has the effect of changing the economic terms determined upon the date of this Master Agreement, imposing on Borrower or Guarantor greater personal liability determined upon the date of this Master Agreement, or materially changing the rights and obligations of Borrower or Guarantor under the Loan Documents, except as may be required to correct patent mistakes or defects.
(e) Financing Statements; Record Searches.
(1) Borrower shall pay all costs and expenses associated with:
(A) any filing or recording of any financing statements, including all continuation statements, termination statements, and amendments or any other filings related to security interests in or liens on collateral; and
(B) any record searches for financing statements that Lender may require.
(2) Borrower hereby authorizes Lender to file any financing statements, continuation statements, termination statements, and amendments (including an all assets or all personal property collateral description or words of similar import) in form and substance as Lender may require in order to protect and preserve Lenders lien priority and security interest in any Mortgaged Property (and to the extent Lender has filed any such financing statements, continuation statements, or amendments prior to the applicable Effective Date, such filings by Lender are hereby authorized and ratified by Borrower).
(f) Loan Document Taxes.
Borrower shall pay, on demand, any transfer taxes, documentary taxes, assessments, or charges made by any Governmental Authority in connection with the execution, delivery, recordation, filing, registration, perfection, or enforcement of any of the Loan Documents or the Advances.
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Section 5.03 Administrative Matters Regarding Advances.
(a) Determination of Allocable Facility Amount and Valuations.
(1) Initial Determinations.
On the Initial Effective Date, Lender shall determine (A) the Allocable Facility Amount and Valuation for each Initial Mortgaged Property, and (B) the Aggregate Debt Service Coverage Ratio and the Aggregate Loan to Value Ratio. Changes in Allocable Facility Amount, Valuations, the Aggregate Debt Service Coverage Ratio, and the Aggregate Loan to Value Ratio shall be made pursuant to Section 5.03(a)(2) (Subsequent Monitoring Determinations).
(2) Subsequent Monitoring Determinations.
(A) Once each Calendar Quarter, within twenty (20) Business Days after Borrower has delivered to Lender the reports required in Section 8.02 (Books and Records; Financial Reporting Covenants), Lender shall determine the Aggregate Debt Service Coverage Ratio, and the Aggregate Loan to Value Ratio set forth in the Loan Documents and whether Borrower is in compliance with the Interest Rate Cap requirements (including requirements for waived Interest Rate Caps) set forth in Section 2.03(a)(2)(B) (Interest Accrual and Computation; Amortization; Interest Rate Cap). At any time, Lender may redetermine Allocable Facility Amounts and Valuations for the Multifamily Residential Properties if, in Lenders reasonable judgment, changed market or property conditions warrant such redetermination or any other event has occurred that invalidates the outstanding determination. In connection with all Collateral Events (including any Borrow Up), Lender shall redetermine Allocable Facility Amounts and Valuations upon receipt of a Request for a Collateral Event and immediately upon closing such Collateral Event, in each case to take account of such Collateral Event, provided however, that the Initial Valuation of each Mortgaged Property shall remain unchanged until at least twelve (12) months after the date such Mortgaged Property was added to the Collateral Pool unless if, in Lenders reasonable judgment, changed market or property conditions warrant a redetermination of Valuation or any other event has occurred that invalidates the determination from such Effective Date.
(B) Lender shall promptly disclose its determinations to Borrower. Until redetermined, the outstanding Allocable Facility Amounts and Valuations shall remain in effect. Upon receipt by Borrower of any such new determinations by Lender, Borrower shall promptly acknowledge such receipt.
Notwithstanding anything in this Master Agreement to the contrary, no change in Allocable Facility Amounts, Valuations, the Aggregate Loan to Value Ratio, or the Aggregate Debt Service Coverage Ratio shall (i) result in a Potential Event of Default or Event of Default, (ii) require the prepayment of any Advance in whole or in part, or (iii) require the addition of Collateral to the Collateral Pool.
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Article 6
PROPERTY USE, PRESERVATION, AND MAINTENANCE
Section 6.01 Representations and Warranties.
The representations and warranties made by Borrower to Lender in this Section 6.01 (Property Use, Preservation and Maintenance Representations and Warranties) are made as of each Effective Date and are true and correct except as disclosed on the Exceptions to Representations and Warranties Schedule.
(a) Compliance with Law; Permits and Licenses.
(1) To Borrowers knowledge, all improvements to the Land and the use of the Mortgaged Property comply with all Applicable Law, including all applicable statutes, rules, and regulations pertaining to requirements for equal opportunity, anti-discrimination, fair housing, and rent control, and Borrower has no knowledge of any action or proceeding (or threatened action or proceeding) regarding noncompliance or nonconformity with any of the foregoing.
(2) To Borrowers knowledge, there is no evidence of any illegal activities on the Mortgaged Property.
(3) To Borrowers knowledge, no permits or approvals from any Governmental Authority, other than those previously obtained and furnished to Lender, are necessary for the commencement and completion of the Repairs or Replacements, as applicable, other than those permits or approvals which will be timely obtained in the ordinary course of business.
(4) All required permits, licenses, and certificates to comply with all Applicable Law, and for the lawful use and operation of the Mortgaged Property, including certificates of occupancy, apartment licenses, or the equivalent, have been obtained and are in full force and effect.
(5) No portion of any Mortgaged Property has been purchased with the proceeds of any illegal activity.
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(b) Property Characteristics.
No part of the Land is included or assessed under or as part of another tax lot or parcel, and no part of any other property is included or assessed under or as part of the tax lot or parcels for the Land.
(c) Property Ownership.
Borrower is the sole owner or ground lessee of the Mortgaged Property. If any Mortgaged Property is a condominium, Borrower is and shall be subject to the representations and covenants specific to such Mortgaged Property and attached to the Loan Documents.
(d) Condition of the Mortgaged Property.
Borrower represents that:
(1) Borrower has not made any claims, and to Borrowers knowledge, no claims have been made, against any contractor, engineer, architect, or other party with respect to the construction or condition of any Mortgaged Property or the existence of any structural or other material defect therein that have not been settled or resolved as of the date hereof;
(2) except with respect to a Release Mortgaged Property that is the subject of a Release Request, no Mortgaged Property has sustained any damage other than damage which has been fully repaired, or is fully insured and is being repaired in the ordinary course of business; and
(3) except as disclosed in any third party report delivered to Lender prior to the date on which any Mortgaged Property is added to the Collateral Pool, to the knowledge of Borrower, the Mortgaged Properties are in good condition, order, and repair, and there exist no structural or other material defects in any Mortgaged Property (whether patent, latent, or otherwise), and Borrower has not received notice from any insurance company or bonding company of any defects or inadequacies in any Mortgaged Property, or any part of it, which would adversely affect the insurability of such Mortgaged Property or cause the imposition of extraordinary premiums or charges for insurance or of any termination or threatened termination of any policy of insurance or bond.
(e) Personal Property.
Borrower owns (or, to the extent disclosed on the Exceptions to Representations and Warranties Schedule, leases) all of the Personal Property and all of the Personalty (as defined in the UCC) that is material to and is used in connection with the management, ownership, and operation of its respective Mortgaged Property.
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Section 6.02 Covenants.
(a) Use of Property.
From and after the Effective Date, Borrower shall not, unless required by Applicable Law or Governmental Authority:
(1) change the use of all or any part of its Mortgaged Property (except in conjunction with a change of commercial units or common area to residential units as provided in clause (2) immediately below);
(2) convert any individual dwelling units or common areas to commercial use, or convert any common area or commercial use to individual dwelling units; provided, however, notwithstanding the foregoing (or subclause (1) above), Borrower shall have the right, without Lenders consent, to convert any portion of the common areas and other commercial areas (e.g. retail space) at a Mortgaged Property to individual dwelling units at such Mortgaged Property provided that such conversion is performed in accordance with all zoning laws and in conformity with the provisions of Section 6.02(f)(Alterations), in which case Borrower shall provide Lender notice of such conversion within thirty (30) days following completion thereof;
(3) initiate or acquiesce in a change in the zoning classification of the Land;
(4) establish any condominium or cooperative regime with respect to its Mortgaged Property;
(5) subdivide the Land; or
(6) suffer, permit, or initiate the joint assessment of any Mortgaged Property with any other real property constituting a tax lot separate from such Mortgaged Property which could cause the part of the Land to be included or assessed under or as part of another tax lot or parcel, or any part of any other property to be included or assessed under or as part of the tax lot or parcels for the Land.
(b) Property Maintenance.
Borrower shall:
(1) pay the expenses of operating, managing, maintaining, and repairing its Mortgaged Property (including insurance premiums, utilities, Repairs, and Replacements) before the last date upon which each such payment may be made without any penalty or interest charge being added;
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(2) keep its Mortgaged Property in good repair and marketable condition (ordinary wear and tear excepted) (including the replacement of Personalty and Fixtures with items of equal or better function and quality) and subject to Section 9.03(b)(3) (Application of Proceeds on Event of Loss) and Section 10.03(d) (Preservation of Mortgaged Property) restore or repair promptly, in a good and workmanlike manner, any damaged part of such Mortgaged Property to the equivalent of its original condition or condition immediately prior to the damage (if improved after the Effective Date), whether or not any insurance proceeds received upon an event of loss or any amounts received in connection with a Condemnation Action are available to cover any costs of such restoration or repair;
(3) commence all Required Repairs, Additional Lender Repairs, and Additional Lender Replacements as follows:
(A) with respect to any Required Repairs, promptly following the Effective Date (subject to Force Majeure, if applicable), in accordance with the timelines set forth on the Required Repair Schedule, or if no timelines are provided, as soon as practical following the Effective Date.
Notwithstanding the foregoing, at any time until one (1) year prior to the Termination Date, Borrower may in good faith contest, at its expense and by appropriate legal proceedings, the amount, validity or application of any such work or materials, if:
(i) Borrower notifies Lender of the commencement or expected commencement of such proceedings, and copies Lender on all material correspondence and pleadings and judicial or non-judicial determinations and proceedings with respect thereto, with such notice to be in the manner set forth in Article 15 (Miscellaneous) of this Master Agreement;
(ii) Lender determines that the Mortgaged Property is not in imminent danger of being sold or forfeited, and such contest does not otherwise materially, adversely affect the Mortgaged Property or Lenders interest therein or adversely affect the ability of Lender to enforce any of the Loan Documents;
(iii) if the amount in question has not been paid under protest, either (1) Borrower furnishes any security as may be required in such proceeding or as may be reasonably requested by Lender to ensure the payment of the amounts contested or the loss or damage that may result from Borrowers failure to prevail in such contest in such amount, or (2) Borrower has bonded off, released of record, insured over or otherwise remedied to Lenders satisfaction any Lien associated with the contested claim within sixty (60) days after the earlier of the date Borrower has actual notice or constructive notice of the existence of such Lien;
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(iv) Borrower commences, and at all times thereafter diligently prosecutes, such contest in good faith until resolved, it being understood that any such contest shall be completed by the later of twenty-four (24) months of its commencement or one (1) year prior to the Termination Date;
(v) no Event of Default has occurred and is continuing; and
(vi) the amount of the contested work or materials does not exceed the greater of $100,000 and half of one percent (.5%) of the Allocable Facility Amount for such Mortgaged Property.
(B) with respect to Additional Lender Repairs, in the event that Lender determines that Additional Lender Repairs are necessary from time to time or pursuant to Section 6.03(c) (Property Condition Assessment), promptly following Lenders written notice of such Additional Lender Repairs (subject to Force Majeure, if applicable), commence any such Additional Lender Repairs in accordance with Lenders timelines, or if no timelines are provided, as soon as practical; and
(C) with respect to Additional Lender Replacements, in the event that Lender determines that Additional Lender Replacements are necessary from time to time or pursuant to Section 6.03(c) (Property Condition Assessment), promptly following Lenders written notice of such Additional Lender Replacements (subject to Force Majeure, if applicable), commence any such Additional Lender Replacements in accordance with Lenders timelines, or if no timelines are provided, as soon as practical;
(4) make, construct, install, diligently perform, and complete all Replacements, Repairs, Restoration, and any other work permitted under the Loan Documents:
(A) in a good and workmanlike manner as soon as practicable following the commencement thereof, free and clear of any Liens, including mechanics or materialmens liens and encumbrances (except Permitted Encumbrances and mechanics or materialmens liens which attach automatically under the laws of any Governmental Authority upon the commencement of any work upon, or delivery of any materials to, the Mortgaged Property and for which Borrower is not delinquent in the payment for any such work or materials);
(B) in accordance with all Applicable Law;
(C) in accordance with all applicable insurance and bonding requirements; and
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(D) within (i) all timeframes required by Lender for all Replacements, Repairs, and Restoration and (ii) commercially reasonable timeframes for any other work permitted under the Loan Documents, and Borrower acknowledges that it shall be an Event of Default if Borrower abandons or ceases work on any Repair at any time prior to the completion of the Repairs for a period of longer than twenty (20) days (except when Force Majeure exists and Borrower is diligently pursuing the reinstitution of such work; provided, however, any such abandonment or cessation shall not in any event allow the Repair to be completed after the Completion Period, subject to Force Majeure);
(5) subject to the terms of Section 6.03(a) (Property Management), provide for professional management of the Mortgaged Property by a residential rental property manager satisfactory to Lender under a contract approved by Lender in writing;
(6) give written notice to Lender of, and, unless otherwise directed in writing by Lender, appear in and defend any action or proceeding purporting to affect any Mortgaged Property, Lenders security for the Advances, or Lenders rights under this Master Agreement; and
(7) upon Lenders written request, submit to Lender any contracts or work orders described in Section 13.02(b) (Approvals of Contracts; Assignment of Claims).
(c) Property Preservation.Borrower shall:
(1) not commit waste or abandon or (ordinary wear and tear excepted) permit impairment or deterioration of any Mortgaged Property;
(2) subject to the provisions of Section 6.02(f) (Alterations to any Mortgaged Property), not (or otherwise permit any other Person to) demolish, make any change in the unit mix, otherwise alter any Mortgaged Property or any part of any Mortgaged Property, or remove any Personalty or Fixtures from the Mortgaged Property, except for: (A) alterations required in connection with Repairs, Replacements, or Restoration; or (B) the replacement of tangible Personalty or Fixtures, provided (i) such Personalty or Fixtures are replaced with items of equal or better function and quality, and (ii) such replacement does not result in any disruption in occupancy (other than in connection with the routine re-leasing of units);
(3) not engage in or knowingly permit, and shall take appropriate measures to prevent and abate or cease and desist, any illegal activities at any Mortgaged Property that could endanger tenants or visitors, result in damage to such Mortgaged Property, result in forfeiture of the Land or otherwise materially impair the lien created by the Security Instrument or Lenders interest in such Mortgaged Property;
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(4) not permit any condition to exist on any Mortgaged Property that would invalidate any part of any insurance coverage required by this Master Agreement; or
(5) not subject any Mortgaged Property to any voluntary, elective, or non-compulsory tax lien or assessment (or opt in to any voluntary, elective, or non-compulsory special tax district or similar regime).
(d) Property Inspections.
Borrower shall:
(1) permit Lender, its agents, representatives, and designees to enter upon and inspect the Mortgaged Properties (including in connection with any Replacement, Repair, or Restoration, or to conduct any Environmental Inspection pursuant to the Environmental Indemnity Agreement), and shall cooperate and provide access to all areas of the Mortgaged Properties (subject to the rights of tenants under the Leases):
(A) during normal business hours upon reasonable notice of not less than one (1) Business Day;
(B) at such other reasonable time upon reasonable notice of not less than one (1) Business Day;
(C) at any time when exigent circumstances exist; or
(D) at any time after an Event of Default has occurred and is continuing; and
(2) pay for reasonable costs or expenses incurred by Lender or its agents in connection with one (1) inspection described above per Calendar Year, unless an Event of Default exists.
(e) Compliance with Laws.
Borrower shall:
(1) comply in all respects with Applicable Law and all recorded lawful covenants and agreements relating to or affecting any Mortgaged Property, including all laws, ordinances, statutes, rules and regulations, and covenants pertaining to construction of improvements on the Land, fair housing, and requirements for equal opportunity, anti-discrimination, and Leases;
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(2) procure and maintain all required permits, licenses, charters, registrations, and certificates necessary to comply with all zoning and land use statutes, laws, ordinances, rules and regulations, and all applicable health, fire, safety, and building codes and for the lawful use and operation of each Mortgaged Property, including certificates of occupancy, apartment licenses, or the equivalent; except (x) in the case where such items of noncompliance that, singly or in the aggregate would not reasonably be expected to have a Material Adverse Effect and Borrower is using diligent efforts to come into compliance and/or (y) for any contest by Borrower of the applicability or validity of any such applicable law to Borrower or the Mortgaged Property that would be reasonably expected to have a Material Adverse Effect and Borrower is using diligent efforts to resolve such contest;
(3) comply with all Applicable Law that pertain to the maintenance and disposition of tenant security deposits;
(4) at all times maintain records sufficient to demonstrate compliance with the provisions of this Section 6.02(e) (Compliance with Laws);
(5) promptly after receipt of written notification thereof, provide Lender copies of any building code or zoning violation from any Governmental Authority with respect to any Mortgaged Property which if adversely determined (individually or in the aggregate) reasonably would be expected to Materially Adverse Effect; and
(6) reasonably cooperate in all material respects with Lender with respect to any proceedings before any court, board, or other Governmental Authority which may in any way affect the rights of Lender hereunder or any rights obtained by Lender under any of the other Loan Documents and, in connection therewith, permit Lender, at its election, to participate in any such proceedings.
(f) Alterations to any Mortgaged Property.
Notwithstanding anything to the contrary in the Loan Documents, but subject to clauses (1), (2) and (3) below and the last paragraph of this Section 6.02(f), (for avoidance of doubt excluding the obligation to obtain Lenders consent) Borrower shall have the right to undertake any Alteration (as defined herein) to any Mortgaged Property without the prior consent of Lender; provided, however, no alteration, improvement, demolition, removal, or construction (collectively, Alterations) shall be made to any Mortgaged Property without the prior written consent of Lender if:
(1) such Alteration could reasonably be expected to adversely affect the value of such Mortgaged Property or its operation as a Multifamily Residential Property in substantially the same manner in which it is being operated on the date such property became Collateral;
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(2) the construction of such Alteration could reasonably be expected to result in interference to the occupancy of tenants of such Mortgaged Property such that tenants in occupancy with respect to five percent (5%) or more of the tenants under the Leases would be displaced from the applicable Mortgaged Property or permitted to terminate their Leases or to abate the payment of all or any portion of their rent; or
(3) such Alteration will be completed in more than twelve (12) months from the date of commencement or in the last year of the Term of this Master Agreement.
In addition, Borrower must obtain Lenders prior written consent to construct Alterations with respect to any Mortgaged Property costing in excess of, with respect to any Mortgaged Property, the number of units in such Mortgaged Property multiplied by $8,000, but in any event, costs in excess of $250,000, and Borrower must give prior written notice to Lender of its intent to construct Alterations at any time with respect to any Mortgaged Property costing in excess of $100,000; provided, however, that the preceding requirements shall not be applicable to Alterations made, conducted, or undertaken by Borrower as part of Borrowers routine maintenance and repair of the Mortgaged Properties as required by the Loan Documents (including any Repair or Replacement or other repairs or capital improvements specifically required under any Loan Document and included as a Repair or Replacement).
Section 6.03 Administration Matters Regarding the Property.
(a) Property Management.
From and after the applicable Effective Date, each property manager and each property management agreement must be approved by Lender. In the event that the Management Agreement expires or is terminated (without limiting any obligation of Borrower to obtain Lenders consent to any termination or modification of the Management Agreement in accordance with the terms and provisions of the Loan Documents), Borrower shall promptly enter into a replacement management agreement consented to in writing by Lender with a property manager that is approved in advance by Lender in writing. Lender shall not unreasonably withhold such consent. If Lender waives in writing the requirement that Borrower enter into a written contract for management of a Mortgaged Property, and Borrower later elects to enter into a written contract or change the management of such Mortgaged Property, such new property manager or the property management agreement must be approved by Lender. As a condition to any approval by Lender, Lender may require that Borrower and such new property manager enter into a collateral assignment of the property management agreement on a form approved by Lender. Lender hereby approves (i) subsidiaries of Greystar, Inc., as the property manager for the Mortgaged Property, and (ii) Resource Real Estate Opportunity Manager II, LLC, a Delaware limited liability company, as the prime manager for the Mortgaged Property on the Initial Effective Date.
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(b) Subordination of Fees to Affiliated Property Managers.
Any property manager that is a Borrower Affiliate to whom fees are payable for the management of a Mortgaged Property must enter into an assignment of management agreement or other agreement with Lender, in a form approved by Lender, providing for subordination of those fees and such other provisions as Lender may require.
(c) Property Condition Assessment.
If, in connection with any inspection of any Mortgaged Property, Lender determines that the condition of such Mortgaged Property has deteriorated (ordinary wear and tear excepted) since the Effective Date that such Mortgaged Property was added to the Collateral Pool, Lender may obtain, at Borrowers expense, a property condition assessment of each Mortgaged Property. Lenders right to obtain a property condition assessment pursuant to this Section 6.03(c) (Property Condition Assessment) shall be in addition to any other rights available to Lender under this Master Agreement in connection with any such deterioration. Any such inspection or property condition assessment may result in Lender requiring Additional Lender Repairs or Additional Lender Replacements as further described in Section 13.02(a)(9)(B) (Additional Lender Replacements and Additional Lender Repairs).
Article 7
LEASES AND RENTS
Section 7.01 Representations and Warranties.
The representations and warranties made by Borrower to Lender in this Section 7.01 (Leases and Rents Representations and Warranties) are made as of each Effective Date and are true and correct except as disclosed on the Exceptions to Representations and Warranties Schedule.
(a) Prior Assignment of Rents.
Borrower has not executed any:
(1) prior assignment of Rents (other than an assignment of Rents securing prior indebtedness that has been paid off and discharged or will be paid off and discharged with the proceeds of the Initial Advance or a Future Advance); or
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(2) instrument which would prevent Lender from exercising its rights under this Master Agreement, the Security Instrument, or any other Loan Document.
(b) Prepaid Rents.
Except for front loading payments under non-Residential Leases (i.e. cable leases) or as otherwise permitted under this Master Agreement, Borrower has not accepted, and does not expect to receive prepayment of, any Rents for more than two (2) months prior to the due dates of such Rents(excluding security deposits and first month and/or last month Rent paid upon execution of the applicable Lease); provided, however, that Rents for up to five percent (5%) of the units at any Mortgaged Property may have been paid for more than two (2) months; provided further than no more than one percent (1%) of all units in the aggregate in the Collateral Pool shall have been paid more than six (6) months prior to the due date of such Rents.
Section 7.02 Covenants.
(a) Leases.
Borrower shall:
(1) comply with and observe Borrowers material obligations under all Leases, including Borrowers obligations pertaining to the maintenance and disposition of tenant security deposits;
(2) surrender possession of the applicable Mortgaged Property, including all Leases and all security deposits and prepaid Rents, immediately upon appointment of a receiver or Lenders entry upon and taking of possession and control of such Mortgaged Property, as applicable;
(3) require that all Residential Leases have initial terms of not less than six (6) months and not more than twenty-four (24) months (however, if customary in the applicable market for properties comparable to the applicable Mortgaged Property, Residential Leases with terms of less than six (6) months (but in no case less than one (1) month) may be permitted with Lenders prior written consent), provided however, Short-Term Rentals (regardless of the duration of the term) shall not be permitted unless otherwise expressly approved by Lender in writing. Notwithstanding the foregoing, Borrower may enter into (A) Residential Leases with terms shorter than six (6) months, but not shorter than one (1) month and (B) Short-Term Rentals, for up to a combined aggregate cap of fifteen percent (15%) of the residential units at any Mortgaged Property without Lenders prior written consent so long as each of the following conditions is satisfied: (i)
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units with Short-Term Rentals do not exceed five percent (5%) of the units of any individual Mortgaged Property, (ii) any such Short-Term Rentals are at all times legally permissible and in compliance with applicable laws and zoning, (iii) Borrower has disclosed such Short-Term Rentals to its insurance carriers, and Borrowers insurance policies cover such Short-Term Rentals to the same extent as all other units on the Mortgaged Property, (iv) Borrower does not knowingly permit other occupancies of less than thirty (30) days at the Mortgaged Property, and (v) total units with Residential Leases that have an initial term of less than six (6) months (whether or not such Residential Leases are Short-Term Rentals) does not exceed ten percent (10%) of the total units in the Collateral Pool; and
(4) promptly provide Lender a copy of any non-Residential Lease at the time such Lease is executed (subject to Lenders consent rights for Material Commercial Leases in Section 7.02(b) (Commercial Leases)), and, upon Lenders written request, promptly provide Lender a copy of any Residential Lease then in effect.
(b) Commercial Leases.
(1) With respect to Material Commercial Leases, Borrower shall not:
(A) enter into any Material Commercial Lease except with the prior written consent of Lender; or
(B) modify the terms of, extend, or terminate any Material Commercial Lease (including any Material Commercial Lease in existence on the Effective Date) without the prior written consent of Lender.
(2) With respect to any non-Material Commercial Lease, Borrower shall not:
(A) enter into any non-Material Commercial Lease that materially alters the use and type of operation of the premises subject to the Lease in effect as of the Effective Date or reduces the number or size of residential units at a Mortgaged Property; or
(B) modify the terms of any non-Material Commercial Lease (including any non-Material Commercial Lease in existence on the Effective Date) in any way that materially alters the use and type of operation of the premises subject to such non-Material Commercial Lease in effect as of the Effective Date, reduces the number or size of residential units at a Mortgaged Property, or results in such non-Material Commercial Lease being deemed a Material Commercial Lease.
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(3) With respect to any Material Commercial Lease or non-Material Commercial Lease (other than the Short Term Rentals permitted under Section 7.02(a)(3) above), Borrower shall cause the applicable tenant to provide within ten (10) days after a request by Borrower, a certificate of estoppel, or if not provided by tenant within such ten (10) day period, Borrower shall provide such certificate of estoppel, certifying:
(A) that such Material Commercial Lease or non-Material Commercial Lease is unmodified and in full force and effect (or if there have been modifications, that such Material Commercial Lease or non-Material Commercial Lease is in full force and effect as modified and stating the modifications);
(B) the term of the Lease including any extensions thereto;
(C) the dates to which the Rent and any other charges hereunder have been paid by tenant;
(D) the amount of any security deposit delivered to Borrower as landlord;
(E) to Borrowers knowledge, whether or not Borrower is in default (or whether any event or condition exists which, with the passage of time, would constitute an event of default) under such Lease;
(F) the address to which notices to tenant should be sent; and
(G) any other information as may be reasonably required by Lender.
(c) Payment of Rents.
Borrower shall:
(1) pay to Lender upon demand all Rents after an Event of Default has occurred and is continuing;
(2) cooperate with Lenders efforts in connection with the assignment of Rents set forth in the Security Instrument; and
(3) not accept Rent under any Lease (whether a Residential Lease or a non-Residential Lease) for more than two (2) months in advance (excluding security deposits and first month and/or last month Rent paid upon execution of the applicable Lease); provided, however, that Rents for up to five percent (5%) of the units at any Mortgaged Property may be paid more than two (2) months but not in excess of six (6) months prior to the due dates of such Rents (provided, however, that Rents for up to five percent (5%) of the units at any Mortgaged Property may have been paid more than two (2) months); provided further than no more than one percent (1%) of all units in the aggregate in the Collateral Pool shall have been paid more than six (6) months prior to the due date of such Rents. Rents may be handled in accordance with the Cash Management System, provided that Rents shall not be recorded as income or distributed as distributions or dividends to any direct or indirect owner of Borrower until such Rents are actually earned.
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(d) Assignment of Rents.
Borrower shall not:
(1) perform any acts or execute any instrument that would prevent Lender from exercising its rights under the assignment of Rents granted in the Security Instrument or in any other Loan Document; or
(2) interfere with Lenders collection of such Rents.
(e) Further Assignments of Leases and Rents.
Borrower, with respect to the Rents from the Mortgaged Property, shall execute and deliver any further assignments of Leases and Rents as Lender may reasonably require.
(f) Options to Purchase by Tenants.
No Lease (whether a Residential Lease or a non-Residential Lease) shall contain an option to purchase, right of first refusal to purchase or right of first offer to purchase, except as required by Applicable Law.
Section 7.03 Administration Regarding Leases and Rents.
(a) Material Commercial Lease Requirements.
Each Material Commercial Lease, including any renewal or extension of any Material Commercial Lease in existence as of the Effective Date, shall provide, directly or pursuant to a subordination, non-disturbance and attornment agreement approved by Lender, that:
(1) the tenant shall, upon written notice from Lender after the occurrence of an Event of Default, pay all Rents payable under such Lease to Lender;
(2) such Lease and all rights of the tenant thereunder are expressly subordinate to the lien of the Security Instrument;
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(3) the tenant shall attorn to Lender and any purchaser at a Foreclosure Event (such attornment to be self-executing and effective upon acquisition of title to the Mortgaged Property by any purchaser at a Foreclosure Event or by Lender in any manner);
(4) the tenant agrees to execute such further evidences of attornment as Lender or any purchaser at a Foreclosure Event may from time to time request; and
(5) such Lease shall not terminate as a result of a Foreclosure Event unless Lender or any other purchaser at such Foreclosure Event affirmatively elects to terminate such Lease pursuant to the terms of the subordination, non-disturbance and attornment agreement.
(b) Residential Lease Form.
All Residential Leases entered into from and after the Effective Date shall be on forms approved by Lender.
Article 8
BOOKS AND RECORDS; FINANCIAL REPORTING
Section 8.01 Representations and Warranties.
The representations and warranties made by Borrower to Lender in this Section 8.01 (Books and Records; Financial Reporting Representations and Warranties) are made as of each Effective Date and are true and correct except as disclosed on the Exceptions to Representations and Warranties Schedule.
(a) Financial Information.
All financial statements and data that have been delivered to Lender, including statements of cash flow and income and operating expenses in respect of the Mortgaged Properties:
(1) are true, complete, and correct in all material respects as of their respective dates; and
(2) accurately in all material respect represent the financial condition of the Mortgaged Properties as of their respective dates.
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(b) No Change in Facts or Circumstances.
All information in the Loan Application and in all financial statements, rent rolls, reports, certificates, and other documents submitted by (or on behalf of) Borrower in connection with the Loan Application are complete and accurate in all material respects, in each case, as of their respective dates. There has been no material adverse change in any fact or circumstance that would make any such information incomplete or inaccurate since the respective application or financial report date or, after the Initial Effective Date, the most recent financial statement delivered.
Section 8.02 Covenants.
(a) | Obligation to Maintain Accurate Books and Records; Access; Discussions with Officers and Accountants. |
(1) Borrower shall keep and maintain at all times at the Mortgaged Property or the property management agents offices or Borrowers General Business Address and, upon Lenders written request, shall make available at the Land:
(A) complete and accurate books of account and records (including copies of supporting bills and invoices) adequate to reflect correctly the operation of the Mortgaged Property; and
(B) copies of all written contracts, Leases and other instruments that materially affect Borrower or the Mortgaged Property.
(2) Borrower shall promptly inform Lender in writing of:
(A) the occurrence of any act, omission, change, or event that has, or would have, a Material Adverse Effect, subsequent to the date of the most recent financial statements of Borrower delivered to Lender pursuant to Section 8.02 (Books and Records; Financial Reporting Covenants); and
(B) any material change in Borrowers accounting policies or financial reporting practices.
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(b) Items to Furnish to Lender.
Borrower shall furnish to Lender the following, certified as true, complete, and accurate, in all material respects, by an individual having authority to bind Borrower (or Guarantor, as applicable), in such form and with such detail as Lender reasonably requires:
(1) within forty-five (45) days after the end of each first, second, and third Calendar Quarter, a statement of income and expenses for Borrower on a year-to-date basis as of the end of each Calendar Quarter;
(2) within one hundred twenty (120) days after the end of each Calendar Year:
(A) for any Borrower that is an entity, a statement of income and expenses and a statement of cash flows for such Calendar Year;
(B) for any Borrower that is an individual or a trust established for estate-planning purposes, a personal financial statement for such Calendar Year;
(C) when requested in writing by Lender, balance sheet(s) showing all assets and liabilities of Borrower and a statement of all contingent liabilities as of the end of such Calendar Year;
(D) if an energy consumption metric for the Mortgaged Property is required to be reported to any Governmental Authority, the Fannie Mae Energy Performance Metrics report, as generated by ENERGY STAR® Portfolio Manager, for the Mortgaged Property for such Calendar Year, which report must include the ENERGY STAR score, the Source Energy Use Intensity (EUI), the month and year ending period for such ENERGY STAR score and such Source Energy Use Intensity, and the ENERGY STAR Portfolio Manager Property Identification Number; provided that, if the Governmental Authority does not require the use of ENERGY STAR Portfolio Manager for the reporting of the energy consumption metric and Borrower does not use ENERGY STAR Portfolio Manager, then Borrower shall furnish to Lender the Source Energy Use Intensity for the Mortgaged Property for such Calendar Year;
(E) an Annual Certification (Borrower) in the form attached as Exhibit G;
(F) intentionally omitted;
(G) 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;
(H) written confirmation of:
(i) any changes occurring since the Effective Date (or that no such changes have occurred since the Effective Date) in (1) the direct owners of Borrower, (2) the indirect owners (and any non-member managers) of Borrower that Control Borrower or own a Restricted
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Ownership Interest in Borrower (excluding any Publicly-Held Corporations or Publicly-Held Trusts), or (3) the indirect owners of Borrower that hold twenty-five percent (25%) or more of the Ownership Interests in Borrower (excluding any Publicly-Held Corporations or Publicly-Held Trusts), and their respective interests;
(ii) the names of all officers and directors of (1) any Borrower which is a corporation, (2) any corporation which is a general partner of any Borrower which is a partnership, or (3) any corporation which is the managing member or non-member manager of any Borrower which is a limited liability company; and
(iii) the names of all managers who are not members of (1) any Borrower which is a limited liability company, (2) any limited liability company which is a general partner of any Borrower which is a partnership, or (3) any limited liability company which is the managing member or non-member manager of any Borrower which is a limited liability company;
(I) if not already provided pursuant to Section 8.02(b)(2)(A) (Items to Furnish to Lender) above, upon Lenders request, a statement of income and expenses for Borrowers operation of the Mortgaged Property on a year-to-date basis as of the end of each Calendar Year;
(3) within forty-five (45) days after the end of each first, second, and third Calendar Quarter and within one hundred twenty (120) days after the end of each Calendar Year, and at any other time upon Lenders written request, a rent schedule for the Mortgaged Property showing the name of each tenant and for each tenant, the space occupied, the lease expiration date, the rent payable for the current month, the date through which rent has been paid, and any related information requested by Lender;
(4) upon Lenders written request (but, absent an Event of Default, no more frequently than once in any six (6) month period):
(A) any item described in Section 8.02(b)(1) or Section 8.02(b)(2) (Items to Furnish to Lender) for Borrower, certified as true, complete, and accurate in all material respects as of the date of such applicable items by an individual having authority to bind Borrower;
(B) a property management or leasing report for the Mortgaged Property, showing deposits received from tenants or prospective tenants, and any other information requested by Lender that is prepared by or on behalf of Borrower in the ordinary course with respect to the Mortgaged Property;
(C) a statement of income and expenses for Borrowers operation of the Mortgaged Property on a year-to-date basis as of the end of each month for such period as requested by Lender, which statement shall be delivered within thirty (30) days after the end of such month requested by Lender;
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(D) a statement of real estate owned directly or indirectly by Borrower and Guarantor for such period as requested by Lender, which statement shall be delivered within thirty (30) days after the end of such month requested by Lender;
(E) intentionally omitted; and
(F) a statement that identifies:
(i) the direct owners of Borrower and their respective interests;
(ii) the indirect owners (and any non-member managers) of Borrower that Control Borrower or own a Restricted Ownership Interest in Borrower (excluding any Publicly-Held Corporations or Publicly-Held Trusts) and their respective interests; and
(iii) the indirect owners of Borrower that hold twenty-five percent (25%) or more of the Ownership Interests in Borrower (excluding any Publicly-Held Corporations or Publicly-Held Trusts) and their respective interests; and
(5) Borrower shall furnish to Lender within one hundred twenty (120) days after the end of each Calendar Year, or upon Lenders written request, an Officers Certificate stating whether or not Borrower and SPE Owner, if applicable, are in compliance with the covenants set forth in Section 4.02(d) (Borrower Status Covenants Single Purpose Status) and, if not in compliance, setting forth the particulars of such noncompliance and the steps that Borrower and SPE Owner (as applicable) have taken, are taking or intend to take to cure such noncompliance.
(c) Audited Financials.
In the event Borrower or Guarantor receives or obtains any audited financial statements and such financial statements are required to be delivered to Lender under Section 8.02(b) (Items to Furnish to Lender), Borrower shall deliver or cause to be delivered to Lender the audited versions of such financial statements.
(d) Delivery of Books and Records.
If an Event of Default has occurred and is continuing, Borrower shall deliver to Lender, upon written demand, all books and records relating to the Mortgaged Property or its operation.
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Section 8.03 Administration Matters Regarding Books and Records and Financial Reporting.
(a) Lenders Right to Obtain Audited Books and Records.
Lender may require that Borrowers or Guarantors books and records be audited, at Borrowers expense, by an independent certified public accountant selected by Lender in order to produce or audit any statements, schedules, and reports of Borrower, Guarantor, or the Mortgaged Property required by Section 8.02 (Books and Records; Financial Reporting Covenants), if
(1) Borrower or Guarantor fails to provide in a timely manner the statements, schedules, and reports required by Section 8.02 (Books and Records; Financial Reporting Covenants) and, thereafter, Borrower or Guarantor fails to provide such statements, schedules and reports within the cure period provided in Section 14.01(c) (Events of Default Subject to Extended Cure Period or Release);
(2) the statements, schedules, and reports submitted to Lender pursuant to Section 8.02 (Books and Records; Financial Reporting Covenants) are not full, complete, and accurate in all material respects as determined by Lender and, thereafter, Borrower or Guarantor fails to provide such statements, schedules, and reports within the cure period provided in Section 14.01(c) (Events of Default Subject to Extended Cure Period or Release); or
(3) an Event of Default has occurred and is continuing.
Notwithstanding the foregoing, the ability of Lender to require the delivery of audited financial statements shall be limited to not more than once per Borrowers fiscal year so long as no Event of Default has occurred during such fiscal year (or no Event of Default or Potential Event of Default has occurred and is continuing). Borrower shall cooperate with Lender in order to satisfy the provisions of this Section 8.03(a) (Lenders Right to Obtain Audited Books and Records). All related costs and expenses of Lender shall become due and payable by Borrower within ten (10) Business Days after demand therefor.
(b) Credit Reports; Credit Score.
No more often than once in any twelve (12) month period, Lender is authorized to obtain a credit report (if applicable) on Borrower or Guarantor, the cost of which report shall be paid by Borrower. Lender is authorized to obtain a Credit Score (if applicable) for Borrower or Guarantor at any time at Lenders expense.
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Article 9
INSURANCE
Section 9.01 Representations and Warranties.
The representations and warranties made by Borrower to Lender in this Section 9.01 (Insurance Representations and Warranties) are made as of each Effective Date and are true and correct except as disclosed on the Exceptions to Representations and Warranties Schedule.
(a) Compliance with Insurance Requirements.
Borrower is in compliance in all material respects with Lenders insurance requirements (or has obtained a written waiver from Lender for any non-compliant coverage) and has paid prior to delinquency all premiums on all required insurance policies.
(b) Property Condition.
(1) No Mortgaged Property has been damaged by fire, water, wind, or other cause of loss; or
(2) if previously damaged, any previous damage to any Mortgaged Property has been repaired and such Mortgaged Property has been fully restored.
Section 9.02 Covenants.
(a) Insurance Requirements.
As required by Lender and Applicable Law, and as may be modified from time to time, Borrower shall:
(1) keep the Improvements insured at all times against any hazards, which insurance shall include coverage against loss by fire and all other perils insured by the special causes of loss coverage form, general boiler and machinery coverage, business income coverage, and flood (if any of the Improvements are located in an area identified by the Federal Emergency Management Agency (or any successor) as an area having special flood hazards and to the extent flood insurance is available in that area), and may include sinkhole insurance, mine subsidence insurance, earthquake insurance, terrorism insurance, windstorm insurance and, if any Mortgaged Property does not conform to applicable building, zoning, or land use laws, ordinance and law coverage;
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(2) maintain at all times commercial general liability insurance, workmens compensation insurance, and such other liability, errors and omissions, and fidelity insurance coverage; and
(3) maintain builders risk and public liability insurance, and other insurance in connection with completing the Repairs or Replacements, as applicable (or, if applicable, the vendor or general contractor shall provide such issuance which shall include contractual liability coverage).
(b) Delivery of Policies, Renewals, Notices, and Proceeds.
Borrower shall:
(1) cause all insurance policies (including any policies not otherwise required by Lender) which can be endorsed with standard non-contributing, non-reporting mortgagee clauses making loss payable to Lender (or Lenders assigns) to be so endorsed;
(2) promptly deliver to Lender a copy of all renewal and other notices received by Borrower with respect to the policies and all receipts for paid premiums;
(3) deliver evidence, in form and content acceptable to Lender, that each Insurance Policy under this Article 9 (Insurance) has been renewed not less than fifteen (15) days prior to the applicable expiration date, and (if such evidence is other than an original or duplicate original of a renewal policy) deliver the original or duplicate original of each renewal policy (or such other evidence of insurance as may be required by or acceptable to Lender) in form and content acceptable to Lender within ninety (90) days after the applicable expiration date of the original Insurance Policy;
(4) provide immediate written notice to the insurance company and to Lender of any event of loss;
(5) execute such further evidence of assignment of any insurance proceeds as Lender may require; and
(6) provide immediate written notice to Lender of Borrowers receipt of any insurance proceeds under any Insurance Policy required by Section 9.02(a)(1) (Insurance Requirements) above and, if requested by Lender, deliver to Lender all of such proceeds received by Borrower to be applied by Lender in accordance with this Article 9 (Insurance).
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Section 9.03 Administration Matters Regarding Insurance
(a) Lenders Ongoing Insurance Requirements.
Borrower acknowledges that Lenders insurance requirements may change from time to time. All insurance policies and renewals of insurance policies required by this Master Agreement shall be:
(1) in the form and with the terms required by Lender;
(2) in such amounts, with such maximum deductibles and for such periods required by Lender; provided, however, that Lenders insurance requirements shall at all times be consistent with Lenders requirements for other properties comparable to the Mortgaged Property based upon Lenders determination of circumstances specific to the Mortgaged Property; and
(3) issued by insurance companies satisfactory to Lender.
BORROWER ACKNOWLEDGES THAT ANY FAILURE OF BORROWER TO COMPLY WITH THE REQUIREMENTS SET FORTH IN SECTION 9.02(a) (Insurance Requirements) OR SECTION 9.02(b)(3) (Delivery of Policies, Renewals, Notices, and Proceeds) ABOVE SHALL PERMIT LENDER TO PURCHASE THE APPLICABLE INSURANCE AT BORROWERS COST. SUCH INSURANCE MAY, BUT NEED NOT, PROTECT BORROWERS INTERESTS. THE COVERAGE THAT LENDER PURCHASES MAY NOT PAY ANY CLAIM THAT BORROWER MAKES OR ANY CLAIM THAT IS MADE AGAINST BORROWER IN CONNECTION WITH ANY MORTGAGED PROPERTY. IF LENDER PURCHASES INSURANCE FOR ANY MORTGAGED PROPERTY AS PERMITTED HEREUNDER, BORROWER WILL BE RESPONSIBLE FOR THE COSTS OF THAT INSURANCE, INCLUDING INTEREST AT THE DEFAULT RATE AND ANY OTHER CHARGES LENDER MAY IMPOSE IN CONNECTION WITH THE PLACEMENT OF THE INSURANCE UNTIL THE EFFECTIVE DATE OF THE CANCELLATION OR THE EXPIRATION OF THE INSURANCE. THE COSTS OF THE INSURANCE SHALL BE ADDED TO BORROWERS TOTAL OUTSTANDING BALANCE OR OBLIGATION AND SHALL CONSTITUTE ADDITIONAL INDEBTEDNESS. THE COSTS OF THE INSURANCE MAY BE MORE THAN THE COST OF INSURANCE BORROWER MAY BE ABLE TO OBTAIN ON ITS OWN. BORROWER MAY LATER CANCEL ANY INSURANCE PURCHASED BY LENDER, BUT ONLY AFTER PROVIDING EVIDENCE THAT BORROWER HAS OBTAINED INSURANCE AS REQUIRED BY THIS MASTER AGREEMENT AND THE OTHER LOAN DOCUMENTS.
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(b) Application of Proceeds on Event of Loss.
(1) Upon an event of loss, Lender may, at Lenders option:
(A) hold such proceeds in the Restoration Reserve Account to be applied to reimburse Borrower for the cost of Restoration in accordance with Article 13 (Replacements, Repairs, and Restoration) and Lenders then-current policies relating to the restoration of casualty damage on similar multifamily residential properties; or
(B) apply such proceeds to the payment of the Indebtedness, whether or not then due; provided, however, Lender shall not apply insurance proceeds to the payment of the Indebtedness and shall permit Restoration pursuant to Section 9.03(b)(1)(A) (Application of Proceeds on Event of Loss) if all of the following conditions are met:
(i) no Potential Event of Default or Event of Default has occurred and is continuing;
(ii) Lender determines that the combination of insurance proceeds and amounts provided by Borrower will be sufficient funds to complete the Restoration;
(iii) Lender determines that after completion of the Restoration the Net Cash Flow generated by the applicable Mortgaged Property will be sufficient to support the Debt Service Coverage Ratio set forth in the definition of Individual Property Coverage and LTV Tests (on a pro forma basis);
(iv) Lender determines that the Restoration will be completed before the earlier of (1) one year before the latest Maturity Date of any Advance Outstanding, or (2) one year after the date of the loss or casualty; and
(v) Borrower provides Lender, upon written request, evidence of the availability during and after the Restoration of the insurance required to be maintained by Borrower pursuant to this Master Agreement.
After completion of the Restoration in accordance with the above requirements, as determined by Lender, the balance, if any, of such proceeds shall be returned to Borrower.
(2) Notwithstanding the foregoing, if any loss is estimated to be in an amount equal to or less than $250,000, Lender shall not exercise its rights and remedies as power of attorney herein and shall allow Borrower to make proof of loss, to adjust and compromise any claims under policies of property damage insurance, to appear in and prosecute any action arising from such policies of property damage insurance, and to collect and receive the proceeds of property damage insurance; provided that each of the following conditions shall be satisfied:
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(A) Borrower shall immediately notify Lender of the casualty giving rise to the claim;
(B) no Potential Event of Default or Event of Default has occurred and is continuing;
(C) the Restoration will be completed before the earlier of (i) one year before the latest Maturity Date of any Advance Outstanding, or (ii) one year after the date of the loss or casualty;
(D) Lender determines that the combination of insurance proceeds and amounts provided by Borrower will be sufficient funds to complete the Restoration;
(E) all proceeds of property damage insurance shall be issued in the form of joint checks to Borrower and Lender;
(F) all proceeds of property damage insurance shall be applied to the Restoration;
(G) Borrower shall deliver to Lender evidence satisfactory to Lender of completion of the Restoration and obtainment of all lien releases;
(H) Borrower shall have complied to Lenders satisfaction with the foregoing requirements on any prior claims subject to this provision, if any; and
(I) Lender shall have the right to inspect the applicable Mortgaged Property (subject to the rights of tenants under the Leases).
(3) If Lender elects to apply insurance proceeds to the Indebtedness in accordance with the terms of this Master Agreement, Borrower shall not be obligated to restore or repair the applicable Mortgaged Property. Rather, Borrower shall restrict access to the damaged portion of such Mortgaged Property and, at its expense and regardless of whether such costs are covered by insurance, clean up any debris resulting from the casualty event, and, if required or otherwise permitted by Lender, demolish or raze any remaining part of the damaged Mortgaged Property to the extent necessary to keep and maintain the Mortgaged Property in a safe, habitable and marketable condition. Nothing in this Section 9.03(b) (Application of Proceeds on Event of Loss) shall affect any of Lenders remedial rights against Borrower in connection with a breach by Borrower of any of its obligations under this Master Agreement or under any Loan Document, including any failure to timely pay Monthly Debt Service Payments or maintain the insurance coverage(s) required by this Master Agreement.
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(c) Payment Obligations Unaffected.
The application of any insurance proceeds to the Indebtedness shall not extend or postpone the Maturity Date, or the due date or the full payment of any Monthly Debt Service Payment, Monthly Replacement Reserve Deposit, or any other installments referred to in this Master Agreement or in any other Loan Document. Notwithstanding the foregoing, if Lender applies insurance proceeds to the Indebtedness in connection with a casualty of less than an entire Mortgaged Property, then Lender shall permit an adjustment to the Monthly Debt Service Payments that become due and owing thereafter, based on the Underwriting and Servicing Requirements.
(d) Foreclosure Sale.
If a Mortgaged Property is transferred pursuant to a Foreclosure Event or Lender otherwise acquires title to a Mortgaged Property, Borrower acknowledges that Lender shall automatically succeed to all rights of Borrower in and to any insurance policies and unearned insurance premiums applicable to such Mortgaged Property and in and to the proceeds resulting from any damage to such Mortgaged Property prior to such Foreclosure Event or such acquisition.
(e) Appointment of Lender as Attorney-In-Fact.
Borrower hereby authorizes and appoints Lender as attorney-in-fact pursuant to Section 14.03(c) (Appointment of Lender as Attorney-In-Fact).
Article 10
CONDEMNATION
Section 10.01 Representations and Warranties.
The representations and warranties made by Borrower to Lender in this Section 10.01 (Condemnation Representations and Warranties) are made as of each Effective Date and are true and correct except as disclosed on the Exceptions to Representations and Warranties Schedule.
(a) Prior Condemnation Action.
No part of any Mortgaged Property has been taken in connection with a Condemnation Action.
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(b) Pending Condemnation Actions.
Except with respect to a Release Mortgaged Property that is the subject of a Release Request, no Condemnation Action is pending or, to Borrowers knowledge, is threatened for the partial or total condemnation or taking of any Mortgaged Property.
Section 10.02 Covenants.
(a) Notice of Condemnation.
Borrower shall:
(1) promptly notify Lender of any Condemnation Action of which Borrower has knowledge;
(2) subject to the last paragraph of Section 10.03(c), appear in and prosecute or defend, at its own cost and expense, any action or proceeding relating to any Condemnation Action, including any defense of Lenders interest in any Mortgaged Property tendered to Borrower by Lender, unless otherwise directed by Lender in writing; and
(3) execute such further evidence of assignment of any condemnation award in connection with a Condemnation Action as Lender may require.
(b) Condemnation Proceeds.
Borrower shall pay to Lender all awards or proceeds of a Condemnation Action promptly upon receipt, except as otherwise set forth in this Article 10.
Section 10.03 Administration Matters Regarding Condemnation.
(a) Application of Condemnation Awards.
Lender may apply any awards or proceeds of a Condemnation Action, after the deduction of Lenders expenses incurred in the collection of such amounts, to:
(1) the restoration or repair of the applicable Mortgaged Property, if applicable;
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(2) the payment of the Indebtedness, with the balance, if any, paid to Borrower; or
(3) Borrower.
(b) Payment Obligations Unaffected.
The application of any awards or proceeds of a Condemnation Action to the Indebtedness shall not extend or postpone any Maturity Date, or the due date or the full payment of any Monthly Debt Service Payment, Monthly Replacement Reserve Deposit, or any other installments referred to in this Master Agreement or in any other Loan Document.
(c) Appointment of Lender as Attorney-In-Fact.
Borrower hereby authorizes and appoints Lender as attorney-in-fact pursuant to Section 14.03(c) (Appointment of Lender as Attorney-In-Fact).
Notwithstanding anything to the contrary herein, Borrower may itself appear in, prosecute or defend any action or proceeding relating to any Condemnation Action and settle or compromise any claim and collect and receive the proceeds of the award therefrom aggregating not in excess of $100,000 (provided Borrower applies such proceeds to restoration or repair of the applicable Mortgaged Property, if applicable), and may itself appear in, prosecute or defend any action or proceeding relating to any Condemnation Action and settle and compromise any claim aggregating not in excess of $100,000 but may not collect and receive the award therefrom, the same having been assigned to Lender hereunder. Borrower shall provide Lender prompt notice of all actions or proceedings relating to any Condemnation Action where Borrower shall itself appear in, prosecute or defend such Condemnation Action.
(d) Preservation of Mortgaged Property.
If a Condemnation Action results in or from damage to any Mortgaged Property and Lender elects to apply the proceeds or awards from such Condemnation Action to the Indebtedness in accordance with the terms of this Master Agreement, Borrower shall not be obligated to restore or repair such Mortgaged Property. Rather, Borrower shall restrict access to any portion of the Mortgaged Property which has been damaged or destroyed in connection with such Condemnation Action and, at Borrowers expense and regardless of whether such costs are covered by insurance, clean up any debris resulting in or from the Condemnation Action, and, if required by any Governmental Authority or otherwise permitted by Lender, demolish or raze any remaining part
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of the damaged Mortgaged Property to the extent necessary to keep and maintain the Mortgaged Property in a safe, habitable, and marketable condition. Nothing in this Section 10.03(d) (Preservation of Mortgaged Property) shall affect any of Lenders remedial rights against Borrower in connection with a breach by Borrower of any of its obligations under this Master Agreement or under any Loan Document, including any failure to timely pay Monthly Debt Service Payments or maintain the insurance coverage(s) required by this Master Agreement.
Article 11
LIENS, TRANSFERS, AND ASSUMPTIONS
Section 11.01 Representations and Warranties.
The representations and warranties made by Borrower to Lender in this Section 11.01 (Liens, Transfers, and Assumptions Representations and Warranties) are made as of each Effective Date and are true and correct except as disclosed on the Exceptions to Representations and Warranties Schedule.
(a) No Labor or Materialmens Claims.
All parties furnishing labor and materials on behalf of Borrower have been or will be in the ordinary course of business, paid in full, except for amounts for which Borrower has notified Lender that Borrower is diligently contesting in good faith and at its own expense and by appropriate legal proceeding, provided at the time of commencement of the proceeding and/or during the pendency thereof:
(1) Borrower copies Lender on all material correspondence and pleadings and judicial or non-judicial determinations and proceedings with respect thereto, with such notice to be in the manner set forth in Article 15 (Miscellaneous) of this Master Agreement;
(2) Lender determines that the Mortgaged Property is not in imminent danger of being sold, forfeited, and such contest does not otherwise materially, adversely affect the Mortgaged Property or Lenders interest therein or adversely affect the ability of Lender to enforce any of the Loan Documents;
(3) if the amount in question has not been paid under protest, either (A) Borrower furnishes any security as may be required in such proceeding or as may be reasonably requested by Lender to ensure the payment of the amounts contested or the loss or damage that may result from Borrowers failure to prevail in such contest in such amount, or (B) Borrower has bonded off, released of record, insured over or otherwise remedied to Lenders satisfaction any Lien associated with the contested claim within sixty (60) days after the earlier of the date Borrower has actual notice or constructive notice of the existence of such Lien;
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(4) Borrower diligently prosecutes such contest in good faith until resolved, it being understood that any such contest shall be completed by the earlier of twenty-four (24) months of its commencement or one (1) year prior to the Termination Date;
(5) no Event of Default has occurred and is continuing; and
(6) the amount of the contested labor or materials does not exceed $250,000.
There are no mechanics or materialmens liens (whether filed or unfiled) outstanding for work, labor, or materials (and no claims or work outstanding that under Applicable Law could give rise to any such mechanics or materialmens liens other than notices of commencement or inchoate liens that are normal and customary for maintenance work which will be paid in the ordinary course) affecting any Mortgaged Property, whether prior to, equal with, or subordinate to the lien of the Security Instrument.
(b) No Other Interests.
No Person:
(1) other than Borrower has any possessory ownership or interest in any Mortgaged Property or right to occupy the same except under and pursuant to the provisions of existing Leases, the material terms of all such Leases having been previously disclosed in writing to Lender; or
(2) has an option, right of first refusal, or right of first offer (except as required by Applicable Law) to purchase any Mortgaged Property, or any interest in any Mortgaged Property.
Section 11.02 Covenants.
(a) Liens; Encumbrances.
Borrower shall not permit the grant, creation, or existence of any Lien, whether voluntary, involuntary, or by operation of law, on all or any portion of any Mortgaged Property (including any voluntary, elective, or non-compulsory tax lien or assessment pursuant to a voluntary, elective, or non-compulsory special tax district or similar regime) other than:
(1) Permitted Encumbrances;
(2) the creation of:
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(A) any tax lien, municipal lien, utility lien, mechanics lien, materialmens lien, or judgment lien against any Mortgaged Property if bonded off, released of record, or otherwise remedied to Lenders satisfaction within sixty (60) days after the earlier of the date Borrower has actual notice or constructive notice of the existence of such lien; or
(B) any mechanics or materialmens liens which attach automatically under the laws of any Governmental Authority upon the commencement of any work upon, or delivery of any materials to, any Mortgaged Property and for which Borrower is not delinquent in the payment for any such work or materials; and
(3) the lien created by the Loan Documents.
(b) Transfers.
(1) Mortgaged Property.
A Transfer as described in clause (b) of the definition of Transfer of all or any part of any Mortgaged Property (including any interest in any Mortgaged Property) shall not occur other than:
(A) a Transfer to which Lender has consented in writing;
(B) Leases permitted pursuant to the Loan Documents;
(C) the grant of an easement solely for cable and internet services, provided such easement is on a standard form provided by a nationally or regionally recognized cable or internet provider, as applicable;
(D) a Transfer of (i) obsolete or worn out Personalty or Fixtures that are contemporaneously replaced by items of equal or better function and quality which are free of Liens (other than those created by the Loan Documents); or (ii) items of Personalty or Fixtures that are made in the ordinary course of owning and operating the Mortgaged Property, without replacement of such item(s) pursuant to subparagraph (i) hereof, provided that such item(s) are not necessary for the continued operation of the Mortgaged Property and such Transfer(s) will not have a Materially Adverse Effect, either individually or in the aggregate, on the value of the Mortgaged Property;
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(E) the grant of an easement, servitude, or restrictive covenant to which Lender has consented, and Borrower has paid to Lender, upon demand, all out-of-pocket costs and expenses incurred by Lender in connection with reviewing Borrowers request (including reasonable attorneys fees and the Review Fee, provided no Transfer Fee shall be due); provided, however, no consent and/or fee (other than the Review Fee provided above)shall be required with respect to (i) the grant of any easement for water and sewer lines, telephone or other fiber optic or other data transmission lines, electric lines or other utilities, all as may be entered into in the ordinary course of business at any Mortgaged Property provided that no such Transfer would reasonably be expected to have a Material Adverse Effect, and (ii) any temporary construction easements or other easements required to be granted by Borrower pursuant to any Permitted Encumbrance and/or Permitted Lien where (I) the granting of any such easement does not materially affect Borrowers access to the Mortgaged Property or the use of any easements or amenities which benefit the Mortgaged Property, (II) the granting of any such easement does not result in the loss of the use of any units, and (III) the consideration paid to Borrower (which consideration may be retained by Borrower as provided in the following sentence) is less than $100,000, provided that if the consideration is greater than $50,000 but less than $100,000, Borrower shall provide Lender with copies of such easement and evidence satisfactory to Lender that the conditions in the foregoing subsections (I)-(III) have been met. So long as no Event of Default exists, Borrower may retain any compensation received from the easement holder for its own account (provided such consideration is less than $100,000), so long as Borrower promptly repairs any damage covered by such easement; provided, however, if such amount exceeds $100,000, then Lender shall hold such funds and disburse them to Borrower to repair such damage in accordance with the terms and provisions of this Master Agreement, and after such repairs have been completed any remaining amount shall be promptly disbursed to Borrower;
(F) a lien permitted pursuant to Section 11.02 (Liens, Transfers, and Assumptions Covenants) of this Master Agreement; or
(G) the conveyance of any Mortgaged Property following a Foreclosure Event.
(2) No Transfers of Restricted Ownership Interests.
Other than a Transfer to which Lender has consented in writing or as otherwise specifically set forth in this Article 11 (Liens, Transfers, and Assumptions), Borrower shall not Transfer, or cause or permit to be Transferred:
(A) any direct or indirect Ownership Interest that would cause a Change of Control;
(B) a direct or indirect Restricted Ownership Interest;
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(C) fifty percent (50%) or more of Key Principals or Guarantors direct or indirect Ownership Interests in Borrower that existed on the Effective Date that such Borrower joined into the Master Agreement (individually or on an aggregate basis); or
(D) the economic benefits or rights to cash flows attributable to any Ownership Interests in Borrower, Key Principal, or Guarantor separate from the Transfer of the underlying Ownership Interests if the Transfer of the underlying Ownership Interest is prohibited by this Master Agreement.
Subject to the provisions of this Article 11 (Liens, Transfers, and Assumptions), a Transfer as described in clause (a) of the definition of Transfer, a Change of Control, or a Transfer of the Restricted Ownership Interest shall not occur.
Notwithstanding the restrictions on Control and Restricted Ownership Interests, to the extent a Restricted Ownership Interest is held by a Publicly-Held Corporation or a Publicly-Held Trust, a Transfer of any Ownership Interests in such Publicly-Held Corporation or Publicly-Held Trust shall not be prohibited under this Master Agreement as long as (E) such Transfer does not result in a conversion of such Publicly-Held Corporation or Publicly-Held Trust to a privately held entity, and (F) Borrower provides written notice to Lender not later than thirty (30) days thereafter of any such Transfer that results in any Person owning ten percent (10%) or more of the Ownership Interests in such Publicly-Held Corporation or Publicly-Held Trust.
(3) Transfers of Non-Controlling Interests.
Transfers of direct or indirect limited partnership or non-managing member interests in Borrower that result in a Transfer of fifty percent (50%) or more of the limited partnership or non-managing membership interests shall be consented to by Lender if such Transfer satisfies the following conditions:
(A) following the consummation of any such Transfer, management and Control of Borrower and Key Principal remains as it existed immediately prior to such Transfer;
(B) such Transfer satisfies the requirements of Section 11.02(b)(2)(C) (No Transfers of Restricted Ownership Interests);
(C) Borrower shall provide Lender not less than thirty (30) days prior written notice of the proposed Transfer and obtain Lenders approval;
(D) Borrower shall provide with its notice to Lender an organizational chart reflecting, and all Organizational Documents relevant to, the proposed Transfer;
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(E) Borrower shall provide with its notice to Lender a certification that no Change of Control shall occur as a result of such Transfer;
(F) the transferee shall not be, as of the date of the Transfer, a Prohibited Person if, as a result of the Transfer, the transferee will own twenty-five percent (25%) or more of the Ownership Interests in Borrower (or, if any other investor will own twenty-five percent (25%) or more of the Ownership Interests in Borrower that did not own twenty-five percent (25%) or more before the Transfer, such investor shall not, as of the date of the Transfer, be a Prohibited Person);
(G) Borrower shall pay to Lender:
(i) concurrently with its notice to Lender, the Review Fee plus a Transfer Fee of $25,000; and
(ii) upon demand, any out-of-pocket costs and expenses, including reasonable attorneys fees and expenses, incurred by Lender in connection with its review of the Transfer request; and
(H) Borrower shall execute upon demand such documents or certifications as Lender reasonably requires in order to confirm the post-transfer ownership structure, compliance with the stated conditions, and any other relevant factual matter.
(4) Name Change or Entity Conversion.
(A) Lender shall consent to a Borrower changing its name, changing its jurisdiction of organization, or converting from one type of legal entity into another type of legal entity for any lawful purpose, provided that:
(i) Lender receives written notice at least thirty (30) days prior to such change or conversion, which notice shall include organizational charts that reflect the structure of such Borrower both prior to and subsequent to such name change or entity conversion;
(ii) such Transfer is not otherwise prohibited under the provisions of Section 11.02(b)(2) (No Transfers of Restricted Ownership Interests);
(iii) Borrower executes an amendment to this Master Agreement and any other Loan Documents required by Lender documenting the name change or entity conversion;
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(iv) Borrower agrees and acknowledges, at Borrowers expense, that (1) Borrower will execute and record in the land records any instrument required by the Property Jurisdiction to be recorded to evidence such name change or entity conversion (or provide Lender with written confirmation from the title company (via electronic mail or letter) that no such instrument is required), (2) Borrower will execute any additional documents required by Lender, including the amendment to this Master Agreement, and allow such documents to be recorded or filed in the land records of the Property Jurisdiction, (3) Lender will obtain a date-down endorsement to Lenders Title Policy (or obtain a new Title Policy if a date-down endorsement is not available in the Property Jurisdiction), evidencing title to the Mortgaged Property being in the name of the successor entity and the Lien of the Security Instrument against the Mortgaged Property, and (4) Lender will file any required UCC-3 financing statement and make any other filing deemed necessary to maintain the priority of its Liens on the Mortgaged Property; and
(v) no later than ten (10) days subsequent to such name change or entity conversion, Borrower shall provide Lender (1) the documentation filed with the appropriate office in such Borrowers state of formation evidencing such name change or entity conversion, (2) copies of the Organizational Documents of such Borrower, including any amendments, filed with the appropriate office in Borrowers state of formation reflecting the post-conversion Borrower name, form of organization, and structure, and (3) if available, new certificates of good standing or valid formation for such Borrower.
(B) Any conversion of Key Principal or Guarantor from one type of entity to another type of entity or any related amendment or modification to the governing instruments of Key Principal or Guarantor shall be consented to by Lender provided the following conditions are satisfied:
(i) no Change of Control or Transfer of a Restricted Ownership Interest occurs as a result of any such Transfer;
(ii) the decision-making powers and rights of any board of directors (or such equivalent governing body) of Key Principal and any board of directors (or such equivalent governing body) of Guarantor (each such board or equivalent governing being referred to herein as the Governing Body) are not eliminated, materially impaired, or materially reduced as a result of such Transfer (provided, however, that the creation of new committees of the Governing Body of Key Principal or of Guarantor that are delegated certain powers and authority of the Governing Body of Key Principal or of Guarantor (as applicable) will not be deemed to be an elimination, material impairment, or material reduction of the decision-making powers of the Governing Body of Key Principal or of Guarantor, so long as the Governing Body of Key Principal or of Guarantor (as applicable) Controls the composition of any such committee and has the right to rescind any such delegation);
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(iii) the Governing Body of Key Principal or of Guarantor continue to exist and Control the Key Principal or Guarantor, as applicable; and
(iv) Borrower shall provide Lender ten (10) days prior written notice of such conversion, which notice shall include organizational charts that reflect the structure of Borrower and Guarantor both prior to and subsequent to such Transfer.
Notwithstanding the foregoing, Borrower shall provide Lender prompt notice of any name change or entity conversion of any other Identified Party.
(5) No Delaware Statutory Trust or Series LLC Conversion.
Notwithstanding any provisions herein to the contrary, no Borrower Entity shall convert to a Delaware Statutory Trust or a series limited liability company.
(6) Plans of Division.
Borrower shall not Divide. Lender shall consent to a Division by Guarantor or Key Principal provided that:
(A) Lender receives written notice at least thirty (30) days prior to the effective date of such Division, which notice shall include (i) a certification acceptable to Lender that such Division is not otherwise prohibited under the provisions of Article 11 (Liens, Transfers, and Assumptions), (ii) a copy of the plan of division, and (iii) organizational charts that reflect the organizational structure of Borrower, Guarantor, and Key Principal both prior to and subsequent to such Division;
(B) no later than ten (10) days subsequent to such Division, Borrower shall provide Lender (i) the certificate of division or such other documentation filed with the appropriate office evidencing such Division, (ii) copies of the Organizational Documents of Borrower (if amended), Guarantor, and Key Principal, including any amendments thereto, that reflect the post-Division organizational structure, and (iii) new certificates of good standing or valid formation for Borrower (if amended), Guarantor, and Key Principal; and
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(C) Borrower has paid to Lender, upon demand, all costs and expenses incurred by Lender in connection with reviewing Borrowers request (including reasonable attorneys fees and a $25,000 review fee, which shall be in lieu of any other Review Fee or Transfer Fee).
(c) No Other Indebtedness.
Other than the Advances, Borrower shall not incur or be obligated at any time with respect to any loan or other indebtedness (except trade payables as otherwise permitted in this Master Agreement), including any indebtedness secured by a Lien on, or the cash flows from, the Mortgaged Property.
(d) No Mezzanine Financing or Preferred Equity.
Neither Borrower nor any direct or indirect owner of Borrower shall: (1) incur any Mezzanine Debt other than Permitted Mezzanine Debt; (2) issue any Preferred Equity other than Permitted Preferred Equity; or (3) incur any similar indebtedness or issue any similar equity.
Section 11.03 Administration Matters Regarding Liens, Transfers, and Assumptions.
(a) Transfer of Collateral Pool.
Lender shall consent to a Transfer of the entire Collateral Pool to and an assumption of the Loan Documents by a new borrower and/or a new key principal and/or a new guarantor if each of the following conditions is satisfied prior to the Transfer:
(1) Borrower has submitted to Lender all information required by Lender to make the determination required by this Section 11.03(a) (Transfer of Collateral Pool);
(2) no Event of Default has occurred and is continuing, and no Potential Event of Default has occurred and is continuing;
(3) Lender determines that:
(A) the proposed new borrower, new key principal, and any other new guarantor fully satisfy all of Lenders then-applicable borrower, key principal, or guarantor eligibility, credit, management, and other loan underwriting standards, which shall include an analysis of (i) the previous relationships between Lender and the proposed new borrower, new key principal, new guarantor, and any Person in Control of them, and the organization of the new borrower, new key principal, and new guarantor (if applicable), and (ii) the operating and financial performance of the Mortgaged Property, including physical condition and occupancy;
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(B) after giving effect to the Transfer, the SPE Requirements shall be satisfied;
(C) none of the proposed new borrower, new key principal, and any new guarantor, or any owners of the proposed new borrower, new key principal, and any new guarantor, are a Prohibited Person; and
(D) none of the proposed new borrower, new key principal, and any new guarantor (if any of such are entities) shall have an organizational existence termination date that ends before the Latest Facility Termination Date;
(4) [reserved];
(5) the proposed new borrower has:
(A) executed an assumption agreement acceptable to Lender that, among other things, requires the proposed new borrower to assume and perform all obligations of Borrower (or any other transferor), and that may require that the new borrower comply with any provisions of any Loan Document which previously may have been waived by Lender for Borrower, subject to the terms of Section 11.03(g) (Further Conditions on Transfers Requiring Lenders Consent);
(B) if required by Lender, delivered to the Title Company for filing or recording in all applicable jurisdictions, all applicable Loan Documents including the assumption agreement to correctly evidence the assumption and the confirmation, continuation, perfection, and priority of the Liens created hereunder and under the other Loan Documents; and
(C) delivered to Lender a date-down endorsement to the Title Policy acceptable to Lender (or a new title insurance policy if a date-down endorsement is not available);
(6) one or more individuals or entities acceptable to Lender as new guarantors have executed and delivered to Lender:
(A) an assumption agreement acceptable to Lender that requires the new guarantor to assume and perform all obligations of Guarantor under any Guaranty given in connection with the Loan Documents; or
(B) a substitute Non-Recourse Guaranty and other substitute guaranty in a form acceptable to Lender;
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(7) Lender has reviewed and approved the Transfer documents;
(8) Borrower has satisfied the applicable provision of Section 11.03(g) (Further Conditions on Transfers Requiring Lenders Consent) including Lenders receipt of the fees described in Section 11.03(g) (Further Conditions on Transfers Requiring Lenders Consent); and
(9) if any MBS is Outstanding, the Transfer shall not result in a significant modification, as defined under applicable Treasury Regulations, of any Advance that has been securitized in an MBS.
(b) Transfers to Key Principal-Owned Affiliates or Guarantor-Owned Affiliates.
(1) Except as otherwise covered in Section 11.03(b)(2) below, Transfers of Ownership Interests in Borrower to Key Principal or Guarantor, or to a transferee through which Key Principal or Guarantor (as applicable) Controls Borrower shall be consented to by Lender if (A) such Transfer does not cause a Change of Control, (B) there is no diminution in Key Principals or Guarantors Ownership Interests in Borrower as a result of such Transfer, and (C) such Transfer satisfies the applicable requirements of Section 11.03(a) (Transfer of Collateral Pool) as they would relate to such transferee, other than Section 11.03(a)(5) (Transfer of Collateral Pool).
(2) Transfers of Ownership Interests in Borrower held by a Key Principal or Guarantor to other Key Principals or Guarantors, as applicable, shall be consented to by Lender if such Transfer satisfies the following conditions:
(A) the Transfer does not cause a Change of Control; and
(B) there is no diminution in Key Principals or Guarantors Ownership Interests in Borrower as a result of such Transfer.
If the conditions set forth in this Section 11.03(b) (Transfers to Key Principal-Owned Affiliates or Guarantor-Owned Affiliates) are satisfied, the Transfer Fee shall be waived provided Borrower shall pay the Review Fee and out-of-pocket costs set forth in Section 11.03(g) (Further Conditions on Transfers Requiring Lenders Consent).
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(c) Estate Planning.
Notwithstanding the provisions of Section 11.02(b)(2) (No Transfers of Restricted Ownership Interests), so long as (1) the Transfer does not cause a Change of Control and (2) Key Principal and Guarantor, as applicable, maintain the same right and ability to Control Borrower as existed prior to the Transfer, Lender shall consent to Transfers of direct or indirect Ownership Interests in Borrower, and Transfers of direct or indirect Ownership Interests in an entity Key Principal or entity Guarantor to:
(A) Immediate Family Members of such transferor each of whom must have obtained the legal age of majority;
(B) United States domiciled trusts established for the benefit of the transferor or Immediate Family Members of the transferor; or
(C) partnerships or limited liability companies of which the partners or members, respectively, are comprised entirely of (i) such transferor and Immediate Family Members (each of whom must have obtained the legal age of majority) of such transferor, (ii) all Immediate Family Members (each of whom must have obtained the legal age of majority) of such transferor, or (iii) United States domiciled trusts established for the benefit of the transferor or Immediate Family Members of the transferor.
If the conditions set forth in this Section 11.03(c) (Estate Planning) are satisfied, the Transfer Fee shall be waived provided Borrower shall pay the Review Fee and out-of-pocket costs set forth in Section 11.03(g) (Further Conditions on Transfers Requiring Lenders Consent).
(d) Termination or Revocation of Trust.
If any of Borrower, Guarantor, or Key Principal is a trust (other than a REIT), or if a Restricted Ownership Interest would be Transferred, or if Control of Borrower, Guarantor, or Key Principal would be Transferred due to the termination or revocation of a trust, the termination or revocation of such trust is an unpermitted Transfer; provided that the termination or revocation of the trust due to the death of an individual trustor shall not be considered an unpermitted Transfer so long as:
(1) Lender is notified within thirty (30) days of the death; and
(2) such Borrower, Guarantor, Key Principal, or other Person, as applicable, is replaced with an individual or entity acceptable to Lender, in accordance with the provisions of Section 11.03(a) (Transfer of Collateral Pool) within ninety (90) days of the date of the death causing the termination or revocation.
If the conditions set forth in this Section 11.03(d) (Termination or Revocation of Trust) are satisfied, the Transfer Fee shall be waived; provided Borrower shall pay the Review Fee and out-of-pocket costs set forth in Section 11.03(g) (Further Conditions on Transfers Requiring Lenders Consent).
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(e) Death of Key Principal or Guarantor; Restricted Ownership Interest/Controlling Interest Transfer Due to Death.
(1) If a Key Principal or Guarantor that is a natural person dies, or if a Transfer of a Restricted Ownership Interest or a Change of Control occurs as a result of the death of a Person (except in the case of trusts which is addressed in Section 11.03(d) (Termination or Revocation of Trust)), Borrower must notify Lender in writing within ninety (90) days in the event of such death. Unless waived in writing by Lender, the deceased shall be replaced by an individual or entity within one hundred eighty (180) days, subject to Borrowers satisfaction of the following conditions:
(A) Borrower has submitted to Lender all information required by Lender to make the determination required by this Section 11.03(e) (Death of Key Principal or Guarantor; Restricted Ownership Interest/Controlling Interest Transfer Due to Death);
(B) Lender determines that, if applicable:
(i) any proposed new key principal and any other new guarantor (or Person Controlling such new key principal or new guarantor) fully satisfies all of Lenders then-applicable key principal or guarantor eligibility, credit, management, and other loan underwriting standards (including any standards with respect to previous relationships between Lender and the proposed new key principal and new guarantor (or Person Controlling such new key principal or new guarantor) and the organization of the new key principal and new guarantor);
(ii) none of any proposed new key principal or any new guarantor, or any owners of the proposed new key principal or any new guarantor, is a Prohibited Person; and
(iii) none of any proposed new key principal or any new guarantor (if any of such are entities) shall have an organizational existence termination date that ends before the Latest Facility Termination Date; and
(C) if applicable, one or more individuals or entities acceptable to Lender as new guarantors have executed and delivered to Lender:
(i) an assumption agreement acceptable to Lender that requires the new guarantor to assume and perform all obligations of Guarantor under any Guaranty given in connection with this Master Agreement; or
(ii) a substitute Non-Recourse Guaranty and other substitute guaranty in a form acceptable to Lender.
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(2) In the event a replacement Key Principal, Guarantor, or other Person is required by Lender due to the death described in this Section 11.03(e) (Death of Key Principal or Guarantor; Restricted Ownership Interest/Controlling Interest Transfer Due to Death), and such replacement has not occurred within such period, the period for replacement may be extended by Lender to a date not more than one year from the date of such death; however, Lender may require as a condition to any such extension that:
(A) the then-current property manager be replaced with a property manager reasonably acceptable to Lender (or if a property manager has not been previously engaged, a property manager reasonably acceptable to Lender be engaged); or
(B) a lockbox agreement or similar cash management arrangement (with the property manager) reasonably acceptable to Lender during such extended replacement period be instituted.
If the conditions set forth in this Section 11.03(e) (Death of Key Principal or Guarantor; Restricted Ownership Interest/Controlling Interest Transfer Due to Death) are satisfied, the Transfer Fee shall be waived, provided Borrower shall pay the Review Fee and out-of-pocket costs set forth in Section 11.03(g) (Further Conditions on Transfers Requiring Lenders Consent).
(f) [Intentionally Deleted.]
(g) Further Conditions on Transfers Requiring Lenders Consent.
(1) In connection with any Transfer for which Lenders approval is required under this Master Agreement including any Transfer under Section 11.02(b)(1)(A) (Liens, Transfers, and Assumptions Covenants Transfers Mortgaged Property) and Section 11.03(a) (Transfer of Collateral Pool), Lender may, as a condition to any such approval, require:
(A) additional collateral, guaranties, or other credit support to mitigate any risks concerning the proposed transferee or the performance or condition of any Mortgaged Property;
(B) amendment of the Loan Documents to delete or modify any specially negotiated terms or provisions previously granted for the exclusive benefit of original Borrower, Key Principal, or Guarantor and to restore the original provisions of the standard Fannie Mae form multifamily loan documents, to the extent such provisions were previously modified;
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(C) a modification to the amounts required to be deposited into the Reserve/Escrow Account pursuant to the terms of Section 13.02(a)(3)(B) (Adjustment to Deposits Transfers);
(D) in connection with any assumption of the Loan Documents, after giving effect to the assumption, the provisions of the General Conditions Schedule shall be satisfied;
(E) delivery to the Title Company for filing or recording in all applicable jurisdictions, all applicable Loan Documents including assumption documents and any other appropriate documents in form and substance reasonably satisfactory to Lender in form proper for recordation as may be necessary in the opinion of Lender to correctly evidence the assumptions and the confirmation of Liens created hereunder; or
(F) if any MBS is Outstanding, the Transfer shall not result in a significant modification, as defined under applicable Treasury Regulations, of any Advance that has been securitized in an MBS.
(2) In connection with any request by Borrower for consent to a Transfer, Borrower shall pay to Lender upon demand:
(A) the Transfer Fee (to the extent charged by Lender);
(B) the Review Fee (regardless of whether Lender approves or denies such request); and
(C) all of Lenders out-of-pocket costs (including reasonable attorneys fees) incurred in reviewing the Transfer request, regardless of whether Lender approves or denies such request.
(h) Additional Mortgaged Property.
Upon satisfaction of the terms and conditions of (1) Section 2.02(c) (Making Advances) of this Master Agreement in connection with the making of a Future Advance, (2) Section 2.10(d) (Right to Substitutions) of this Master Agreement in connection with a Substitution and/or (3) Section 2.10(c) (Right to Add Additional Mortgaged Properties as Collateral) of this Master Agreement in connection with an Addition, any Borrower that does not own a Mortgaged Property on the Initial Effective Date is permitted to acquire, hold, own, lease, and manage a Multifamily Residential Property (either in fee simple or as tenant under a ground lease meeting all of the Underwriting and Servicing Requirements) so long as such Borrower adds such Multifamily Residential Property on the date of acquisition to the Collateral Pool as an Additional Mortgaged Property. Any such acquisition may be accomplished by a merger of such Borrower with a limited liability company or other entity that owns such Multifamily Residential Property, with such
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Borrower being the survivor of the merger, and such Borrower satisfying the representations, warranties, and requirements of an Additional Borrower post-merger including Section 4.02(d)(17) (Borrower Status Covenants Single Purpose Status). Lender shall consent to any such merger consummated prior to and in connection with an Addition or a Substitution and agrees that no Transfer Fee or Review Fee shall be payable for Lenders review of the same.
(i) Permitted Transfers.
(1) Ownership Interest Transfers. Notwithstanding the provisions of Section 11.02(b)(2) (No Transfers of Interests in Borrower, Key Principal, or Guarantor), the following Transfers are permitted without the consent of Lender:
(A) a Transfer of any direct or indirect ownership interest in Borrower, Guarantor, Key Principal, or OP Partner;
(B) the issuance by Borrower, Guarantor, Key Principal, or OP Partner of additional membership interests, partnership interests, stock (including by creation of a new class or series of interests or stock), other beneficial or ownership interests or other forms of securities, as the case may be, and the subsequent direct or indirect Transfer of such interests, securities or stock; or
(C) a merger with or acquisition of another entity by Key Principal or Guarantor, as applicable, provided that such Key Principal or Guarantor, as applicable, is the surviving entity after such merger or acquisition; provided that:
(i) at the time of the proposed Transfer, no Event of Default has occurred or is continuing;
(ii) no Change of Control occurs as the result of such Transfer;
(iii) Following the Transfer, REIT continues to own (A) not less than a thirty-five percent (35%) direct or indirect ownership interest in Borrower and (B) the general partnership interest in the OP and/or the ownership interests required to have the exclusive right to appoint and remove a majority of the board of directors of the OP Partner (if OP Partner has a board of directors);
(iv) Following the Transfer, OP Partner continues to own the ownership interests required to have the exclusive right to appoint and remove a majority of the board of directors of Borrower; and
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(v) the transferee shall not be, as of the date of the Transfer, a Prohibited Person if, as a result of the Transfer, the transferee will own twenty-five percent (25%) or more of the Ownership Interests in Borrower (or, if any other investor will own twenty-five percent (25%) or more of the Ownership Interests in Borrower that did not own twenty-five percent (25%) or more before the Transfer, such investor shall not, as of the date of the Transfer, be a Prohibited Person).
If the conditions set forth in this Section 11.03(i)(2) (Ownership Interest Transfers) are satisfied, the Transfer Fee shall be waived, provided Borrower shall provide Lender ten (10) days prior written notice of any Transfer in Sections 11.03(i)(2)(C) or (D) (provided no notice shall be required with respect to a transfer of less than forty-nine percent (49%) of such ownership interests provided that Borrower must confirm with Lender that clause (E) above is satisfied prior to the Transfer), which notice shall include the Review Fee together with organizational charts and operating documents that reflect the structure of Borrower, Key Principal, and/or Guarantor, as applicable, both prior to and subsequent to such Transfer. Borrower shall also pay or reimburse Lender, upon demand, for all reasonable costs, expenses, and attorneys fees incurred by Lender in connection with such Transfer.
(2) Director Transfers. A Director Transfer shall be permitted provided that each of the following conditions is satisfied:
(A) Borrower provides Lender with thirty (30) days written notice of the Director Transfer (which notice requirement shall be deemed satisfied with respect to a Guarantor or Key Principal Director Transfer by delivery to Lender of the 8-K evidencing such Director Transfer promptly after its filing with the Securities and Exchange Commission if such filing occurs within the thirty (30) day window following the Director Transfer);
(B) Borrower pays or reimburses Lender, upon demand, for all reasonable costs, expenses, and attorneys fees incurred by Lender in connection with the Director Transfer;
(C) Borrower confirms that:
(i) (i) Borrower and Key Principal, as the case may be, continues to be managed by a board of directors; and
(ii) (ii) each board of directors continues to operate by majority vote.
(D) For each new Director appointed pursuant to the Director Transfer (the New Director) Borrower shall certify to Lender that OP Partner continues to be the sole member of Borrower and continues to appoint the members of Borrowers board of directors. In addition, Borrower shall certify to Lender that each of the following is true:
(i) the New Director has not been convicted of fraud or a crime involving moral turpitude;
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(ii) the New Director has not filed for bankruptcy or reorganization within ten (10) years preceding the date of the Director Transfer; and
(iii) the New Director is not a Prohibited Person.
(E) Following any Director Transfer, Control and management of the day-to-day operations of Borrower shall continue to be held by the Person(s) exercising such Control and management immediately prior to the Director Transfer, except for the Person being replaced as a result of the Director Transfer, there shall be no Change of Control of Key Principal, Borrower or Guarantor and REIT shall continue to hold not less than a thirty-five percent (35%) direct or indirect ownership interest in Borrower.
If the conditions set forth in this Section 11.03(i)(2) (Director Transfer) are satisfied, the Transfer Fee shall be waived.
(3) Other Merger, Consolidation or Reconstitution.
A merger, consolidation or reconstitution of Key Principal and/or Guarantor into another entity or of another entity into Key Principal or Guarantor, as applicable, where Key Principal or Guarantor, as applicable, is not the survivor of such merger (New REIT) or a merger, consolidation or reconstitution of OP Partner into another entity or of another entity into OP Partner where OP Partner is not the survivor of such merger (New OP) shall be permitted provided the following conditions are satisfied:
(A) Notice and Approval. Borrower shall provide Lender not less than sixty (60) days prior written notice of the proposed Transfer and obtain Lenders approval;
(B) Organizational Documents. Borrower shall provide with its notice to Lender an organizational chart reflecting, and all organizational documents relevant to, the proposed Transfer and any other information required by Lender to make the determination required by this Section;
(C) No Event of Default. No Event of Default shall have occurred and be continuing: (i) at the time Lender is notified of the Transfer; and at the time of such Transfer;
(D) Transferee Status. With respect to Key Principal or Guarantor, New REIT shall, as of the date of the Transfer be a Qualified Transferee and meet the qualifications identified in paragraph (G) below. With respect to OP Partner, the managing general partner of NEW OP shall, as of the date of the Transfer, be Guarantor or the proposed New REIT;
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(E) Ownership. REIT or a permitted New REIT shall continue to hold not less than a thirty-five percent (35%) direct or indirect ownership interest in Borrower;
(F) Qualifications. The proposed New REIT shall fully satisfy all of Lenders then-applicable key principal, or guarantor eligibility, credit, management, and other loan underwriting standards, which shall include an analysis of the previous relationships between Lender and the proposed New REIT and any Person in Control of them, and the organization of the proposed New REIT;
(G) Fees. Borrower shall pay to Lender:
(i) concurrently with its notice to Lender, the Review Fee plus a Transfer Fee, which, solely for the purposes of this Section 11.03(i)(3), shall be $250,000.00; and
(ii) upon demand, any out-of-pocket costs and expenses, including attorneys fees and expenses, incurred by Lender in connection with its review of the Transfer request; and
(H) Further Assurances. Borrower shall execute, and shall cause New REIT or New OP, as applicable, to execute upon demand such documents or certifications as Lender reasonably requires in order to confirm the post-transfer ownership structure, compliance with the stated conditions, and any other relevant factual matter (including any modifications necessary or desirable to identify New REIT as new key principal and guarantor in the Loan Documents).
(4) Listing.
A Transfer in connection with a public offering of Borrower, Key Principal, Guarantor, and/or any of their respective direct or indirect owners or of any entity to which any of Borrower, Key Principal or Guarantor and/or any of their respective direct or indirect owners is a predecessor under Rule 405 of the Securities Act of 1933, or in connection with any other event pursuant to which any of the foregoing entities has its shares listed on a national securities exchange (a Listing) shall be permitted and no Transfer Fee shall be required provided that, as of the date of any such Listing: (A)(i) none of Borrower, Key Principal, Guarantor or anyone holding a twenty-five percent (25%) or more ownership in Borrower, Key Principal or Guarantor is a Prohibited Person, (ii) Borrower, Key Principal, and Guarantor are in compliance with all applicable Economic Sanctions, (iii) no Change of Control of Borrower, Key Principal and/or Guarantor has occurred or will occur as a result of such Listing, and (iv) none of Borrower, Key Principal, Guarantor or anyone holding a ten percent (10%) or more ownership interest in Borrower, Key Principal or Guarantor is a Sanctioned Person or is otherwise prohibited from transacting business of the type contemplated by this Master Agreement and the other Loan Documents; and (B) Borrower provides Lender with notice of such Listing within thirty (30) days after such Listing, which notice shall include a certification from Borrower of compliance with (A)(i)-(iv) above together with the names, if any, of any Person having a ten percent (10%) or more ownership interest in Borrower, Key Principal or Guarantor as a result of such Listing and the names of all members the boards of directors of Borrower, Key Principal and Guarantor.
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Provided the same are timely provided to Lender and are solely for the purposes of effectuating the Transfers described in this Section 11.03(i), modifications to the operating documents of Borrower, Key Principal and/or Guarantor shall not violate Section 4.02(a)(1) of this Master Agreement.
Article 12
IMPOSITIONS
Section 12.01 Representations and Warranties.
The representations and warranties made by Borrower to Lender in this Section 12.01 (Impositions Representations and Warranties) are made as of each Effective Date and are true and correct except as disclosed on the Exceptions to Representations and Warranties Schedule.
(a) Payment of Taxes, Assessments, and Other Charges.
Borrower has:
(1) paid (or with the approval of Lender, established an escrow fund sufficient to pay when due and payable) all amounts and charges relating to the Mortgaged Properties that have become due and payable before any fine, penalty interest, lien, or costs may be added thereto, including Impositions, leasehold payments, and ground rents;
(2) paid all Taxes for the Mortgaged Properties that have become due before any fine, penalty interest, lien, or costs may be added thereto pursuant to any notice of assessment received by Borrower and any and all taxes that have become due against Borrower before any fine, penalty interest, lien, or costs may be added thereto;
(3) no knowledge of any basis for any additional assessments;
(4) no knowledge of any presently pending special assessments against all or any part of the Mortgaged Properties, or any presently pending special assessments against Borrower; and
(5) not received any written notice of any contemplated special assessment against any Mortgaged Property, or any contemplated special assessment against Borrower.
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Section 12.02 Covenants.
(a) Imposition Deposits, Taxes, and Other Charges.
Borrower shall:
(1) deposit the Imposition Deposits with Lender on each Payment Date (or on another day designated in writing by Lender) in amount sufficient, in Lenders discretion, to enable Lender to pay each Imposition before the last date upon which such payment may be made without any penalty or interest charge being added, plus an amount equal to no more than one-sixth (or the amount permitted by Applicable Law) of the Impositions for the trailing twelve (12) months (calculated based on the aggregate annual Imposition costs divided by twelve (12) and multiplied by two (2));
(2) deposit with Lender, within ten (10) days after written notice from Lender (subject to Applicable Law), such additional amounts estimated by Lender to be reasonably necessary to cure any deficiency in the amount of the Imposition Deposits held for payment of a specific Imposition;
(3) except as set forth in Section 12.03(c) (Payment of Impositions; Sufficiency of Imposition Deposits) below, pay all Impositions, leasehold payments, ground rents, and Taxes when due and before any fine, penalty interest, lien, or costs may be added thereto;
(4) promptly deliver to Lender a copy of all notices of, and invoices for, Impositions, and, if Borrower pays any Imposition directly, Borrower shall promptly furnish to Lender receipts evidencing such payments; and
(5) promptly deliver to Lender a copy of all notices of any special assessments and contemplated special assessments against any Mortgaged Property or Borrower.
Section 12.03 Administration Matters Regarding Impositions.
(a) Maintenance of Records by Lender.
Lender shall maintain records of the monthly and aggregate Imposition Deposits held by Lender for the purpose of paying Taxes, insurance premiums, and each other obligation of Borrower for which Imposition Deposits are required.
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(b) Imposition Accounts.
All Imposition Deposits shall be held in an institution (which may be Lender, if Lender is such an institution) whose deposits or accounts are insured or guaranteed by a federal agency and which accounts meet the standards for custodial accounts as required by Lender from time to time. Lender shall not be obligated to open additional accounts, or deposit Imposition Deposits in additional institutions, when the amount of the Imposition Deposits exceeds the maximum amount of the federal deposit insurance or guaranty. No interest, earnings, or profits on the Imposition Deposits shall be paid to Borrower unless Applicable Law so requires. Imposition Deposits shall not be trust funds, or operate to reduce the Indebtedness, unless applied by Lender for that purpose in accordance with this Master Agreement. For the purposes of §9-104(a)(3) of the UCC, Lender is the owner of the Imposition Deposits and shall be deemed a customer with sole control of the account holding the Imposition Deposits.
(c) Payment of Impositions; Sufficiency of Imposition Deposits.
Lender may pay an Imposition according to any bill, statement, or estimate from the appropriate public office or insurance company without inquiring into the accuracy of the bill, statement, or estimate or into the validity of the Imposition. Imposition Deposits shall be required to be used by Lender to pay Taxes, insurance premiums and any other individual Imposition only if:
(1) no Event of Default exists;
(2) Borrower has timely delivered to Lender all applicable bills or premium notices that it has received; and
(3) sufficient Imposition Deposits are held by Lender for each Imposition at the time such Imposition becomes due and payable.
Lender shall have no liability to Borrower or any other Person for failing to pay any Imposition if any of the conditions are not satisfied. If at any time the amount of the Imposition Deposits held for payment of a specific Imposition exceeds the amount reasonably deemed necessary by Lender to be held in connection with such Imposition, the excess may be credited against future installments of Imposition Deposits for such Imposition.
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(d) Imposition Deposits Upon Event of Default.
If an Event of Default has occurred and is continuing, Lender may apply any Imposition Deposits, in such amount and in such order as Lender determines, to pay any Impositions or as a credit against the Indebtedness.
(e) Contesting Impositions.
Other than insurance premiums, Borrower may contest, at its expense, by appropriate legal proceedings, the amount or validity of any Imposition if:
(1) Borrower notifies Lender of the commencement or expected commencement of such proceedings;
(2) Lender determines that the applicable Mortgaged Property is not in danger of being sold or forfeited;
(3) Borrower deposits with Lender (or the applicable Governmental Authority if required by Applicable Law) reserves sufficient to pay the contested Imposition, if required by Lender (or the applicable Governmental Authority);
(4) Borrower furnishes whatever additional security is required in the proceedings or is reasonably requested in writing by Lender; and
(5) Borrower commences, and at all times thereafter diligently prosecutes, such contest in good faith until a final determination is made by the applicable Governmental Authority.
(f) Release to Borrower.
Upon payment in full of all sums secured by the Security Instrument and this Master Agreement and release by Lender of the lien of the Security Instrument, Lender shall disburse to Borrower the balance of any Imposition Deposits then on deposit with Lender.
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Article 13
REPLACEMENTS, REPAIRS, AND RESTORATION
Section 13.01 Covenants.
(a) | Initial Deposits to Replacement Reserve Account, Repairs Escrow Account, and Restoration Reserve Account. |
(1) On the Effective Date, Borrower shall pay to Lender:
(A) the Initial Replacement Reserve Deposit for deposit into the Replacement Reserve Account; and
(B) the Repairs Escrow Deposit for deposit into the Repairs Escrow Account.
(2) Subject to the terms of Articles 9 (Insurance) and 10 (Condemnation), after an event of loss, Borrower shall deliver or cause to be delivered to Lender any insurance proceeds received under any insurance policy required to be maintained in accordance with Article 9 (Insurance).
(b) Monthly Replacement Reserve Deposits.
Borrower shall deposit the applicable Monthly Replacement Reserve Deposit into the Replacement Reserve Account on each Payment Date.
(c) Payment and Deliverables for Replacements, Repairs, and Restoration.
Borrower shall:
(1) pay all invoices for Replacements, Repairs, and Restoration, regardless of whether funds on deposit in the applicable Reserve/Escrow Account, are sufficient to pay the full amount of such invoices, prior to any request for disbursement from such Reserve/Escrow Account (unless Lender has agreed to issue joint checks in connection with a particular Replacement, Repair, or Restoration);
(2) pay all applicable fees and charges of any Governmental Authority on account of the Replacements, Repairs, and Restoration, as applicable;
(3) provide evidence satisfactory to Lender of completion of the Replacements, Restoration (within the period required under Section 9.03(b)(1)(B)(iv) (Application of Proceeds on Event of Loss) or such other period required by Lender), and any Required Repairs (within the Completion Period or within such other period or by such other date set forth in the Required Repair Schedule and any Borrower Requested Repairs and Additional Lender Repairs (by the date specified by Lender for any such Borrower Requested Repairs or Additional Lender Repairs)); and
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(4) prior to commencement of any Restoration, Borrower shall deliver to Lender, for Lenders review and approval:
(A) if the Restoration is the type for which plans and specifications are customarily obtained, a copy of the plans and specifications for the Restoration; and
(B) a copy of all building and other permits and authorizations required by any law, ordinance, statute, rule or regulation of the Governmental Authority to commence the then applicable portion of the Restoration.
(d) Assignment of Contracts for Replacements, Repairs, and Restoration.
Borrower shall collaterally assign to Lender as additional security any contract or subcontract for Replacements, Repairs, or Restoration, upon Lenders written request, on a form of assignment approved by Lender.
(e) Indemnification.
If Lender elects to exercise its rights under Section 14.03 (Additional Lender Rights; Forbearance) due to Borrowers failure to timely commence or complete any Replacements, Repairs, or Restoration, Borrower shall indemnify and hold Lender harmless for, from and against any and all actions, suits, claims, demands, liabilities, losses, damages, obligations, and costs or expenses, including litigation costs and reasonable attorneys fees, arising from or in any way connected with the performance by Lender of the Replacements, Repairs, or Restoration or the investment of the Reserve/Escrow Account Funds; provided that Borrower shall have no indemnity obligation if such actions, suits, claims, demands, liabilities, losses, damages, obligations, and costs or expenses, including litigation costs and reasonable attorneys fees, arise as a result of the willful misconduct or gross negligence of Lender, Lenders agents, employees, or representatives as determined by a court of competent jurisdiction pursuant to a final non-appealable court order.
(f) Amendments to Loan Documents.
Subject to Section 5.02 (The Advances Covenants) Borrower shall execute and deliver to Lender, upon written request, an amendment to this Master Agreement, the Security Instrument, any other Loan Document deemed necessary or desirable to perfect Lenders lien upon any portion of each Mortgaged Property for which Reserve/Escrow Account Funds were expended.
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(g) Administration Fees and Expenses.
Borrower shall pay to Lender:
(1) by the date specified in the applicable invoice, the Repairs Escrow Account Administration Fee, the Replacement Reserve Account Administration Fee, and the Restoration Reserve Account Administration Fee for Lenders services in administering the Reserve/Escrow Accounts and investing the Reserve/Escrow Account Funds;
(2) upon demand, a reasonable inspection fee, not exceeding the Maximum Inspection Fee, for each inspection of a Mortgaged Property by Lender in connection with a Repair, Replacement, or Restoration item, plus all other reasonable costs and out-of-pocket expenses relating to such inspections; and
(3) upon demand, all reasonable fees charged by any engineer, architect, inspector or other person inspecting a Mortgaged Property on behalf of Lender for each inspection of such Mortgaged Property in connection with a Repair, Replacement, or Restoration item, plus all other reasonable costs and out-of-pocket expenses relating to such inspections.
Section 13.02 Administration Matters Regarding Reserves.
(a) Accounts, Deposits, and Disbursements.
(1) Custodial Accounts.
(A) The Replacement Reserve Account shall be an interest-bearing account that meets the standards for custodial accounts as required by Lender from time to time. Lender shall not be responsible for any losses resulting from the investment of the Replacement Reserve Deposits or for obtaining any specific level or percentage of earnings on such investment. All interest, if any, earned on the Replacement Reserve Deposits shall be added to and become part of the Replacement Reserve Account; provided, however, if Applicable Law requires, and so long as no Event of Default has occurred and is continuing under any of the Loan Documents, Lender shall pay to Borrower the interest earned on the Replacement Reserve Account not less frequently than the Replacement Reserve Account Interest Disbursement Frequency.
(B) Lender shall not be obligated to deposit the Repairs Escrow Deposits or any funds held in the Restoration Reserve Account into an interest-bearing account.
(C) In no event shall Lender be obligated to disburse funds from the Reserve/Escrow Account if an Event of Default has occurred and is continuing.
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(2) Disbursements by Lender Only.
Only Lender or a designated representative of Lender may make disbursements from the Reserve/Escrow Accounts. Except as provided in Section 13.02(a)(7) (Conditions to Disbursement), disbursements shall only be made upon Borrower request and after satisfaction of all conditions for disbursement.
(3) Adjustment to Deposits.
(A) Mortgaged Properties in Collateral Pool over Ten (10) Years.
If any Mortgaged Property is part of the Collateral Pool for ten (10) years or more (or five (5) years for any Mortgaged Property that is an affordable housing property as indicated on the Summary of Master Terms), a property condition assessment shall be ordered by Lender for such Mortgaged Property at the expense of Borrower (which expense may be paid out of the Replacement Reserve Account if excess funds are available). The property condition assessment shall be performed no earlier than the sixth month and no later than the ninth month of the tenth year after such Mortgaged Property was added to the Collateral Pool and thereafter every tenth year such Mortgaged Property was added to the Collateral Pool (or every fifth year for any Mortgaged Property that is an affordable housing property as indicated on the Summary of Master Terms and every fifth year thereafter if the Term of the Master Agreement exceeds ten (10) years). After review of the property condition assessment, the amount of the Monthly Replacement Reserve Deposit may be adjusted by Lender for the remaining Facility Year by written notice to Borrower so that the Monthly Replacement Reserve Deposits are sufficient to fund the Replacements as and when required and/or the amount to be held in the Repairs Escrow Account may be adjusted by Lender so that the Repairs Escrow Deposit is sufficient to fund the Repairs as and when required.
(B) Transfers.
In connection with any Transfer of any Mortgaged Property in connection with an assumption, or any Transfer of Ownership Interest(s) in a Borrower Entity that requires Lenders consent, Lender may review the amounts on deposit, if any, in the Reserve/Escrow Accounts, the amount of the Monthly Replacement Reserve Deposit for the applicable Mortgaged Property(ies) and the likely repairs and
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replacements required by such Mortgaged Property(ies), and the related contingencies which may arise during the remaining Term of this Master Agreement. Based upon that review, Lender may require an additional deposit to the Replacement Reserve Account, the Repairs Escrow Account, or the Restoration Reserve Account, or an increase in the amount of the Monthly Replacement Reserve Deposit as a condition to Lenders consent to such Transfer.
(4) Insufficient Funds.
Lender may, upon thirty (30) days prior written notice to Borrower, require an additional deposit(s) to the Replacement Reserve Account, the Repairs Escrow Account, or the Restoration Reserve Account, or an increase in the amount of the Monthly Replacement Reserve Deposit, if Lender determines that the amounts on deposit in any of the Reserve/Escrow Accounts are not sufficient to cover the costs for Required Repairs, Required Replacements, or the Restoration or, pursuant to the terms of Section 13.02(a)(9) (Replacements and Repairs Other than Required Replacements or Required Repairs), not sufficient to cover the costs for Borrower Requested Repairs, Additional Lender Repairs, Borrower Requested Replacements, or Additional Lender Replacements. Borrowers agreement to complete the Replacements, the Repairs, or the Restoration as required by this Master Agreement shall not be affected by the insufficiency of any balance in the Reserve/Escrow Accounts.
(5) Disbursements for Replacements, Repairs, and Restoration.
(A) With respect to Replacements, disbursement requests may only be made after completion of the applicable Replacements and only to reimburse the applicable Borrower for the actual approved costs of the Replacements. Lender shall not disburse from the Replacement Reserve Account the costs of routine maintenance to any Mortgaged Property or for costs which are to be reimbursed from the other Reserve/Escrow Account. Disbursement from the Replacement Reserve Account shall not be made more frequently than the Maximum Replacement Reserve Disbursement Interval for such Mortgaged Property. Other than in connection with a final request for disbursement, disbursements from the Replacement Reserve Account shall not be less than the Minimum Replacement Reserve Disbursement Amount for such Mortgaged Property.
(B) With respect to Repairs, disbursement requests may only be made after completion of the applicable Repairs and only to reimburse the applicable Borrower for the actual cost of the Repairs, up to the Maximum Repair Cost for such Mortgaged Property. Lender shall not disburse any amounts which would cause the funds remaining in the Repairs Escrow Account after any disbursement (other than with respect to the final disbursement) to be less than the Maximum
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Repair Cost of the then-current estimated cost of completing all remaining Repairs. Lender shall not disburse from the Repairs Escrow Account the costs of routine maintenance to any Mortgaged Property or for costs which are to be reimbursed from any other Reserve/Escrow Account or any similar account. Disbursement from the Repairs Escrow Account shall not be made more frequently than the Maximum Repair Disbursement Interval. Other than in connection with a final request for disbursement, disbursements from the Repairs Escrow Account shall not be less than the Minimum Repairs Disbursement Amount for such Mortgaged Property.
(C) With respect to Restoration, disbursement requests may only be made for amounts of $25,000 or more after completion of the applicable component of the Restoration and only to reimburse Borrower for the actual approved costs of the applicable items of the Restoration. Each disbursement shall be equal to the amount of the actual approved costs of the Restoration items covered by the disbursement request. In addition, Lender shall not disburse any amounts which would cause the funds remaining in the Restoration Reserve Account after any disbursement (other than with respect to the final disbursement) to be less than the then-current estimated cost of completing all remaining Restoration. Lender shall not disburse from the Restoration Reserve Account the costs of routine maintenance to the Mortgaged Property or for costs which are to be reimbursed from any other Reserve/Escrow Account. Disbursement from the Restoration Reserve Account shall not be made more frequently than the Maximum Restoration Reserve Disbursement Interval. Other than in connection with a final request for disbursement, disbursements from the Restoration Reserve Account shall not be less than the Minimum Restoration Reserve Disbursement Amount.
(6) Disbursement Requests.
Borrower must submit a disbursement request in writing for each disbursement from the Reserve/Escrow Account, which disbursement request must specify the items of Replacement, Repairs, or Restoration for which reimbursement is requested (provided that for any Borrower Requested Replacements, Borrower Requested Repairs, Additional Lender Replacements and Additional Lender Repairs, Lender shall have approved the use of the Reserve/Escrow Account Funds for such replacements or repairs pursuant to the terms of Section 13.02(a)(9) (Replacements and Repairs Other than Required Replacements or Required Repairs)), and must:
(A) if applicable, specify the quantity and price of the items or materials purchased, grouped by type or category;
(B) if applicable, specify the cost of all contracted labor or other services, including architectural services, involved in the Replacement, Repair, or Restoration for which such request for disbursement is made;
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(C) if applicable, include copies of invoices for all items or materials purchased and all contracted labor or services provided;
(D) include evidence of payment of such Replacement, Repair, or Restoration satisfactory to Lender (unless Lender has agreed to issue joint checks in connection with a particular Repair, Replacement, or Restoration item as provided in this Master Agreement);
(E) if applicable, contain a certification by Borrower that the Repair, Replacement, or Restoration has been completed lien free and in a good and workmanlike manner, in accordance with any plans and specifications previously approved by Lender (if applicable) and in compliance with all Applicable Law, and otherwise in accordance with the provisions of this Master Agreement; and
(F) if applicable, include evidence that any certificate of occupancy (or, a temporary certificate of occupancy, if permitted by Applicable Law or Governmental Authority to occupy the applicable portion of the Mortgaged Property with a temporary certificate of occupancy) required by Applicable Law or any Governmental Authority have been issued.
(7) Conditions to Disbursement.
In addition to each disbursement request and information required in connection with such disbursement request, Lender may require any or all of the following at the expense of Borrower as a condition to disbursement of Reserve/Escrow Account Funds (provided that for any Borrower Requested Replacements, Borrower Requested Repairs, Additional Lender Replacements, and Additional Lender Repairs, Lender shall have approved the use of the Reserve/Escrow Account Funds for such replacements or repairs pursuant to the terms of Section 13.02(a)(9) (Replacements and Repairs Other than Required Replacements or Required Repairs)):
(A) an inspection by Lender of the applicable Mortgaged Property and the applicable Replacement, Repair, or Restoration item;
(B) an inspection or certificate of completion by an appropriate independent qualified professional (such as an architect, engineer or property inspector, depending on the nature of the Repair, Replacement, or Restoration) selected by Lender;
(C) either:
(i) a search of title to the applicable Mortgaged Property effective to the date of disbursement; or
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(ii) if the estimated costs of the applicable Borrower Requested Replacements, Borrower Requested Repairs, Additional Lender Replacements, and Additional Lender Repairs, exceeds $250,000 a date-down endorsement to Lenders Title Policy (or a new Lenders Title Policy if a date-down is not available) extending the effective date of such policy to the date of disbursement, and showing no Liens other than (1) Permitted Encumbrances, (2) liens which Borrower is diligently contesting in good faith that have been bonded off to the satisfaction of Lender, or (3) mechanics or materialmens liens which attach automatically under the laws of any Governmental Authority upon the commencement of any work upon, or delivery of any materials to, the Mortgaged Property and for which Borrower is not delinquent in the payment for any such work or materials; and
(D) an acknowledgement of payment, waiver of claims, and release of lien for work performed and materials supplied from each contractor, subcontractor or materialman in accordance with the requirements of Applicable Law and covering all work performed and materials supplied (including equipment and fixtures) for the applicable Mortgaged Property by that contractor, subcontractor, or materialman through the date covered by the disbursement request (or, in the event that payment to such contractor, subcontractor, or materialman is to be made by a joint check, the release of lien shall be effective through the date covered by the previous disbursement).
(8) | Joint Checks for Periodic Disbursements. |
Lender may, upon Borrowers written request, issue joint checks, payable to Borrower and the applicable supplier, materialman, mechanic, contractor, subcontractor or other similar party, if:
(A) the cost of the Replacement, Repair, or Restoration item exceeds the Replacement Threshold, the Repair Threshold, or the Restoration Threshold, as applicable, for such Mortgaged Property and the contractor performing such Replacement, Repair, or Restoration requires periodic payments pursuant to the terms of the applicable written contract;
(B) the contract for such Replacement, Repair, or Restoration item requires payment upon completion of the applicable portion of the work;
(C) Borrower makes the disbursement request after completion of the applicable portion of the work required to be completed under such contract;
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(D) the materials for which the request for disbursement has been made are on site at the applicable Mortgaged Property and are properly secured or installed;
(E) Lender determines that the remaining funds in the Reserve/Escrow Account are sufficient to pay the cost of the Replacement, Repair, or Restoration item, as applicable, and the then-current estimated cost of completing all remaining Required Replacements, Restoration, or Required Repairs (at the Maximum Repair Cost), as applicable, and any other Borrower Requested Replacements, Borrower Requested Repairs, Additional Lender Replacements, or Additional Lender Repairs that have been previously approved by Lender;
(F) each supplier, materialman, mechanic, contractor, subcontractor, or other similar party receiving payments shall have provided, if requested in writing by Lender, a waiver of liens with respect to amounts which have been previously paid to them; and
(G) all other conditions for disbursement have been satisfied.
(9) Replacements and Repairs Other than Required Replacements or Required Repairs.
(A) | Borrower Requested Replacements and Borrower Requested Repairs. |
Borrower may submit a disbursement request from the Replacement Reserve Account or the Repairs Escrow Account to reimburse Borrower for any Borrower Requested Replacement or Borrower Requested Repair. The disbursement request must be in writing and include an explanation for such request. Lender shall make disbursements for Borrower Requested Replacements or Borrower Requested Repairs if:
(i) they are of the type intended to be covered by the Replacement Reserve Account or the Repairs Escrow Account, as applicable;
(ii) the costs are commercially reasonable;
(iii) the amount of funds in the Replacement Reserve Account or Repairs Escrow Account, as applicable, is sufficient to pay such costs and the then-current estimated cost of completing all remaining Required Replacements or Required Repairs (at the Maximum Repair Cost), as applicable, and any other Borrower Requested Replacements, Borrower Requested Repairs, Additional Lender Replacements, or Additional Lender Repairs that have been previously approved by Lender; and
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(iv) all conditions for disbursement from the Replacement Reserve Account or Repairs Escrow Account, as applicable, have been satisfied.
Nothing in this Master Agreement shall limit Lenders right to require an additional deposit to the Replacement Reserve Account or an increase to the Monthly Replacement Reserve Deposit in connection with any such Borrower Requested Replacements, or an additional deposit to the Repairs Escrow Account for any such Borrower Requested Repairs.
(B) Additional Lender Replacements and Additional Lender Repairs.
Lender may require, as set forth in Section 6.02(b) (Property Maintenance), Section 6.03(c) (Property Condition Assessment), or otherwise from time to time, upon written notice to Borrower, that Borrower make Additional Lender Replacements or Additional Lender Repairs. Lender shall make disbursements from the Replacement Reserve Account for Additional Lender Replacements or from the Repairs Escrow Account for Additional Lender Repairs, as applicable, if:
(i) the costs are commercially reasonable;
(ii) the amount of funds in the Replacement Reserve Account or the Repairs Escrow Account, as applicable, is sufficient to pay such costs and the then-current estimated cost of completing all remaining Required Replacements or Required Repairs (at the Maximum Repair Cost), as applicable, and any other Borrower Requested Replacements, Borrower Requested Repairs, Additional Lender Replacements, or Additional Lender Repairs that have been previously approved by Lender; and
(iii) all conditions for disbursement from the Replacement Reserve Account or Repairs Escrow Account, as applicable, have been satisfied.
Nothing in this Master Agreement shall limit Lenders right to require an additional deposit to the Replacement Reserve Account or an increase to the Monthly Replacement Reserve Deposit for any such Additional Lender Replacements or an additional deposit to the Repairs Escrow Account for any such Additional Lender Repair.
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(10) Excess Costs.
In the event any Replacement, Repair, or Restoration item exceeds the approved cost set forth on the Required Replacement Schedule for Replacements, the Maximum Repair Cost for Repairs, or the initial cost approved by Lender for Restoration, as applicable, Borrower may submit a disbursement request to reimburse Borrower for such excess cost. The disbursement request must be in writing and include an explanation for such request. Lender shall make disbursements from the applicable Reserve/Escrow Account, if:
(A) the excess cost is commercially reasonable;
(B) the amount of funds in the applicable Reserve/Escrow Account is sufficient to pay such excess costs and the then-current estimated cost of completing all remaining Required Replacements, Restoration, or Required Repairs (at the Maximum Repair Cost), as applicable, and any other Borrower Requested Replacements, Borrower Requested Repairs, Additional Lender Replacements, or Additional Lender Repairs that have been previously approved by Lender; and
(C) all conditions for disbursement from the applicable Reserve/Escrow Account have been satisfied.
(11) Final Disbursements.
Upon completion and satisfaction of all applicable conditions for disbursements for any Repairs and Restoration, and further provided no Event of Default has occurred and is continuing, Lender shall disburse to Borrower any amounts then remaining in the Repairs Escrow Account or the Restoration Reserve Account, as applicable. Upon payment in full of the Indebtedness and release by Lender of the lien of the Security Instrument, Lender shall disburse to Borrower any and all amounts then remaining in the Reserve/Escrow Accounts (if not previously released).
(b) Approvals of Contracts; Assignment of Claims.
Lender retains the right to approve all contracts or work orders with materialmen, mechanics, suppliers, subcontractors, contractors, or other parties providing labor or materials in connection with the Replacements, Repairs, or Restoration. Notwithstanding Borrowers assignment (in the Security Instrument) of its rights and claims against all Persons supplying labor or materials in connection with the Replacements, Repairs, or Restoration, Lender will not pursue any such right or claim unless an Event of Default has occurred and is continuing or as otherwise provided in Section 14.03(c) (Appointment of Lender as Attorney-In-Fact).
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(c) Delays and Workmanship.
If any work for any Replacement, Repair, or Restoration item has not timely commenced, has not been timely performed in a workmanlike manner, or has not been timely completed in a workmanlike manner, Lender may, without notice to Borrower:
(1) withhold disbursements from the applicable Reserve/Escrow Account for such unsatisfactory Replacement, Repair or Restoration items, as applicable;
(2) proceed under existing contracts or contract with third parties to make or complete such Replacements, Repairs, or Restoration item;
(3) apply the funds in the applicable Reserve/Escrow Account toward the labor and materials necessary to make or complete such Replacements, Repairs, or Restoration items, as applicable; or
(4) exercise any and all other remedies available to Lender under this Master Agreement or any other Loan Document, including any remedies otherwise available upon an Event of Default pursuant to the terms of Section 14.02 (Remedies).
To facilitate Lenders completion and performance of such Replacements, Repairs, or Restoration items, Lender shall have the right to enter onto each Mortgaged Property and perform any and all work and labor necessary to make or complete the Replacements, Repairs, or Restoration and employ watchmen to protect such Mortgaged Property from damage. All funds so expended by Lender shall be deemed to have been advanced to Borrower, and included as part of the Indebtedness and secured by the Security Instrument and this Master Agreement.
(d) Appointment of Lender as Attorney-In-Fact.
Borrower hereby authorizes and appoints Lender as attorney-in-fact pursuant to Section 14.03(c) (Appointment of Lender as Attorney-In-Fact).
(e) No Lender Obligation.
Nothing in this Master Agreement shall:
(1) make Lender responsible for making or completing the Replacements, Repairs, or Restoration;
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(2) require Lender to expend funds, whether from any Reserve/Escrow Account, or otherwise, to make or complete any Replacement, Repair, or Restoration item;
(3) obligate Lender to proceed with the Replacements, Repairs, or Restoration; or
(4) obligate Lender to demand from Borrower additional sums to make or complete any Replacement, Repair, or Restoration item.
(f) No Lender Warranty.
Lenders approval of any plans for any Replacement, Repair, or Restoration, release of funds from the Reserve/Escrow Account, inspection of any Mortgaged Property by Lender or its agents, representatives, or designees, or other acknowledgment of completion of any Replacement, Repair, or Restoration in a manner satisfactory to Lender shall not be deemed an acknowledgment or warranty to any Person that the Replacement, Repair, or Restoration has been completed in accordance with applicable building, zoning or other codes, ordinances, statutes, laws, regulations or requirements of any Governmental Authority, such responsibility being at all times exclusively that of Borrower.
Article 14
DEFAULTS/REMEDIES
Section 14.01 Events of Default.
The occurrence of any one or more of the following in this Section 14.01 (Events of Default) shall constitute an Event of Default under this Master Agreement.
(a) Automatic Events of Default.
Any of the following shall constitute an automatic Event of Default:
(1) any failure by Borrower to pay or deposit when due any amount required by the Note, this Master Agreement or any other Loan Document;
(2) any failure by Borrower to maintain the insurance coverage required by any Loan Document;
(3) any failure by Borrower to comply with the provisions of Section 4.02(d) (Borrower Status Covenants Single Purpose Status) relating to its single asset status;
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(4) if any warranty, representation, certification, or statement of Borrower or Guarantor in this Master Agreement or any of the other Loan Documents is false, inaccurate, or misleading in any material respect when made;
(5) fraud, gross negligence, willful misconduct or material misrepresentation or material omission by or on behalf of Borrower, Guarantor or Key Principal or any of their officers, directors, trustees, partners, members, or managers in connection with:
(A) the application for, or creation of, the Indebtedness;
(B) any financial statement, rent roll, or other report or information provided to Lender during the Term of this Master Agreement; or
(C) any request for Lenders consent to any proposed action, including a request for disbursement of Reserve/Escrow Account Funds or Collateral Account Funds;
(6) the occurrence of any Transfer not permitted by the Loan Documents;
(7) the occurrence of a Bankruptcy Event of Borrower, Borrowers general partner, sole member, or managing member, SPE Owner or Guarantor;
(8) the commencement of a forfeiture action or other similar proceeding, whether civil or criminal, which, in Lenders reasonable judgment, could result in a forfeiture of any Mortgaged Property or otherwise materially impair the lien created by this Master Agreement or the Security Instrument or Lenders interest in any Mortgaged Property;
(9) if Borrower, Guarantor or Key Principal is a trust (other than a REIT), or if a Transfer of the Restricted Ownership Interest or a Change of Control occurs due to the termination or revocation of a trust, the termination or revocation of such trust, except as set forth in Section 11.03(d) (Termination or Revocation of Trust);
(10) any failure by Borrower to complete any Repair related to fire, life, or safety issues in accordance with the terms of this Master Agreement within the Completion Period (or such other date set forth on the Required Repair Schedule or otherwise required by Lender in writing for such Repair);
(11) any exercise by the holder of any other debt instrument secured by a mortgage, deed of trust, or deed to secure debt on any Mortgaged Property of a right to declare all amounts due under that debt instrument immediately due and payable; or
(12) a dissolution or liquidation for any reason (whether voluntary or involuntary) of Borrower Entity or any general partner, managing member, or sole member of any Borrower Entity in violation of the Loan Documents.
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(b) Events of Default Subject to a Specified Cure Period.
Any of the following shall constitute an Event of Default subject to the cure period set forth in the Loan Documents:
(1) if Key Principal or Guarantor is a natural Person, the death of such individual, unless all requirements of Section 11.03(e) (Death of Key Principal or Guarantor; Restricted Ownership Interest/Controlling Interest Transfer Due to Death) are met;
(2) [intentionally deleted;]
(3) any failure by Borrower, Key Principal, or Guarantor to comply with the provisions of Section 5.02(b) (Further Assurances) and Section 5.02(c) (Sale of Advances); and
(4) any failure by Borrower to perform any obligation under this Master Agreement or any Loan Document that is subject to a specified written notice and cure period, which failure continues beyond such specified written notice and cure period as set forth herein or in the applicable Loan Document.
(c) Events of Default Subject to Extended Cure Period or Release.
The following shall constitute an Event of Default if the existence of such condition or event, or such failure to perform or default in performance continues for a period of thirty (30) days after written notice by Lender to Borrower of the existence of such condition or event, or of such failure to perform or default in performance; provided, however, such period may be extended for up to an additional thirty (30) days if Borrower, in the discretion of Lender, is diligently pursuing a cure of such; provided further, however, no such written notice, grace period or extension shall apply if, in Lenders discretion, immediate exercise by Lender of a right or remedy under this Master Agreement or any Loan Document is required to avoid harm to Lender or impairment of the Indebtedness, the Mortgaged Property or any other security given to secure the Indebtedness:
(1) any failure by Borrower to perform any of its obligations under this Master Agreement or any Loan Document (other than those specified in Section 14.01(a) (Automatic Events of Default) or Section 14.01(b) (Events of Default Subject to a Specified Cure Period)) as and when required.
Notwithstanding anything to the contrary herein or in any other Loan Document, if an Event of Default shall occur hereunder or under any other Loan Document because a representation, warranty, affirmative covenant, negative covenant, or other provision hereunder or
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thereunder shall be breached or violated that in Lenders sole and exclusive judgment is with respect to a particular Mortgaged Property (other than any misappropriation of funds collected in respect thereof) (each, a Property-Specific Event of Default), such Event of Default shall be deemed cured if Borrower shall satisfy all of the conditions set forth in Section 2.10(b) (Right to Obtain Releases of Mortgaged Property) of this Master Agreement relating to the Release of such Mortgaged Property from the Collateral Pool within thirty (30) days of Borrower acquiring knowledge of such Event of Default (the Release Cure Period). During the Release Cure Period, Lender agrees that it shall not have the right to exercise the remedy set forth in Section 14.02 (Remedies) of this Master Agreement; provided, however, that the foregoing shall not impair Lenders right to exercise the remedies available to Lender under any of the other Loan Documents or at law or in equity or under Section 14.03(b) (No Waiver of Rights or Remedies) during such Release Cure Period. If Lender shall elect to exercise any such remedies during such period, and if Borrower releases such Mortgaged Property pursuant to the provisions of the Mortgaged Property Release Schedule as described in the preceding sentence and at the time of such release no other Event of Default has occurred and is continuing, Lender shall cease exercising such remedies with respect to the applicable Property-Specific Event of Default and discontinue any proceedings it may have initiated in connection therewith, and the parties shall be restored to their former positions and rights hereunder; provided, however, that if Borrower shall fail to satisfy all of the conditions set forth in the Mortgaged Property Release Schedule relating to the release of such Mortgaged Property from the Collateral Pool during the Release Cure Period, Lender may thereafter exercise any and all remedies available to Lender under Article 14 (Defaults/Remedies) of this Master Agreement, including, without limitation, the remedies set forth in Section 14.02 (Remedies).
Section 14.02 Remedies.
(a) Acceleration; Foreclosure.
(1) If an Event of Default has occurred and is continuing, the entire unpaid principal balance of the Advances Outstanding, any Accrued Interest, interest accruing at the Default Rate, the Prepayment Premium (if applicable), and all other Indebtedness, at the option of Lender, shall immediately become due and payable, without any prior written notice to Borrower, unless Applicable Law requires otherwise (and in such case, after any required written notice has been given). Lender may exercise this option to accelerate regardless of any prior forbearance. In addition, Lender shall have all rights and remedies afforded to Lender hereunder and under the other Loan Documents, including, foreclosure on and/or the power of sale of any or all of the Mortgaged Properties, as provided in the Security Instrument, and any rights and remedies available to Lender at law or in equity (subject to Borrowers statutory rights of reinstatement, if any). Any proceeds of a Foreclosure Event may be held and applied by Lender as additional collateral for the Indebtedness pursuant to this Master Agreement. Notwithstanding the foregoing, the occurrence of any Bankruptcy Event of Borrower shall automatically accelerate the Indebtedness, which Indebtedness shall be immediately due and payable without written notice or further action by Lender.
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(2) Lender may Accelerate any Note without the obligation, but the right to accelerate any other Note (if more than one). In the exercise of its rights and remedies under the Loan Documents, Lender may, except as provided in this Master Agreement, exercise and perfect any and all of its rights in and under the Loan Documents with regard to any Mortgaged Property without the obligation (but with the right) to exercise and perfect its rights and remedies with respect to any other Mortgaged Property. Any such exercise shall be without regard to the Allocable Facility Amount assigned to such Mortgaged Property. Lender may recover an amount equal to the full amount Outstanding in respect of any of the Notes in connection with such exercise. Any such amount shall be applied to the Obligations as determined by Lender.
(b) Loss of Right to Disbursements from Collateral Accounts.
If an Event of Default has occurred and is continuing, Borrower shall immediately lose all of its rights to receive disbursements from the Reserve/Escrow Accounts and any Collateral Accounts. During the continuance of any such Event of Default, Lender may use the Reserve/Escrow Account Funds and any Collateral Account Funds (or any portion thereof) for any purpose, including:
(1) repayment of the Indebtedness, including principal prepayments and the Prepayment Premium applicable to such full or partial prepayment, as applicable (however, such application of funds shall not cure or be deemed to cure any Event of Default);
(2) reimbursement of Lender for all losses and expenses (including reasonable legal fees) suffered or incurred by Lender as a result of such Event of Default;
(3) completion of the Replacement, Repair, or Restoration or for any other replacement or repair to a Mortgaged Property; and
(4) payment of any amount expended in exercising (and the exercise of) all rights and remedies available to Lender at law or in equity or under this Master Agreement or under any of the other Loan Documents.
Nothing in this Master Agreement shall obligate Lender to apply all or any portion of the Reserve/Escrow Account Funds or Collateral Account Funds on account of any Event of Default by Borrower or to repayment of the Indebtedness or in any specific order of priority.
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(c) Remedies Cumulative.
Each right and remedy provided in this Master Agreement is distinct from all other rights or remedies under this Master Agreement or any other Loan Document or afforded by Applicable Law, and each shall be cumulative and may be exercised concurrently, independently or successively, in any order. Lender shall not be required to demonstrate any actual impairment of its security or any increased risk of additional default by Borrower in order to exercise any of its remedies with respect to an Event of Default.
Section 14.03 Additional Lender Rights; Forbearance.
(a) No Effect Upon Obligations.
Lender may, but shall not be obligated to, agree with Borrower, from time to time, and without giving notice to, or obtaining the consent of, or having any effect upon the obligations of, Guarantor, Key Principal, or other third party obligor, to take any of the following actions:
(1) the time for payment of the principal of or interest on the Indebtedness may be extended, or the Indebtedness may be renewed in whole or in part;
(2) the rate of interest on or period of amortization of the Advances or the amount of the Monthly Debt Service Payments payable under the Loan Documents may be modified;
(3) the time for Borrowers performance of or compliance with any covenant or agreement contained in any Loan Document, whether presently existing or hereinafter entered into, may be extended or such performance or compliance may be waived;
(4) any or all payments due under this Master Agreement or any other Loan Document may be reduced;
(5) any Loan Document may be modified or amended by Lender and Borrower in any respect, including an increase in the principal amount of the Advances;
(6) any amounts under this Master Agreement or any other Loan Document may be released;
(7) any security for the Indebtedness may be modified, exchanged, released, surrendered, or otherwise dealt with, or additional security may be pledged or mortgaged for the Indebtedness;
(8) the payment of the Indebtedness or any security for the Indebtedness, or both, may be subordinated to the right to payment or the security, or both, of any other present or future creditor of Borrower; or
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(9) any other terms of the Loan Documents may be modified.
(b) No Waiver of Rights or Remedies.
Any waiver of an Event of Default or forbearance by Lender in exercising any right or remedy under this Master Agreement or any other Loan Document or otherwise afforded by Applicable Law, shall not be a waiver of any other Event of Default or preclude the exercise or failure to exercise of any other right or remedy. The acceptance by Lender of payment of all or any part of the Indebtedness after the due date of such payment, or in an amount which is less than the required payment, shall not be a waiver of Lenders right to require prompt payment when due of all other payments on account of the Indebtedness or to exercise any remedies for any failure to make prompt payment. Enforcement by Lender of any security for the Indebtedness shall not constitute an election by Lender of remedies so as to preclude the exercise or failure to exercise of any other right available to Lender. Lenders receipt of any insurance proceeds or amounts in connection with a Condemnation Action shall not operate to cure or waive any Event of Default.
(c) Appointment of Lender as Attorney-In-Fact.
Borrower hereby irrevocably makes, constitutes, and appoints Lender (and any officer of Lender or any Person designated by Lender for that purpose) as Borrowers true and lawful proxy and attorney-in-fact (and agent-in-fact) in Borrowers name, place, and stead, with full power of substitution, to:
(1) use any Reserve/Escrow Account Funds for the purpose of making or completing the Replacements, Repairs, or Restoration;
(2) make such additions, changes, and corrections to the Replacements, Repairs, or Restoration as shall be necessary or desirable to complete the Replacements, Repairs, or Restoration;
(3) employ such contractors, subcontractors, agents, architects, and inspectors as shall be required for such purposes;
(4) pay, settle, or compromise all bills and claims for materials and work performed in connection with the Replacements, Repairs, or Restoration, or as may be necessary or desirable for the completion of the Replacements, Repairs, or Restoration, or for clearance of title;
(5) adjust and compromise any claims under any and all policies of insurance required pursuant to this Master Agreement and any other Loan Document, subject only to Borrowers rights under this Master Agreement;
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(6) appear in and prosecute any action arising from any insurance policies;
(7) collect and receive the proceeds of insurance, and to deduct from such proceeds Lenders expenses incurred in the collection of such proceeds;
(8) commence, appear in, and prosecute, in Lenders or Borrowers name, any Condemnation Action;
(9) settle or compromise any claim in connection with any Condemnation Action;
(10) execute all applications and certificates in the name of Borrower which may be required by any of the contract documents;
(11) prosecute and defend all actions or proceedings in connection with any Mortgaged Property or the rehabilitation and repair of any Mortgaged Property;
(12) take such actions as are permitted in this Master Agreement and any other Loan Documents;
(13) execute such financing statements and other documents and to do such other acts as Lender may require to perfect and preserve Lenders security interest in, and to enforce such interests in, the collateral; and
(14) carry out any remedy provided for in this Master Agreement and any other Loan Documents, including endorsing Borrowers name to checks, drafts, instruments, and other items of payment and proceeds of the collateral, executing change of address forms with the postmaster of the United States Post Office serving the address of Borrower, changing the address of Borrower to that of Lender, opening all envelopes addressed to Borrower, and applying any payments contained therein to the Indebtedness.
Borrower hereby acknowledges that the constitution and appointment of such proxy and attorney-in-fact are coupled with an interest and are irrevocable and shall not be affected by the disability or incompetence of Borrower. Borrower specifically acknowledges and agrees that this power of attorney granted to Lender may be assigned by Lender to Lenders successors or assigns as holder of the Note (and the other Loan Documents). The foregoing powers conferred on Lender under this Section 14.03(c) (Appointment of Lender as Attorney-In-Fact) shall not impose any duty upon Lender to exercise any such powers and shall not require Lender to incur any expense or take any action. Borrower hereby ratifies and confirms all that such attorney-in-fact may do or cause to be done by virtue of any provision of this Master Agreement and any other Loan Documents.
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Notwithstanding the foregoing provisions, Lender shall not exercise its rights as set forth in this Section 14.03(c) (Appointment of Lender as Attorney-In-Fact) unless: (A) an Event of Default has occurred and is continuing or (B) Lender determines, in its discretion, that exigent circumstances exist or that such exercise is necessary or prudent in order to protect and preserve the Mortgaged Property, or Lenders lien priority and security interest in the Mortgaged Property.
(d) Borrower Waivers.
If more than one Person signs this Master Agreement as Borrower, each Borrower, with respect to any other Borrower, hereby agrees that Lender, in its discretion, may:
(1) bring suit against Borrower, or any one or more of Borrower, jointly and severally, or against any one or more of them;
(2) compromise or settle with any one or more of the persons constituting Borrower, for such consideration as Lender may deem proper;
(3) release one or more of the persons constituting Borrower, from liability; or
(4) otherwise deal with Borrower, or any one or more of them, in any manner, and no such action shall impair the rights of Lender to collect from any Borrower the full amount of the Indebtedness.
Section 14.04 Waiver of Marshaling.
Notwithstanding the existence of any other security interests in the Mortgaged Properties held by Lender or by any other party, Lender shall have the right to determine the order in which any or all of the Mortgaged Properties (or any part thereof) shall be subjected to the remedies provided in this Master Agreement, any other Loan Document or Applicable Law. Lender shall have the right to determine the order in which all or any part of the Indebtedness is satisfied from the proceeds realized upon the exercise of such remedies. Borrower and any party who now or in the future acquires a security interest in any Mortgaged Property and who has actual or constructive notice of this Master Agreement waives any and all right to require the marshaling of assets or to require that any of the Mortgaged Properties be sold in the inverse order of alienation or that any of the Mortgaged Properties 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 Master Agreement or any other Loan Documents.
Lender shall account for any moneys received by Lender in respect of any foreclosure on or disposition of collateral hereunder and under the other Loan Documents provided that Lender shall not have any duty as to any collateral, and Lender shall be accountable only for amounts that it actually receives as a result of the exercise of such powers. NONE OF LENDER OR ITS AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, OR REPRESENTATIVES SHALL BE RESPONSIBLE TO BORROWER (a) FOR ANY ACT OR FAILURE TO ACT UNDER ANY POWER OF ATTORNEY OR OTHERWISE, EXCEPT IN RESPECT OF DAMAGES ATTRIBUTABLE SOLELY TO THEIR OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT AS FINALLY DETERMINED PURSUANT TO A FINAL, NON-APPEALABLE COURT ORDER BY A COURT OF COMPETENT JURISDICTION, OR (b) FOR ANY PUNITIVE, EXEMPLARY, INDIRECT OR CONSEQUENTIAL DAMAGES.
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Section 14.05 Severed Loan Documents.
Lender shall have the right from time to time to sever the Note and the other Loan Documents into one or more separate notes, mortgages, and other security documents (the Severed Loan Documents) in such denominations as Lender shall determine in its discretion for purposes of evidencing and enforcing its rights and remedies provided hereunder, provided that:
(a) the amount of Advances Outstanding immediately after the effective date of such modification equals the amount of Advances Outstanding immediately prior to such modification;
(b) the weighted average of the interest rates for Advances Outstanding immediately after the effective date of such modification equals the weighted average of the interest rates for Advances Outstanding immediately prior to such modification;
(c) each future principal payment shall be ratably allocated to each Advance based on the Outstanding principal balance of such Advance at the time of such modification and each future amortization payment shall be ratably paid in accordance with such allocation at all times;
(d) there shall be no other change to the economic and/or other material terms, rights and obligations of Borrower under the Loan Documents and no increase in any liabilities or obligations or decrease in any rights of Borrower or Key Principal under the Loan Documents; and
(e) the Collateral and the revenue therefrom shall continue to secure, and be available to be applied against, the total Advances Outstanding.
Borrower shall execute and deliver to Lender from time to time, promptly after the request of Lender, a severance agreement and such other documents as Lender shall request in order to effect the severance described above, all in form and substance reasonably satisfactory to Lender. Borrower hereby absolutely and irrevocably appoints Lender as its true and lawful attorney, coupled with an interest, in its name and stead to make and execute all documents necessary or desirable to effect the aforesaid severance, Borrower ratifying all that its said attorney shall do by virtue thereof; provided, however, Lender shall not make or execute any such documents under such power until three (3) days after notice has been given to Borrower by Lender of Lenders intent to exercise its rights under such power. Borrower shall be obligated to pay any costs or expenses incurred in connection with the preparation, execution, recording, or filing of the Severed Loan Documents, and the Severed Loan Documents shall not contain any representations, warranties, or covenants not contained in the Loan Documents and any such representations and warranties contained in the Severed Loan Documents will be given by Borrower only as of the date last given.
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Article 15
MISCELLANEOUS
Section 15.01 Choice of Law; Consent to Jurisdiction.
Notwithstanding anything in the Notes, the Security Documents, or any of the other Loan Documents to the contrary, each of the terms and provisions, and rights and obligations of Borrower under this Master Agreement and the Notes and the other Loan Documents, shall be governed by, interpreted, construed, and enforced pursuant to and in accordance with the laws of the District of Columbia (excluding the law applicable to conflicts or choice of law) except to the extent of procedural and substantive matters relating only to the creation, perfection, and foreclosure of liens and security interests, and enforcement of the rights and remedies, against the Mortgaged Properties, which matters shall be governed by the laws of the jurisdiction in which a Mortgaged Property is located, the perfection, the effect of perfection and non-perfection and foreclosure of security interests on personal property, which matters shall be governed by the laws of the jurisdiction determined by the choice of law provisions of the Uniform Commercial Code in effect for the jurisdiction in which any Borrower is organized. Borrower agrees that any controversy arising under or in relation to the Notes, the Security Documents (other than the Security Instruments), or any other Loan Document shall be, except as otherwise provided herein, litigated in the District of Columbia. The local and federal courts and authorities with jurisdiction in the District of Columbia shall, except as otherwise provided herein, have jurisdiction over all controversies which may arise under or in relation to the Loan Documents, including those controversies relating to the execution, jurisdiction, breach, enforcement, or compliance with the Notes, the Security Documents (other than the Security Instruments), or any other issue arising under, relating to, or in connection with any of the Loan Documents. Borrower irrevocably consents to service, jurisdiction, and venue of such courts for any litigation arising from the Notes, the Security Documents, or any of the other Loan Documents, and waives any other venue to which it might be entitled by virtue of domicile, habitual residence, or otherwise. Nothing contained herein, however, shall prevent Lender from bringing any suit, action, or proceeding or exercising any rights against Borrower and against the collateral in any other jurisdiction. Initiating such suit, action, or proceeding or taking such action in any other jurisdiction shall in no event constitute a waiver of the agreement contained herein that the laws of the District of Columbia shall govern the rights and obligations of Borrower and Lender as provided herein or the submission herein by Borrower to personal jurisdiction within the District of Columbia.
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Section 15.02 Waiver of Jury Trial.
TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, EACH OF BORROWER AND LENDER (a) COVENANTS AND AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS MASTER AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR THE RELATIONSHIP BETWEEN THE PARTIES AS BORROWER AND LENDER, THAT IS TRIABLE OF RIGHT BY A JURY AND (b) WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL.
Section 15.03 Notice.
(a) Process of Serving Notice.
Except as otherwise set forth herein or in any other Loan Document, all notices under this Master Agreement and any other Loan Document shall be:
(1) in writing and shall be:
(A) delivered, in person;
(B) mailed, postage prepaid, either by registered or certified delivery, return receipt requested;
(C) sent by overnight courier; or
(D) sent by electronic mail with originals to follow by overnight courier;
(2) addressed to the intended recipient at Borrowers Notice Address and Lenders Notice Address, as applicable; and
(3) deemed given on the earlier to occur of:
(A) the date when the notice is received by the addressee; or
(B) if the recipient refuses or rejects delivery, the date on which the notice is so refused or rejected, as conclusively established by the records of the United States Postal Service or such express courier service.
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(b) Change of Address.
Any party to this Master Agreement may change the address to which notices intended for it are to be directed by means of notice given to the other parties identified on the Summary of Master Terms in accordance with this Section 15.03 (Notice).
(c) Default Method of Notice.
Any required notice under this Master Agreement or any other Loan Document which does not specify how notices are to be given shall be given in accordance with this Section 15.03 (Notice).
(d) Receipt of Notices.
Neither Borrower nor Lender shall refuse or reject delivery of any notice given in accordance with this Master Agreement. Each party is required to acknowledge, in writing, the receipt of any notice upon request by the other party.
Section 15.04 Successors and Assigns Bound; Sale of Advances.
(a) Binding Agreement.
This Master Agreement shall bind, and the rights granted by this Master Agreement shall inure to, the successors and assigns of Lender and the permitted successors and assigns of Borrower. However, a Transfer not permitted by this Master Agreement shall be an Event of Default and shall be void ab initio.
(b) Sale of Advances; Change of Servicer.
Nothing in this Master Agreement shall limit Lenders (including its successors and assigns) right to sell or transfer the Advances or any interest in the Advances. The Advances or a partial interest in the Advances (together with this Master Agreement and the other Loan Documents) may be sold one or more times without prior written notice to Borrower. A sale may result in a change of the Loan Servicer.
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Section 15.05 Counterparts.
This Master Agreement may be executed in any number of counterparts with the same effect as if the parties hereto had signed the same document and all such counterparts shall be construed together and shall constitute one instrument.
Section 15.06 [Intentionally Deleted.]
Section 15.07 Relationship of Parties; No Third Party Beneficiary.
(a) Solely Creditor and Debtor.
The relationship between Lender and Borrower shall be solely that of creditor and debtor, respectively, and nothing contained in this Master Agreement shall create any other relationship between Lender and Borrower. Nothing contained in this Master Agreement shall constitute Lender as a joint venturer, partner, or agent of Borrower, or render Lender liable for any debts, obligations, acts, omissions, representations, or contracts of Borrower.
(b) No Third Party Beneficiaries.
No creditor of any party to this Master Agreement and no other Person shall be a third party beneficiary of this Master Agreement or any other Loan Document or any account created or contemplated under this Master Agreement or any other Loan Document. Nothing contained in this Master Agreement shall be deemed or construed to create an obligation on the part of Lender to any third party and no third party shall have a right to enforce against Lender any right that Borrower may have under this Master Agreement. Without limiting the foregoing:
(1) any Servicing Arrangement between Lender and any Loan Servicer shall constitute a contractual obligation of such Loan Servicer that is independent of the obligation of Borrower for the payment of the Indebtedness;
(2) Borrower shall not be a third party beneficiary of any Servicing Arrangement; and
(3) no payment by the Loan Servicer under any Servicing Arrangement will reduce the amount of the Indebtedness.
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Section 15.08 Severability; Entire Agreement; Amendments.
The invalidity or unenforceability of any provision of this Master Agreement or any other Loan Document shall not affect the validity or enforceability of any other provision of this Master Agreement or of any other Loan Document, all of which shall remain in full force and effect, including the Guaranty. All of the Loan Documents contain the complete and entire agreement among the parties as to the matters covered, rights granted and the obligations assumed in this Master Agreement and the other Loan Documents. This Master Agreement may not be amended or modified except by written agreement signed by the parties hereto.
Section 15.09 Construction.
(a) The captions and headings of the sections of this Master Agreement and the Loan Documents are for convenience only and shall be disregarded in construing this Master Agreement and the Loan Documents.
(b) Any reference in this Master Agreement to an Exhibit or Schedule or a Section or an Article shall, unless otherwise explicitly provided, be construed as referring, respectively, to an Exhibit or Schedule attached to this Master Agreement or to a Section or Article of this Master Agreement.
(c) Any reference in this Master Agreement to a statute or regulation shall be construed as referring to that statute or regulation as amended from time to time.
(d) Use of the singular in this Master Agreement includes the plural and use of the plural includes the singular.
(e) As used in this Master Agreement, the term including means including, but not limited to or including, without limitation, and is for example only and not a limitation.
(f) Whenever Borrowers knowledge is implicated in this Master Agreement or the phrase to Borrowers knowledge or a similar phrase is used in this Master Agreement, Borrowers knowledge or such phrase(s) shall be interpreted to mean to the best of Borrowers knowledge after reasonable and diligent inquiry and investigation.
(g) Unless otherwise provided in this Master Agreement, if Lenders approval, designation, determination, selection, estimate, action, or decision is required, permitted, or contemplated hereunder, such approval, designation, determination, selection, estimate, action, or decision shall be made in Lenders sole and absolute discretion.
(h) All references in this Master Agreement to a separate instrument or agreement shall include such instrument or agreement as the same may be amended or supplemented from time to time pursuant to the applicable provisions thereof.
(i) Lender may shall mean at Lenders discretion, but shall not be an obligation.
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Section 15.10 Loan Servicing.
All actions regarding the servicing of the Advances, including the collection of payments, the giving and receipt of notice, inspections of the Mortgaged Properties, inspections of books and records, and the granting of consents and approvals, may be taken by the Loan Servicer unless Borrower receives written notice to the contrary. If Borrower receives conflicting notices regarding the identity of the Loan Servicer or any other subject, any such written notice from Lender shall govern. The Loan Servicer may change from time to time (whether related or unrelated to a sale of the Advances). If there is a change of the Loan Servicer, Borrower will be given written notice of the change.
Section 15.11 Disclosure of Information.
Lender may furnish information regarding Borrower, Key Principal or Guarantor or the Mortgaged Properties to third parties with an existing or prospective interest in the servicing, enforcement, evaluation, performance, purchase, or securitization of the Advances, including trustees, master servicers, special servicers, rating agencies, and organizations maintaining databases on the underwriting and performance of multifamily mortgage loans. Borrower irrevocably waives any and all rights it may have under Applicable Law to prohibit such disclosure, including any right of privacy.
Section 15.12 Waiver; Conflict.
No specific waiver of any of the terms of this Master Agreement shall be considered as a general waiver. If any provision of this Master Agreement is in conflict with any provision of any other Loan Document, the provision contained in this Master Agreement shall control.
Section 15.13 No Reliance.
Borrower acknowledges, represents, and warrants that:
(a) it understands the nature and structure of the transactions contemplated by this Master Agreement and the other Loan Documents;
(b) it is familiar with the provisions of all of the documents and instruments relating to such transactions;
(c) it understands the risks inherent in such transactions, including the risk of loss of all or any part of any Mortgaged Property;
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(d) it has had the opportunity to consult counsel; and
(e) it has not relied on Lender for any guidance or expertise in analyzing the financial or other consequences of the transactions contemplated by this Master Agreement or any other Loan Document or otherwise relied on Lender in any manner in connection with interpreting, entering into, or otherwise in connection with this Master Agreement, any other Loan Document, or any of the matters contemplated hereby or thereby.
Section 15.14 Subrogation.
If, and to the extent that, the proceeds of any Advance are used to pay, satisfy, or discharge any obligation of Borrower for the payment of money that is secured by a pre-existing mortgage, deed of trust, or other lien encumbering any Mortgaged Property, such proceeds shall be deemed to have been advanced by Lender at Borrowers request, and Lender shall be subrogated automatically, and without further action on its part, to the rights, including lien priority, of the owner or holder of the obligation secured by such prior lien, whether or not such prior lien is released.
Section 15.15 Counting of Days.
Except where otherwise specifically provided, any reference in this Master Agreement to a period of days means calendar days, not Business Days. If the date on which Borrower is required to perform an obligation under this Master Agreement is not a Business Day, Borrower shall be required to perform such obligation by the Business Day immediately preceding such date; provided, however, in respect of any Payment Date, or if the Maturity Date is other than a Business Day, Borrower shall be obligated to make such payment by the Business Day immediately following such date.
Section 15.16 Revival and Reinstatement of Indebtedness.
If the payment of all or any part of the Indebtedness by Borrower, Guarantor, or any other Person, or the transfer to Lender of any collateral or other property should for any reason subsequently be declared to be void or voidable under any state or federal law relating to creditors rights, including provisions of the Insolvency Laws relating to a Voidable Transfer, and if Lender is required to repay or restore, in whole or in part, any such Voidable Transfer, or elects to do so upon the advice of its counsel, then the amount of such Voidable Transfer or the amount of such Voidable Transfer that Lender is required or elects to repay or restore, including all reasonable costs, expenses, and attorneys fees incurred by Lender in connection therewith, and the Indebtedness shall be automatically revived, reinstated, and restored by such amount and shall exist as though such Voidable Transfer had never been made.
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Section 15.17 Time is of the Essence.
Borrower agrees that, with respect to each and every obligation and covenant contained in this Master Agreement and the other Loan Documents, time is of the essence.
Section 15.18 Final Agreement.
THIS MASTER AGREEMENT ALONG WITH ALL OF THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. All prior or contemporaneous agreements, understandings, representations, and statements, oral or written, are merged into this Master Agreement and the other Loan Documents. This Master Agreement, the other Loan Documents, and any of their provisions may not be waived, modified, amended, discharged, or terminated except by an agreement in writing signed by the party against which the enforcement of the waiver, modification, amendment, discharge, or termination is sought, and then only to the extent set forth in that agreement.
Section 15.19 Survival.
The representations, warranties, and covenants made by Borrower in this Master Agreement shall survive the execution and delivery of this Master Agreement and other Loan Documents, regardless of any investigation made by Lender or Fannie Mae.
Section 15.20 Assignments; Third Party Rights.
Lender may assign its rights and/or obligations under this Master Agreement separately or together, without Borrowers consent, only to Fannie Mae. Upon assignment to Fannie Mae, Fannie Mae shall be permitted to further assign its rights under this Master Agreement separately or together, without Borrowers consent. Fannie Mae shall have the right to hold, sell, or securitize the Advances made hereunder without Borrowers consent.
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Section 15.21 Interpretation.
The parties hereto acknowledge that each party and their respective counsel have participated in the drafting and revision of this Master Agreement and the Loan Documents. Accordingly, the parties agree that any rule of construction that disfavors the drafting party shall not apply in the interpretation of this Master Agreement and the Loan Documents or any amendment or supplement or Exhibit hereto or thereto.
[Remainder of Page Intentionally Blank]
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IN WITNESS WHEREOF, Borrower and Lender have signed and delivered this Master Agreement under seal (where applicable) or have caused this Master Agreement to be signed and delivered under seal (where applicable) by their duly authorized representatives. Where Applicable Law so provides, Borrower and Lender intend that this Master Agreement shall be deemed to be signed and delivered as a sealed instrument.
BORROWER: | ||
RRE ADDISON PLACE HOLDINGS, LLC, a Delaware limited liability company | ||
By: | /s/ Alan F. Feldman | |
Name: | Alan F. Feldman | |
Title: | Chief Executive Officer | |
RRE GILBERT HOLDINGS, LLC, a Delaware limited liability company | ||
By: | /s/ Alan F. Feldman | |
Name: | Alan F. Feldman | |
Title: | Chief Executive Officer | |
RRE PROVIDENCE HOLDINGS, LLC, a Delaware limited liability company | ||
By: | /s/ Alan F. Feldman | |
Name: | Alan F. Feldman | |
Title: | Chief Executive Officer | |
RRE WOODMOOR HOLDINGS, LLC, a Delaware limited liability company | ||
By: | /s/ Alan F. Feldman | |
Name: | Alan F. Feldman | |
Title: | Chief Executive Officer | |
RRE CENTENNIAL HOLDINGS, LLC, a Delaware limited liability company | ||
By: | /s/ Alan F. Feldman | |
Name: | Alan F. Feldman | |
Title: | Chief Executive Officer |
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RRE BRENTDALE HOLDINGS, LLC, a Delaware limited liability company | ||
By: | /s/ Alan F. Feldman | |
Name: | Alan F. Feldman | |
Title: | Chief Executive Officer | |
RRE BRECKENRIDGE HOLDINGS, LLC, a Delaware limited liability company | ||
By: | /s/ Alan F. Feldman | |
Name: | Alan F. Feldman | |
Title: | Chief Executive Officer | |
RRE BEAR CREEK HOLDINGS, LLC, a Delaware limited liability company | ||
By: | /s/ Alan F. Feldman | |
Name: | Alan F. Feldman | |
Title: | Chief Executive Officer | |
RRE FAIRWAYS OF BENT TREE HOLDINGS, LLC, a Delaware limited liability company | ||
By: | /s/ Alan F. Feldman | |
Name: | Alan F. Feldman | |
Title: | Chief Executive Officer | |
RRE MONTCLAIR TERRACE HOLDINGS, LLC, a Delaware limited liability company | ||
By: | /s/ Alan F. Feldman | |
Name: | Alan F. Feldman | |
Title: | Chief Executive Officer |
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RRE SANTA ROSA HOLDINGS, LLC, a Delaware limited liability company | ||
By: | /s/ Alan F. Feldman | |
Name: | Alan F. Feldman | |
Title: | Chief Executive Officer | |
RRE BUCKHEAD HOLDINGS, LLC, a Delaware limited liability company | ||
By: | /s/ Alan F. Feldman | |
Name: | Alan F. Feldman | |
Title: | Chief Executive Officer | |
RRE FNM1 LLC, a Delaware limited liability company | ||
By: | /s/ Alan F. Feldman | |
Name: | Alan F. Feldman | |
Title: | Chief Executive Officer | |
RRE FNM2 LLC, a Delaware limited liability company | ||
By: | /s/ Alan F. Feldman | |
Name: | Alan F. Feldman | |
Title: | Chief Executive Officer | |
RRE FNM3 LLC, a Delaware limited liability company | ||
By: | /s/ Alan F. Feldman | |
Name: | Alan F. Feldman | |
Title: | Chief Executive Officer | |
RRE FNM4 LLC, a Delaware limited liability company | ||
By: | /s/ Alan F. Feldman | |
Name: | Alan F. Feldman | |
Title: | Chief Executive Officer |
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Signature Page | 11-20 | © 2020 Fannie Mae | ||
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LENDER: | ||||
CBRE MULTIFAMILY CAPITAL, INC., a Delaware corporation | ||||
By: | /s/ Amy Phillips |
(SEAL) | ||
Name: | Amy Phillips | |||
Title: | Assistant Vice President |
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SCHEDULES AND EXHIBITS
Schedules
Schedule 1 | Definitions Schedule General | |||
Schedule 2 | Summary of Master Terms | |||
Schedule 3.1 Schedule 3.2 Schedule 3.3 |
Schedule of Advance Terms (Fixed #1) Schedule of Advance Terms (Fixed #2) Schedule of Advance Terms (Variable) |
|||
Schedule 4.1 | Prepayment Premium Schedule (Fixed #1) | Form 6104.01 [modified] [05-20] | ||
Schedule 4.2 | Prepayment Premium Schedule (Fixed #2) | Form 6104.01 [modified] [05-20] | ||
Schedule 4.3 | Prepayment Premium Schedule (Variable) | Form 6104.11 [modified] [01-11] | ||
Schedule 5 | Required Replacement Schedule | |||
Schedule 6 | Required Repair Schedule | |||
Schedule 7 | General Conditions Schedule | |||
Schedule 8 | Property-Related Documents Schedule | |||
Schedule 9 | Conversion Schedule | |||
Schedule 10 | Mortgaged Property Release Schedule | |||
Schedule 11 | Mortgaged Property Addition Schedule | |||
Schedule 12 | [Intentionally Deleted] | |||
Schedule 13 | Ownership Interests Schedule | |||
Schedule 14 | Future Advance Schedule | |||
Schedule 15 | Letter of Credit Schedule | |||
Schedule 16 | Exceptions to Representations and Warranties Schedule | |||
Schedule 17 | SPE Requirements Schedule | |||
Schedule 18 | Waiver of Imposition Deposits | Form 6228 [modified] [04-12] | ||
Schedule 19 | Replacement Reserve Waiver | Form 6220 [modified] [08-14] | ||
Schedule 19-A | Addenda to Schedule 2 Replacement Reserve Waiver | Form 6102.04 [04-12] | ||
Schedule 20 | Additional Reserve Escrows | Form 6268.MCFA [09-20] | ||
Schedule 20-A | Addenda to Schedule 2 Additional Reserve Escrows | Form 6102.25. MCFA [09-20] | ||
Schedule 21 | Oil, Gas and Mineral Rights | Form 6262 |
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Exhibits
Exhibit A | Mortgaged Properties | |
Exhibit B | Conversion Request | |
Exhibit C | Release Request | |
Exhibit D | Addition Request | |
Exhibit E | Future Advance Request | |
Exhibit F | [Intentionally Deleted] | |
Exhibit G | Annual Certification (Borrower) | |
Exhibit H | Annual Certification (Guarantor) | |
Exhibit I | Confirmation of Guaranty | |
Exhibit J | Confirmation of Environmental Indemnity Agreement | |
Exhibit K-1 | Organizational Certificate (Borrower) | |
Exhibit K-2 | Organizational Certificate (Guarantor) | |
Exhibit L | Confirmation of Obligations |
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Borrower hereby acknowledges and agrees that the Schedules and Exhibits referenced above are hereby incorporated fully into this Master Agreement by this reference and each constitutes a substantive part of this Master Agreement.
/s/ AF Borrower Initials |
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SCHEDULE 1
TO MASTER CREDIT FACILITY AGREEMENT
Definitions Schedule
Capitalized terms used in this Master Agreement have the meanings given to such terms in this Definitions Schedule.
30-Day Average SOFR means the 30-Day Average SOFR published by the SOFR Administrator on the SOFR Administrator Website.
Accrued Interest means unpaid interest, if any, on the Advances Outstanding that has not been added to the unpaid principal balance of the Advances pursuant to Section 2.03(b) (Capitalization of Accrued But Unpaid Interest) of this Master Agreement.
Addition has the meaning set forth in Section 2.10(c) (Right to Add Additional Mortgaged Properties as Collateral).
Addition Request means a written request, substantially in the form of Exhibit D to this Master Agreement, to add Additional Mortgaged Properties to the Collateral Pool as set forth in Section 2.10(c) (Right to Add Additional Mortgaged Properties as Collateral).
Additional Borrower means the owner of an Additional Mortgaged Property, which entity has been approved by Lender and becomes a Borrower under this Master Agreement and the applicable Loan Documents, and its permitted successors and assigns, which owner must demonstrate to the satisfaction of Lender that:
(a) Additional Borrower complies with the SPE Requirements;
(b) the ownership structure of Additional Borrower satisfies the definition of Restricted Ownership Interests and Additional Borrower is Controlled and managed, directly and indirectly, by the same Person or group of Persons as Initial Borrower; and
(c) Additional Borrower is not a Prohibited Person.
Additional Due Diligence Fee Deposit means the deposit made by Borrower to Lender with respect to each proposed Additional Mortgaged Property in an amount equal to $20,000 per Additional Mortgaged Property. On or prior to the applicable Effective Date, Lender shall notify Borrower of the actual amount of the Additional Due Diligence Fees and Borrower shall, on the Effective Date, pay to Lender the remainder of such Additional Due Diligence Fees (if the actual amount of the Additional Due Diligence Fees exceeds the deposit and the other amounts previously paid to Lender by Borrower) or Lender shall promptly refund to Borrower any amounts paid to Lender by Borrower in excess of the Additional Due Diligence Fees (if the actual amount of the Additional Due Diligence Fees is less than the deposit and the other amounts previously paid to Lender by Borrower).
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Additional Due Diligence Fees means with respect to each proposed Additional Mortgaged Property an amount equal to the actual costs of Lenders due diligence for such Additional Mortgaged Properties, including but not limited to third party reports required by Lender plus a non-refundable $5,000 processing fee per Additional Mortgaged Property payable by Borrower to Lender. Borrower shall pay the Additional Due Diligence Fee Deposit towards the Additional Due Diligence Fees.
Additional Lender Repairs means repairs of the type listed on the Required Repair Schedule but not otherwise identified thereon that are determined advisable by Lender to keep the Mortgaged Property in good order and repair (ordinary wear and tear excepted) and in good marketable condition or to prevent deterioration of the Mortgaged Property.
Additional Lender Replacements means replacements of the type listed on the Required Replacement Schedule but not otherwise identified thereon that are determined advisable by Lender to keep the Mortgaged Property in good order and repair (ordinary wear and tear excepted) and in good marketable condition or to prevent deterioration of the Mortgaged Property.
Additional Mortgaged Property means each Multifamily Residential Property owned by Borrower or an Additional Borrower (either in fee simple or as tenant under a ground lease meeting all of the Underwriting and Servicing Requirements) and added to the Collateral Pool after the Initial Effective Date in connection with an Addition or a Substitution pursuant to Section 2.10(c) (Right to Add Additional Mortgaged Properties as Collateral) or Section 2.10(d) (Right to Substitutions).
Additional Origination Fee means an origination fee equal to
(a) | If the Future Advance is up to and including $9,000,000, a fee equal to 110 basis points (1.10%) multiplied by the Future Advance; |
(b) | If the Future Advance is $9,000,001 - $20,000,000, a fee equal to 90 basis points (0.90%) multiplied by the Future Advance; |
(c) | If the Future Advance is $20,000,001 - $50,000,000, a fee equal to 60 basis points (0.60%) multiplied by the Future Advance; |
(d) | If the Future Advance is $50,000,001 - $75,000,000, a fee equal to 47.5 basis points (0.475%) multiplied by the Future Advance; |
(e) | If the Future Advance is $75,000,001, a fee equal to 35 basis points (0.35%) multiplied by the Future Advance. |
Adjustable Rate has the meaning set forth in the applicable Schedule of Advance Terms.
Advance means a Variable Advance and/or a Fixed Advance.
Advance Minimum Underwriting Strike Rate means, for each Variable Structured ARM Advance, the percentage determined by Lender pursuant to the Underwriting and Servicing Requirements as set forth on the Schedule of Advance Terms for such Advance.
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Advance Year has the meaning set forth in the applicable Schedule of Advance Terms.
Aggregate Debt Service Coverage Ratio means, for any specified period, the ratio (expressed as a percentage) of
(a) the Net Cash Flow for the Mortgaged Properties for the preceding number of months as determined pursuant to the Underwriting and Servicing Requirements;
to
(b) the Facility Debt Service for the specified period, based on the Amortization Period.
Aggregate Loan to Value Ratio means, for any specified date, the ratio (expressed as a percentage) of
(a) the Advances Outstanding on the specified date,
to
(b) the sum of (1) the aggregate of the Valuations most recently obtained prior to the specified date for all of the Mortgaged Properties, plus (2) any Substitution Deposit being held by Lender as of such specified date.
Allocable Facility Amount means the most recently determined amount of the then Advances Outstanding allocated to a particular Mortgaged Property by Lender in accordance with the Underwriting and Servicing Requirements and as required by this Master Agreement.
Alterations has the meaning set forth in Section 6.02(f) (Alterations to any Mortgaged Property).
Alternate Coverage and LTV Tests means:
(a) the Aggregate Debt Service Coverage Ratio is not less than 1.55:1.0 with respect to the amount of Fixed Advances and 1.30:1.0 with respect to the amount of Variable Advances; and
(b) the Aggregate Loan to Value Ratio does not exceed fifty-five percent (55%).
Amortization Period means the period of thirty (30) years.
Amortization Type has the meaning set forth in the applicable Schedule of Advance Terms.
Applicable Law means (a) all applicable provisions of all constitutions, statutes, rules, regulations and orders of all governmental bodies, all Governmental Approvals and all orders, judgments and decrees of all courts and arbitrators, (b) all zoning, building, environmental and other laws, ordinances, rules, regulations and restrictions of any Governmental Authority affecting
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the ownership, management, use, operation, maintenance or repair of the Mortgaged Properties, including the Americans with Disabilities Act (if applicable), the Manufactured Housing Construction and Safety Standards Act of 1974 (if applicable), the Fair Housing Amendment Act of 1988 and Environmental Laws, (c) any building permits or any conditions, easements, rights-of-way, covenants, restrictions of record or any recorded or unrecorded agreement affecting or concerning any Mortgaged Property, planned development permits, condominium declarations, and reciprocal easement and regulatory agreements with any Governmental Authority, (d) all laws, ordinances, rules and regulations, whether in the form of rent control, rent stabilization or otherwise, that limit or impose conditions on the amount of rent that may be collected from the units of a Mortgaged Property, and (e) requirements of insurance companies or similar organizations, affecting the operation or use of any Mortgaged Property or the consummation of the transactions to be effected by this Master Agreement or any of the other Loan Documents.
Appraisal means an appraisal of Multifamily Residential Property conforming to the Underwriting and Servicing Requirements.
Bankruptcy Code means Title 11 of the United States Code entitled Bankruptcy as now and hereafter in effect, or any successor statute.
Bankruptcy Event means any one or more of the following:
(a) the commencement, filing or continuation of a voluntary case or proceeding under one or more of the Insolvency Laws by any Person seeking to take advantage of any other laws, domestic or foreign, relating to bankruptcy, insolvency, reorganization, debt adjustment, winding up or composition or adjustment of debts;
(b) the acknowledgment in writing by any Person (other than to Lender in connection with a workout) that it is unable to pay its debts generally as they mature;
(c) the making of a general assignment for the benefit of creditors by any Person;
(d) the commencement, filing or continuation of an involuntary case or proceeding under one or more Insolvency Laws against any Person;
(e) the appointment of a receiver (other than a receiver appointed at the direction or request of Lender under the terms of the Loan Documents), liquidator, custodian, sequestrator, trustee or other similar officer who exercises Control over Borrower or any substantial part of the assets of any Person; or
(f) any action by a Person for the purpose of effecting any of the foregoing; provided, however, that any proceeding or case under (d) or (e) above shall not be a Bankruptcy Event until the ninetieth day after filing (if not earlier dismissed) so long as such proceeding or case occurred without the consent, encouragement, active participation or the failure to object in a timely and appropriate manner by any Person (in which event such case or proceeding shall be a Bankruptcy Event immediately).
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Borrow Up has the meaning set forth in Section 2.02(c)(2)(B) (Future Advances).
Borrow Up Availability Period means the period beginning on the First Anniversary and ending on the Fifth Anniversary. Notwithstanding the foregoing, upon Borrowers election of the Elected Coverage and LTV Tests, such Borrow Up Availability Period shall be extended to end on the date five (5) years prior to the weighted average maturity date of the total Outstanding Advances.
Borrower means individually (and jointly and severally if more than one), the Initial Borrower and any Additional Borrower becoming a party to this Master Agreement and any other Loan Documents, together with their permitted successors and assigns.
Borrower Affiliate means:
(a) any Person that owns any direct Ownership Interest in any Borrower Entity or twenty percent (20%) or more the of the direct Ownership Interests in any Identified Party but excluding any Person directly or indirectly owning any publicly held stock of Key Principal with no other direct or indirect Ownership Interest in Borrower;
(b) any Person that indirectly owns, with the power to vote, twenty percent (20%) or more of the Ownership Interests in any Borrower Entity or Identified Party;
(c) any Person Controlled by, under common Control with, or which Controls, any Borrower Entity or Identified Party;
(d) any entity in which any Borrower Entity or Identified Party directly or indirectly owns, with the power to vote, twenty percent (20%) or more of the Ownership Interests in such entity; or
(e) any other individual that is related (to the third degree of consanguinity) by blood or marriage to any Borrower Entity or Identified Party.
Borrower Agent means each of Steven Saltzman, Shelle Weisbaum and Yvana Rizzo.
Borrower Entity means, individually and collectively, Borrower, Guarantor and Key Principal.
Borrower Requested Repairs means repairs not listed on the Required Repair Schedule requested by Borrower to be reimbursed from the Repairs Escrow Account and determined advisable by Lender to keep the Mortgaged Property in good order and repair and in a good marketable condition or to prevent deterioration of the Mortgaged Property.
Borrower Requested Replacements means replacements not listed on the Required Replacement Schedule requested by Borrower to be reimbursed from the Replacement Reserve Account and determined advisable by Lender to keep the Mortgaged Property in good order and repair and in a good marketable condition or to prevent deterioration of the Mortgaged Property.
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Borrowers General Business Address has the meaning set forth in the Summary of Master Terms.
Borrowers Notice Address has the meaning set forth in the Summary of Master Terms.
Business Day means any day other than (a) a Saturday, (b) a Sunday, (c) a day on which Lender is not open for business, or (d) a day on which the Federal Reserve Bank of New York is not open for business.
Calendar Quarter means, with respect to any year, any of the following three (3) month periods: (a) January-February-March; (b) April-May-June; (c) July-August-September; and (d) October-November-December.
Calendar Year means the twelve (12) month period from the first day of January to and including the last day of December, and each twelve (12) month period thereafter.
Cap Security Agreement means, individually and collectively, with respect to any Interest Rate Cap, a reserve, hedge assignment and security agreement between Borrower and Lender, for the benefit of Lender in the form required by Fannie Mae from time to time, which will be issued by Borrower to Lender concurrently with the funding of a Variable Advance requiring an Interest Rate Cap.
Cash Collateral Account means the cash collateral account established pursuant to the Cash Collateral Agreement.
Cash Collateral Agreement means a cash collateral pledge, security and custody agreement in the form approved by Fannie Mae by and among Fannie Mae, Borrower and a collateral agent for Fannie Mae, as the same may be amended, modified or supplemented from time to time.
Change of Control see Control.
Collateral means the Mortgaged Properties and other collateral from time to time or at any time encumbered by the Security Instruments, or any other property securing Borrowers obligations under the Loan Documents.
Collateral Account means any account designated by Lender as such pursuant to a Collateral Agreement or as established pursuant to this Master Agreement, including the Reserve/Escrow Account and any Cash Collateral Account.
Collateral Account Funds means, collectively, the funds on deposit in any or all of the Collateral Accounts, including the Reserve/Escrow Account Funds and any funds in any Cash Collateral Account.
Collateral Agreement means any separate agreement between Borrower and Lender and any other party (if applicable) for the establishment of any other fund, reserve or account related to the Advance or the Mortgaged Property.
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Collateral Event means, individually and collectively, a Release, Substitution, Addition, Future Advance, and/or Conversion.
Collateral Pool means all of the Collateral.
Completion Period has the meaning set forth in the Summary of Master Terms.
Condemnation Action has the meaning set forth in the Security Instrument.
Confirmation of Environmental Indemnity Agreement means a confirmation of the Environmental Indemnity Agreement executed by Borrower in connection with any Request after the Initial Effective Date, substantially in the form of Exhibit J to this Master Agreement.
Confirmation of Obligations means a Confirmation of Obligations executed by Borrower in connection with any Request after the Initial Effective Date, pursuant to which Borrower confirm its obligations under the Loan Documents substantially in the form of Exhibit L to this Master Agreement.
Contribution Agreement means the Contribution Agreement by and among Initial Borrower and each Additional Borrower, required by Lender and satisfying Lenders requirements, as the same may be amended, restated, modified or supplemented from time to time.
Control (including with correlative meanings, such as Controlling, Controlled by and under common Control with) means, as applied to any entity, the possession, directly or indirectly, of the power to direct or cause the direction of the management and operations of such entity, whether through the ownership of voting securities or other Ownership Interests, by contract or otherwise.
As used herein, a Change of Control means:
(a) | Borrower ceases to be Controlled, directly or indirectly, by Key Principal; |
(b) | Op Partner ceases to be Controlled by Key Principal; |
(c) | Borrower ceases to be Controlled by a board of directors appointed by the OP Partner; |
(d) | Key Principal ceases to be Controlled by a board of directors; |
(e) | the replacement (other than solely by reason of retirement at age fifty-five (55) or older, death or disability) of more than fifty percent (50%) (or such lesser percentage as is required for decision-making by the board of directors or an equivalent governing body) of the members of the board of directors (or an equivalent governing body) of Key Principal over a one-year period from the directors who constituted such board of directors at the beginning of such period and such replacement shall not have been approved by a vote of at least a majority of the board of directors of Key Principal then still in office who either were members of such board of directors at the beginning of such one-year period or whose election as members of the board of directors was previously so approved; or |
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(f) | None of the RSM Members (or any replacement of any of the RSM Members that Lender consents to in writing, which consent shall not be unreasonably conditioned or delayed, nor require a fee) are actively involved in the day-to-day management of the Key Principal or Borrower. |
Conversion means the conversion of all or a portion of a Variable Note to a Fixed Note pursuant to the Conversion Schedule pursuant to which the interest rate payable on the Variable Note may be converted on a Payment Date during the Conversion Period from the Adjustable Rate to the Fixed Rate, after which the interest rate on the Note shall be the Fixed Rate.
Conversion Amendment means an amendment to this Master Agreement and the appropriate Schedules reflecting the Conversion of all or any portion of a Variable Note to a Fixed Note as set forth in Section 2.10(a) (Conversion from Variable Note to Fixed Note).
Conversion Closing Date means the date designated by Lender for the closing of a Conversion.
Conversion Documents means the Conversion Amendment, together with an amendment to each Security Document if required by Lender and other applicable Loan Documents, in form and substance satisfactory to Lender, reflecting the Conversion of a Variable Note to a Fixed Note pursuant to Section 2.10(a) (Conversion from Variable Note to Fixed Note) and the Conversion Schedule.
Conversion Effective Date means the issuance date of the MBS effectuating a Conversion which date shall be (a) if the Conversion Exercise Date occurs on a Payment Date, the first day of the calendar month following the Conversion Exercise Date, or (b) if the Conversion Exercise Date occurs on any other day other than a Payment Date, the first day of the second calendar month following the Conversion Exercise Date, but in no event shall the Conversion Effective Date be before the first day of the Conversion Period or after the last day of the Conversion Period.
Conversion Exercise Date has the meaning set forth in Section (a)(2)(B) of the Conversion Schedule.
Conversion Fee means $20,000 per each Request for Conversion.
Conversion Good Faith Deposit means, in connection with a Conversion, a fee in an amount equal to two percent (2%) of the unpaid principal balance of the applicable Variable Advance.
Conversion Period means with respect to a Conversion, the period commencing on the day after the end of the Prepayment Lockout Period of such Variable Note and ending on the earlier of (a) the day after the end of the Prepayment Premium Term of such Variable Note, and (b) unless otherwise agreed to by Lender, the date that is seven (7) years prior to the Latest Facility Termination Date.
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Conversion Rate Lock Request means, in connection with any Conversion, a request from Borrower to Lender for a rate quote for the Fixed Rate.
Conversion Request means a written request, substantially in the form of Exhibit B to this Master Agreement, to convert all or any portion of a Variable Note to a Fixed Note pursuant to Section 2.10(a) (Conversion from Variable Note to Fixed Note).
Conversion Request Period means, for each Variable Advance, the period beginning on the date three (3) months prior to the first day of the Conversion Period for such Variable Advance and ending on the date three (3) months prior to the last day of the Conversion Period for such Variable Advance.
Conversion Schedule means Schedule 9 attached to this Master Agreement.
Corresponding Tenor with respect to an Index Replacement means a tenor (including overnight) having approximately the same length (disregarding Business Day adjustment) as the tenor for the Current Index.
Coverage and LTV Tests means, for any specified date, each of the following financial tests:
(a) Effective from the Initial Effective Date unless and until Borrower elects the Elected Coverage and LTV Tests:
(1) The Aggregate Debt Service Coverage Ratio is not less than 1.35:1.0 with respect to the amount of the Fixed Advances, and 1.10:1.0 with respect to the amount of the Variable Advances.
(2) The Aggregate Loan to Value Ratio does not exceed sixty-five percent (65%).
(b) On and after the date Borrower elects the Elected Coverage and LTV Tests:
(1) the Aggregate Debt Service Coverage Ratio is not less than 1.40:1.0 with respect to the amount of the Fixed Advances, and 1.15:1.0 with respect to the amount of the Variable Advances; and
(2) the Aggregate Loan to Value Ratio does not exceed sixty percent (60%).
Credit Score means a numerical value or a categorization derived from a statistical tool or modeling system used to measure credit risk and predict the likelihood of certain credit behaviors, including default.
Current Index has the meaning set forth in applicable Schedule of Advance Terms.
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Debt Service Amounts means the Monthly Debt Service Payments and all other amounts payable under this Master Agreement, the Note, the Security Instrument or any other Loan Document.
Debt Service Coverage Ratio means, for any Mortgaged Property for any specified period, the ratio (expressed as a percentage) of
(a) the Net Cash Flow for the specified period for the preceding number of months as determined pursuant to the Underwriting and Servicing Requirements;
to
(b) the Facility Debt Service for the specified period, assuming, for the purpose of calculating the Facility Debt Service of this definition, that Advances Outstanding shall be the Allocable Facility Amount, in each case, for the subject Mortgaged Property.
Default Rate means an interest rate equal to the lesser of:
(a) the sum of the Interest Rate plus four (4) percentage points; or
(b) the maximum interest rate which may be collected from Borrower under Applicable Law.
Definitions Schedule means this Schedule 1 (Definitions Schedule General) to this Master Agreement.
Division means the filing of a certificate of division, adoption of a plan of division, amending of any Organizational Documents, or any other actions taken, permitted, or consented to in order to divide a Person into two or more Persons pursuant to a plan of division such as contemplated under the Delaware Limited Liability Company Act or any other similar requirement of law in any jurisdiction. The term Divide shall have a correlative meaning.
Director means any member of the board of directors of Borrower, Key Principal or Guarantor.
Director Transfer means a removal, replacement, withdrawal or addition of any Director.
Economic Sanctions means any economic or financial sanction administered or enforced by the United States Government (including, without limitation, those administered by OFAC at http://www.treasury.gov/about/organizational-structure/offices/Pages/Office-of-Foreign-Assets-Control.aspx), the U.S. Department of Commerce, or the U.S. Department of State.
Effective Date means the Initial Effective Date and each date after the Initial Effective Date on which the funding or other transaction requested in a Request takes place.
Elected Coverage and LTV Tests has the meaning set forth in Section 2.10(g) (Elected Coverage and LTV Tests).
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Eligibility Requirements means any person or entity that:
(a) has total assets (in name or under management) in excess of $100,000,000 and (except with respect to a pension advisory firm or similar fiduciary) capital/statutory surplus or shareholders equity of $25,000,000;
(b) is regularly engaged in the business of making commercial or multifamily real estate loans or owning or operating commercial or multifamily properties;
(c) the senior management of which has at least ten (10) years experience in the business of making commercial or multifamily real estate loans or owning or operating commercial or multifamily properties;
(d) has at least 2,500 multifamily units under management; and
(e) is not a Prohibited Person.
Employee Benefit Plan means a plan described in Section 3(3) of ERISA, regardless of whether the plan is subject to ERISA, or a plan as defined in Section 4975(e)(1) of the Internal Revenue Code.
Enforcement Costs has the meaning set forth in the Security Instrument.
Environmental Indemnity Agreement means that certain Environmental Indemnity Agreement dated as of the Effective Date made by Borrower to and for the benefit of Lender, as the same may be amended, restated, replaced, supplemented, or otherwise modified from time to time.
Environmental Inspections has the meaning set forth in the Environmental Indemnity Agreement.
Environmental Laws has the meaning set forth in the Environmental Indemnity Agreement.
ERISA means the Employee Retirement Income Security Act of 1974, as amended from time to time and the regulations promulgated thereunder.
ERISA Affiliate shall mean, with respect to Borrower, any entity that, together with Borrower, would be treated as a single employer under Section 414(b) or (c) of the Internal Revenue Code, or Section 4001(a)(14) of ERISA, or the regulations thereunder.
ERISA Plan means any employee pension benefit plan within the meaning of Section 3(2) of ERISA (or related trust) that is subject to the requirements of Title IV of ERISA, Sections 430 or 431 of the Internal Revenue Code, or Sections 302, 303, or 304 of ERISA, which is maintained or contributed to by Borrower or its ERISA Affiliates.
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Event of Default means the occurrence of any event listed in Section 14.01 (Events of Default).
Exceptions to Representations and Warranties Schedule means that certain Schedule 16 (Exceptions to Representations and Warranties) to this Master Agreement.
Facility Debt Service means, as of any date, the sum of the amount of interest and principal amortization that would be payable during the applicable period determined by Lender in accordance with the Underwriting and Servicing Requirements.
Facility Year means the twelve (12) month period from (a) if the Initial Effective Date is the first day of the month, the Initial Effective Date, or (b) if the Initial Effective Date is not the first day of the month, the date that is the first day of the month following the Initial Effective Date, in each case to and including the last day before the First Anniversary, and each twelve (12) month period thereafter.
Fannie Mae means the corporation duly organized and existing under the laws of the United States.
Fifth Anniversary means (a) if the Initial Effective Date is the first day of the month, the date that is five (5) years after the Initial Effective Date, or (b) if the Initial Effective Date is not the first day of the month, the date that is the first day of the month following the date five (5) years after the Initial Effective Date.
First Anniversary means (a) if the Initial Effective Date is the first day of the month, the date that is one (1) year after the Initial Effective Date, or (b) if the Initial Effective Date is not the first day of the month, the date that is the first day of the month following the date one (1) year after the Initial Effective Date.
First Payment Date has the meaning set forth in the applicable Schedule of Advance Terms.
First Principal and Interest Payment Date has the meaning set forth in the applicable Schedule of Advance Terms.
Fixed Advance means a fixed rate loan made by Lender to Borrower under this Master Agreement evidenced by a Fixed Note.
Fixed Monthly Principal Component with respect to any Variable Advance has the meaning set forth in the applicable Schedule of Advance Terms for such Variable Advance.
Fixed Note means the promissory note (together with all schedules, riders, allonges, addenda, renewals, extensions, amendments and modifications thereto), which will be issued by Borrower to Lender, concurrently with the funding of each Fixed Advance, and which promissory note will be the same or substantially similar in form to the then current form of promissory note utilized by Fannie Mae for fixed rate loans with the applicable type of loan execution.
Fixed Rate has the meaning set forth in the applicable Schedule of Advance Terms.
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Fixed Rate Amortization Factor with respect to any Variable Advance has the meaning set forth in the applicable Schedule of Advance Terms for such Variable Advance.
Fixed Rate Option means, in connection with a Conversion, unless otherwise agreed to by Lender, Borrowers selection of one (1) of the following fixed rate options for the Advance, which shall be effective from and after the Conversion Effective Date:
(a) seven (7) year term with a five (5) year yield maintenance period;
(b) seven (7) year term with a six and one-half (6.5) year yield maintenance period;
(c) ten (10) year term with a seven (7) year yield maintenance period; or
(d) ten (10) year term with a nine and one-half (9.5) year yield maintenance period.
Fixtures has the meaning set forth in the Security Instrument.
Force Majeure shall mean acts of God, acts of war, civil disturbance, governmental action (including the revocation or refusal to grant licenses or permits, where such revocation or refusal is not due to the fault of Borrower), strikes, lockouts, fire, unavoidable casualties or any other causes beyond the reasonable control of Borrower (other than lack of financing), and of which Borrower shall have notified Lender in writing within ten (10) days after its occurrence.
Foreclosure Event means:
(a) foreclosure under the Security Instrument;
(b) any other exercise by Lender of rights and remedies (whether under the Security Instrument or under Applicable Law, including Insolvency Laws) as holder of the Note and/or the Security Instrument, as a result of which Lender (or its designee or nominee) or a third party purchaser becomes owner of a Mortgaged Property;
(c) delivery by Borrower to Lender (or its designee or nominee) of a deed or other conveyance of Borrowers interest in a Mortgaged Property in lieu of any of the foregoing; or
(d) in Louisiana, any dation en paiement.
Future Advance means an Advance made after the Initial Effective Date pursuant to Section 2.02(c)(2) (Future Advances) including any Borrow Up and any refinance of an Advance.
Future Advance Request means a written request for a Future Advance, substantially in the form of Exhibit E to this Master Agreement.
Future Advance Schedule means Schedule 14 attached to this Master Agreement.
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GAAP means generally accepted accounting principles in the United States in effect from time to time, consistently applied.
General Conditions means those conditions set forth on Schedule 7 attached hereto.
General Conditions Schedule means that certain Schedule 7 (General Conditions Schedule) to this Master Agreement.
Goods has the meaning set forth in the Security Instrument.
Governing Body has the meaning set forth in Section 11.03(b) (Transfers to Key Principal-Owned Affiliates or Guarantor-Owned Affiliates).
Governmental Approval means an authorization, permit, consent, approval, license, registration or exemption from registration or filing with, or report to, any Governmental Authority.
Governmental Authority means any court, board, commission, department or body of any municipal, county, state or federal governmental unit, or any subdivision of any court, board, commission, department or body of any municipal, county, state or federal governmental unit, that has or acquires jurisdiction over Borrower or the Mortgaged Property or the use, operation or improvement of the Mortgaged Property.
Guarantor means, individually and collectively, any guarantor of the Indebtedness or any other obligation of Borrower under any Loan Document which must be a Key Principal.
Guarantors General Business Address has the meaning set forth in the Summary of Master Terms.
Guarantors Notice Address has the meaning set forth in the Summary of Master Terms.
Guaranty means, individually and collectively, any Payment Guaranty, Non-Recourse Guaranty or other guaranty executed by Guarantor in connection with this Master Agreement.
Hedging Arrangement means any interest rate swap, interest rate cap or other arrangement, contractual or otherwise, which has the effect of an interest rate swap or interest rate cap or which otherwise (directly or indirectly, derivatively or synthetically) hedges interest rate risk associated with being a debtor of variable rate debt or any agreement or other arrangement to enter into any of the above on a future date or after the occurrence of one or more events in the future.
Identified Party means, individually and collectively, (a) Borrowers general partners, sole member, managing members and managers (if non-member managed), and (b) any Person Controlling Borrower, Guarantor, Key Principal or Borrowers general partners, sole members, managing members or managers (if non-member managed) but excluding the individuals comprising any Governing Body of Borrower or Guarantor and any Person directly or indirectly owning any public stock of Guarantor with no other direct or indirect Ownership Interest in Borrower.
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Immediate Family Members means a child, stepchild, grandchild, spouse, sibling, or parent, each of whom is not a Prohibited Person.
Imposition Deposits has the meaning set forth in the Security Instrument.
Impositions has the meaning set forth in the Security Instrument.
Improvements has the meaning set forth in the Security Instrument.
Indebtedness has the meaning set forth in the Security Instrument.
Index means, for each Variable Advance, the index applicable to such Variable Advance determined by Lender at the time such Variable Advance is made and as set forth in the applicable Schedule of Advance Terms.
Index Replacement means, for each Variable Advance, for any Interest Period, the sum determined by Lender as of the Index Replacement Date of: (a) the alternate rate of interest that has been selected by Lender as the replacement for the Current Index for the applicable Corresponding Tenor giving due consideration to (1) any selection or recommendation of a replacement rate or the mechanism for determining such a rate by the SOFR Administrator at such time or (2) any evolving or then-prevailing market convention for determining a rate of interest as a replacement for the Current Index for U.S. dollar-denominated syndicated or bilateral credit facilities at such time, and (b) the Index Replacement Adjustment. If the Index Replacement as determined pursuant to this definition would be less than zero, the Index Replacement shall be deemed to be zero.
Index Replacement Adjustment means, for each Variable Advance, for any Interest Period, the first alternative set forth in the order below that can be determined by Lender as of the Index Replacement Date:
(a) the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected or recommended by the SOFR Administrator for the applicable Unadjusted Index Replacement;
(b) the spread adjustment (which may be a positive or negative value or zero) that would apply to the fallback rate for derivative transactions utilizing the ISDA Definitions to be effective upon an index cessation event with respect to the Current Index; or
(c) the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by Lender for the applicable Corresponding Tenor giving due consideration to (1) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of the Current Index with the applicable Unadjusted Index
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Replacement by the SOFR Administrator at such time or (2) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of the Current Index with the applicable Unadjusted Index Replacement for U.S. dollar-denominated syndicated or bilateral credit facilities at such time.
Index Replacement Conforming Changes means, with respect to any Index Replacement, any technical, administrative or operational changes (including changes to the definition of Interest Period, timing and frequency of determining rates and making payments of interest and other administrative matters, as well as the determination of the effective date for any such changes) that Lender decides may be appropriate to reflect the adoption and implementation of such Index Replacement and to permit the administration thereof by Lender in a manner substantially consistent with market practice (or, if Lender decides that adoption of any portion of such market practice is not administratively feasible or if Lender determines that no market practice for the administration of the Index Replacement exists, in such other manner of administration as Lender decides is reasonably necessary in connection with administration of the Advance).
Index Replacement Date means the earliest to occur of the following events with respect to the Current Index:
(a) in the case of clause (a) or (b) of the definition of Index Transition Event, the date on which the administrator of the Index permanently or indefinitely ceases to provide the Index; or
(b) in the case of clause (c) of the definition of Index Transition Event, the date of the public statement or publication of information referenced therein.
Index Transition Event means the occurrence of one or more of the following events with respect to the Current Index, including comparable events that affect the published spread adjustment or other components used in the calculation of the Index:
(a) a public statement or publication of information by or on behalf of the administrator of the Index announcing that such administrator has ceased or will cease to provide the Index, permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide the Index;
(b) a public statement or publication of information by the regulatory supervisor for the administrator of the Index, the central bank for the currency of the Index, an insolvency official with jurisdiction over the administrator for the Index, a resolution authority with jurisdiction over the administrator for the Index or a court or an entity with similar insolvency or resolution authority over the administrator for the Index, which states that the administrator of the Index has ceased or will cease to provide the Index permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide the Index; or
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(c) a public statement or publication of information by the regulatory supervisor for the administrator of the Index announcing that the Index is no longer representative.
Individual Property Coverage and LTV Tests means each of the following tests:
(a) the Debt Service Coverage Ratio is not less than 1.25:1.0 with respect to any Fixed Advance and 1.00:1.0 with respect to any Variable Advance; and
(b) the Loan to Value Ratio does not exceed eighty percent (80%).
Initial Adjustable Rate for an Advance has the meaning set forth in the applicable Schedule of Advance Terms.
Initial Advance means, the Advance made on the Initial Effective Date in the aggregate amount of $495,170,000, comprised of (i) a Fixed Advance of $235,205,000, (ii) a Fixed Advance of $235,205,000, and (iii) a Variable Advance of $24,760,000.
Initial Allocable Facility Amount means the initial Allocable Facility Amount for each of the Initial Mortgaged Properties as set forth in Exhibit A to this Master Agreement.
Initial Borrower means each Borrower under this Master Agreement as of the Initial Effective Date.
Initial Effective Date means the date of this Master Agreement.
Initial Fixed Rate Payment Date means, in connection with any Conversion, the first day of the calendar month following the Conversion Effective Date for such Conversion.
Initial Monthly Debt Service Payment has the meaning set forth in the applicable Schedule of Advance Terms.
Initial Mortgaged Properties means the Multifamily Residential Properties described on Exhibit A to this Master Agreement and which represent the Mortgaged Properties that are made part of the Collateral Pool on the Initial Effective Date.
Initial Replacement Reserve Deposit has the meaning set forth in the Summary of Master Terms.
Initial Valuation means, when used with reference to specified Collateral, the Valuation initially performed for the Collateral as of the date on which the Collateral was added to the Collateral Pool. The Initial Valuation for each of the Initial Mortgaged Properties is as set forth in Exhibit A to this Master Agreement.
Insolvency Laws means the Bankruptcy Code, together with any other federal or state law affecting debtor and creditor rights or relating to the bankruptcy, insolvency, reorganization, arrangement, moratorium, readjustment of debt, dissolution, liquidation or similar laws, proceedings, or equitable principles affecting the enforcement of creditors rights, as amended from time to time.
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Insolvent means:
(a) that the sum total of all of a specified Persons liabilities (whether secured or unsecured, contingent or fixed, or liquidated or unliquidated) is in excess of the value of such Persons non-exempt assets, i.e., all of the assets of such Person that are available to satisfy claims of creditors (provided that for the purposes of determining liability for each Borrower under this definition, liability for the Advances Outstanding under this Master Agreement shall mean the then current Allocable Facility Amount attributable to the Mortgaged Property owned by each Borrower); or
(b) such Persons inability to pay its debts as they become due (provided that for the purposes of determining debt for each Borrower under this definition, liability for the Advances Outstanding under this Master Agreement shall mean the then current Allocable Facility Amount attributable to the Mortgaged Property owned by each Borrower).
Insurance Policy means, with respect to any Mortgaged Property, the insurance coverage and insurance certificates evidencing such insurance required to be maintained pursuant to this Master Agreement.
Intended Prepayment Date means the date upon which Borrower intends to make a prepayment on an Advance, as set forth in the Prepayment Notice, which date must be a Permitted Prepayment Date.
Interest Accrual Method has the meaning set forth in the applicable Schedule of Advance Terms.
Interest Only Term has the meaning set forth in the applicable Schedule of Advance Terms.
Interest Period means, for any Variable Advance, each period for the determination of the Interest Rate commencing on the Effective Date of such Advance and ending on each Rate Change Date for such Advance thereafter until the Advance is fully paid.
Interest Rate means with respect to a Fixed Advance, the Fixed Rate, or with respect to a Variable Advance, the Initial Adjustable Rate or the Adjustable Rate, as applicable, and after any Conversion, the Fixed Rate, each as set forth in the applicable Schedule of Advance Terms.
Interest Rate Cap has the meaning set forth in Section 2.03(a)(2)(B) (Interest Accrual and Computation; Amortization; Interest Rate Cap).
Interest Rate Cap Documents means the Cap Security Agreement and any and all other documents required pursuant thereto or hereto or as Lender shall require from time to time in connection with Borrowers obligation to maintain an Interest Rate Cap when a Variable Advance is Outstanding.
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Interest Rate Type has the meaning set forth in the applicable Schedule of Advance Terms.
Internal Revenue Code means the Internal Revenue Code of 1986, as amended.
Investor means any Person to whom Lender intends to (a) sell, transfer, deliver or assign the Advances in the secondary mortgage market or (b) sell an MBS backed by the Advances.
ISDA Definitions means the 2006 ISDA Definitions published by the International Swaps and Derivatives Association, Inc. or any successor thereto, as amended or supplemented from time to time, or any successor definitional booklet for interest rate derivatives published from time to time.
Issuer means a financial institution satisfactory to Fannie Mae issuing a Letter of Credit.
Key Principal means, collectively:
(a) the natural person(s) or entity that Controls Borrower that Lender determines is critical to the successful operation and management of Borrower and the Mortgaged Property, as identified as such in the Summary of Master Terms; or
(b) any natural person or entity who becomes a Key Principal after the date of this Master Agreement and is identified as such in an assumption agreement, or another amendment or supplement to this Master Agreement.
Key Principals General Business Address has the meaning set forth in the Summary of Master Terms.
Key Principals Notice Address has the meaning set forth in the Summary of Master Terms.
Land means the land described in Exhibit A to the Security Instrument.
Last Interest Only Payment Date has the meaning set forth in the applicable Schedule of Advance Terms.
Late Charge means an amount equal to the delinquent amount then due under the Loan Documents multiplied by five percent (5%).
Latest Facility Termination Date means (a) if the Initial Effective Date is the first day of the month, the date that is fifteen (15) years after the Initial Effective Date, or (b) if the Initial Effective Date is not the first day of the month, the date that is the first day of the month following the date fifteen (15) years after the Initial Effective Date.
Leases has the meaning set forth in the Security Instrument.
Lender means the entity identified as Lender in the first paragraph of this Master Agreement and its transferees, successors and assigns, or any subsequent holder of the Note.
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Lenders General Business Address has the meaning set forth in the Summary of Master Terms.
Lenders Notice Address has the meaning set forth in the Summary of Master Terms.
Lenders Payment Address has the meaning set forth in the Summary of Master Terms.
Letter of Credit means a letter of credit issued by an Issuer satisfactory to Fannie Mae naming Fannie Mae as beneficiary, in form and substance approved by Lender and Fannie Mae.
Letter of Credit Schedule means Schedule 15 attached to this Master Agreement.
Lien has the meaning set forth in the Security Instrument.
Listing has the meaning set forth in Section 11.03(i)(4).
Loan Application means the application for the Advances submitted by Borrower to Lender.
Loan Document Taxes has the meaning set forth in Section 5.02(f) (Loan Document Taxes).
Loan Documents means the Note, this Master Agreement, the Security Instrument, the Environmental Indemnity Agreement, the Guaranty, if any, all UCC filings, all guaranties, all indemnity agreements, all Collateral Agreements, the Assignment of Management Agreement (if applicable), all O&M Plans, and any other documents now or in the future executed by Borrower, Guarantor, Key Principal, any other guarantor or any other Person in connection with the Advances, as such documents may be amended, restated, replaced, supplemented or otherwise modified from time to time.
Loan Servicer means the entity that from time to time is designated by Lender to collect payments and deposits and receive notices under the Note, this Master Agreement, the Security Instrument and any other Loan Document, and otherwise to service the Advances for the benefit of Lender. Unless Borrower receives notice to the contrary, the Loan Servicer shall be Lender originally named on the Summary of Master Terms.
Loan to Value Ratio means, for a Mortgaged Property, for any specified date, the ratio (expressed as a percentage) of
(a) the Allocable Facility Amount of the subject Mortgaged Property on the specified date,
to
(b) the Valuation most recently obtained prior to the specified date for the subject Mortgaged Property.
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Management Agreement means, individually and collectively, (a) that certain Management Agreement by and among, Resource REIT, Inc., RRE Opportunity OP II, LP and Resource Real Estate Opportunity Manager II, LLC dated December 20th, 2013, as amended and (b) that certain Amended and Restated Property Management Agreement effective as of January 28, 2021 by and among Resource Real Estate Opportunity Manager II, LLC and the managers listed on Exhibit A thereto, including (i) GREP Southeast, LLC as Manager thereunder in respect of the Mortgaged Property known as Estates at Johns Creek, (ii) GREP Southwest, LLC as Manager thereunder in respect of the Mortgaged Property known as Heritage Pointe, (iii) GREP Texas, LLC as Manager thereunder in respect of the Mortgaged Property known as Providence in the Park, (iv) GREP Texas, LLC as Manager thereunder in respect of the Mortgaged Property known as South Lamar Village, (v) GREP Southwest, LLC as Manager thereunder in respect of the Mortgaged Property known as Verona Apartments, (vi) GREP Texas, LLC as Manager thereunder in respect of the Mortgaged Property known as Westside, (vii) GREP Southwest, LLC as Manager thereunder in respect of the Mortgaged Property known as 81 Fifty at West Hills, (viii) GREP Texas, LLC as Manager thereunder in respect of the Mortgaged Property known as Adair off Addison I & II, (ix) GREP Southwest, LLC as Manager thereunder in respect of the Mortgaged Property known as Montclair Terrace, (x) GREP Texas, LLC as Manager thereunder in respect of the Mortgaged Property known as Palmer at Las Colinas, and (xi) GREP Southeast, LLC as Manager thereunder in respect of the Mortgaged Property known as Uptown Buckhead and, (c) any future management agreement approved by Lender.
Margin means the Margin set forth in the applicable Schedule of Advance Terms, which includes the Variable Fee.
Master Agreement means this Master Credit Facility Agreement, as it may be amended, restated, supplemented or otherwise modified from time to time, including all Recitals, Schedules and Exhibits to this Master Agreement, each of which is hereby incorporated into this Master Agreement by this reference.
Material Adverse Effect means, with respect to any circumstance, act, condition or event of whatever nature (including any adverse determination in any litigation, arbitration, or governmental investigation or proceeding), whether singularly or in conjunction with any other event or events, act or acts, condition or conditions, or circumstance or circumstances, whether or not related, a material adverse change in or a materially adverse effect upon any of
(a) the business, operations, property or condition (financial or otherwise) of any Borrower Entity, to the extent specifically referred to in the applicable provision of the applicable Loan Document;
(b) the present or future ability of Borrower to perform the obligations of Borrower under this Master Agreement and the other Loan Documents, to the extent specifically referred to in the applicable provision of the applicable Loan Document;
(c) the validity, priority, perfection or enforceability of this Master Agreement or any other Loan Document or the rights or remedies of Lender under any Loan Document; or
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(d) the value of, or Lenders ability to have recourse against, any Mortgaged Property.
Material Commercial Lease means:
(a) any Lease that is not a Residential Lease and that, individually or in the aggregate with other Leases entered into with the same tenant, comprises five percent (5%) or more of the total gross income at the Mortgaged Property on an annualized basis; or
(b) regardless of the percentage of the total gross income at any Mortgaged Property that it comprises, any Lease that is not a Residential Lease relating to:
(1) solar power, thermal power generation, or co-power generation, or for the installation of solar panels or any other electrical power generation equipment, and any related power purchase agreement; or
(2) any dwelling unit at the Mortgaged Property leased to Guarantor, Key Principal, or another Borrower Affiliate.
Maturity Date for any Advance has the meaning set forth in the applicable Schedule of Advance Terms.
Maximum Inspection Fee has the meaning set forth in the Summary of Master Terms.
Maximum Repair Cost shall be the amount(s) set forth in the Required Repair Schedule, if any.
Maximum Repair Disbursement Interval has the meaning set forth in the Summary of Master Terms.
Maximum Replacement Reserve Disbursement Interval has the meaning set forth in the Summary of Master Terms.
Maximum Restoration Reserve Disbursement Interval has the meaning set forth in the Summary of Master Terms.
MBS means an investment security that represents an undivided beneficial interest in a pool of mortgage loans or participation interests in mortgage loans held in trust pursuant to the terms of a governing trust document.
Mezzanine Debt means a loan to a direct or indirect owner of Borrower secured by a pledge of such owners interest in an entity owning a direct or indirect interest in Borrower.
Minimum Repairs Disbursement Amount has the meaning set forth in the Summary of Master Terms.
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Minimum Replacement Reserve Disbursement Amount has the meaning set forth in the Summary of Master Terms.
Minimum Restoration Reserve Disbursement Amount has the meaning set forth in the Summary of Master Terms.
Monthly Debt Service Payment has the meaning set forth in the applicable Schedule of Advance Terms.
Monthly Replacement Reserve Deposit has the meaning set forth in the Summary of Master Terms.
Mortgaged Property individually has the meaning set forth in the Security Instrument and collectively means the Initial Mortgaged Properties and the Additional Mortgaged Properties, but excluding each Release Mortgaged Property from and after the date of its Release from the Collateral Pool.
Mortgaged Property Addition Schedule means Schedule 11 attached to this Master Agreement.
Mortgaged Property Release Schedule means Schedule 10 attached to this Master Agreement.
Multiemployer Plan shall mean a multiemployer plan within the meaning of Section 4001(a)(3) or Section 3(37) of ERISA (a) to which Borrower or any ERISA Affiliate is making or accruing an obligation to make contributions; (b) to which Borrower or any ERISA Affiliate has in the past made contributions; or (c) with respect to which Borrower or any ERISA Affiliate could incur liability.
Multifamily Project has the meaning set forth in the Summary of Master Terms.
Multifamily Project Address has the meaning set forth in the Summary of Master Terms.
Multifamily Residential Property means a residential property located in the United States and conforming to the Underwriting and Servicing Requirements.
Net Cash Flow means, for any specified period, the total of (a) the net rental income for the Mortgaged Property, plus (b) other allowable income for the Mortgaged Property, if any, minus (c) operating expenses for the Mortgaged Property (for this purpose, the definition of operating expenses will not include non-recurring, extraordinary expenses, or professional fees and general administrative expenses to cover corporate overhead expenses, for so long as permitted by the applicable Underwriting and Servicing Requirements), minus (d) the full amount underwritten for the Replacement Reserve Account (regardless of whether deposits have been or will be waived or reduced), and as adjusted for economic vacancy and other factors by Lender for the specific asset class or loan type.
New Director has the meaning set forth in Section 11.03(i)(2)(D).
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New OP has the meaning set forth in 11.03(i)(3).
New REIT has the meaning set forth in 11.03(i)(3).
Non-Recourse Guaranty means, if applicable, that certain Guaranty of Non-Recourse Obligations of even date herewith executed by Guarantor to and for the benefit of Lender, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.
Note means, individually and collectively, each Fixed Note and/or each Variable Note.
O&M Plan has the meaning set forth in the Environmental Indemnity Agreement.
OFAC means the United States Treasury Department, Office of Foreign Assets Control, and any successor thereto.
OP Partner means RRE Opportunity OP II, LP, a Delaware limited partnership.
Organizational Certificate means, collectively, certificates from Borrower to Lender, in the form of Exhibits K-1 to this Master Agreement, certifying as to certain organizational matters with respect to each Borrower.
Organizational Documents means all certificates, instruments, other documents and any amendments thereto in effect on the Initial Effective Date and the applicable Effective Date pursuant to which any Person is organized, operates or is governed, including (a) with respect to a corporation, its articles of incorporation and bylaws, (b) with respect to a limited partnership, its limited partnership certificate and partnership agreement, (c) with respect to a general partnership or joint venture, its partnership or joint venture agreement, (d) with respect to a limited liability company, its articles of organization and operating agreement, in each case all amendments, supplements and modifications thereto, and (e) any other document that affects the Control of, or the ability to oversee the management and day-to-day operations of such Person.
Outstanding or outstanding means, when used in connection with promissory notes, other debt instruments or the Advances, for a specified date, promissory notes or other debt instruments which have been issued, or Advances which have been made, to the extent not repaid in full as of the specified date.
Ownership Interests means, with respect to any entity, any direct or indirect ownership interests in the entity and any economic rights (such as a right to distributions, net cash flow or net income) to which the owner of such ownership interests is entitled.
Ownership Interests Schedule means Schedule 13 attached to this Master Agreement.
Payment Change Date has the meaning set forth in the applicable Schedule of Advance Terms.
Payment Date means the First Payment Date and the first day of each month thereafter until the applicable Advance is fully paid.
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Payment Guaranty means, if applicable, that certain Guaranty (Payment) of even date herewith executed by Guarantor to and for the benefit of Lender, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.
Permitted Encumbrance has the meaning set forth in the Security Instrument.
Permitted Mezzanine Debt means Mezzanine Debt incurred by a direct or indirect owner or owners of Borrower where the exercise of any of the rights and remedies by the holder or holders of the Mezzanine Debt would not in any circumstance cause (a) a change in Control in Borrower Entity, or (b) a Transfer of a direct or indirect Restricted Ownership Interest in Borrower Entity.
Permitted Preferred Equity means Preferred Equity that does not (a) require mandatory dividends, distributions, payments or returns (including at maturity or in connection with a redemption), or (b) provide the Preferred Equity owner with rights or remedies on account of a failure to receive any preferred dividends, distributions, payments or returns (or, if such rights are provided, the exercise of such rights do not violate the Loan Documents or are otherwise exercised with the prior written consent of Lender in accordance with Article 11 (Liens, Transfers, and Assumptions) of this Master Agreement and the payment of all applicable fees and expenses as set forth in Section 11.03(g) (Further Conditions on Transfers Requiring Lenders Consent) of this Master Agreement).
Permitted Prepayment Date means the last Business Day of a calendar month.
Person means an individual, an estate, a trust, a corporation, a partnership, a limited liability company or any other organization or entity (whether governmental or private).
Personal Property means the Goods, accounts, choses of action, chattel paper, documents, general intangibles (including Software), payment intangibles, instruments, investment property, letter of credit rights, supporting obligations, computer information, source codes, object codes, records and data, all telephone numbers or listings, claims (including claims for indemnity or breach of warranty), deposit accounts and other property or assets of any kind or nature related to the Land or the Improvements, including operating agreements, surveys, plans and specifications and contracts for architectural, engineering and construction services relating to the Land or the Improvements, and all other intangible property and rights relating to the operation of, or used in connection with, the Land or the Improvements, including all governmental permits relating to any activities on the Land.
Personalty has the meaning set forth in the Security Instrument.
Potential Event of Default means any event or circumstance that, with the giving of notice or the passage of time, or both, would constitute an Event of Default.
Preferred Equity means a direct or indirect equity Ownership Interest in, economic interests in, or rights with respect to, Borrower that provide an equity owner preferred dividend, distribution, payment, or return treatment relative to other equity owners.
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Prepayment Lockout Period for any Advance has the meaning set forth in the applicable Schedule of Advance Terms.
Prepayment Notice means the written notice that Borrower is required to provide to Lender in accordance with Section 2.04 (Prepayment; Prepayment Lockout; Prepayment Premium) in order to make a prepayment on an Advance, which shall include, at a minimum, the Intended Prepayment Date.
Prepayment Premium means, individually, the amount payable by Borrower in connection with a prepayment of an Advance, as provided in Section 2.04 (Prepayment; Prepayment Lockout; Prepayment Premium) and calculated in accordance with the Prepayment Premium Schedule applicable to such Advance for such Advance, and, collectively, all amounts payable pursuant to all Prepayment Premium Schedules.
Prepayment Premium Period End Date or Yield Maintenance Period End Date for any Advance has the meaning set forth in the applicable Schedule of Advance Terms.
Prepayment Premium Period Term or Yield Maintenance Period Term for any Advance has the meaning set forth in the applicable Schedule of Advance Terms.
Prepayment Premium Schedule means, individually and collectively, Schedule 4 (Prepayment Premium) to this Master Agreement for each Advance.
Prepayment Premium Term for any Advance has the meaning set forth in the applicable Schedule of Advance Terms.
Prohibited Person means:
(a) any Person with whom Lender or Fannie Mae is prohibited from doing business pursuant to any law, rule, regulation, judicial proceeding or administrative directive; or
(b) any Person identified on the United States Department of Housing and Urban Developments Limited Denial of Participation, HUD Funding Disqualifications and Voluntary Abstentions List, or on the General Services Administrations System for Award Management (SAM) exclusion list, each of which may be amended from time to time, and any successor or replacement thereof; or
(c) any Person that is determined by Fannie Mae to pose an unacceptable credit risk due to the aggregate amount of debt of such Person owned or held by Fannie Mae; or
(d) any Person that has caused any unsatisfactory experience of a material nature with Fannie Mae or Lender, such as a default, fraud, intentional misrepresentation, litigation, arbitration or other similar act.
Property Delivery Deadline has the meaning set forth in the Mortgaged Property Addition Schedule.
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Property Jurisdiction has the meaning set forth in the Security Instrument.
Property Manager means Resource Real Estate Opportunity Manager II, LLC, a Delaware limited liability company, as the prime manager for the Mortgaged Property and GREP Southeast, LLC, GREP Southwest, LLC and GREP Texas, LLC, as the sub-manager for the Mortgaged Property, or any other property manager approved by Lender.
Property-Related Documents has the meaning set forth on Schedule 8 attached to this Master Agreement.
Property-Related Documents Schedule means Schedule 8 attached to this Master Agreement.
Publicly-Held Corporation means a corporation, the outstanding voting stock of which is registered under Sections 12(b) or 12(g) of the Securities Exchange Act of 1934, as amended.
Publicly-Held Trust means a real estate investment trust, the outstanding voting shares or beneficial interests of which are registered under Sections 12(b) or 12(g) of the Securities Exchange Act of 1934, as amended.
Qualified Transferee means:
(a) a real estate investment trust, bank, saving and loan association, investment bank, insurance company, trust company, commercial credit corporation, pension plan, pension fund or pension advisory firm, mutual fund, government entity or plan, that satisfies the Eligibility Requirements;
(b) an investment company, money management firm or qualified institutional buyer within the meaning of Rule 144A under the Securities Act, or an accredited investor within the meaning of Regulation D under the Securities Act, that satisfies the Eligibility Requirements;
(c) an institution substantially similar to any of the entities described in clauses (a) or (b) that satisfies the Eligibility Requirements; or
(d) any entity Controlled by any of the entities described in clause (a) or (b) above that is not a Prohibited Person.
Rate Change Date has the meaning set forth in the applicable Schedule of Advance Terms.
REIT means Resource REIT, Inc., a Maryland corporation.
Release has the meaning set forth in Section 2.10(b) (Right to Obtain Releases of Mortgaged Property).
Release Documents mean instruments releasing the applicable Security Instrument as a Lien on a Mortgaged Property, and UCC-3 Termination Statements terminating the UCC-1 Financing Statements, and such other documents and instruments to evidence the Release of such Mortgaged Property from the Collateral Pool.
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Release Fee means with respect to any Release effected in accordance with Section 2.10(b) (Right to Obtain Releases of Mortgaged Property), a fee in the amount of $20,000 per Release Request.
Release Mortgaged Property means the Mortgaged Property to be released pursuant to Section 2.10(b) (Right to Obtain Releases of Mortgaged Property).
Release Price has the meaning set forth in the Mortgaged Property Release Schedule.
Release Request means a written request, substantially in the form of Exhibit C to this Master Agreement, to obtain a Release of Mortgaged Property from the Collateral Pool pursuant to Section 2.10(b) (Right to Obtain Releases of Mortgaged Property).
Remaining Amortization Period has the meaning set forth in the applicable Schedule of Advance Terms.
Remaining Mortgaged Properties has the meaning set forth in the Mortgaged Property Release Schedule.
Rent Roll means, with respect to any Mortgaged Property, a rent roll prepared and certified by the owner of such Mortgaged Property, on a form approved by Lender.
Rents has the meaning set forth in the Security Instrument.
Repair Threshold has the meaning set forth in the Summary of Master Terms.
Repairs means, individually and collectively, the Required Repairs, Borrower Requested Repairs, and Additional Lender Repairs.
Repairs Escrow Account means the account established by Lender into which the Repairs Escrow Deposit is deposited to fund the Repairs.
Repairs Escrow Account Administration Fee has the meaning set forth in the Summary of Master Terms.
Repairs Escrow Deposit has the meaning set forth in the Summary of Master Terms.
Replacement Reserve Account means the account established by Lender into which the Replacement Reserve Deposits are deposited to fund the Replacements.
Replacement Reserve Account Administration Fee has the meaning set forth in the Summary of Master Terms.
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Replacement Reserve Account Interest Disbursement Frequency has the meaning set forth in the Summary of Master Terms.
Replacement Reserve Deposits means the Initial Replacement Reserve Deposit, Monthly Replacement Reserve Deposits and any other deposits to the Replacement Reserve Account required by this Master Agreement.
Replacement Threshold has the meaning set forth in the Summary of Master Terms.
Replacements means, individually and collectively, the Required Replacements, Borrower Requested Replacements and Additional Lender Replacements.
Request means a Future Advance Request, an Addition Request, a Release Request, or a Conversion Request.
Request Opinion means a favorable opinion of counsel (including local counsel, as applicable) to Borrower, as to the due organization and qualification of Borrower, the due authorization, execution, delivery and enforceability of each Loan Document executed in connection with the applicable Request and such other matters as Lender may reasonably require, each dated as of the Effective Date for the Request, in form and substance satisfactory to Lender in all respects.
Required Repair Schedule means that certain Schedule 6 (Required Repair Schedule) to this Master Agreement.
Required Repairs means those items listed on the Required Repair Schedule.
Required Replacement Schedule means that certain Schedule 5 (Required Replacement Schedule) to this Master Agreement.
Required Replacements means those items listed on the Required Replacement Schedule.
Rescinded Payment has the meaning set forth in Section 3.12 (Preferences, Fraudulent Conveyances, Etc.) of this Master Agreement.
Reserve/Escrow Account Funds means, collectively, the funds on deposit in the Reserve/Escrow Accounts.
Reserve/Escrow Accounts means, individually and collectively, the Replacement Reserve Account, the Repairs Escrow Account, and the Restoration Reserve Account.
Residential Lease means a Lease of an individual dwelling unit.
Restoration means any work and improvements required to be performed to the applicable Mortgaged Property following a casualty or event of loss in accordance with the terms of Articles 9 and 10.
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Restoration Reserve Account means, if applicable, the account established by Lender into which insurance proceeds are deposited in order to fund a Restoration following a casualty or event of loss.
Restoration Reserve Account Administration Fee has the meaning set forth in the Summary of Master Terms.
Restoration Threshold has the meaning set forth in the Summary of Master Terms.
Restricted Ownership Interest means, with respect to any entity, the following:
(a) if such entity is a general partnership or a joint venture, fifty percent (50%) or more of all general partnership or joint venture interests in such entity;
(b) if such entity is a limited partnership:
(1) the interest of any general partner; or
(2) fifty percent (50%) or more of all limited partnership interests in such entity;
(c) if such entity is a limited liability company or a limited liability partnership:
(1) the interest of any managing member or the contractual rights of any non-member manager; or
(2) fifty percent (50%) or more of all membership or other ownership interests in such entity, provided that if the limited liability company is Borrower, REIT shall be required to own thirty five percent (35%) or more of all indirect membership or other ownership interests in Borrower;
(d) if such entity is a corporation (other than a Publicly-Held Corporation) with only one class of voting stock, fifty percent (50%) or more of voting stock in such corporation;
(e) if such entity is a corporation (other than a Publicly-Held Corporation) with more than one class of voting stock, the amount of shares of voting stock sufficient to have the power to elect the majority of directors of such corporation; or
(f) if such entity is a trust (other than a land trust or a Publicly-Held Trust), the power to Control such trust vested in the trustee of such trust or the ability to remove, appoint or substitute the trustee of such trust (unless the trustee of such trust after such removal, appointment or substitution is a trustee identified in the trust agreement approved by Lender).
(g) if Key Principal is a Publicly Held Corporation, the amount of shares of voting stock sufficient to take the entity private.
Re-Underwriting Fee means a non-refundable fee of $5,000 per Mortgaged Property then in the Collateral Pool in connection with any Request for a Conversion or any Borrow Up.
Review Fee means the non-refundable fee of $6,000.
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RSM Members means Alan F. Feldman, Steven R. Saltzman and Shelle Weisbaum, or their replacements approved by Lender.
Sanctioned Country means a country subject to either a targeted or comprehensive country-wide sanctions program administered and enforced by OFAC, which list is updated from time to time.
Sanctioned Person means (a) a Person named on the list of Specially Designated Nationals and Blocked Persons maintained by OFAC, available at http://www.treasury.gov/resource-center/sanctions/SDN-List/Pages/default.aspx, or as otherwise published from time to time; (b) (1) an agency of the government of a Sanctioned Country, (2) an organization controlled by a Sanctioned Country, or (3) a Person resident in a Sanctioned Country, to the extent any Person described in clauses (1), (2) or (3) is the subject of a sanctions program administered by OFAC; and, (c) a Person whose property and interests in property are blocked pursuant to an Executive Order or regulations administered by OFAC consistent with the guidance issued by OFAC.
Schedule of Advance Terms means, individually and collectively as the context may require the Schedule(s) of Advance Terms attached to this Master Agreement as Schedule 3 as of the Initial Effective Date and as such Schedule shall be amended or supplemented with respect to any Future Advance.
Securities Act means the Securities Act of 1933, as amended from time to time.
Security Documents means the Security Instruments and any other documents executed by Borrower or Guarantor from time to time to secure any of Borrowers or Guarantors obligations under the Loan Documents, as the same may be amended, restated, modified or supplemented from time to time.
Security Instrument means for each Mortgaged Property, a Multifamily Mortgage, Deed of Trust or Deed to Secure Debt, Assignment of Leases and Rents and Security Agreement given by a Borrower to or for the benefit of Lender to secure the obligations of Borrower under the Loan Documents. With respect to each Mortgaged Property owned by a Borrower, the Security Instrument shall be substantially in the form published by Fannie Mae for use in the state in which the Mortgaged Property is located.
Selected Advance has the meaning set forth in Section (d) (Application of Release Price) of the Mortgaged Property Release Schedule.
Servicing Arrangement means any arrangement between Lender and the Loan Servicer for loss sharing or interim advancement of funds.
Short-Term Rental means any Lease or master Lease (including subleases, licenses, and other possessory interests, whether oral or written) of an individual dwelling unit, for which the intended occupancy of the dwelling unit is for a period or periods of less than thirty (30) days, irrespective of the stated term of the Lease, including any Lease:
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Schedule 1 (Definitions Schedule) | 11-20 | © 2020 Fannie Mae | ||
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(a) for corporate tenant and guest suite purposes; or
(b) with an agreement or arrangement between either:
(1) Borrower and a tenant whereby the tenant may enter into a separate agreement or arrangement with a Short-Term Rental Provider to offer Short-Term Rentals at the Mortgaged Property; or
(2) Borrower and a Short-Term Rental Provider, pursuant to which tenants may offer Short-Term Rentals at the Mortgaged Property.
Short-Term Rental Provider means any platform or provider (including any internet or online service platform or provider) that offers Short-Term Rental services and arrangements, including booking and reservation services to guests and customers.
Single Purpose means compliance with Section 4.01(h) (Borrower Status Representations and Warranties Single Purpose Status) and Section 4.02(d) (Borrower Status Covenants Single Purpose Status) of this Master Agreement.
SOFR means, with respect to any day, the secured overnight financing rate last published for such day by the SOFR Administrator on the SOFR Administrator Website.
SOFR Administrator means the Federal Reserve Board and/or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Federal Reserve Board and/or the Federal Reserve Bank of New York, or any successor publisher of SOFR.
SOFR Administrator Website means the website of the Federal Reserve Bank of New York at http://www.newyorkfed.org, or such other source generally used by commercial lenders to obtain SOFR for any day.
Software has the meaning set forth in the Security Instrument.
SPE Owner means the entities identified on the Ownership Interests Schedule that comply with the provisions of Section 4.02(d) (Borrower Status Covenants Single Purpose Status) and the SPE Requirements, as such schedule may be updated with the Addition of new Borrowers to this Master Agreement. At the time of the Initial Effective Date, there are no SPE Owners. For the avoidance of doubt, on the Initial Effective Date the SPE Requirements do not apply to the OP Partner.
SPE Requirements means those provisions set forth on the SPE Requirements Schedule.
SPE Requirements Schedule means Schedule 17 attached to this Master Agreement.
Staggered Substitution means a Substitution of Additional Mortgaged Property that occurs subsequent to the release of the Release Mortgaged Property.
Master Credit Facility Agreement | Form 6001.MCFA | Page 32 | ||
Schedule 1 (Definitions Schedule) | 11-20 | © 2020 Fannie Mae | ||
[Resources/ CBRE 2021] |
Substitution has the meaning set forth in Section 2.10(d) (Right to Substitutions).
Substitution Cost Deposit has the meaning set forth in the Mortgaged Property Release Schedule.
Substitution Costs has the meaning set forth in the Mortgaged Property Release Schedule.
Substitution Deposit has the meaning set forth in the Mortgaged Property Release Schedule.
Substitution Fee means with respect to any Substitution effected in accordance with Section 2.10(d) (Right to Substitutions), a fee in the amount which is the greater of (a) 35 basis points (.35%) multiplied by the Allocable Facility Amount of the Mortgaged Property being released in connection with the Substitution, and (b) $25,000.
Summary of Master Terms means that certain Schedule 2 (Summary of Master Terms) to this Master Agreement.
Survey means the as-built survey of each Mortgaged Property prepared in accordance with the Underwriting and Servicing Requirements.
Taxes has the meaning set forth in the Security Instrument.
Term of this Master Agreement means the period beginning on the Initial Effective Date and ending on the Termination Date.
Termination Date means the latest Maturity Date of any Advance Outstanding, provided no Maturity Date shall be after the Latest Facility Termination Date.
Termination Documents means the instruments releasing the Security Instruments as liens on the Mortgaged Properties, UCC-3 Termination Statements terminating the UCC-1 Financing Statements in favor of Lender, and such other documents and instruments necessary to evidence the release of the Collateral from any Lien securing the Indebtedness, and the Notes, all in connection with the termination of this Master Agreement pursuant to Section 2.11 (Termination of Master Agreement).
Termination Request means a written request to terminate this Master Agreement pursuant to Section 2.11 (Termination of Master Agreement).
Title Company means the title company which provides title insurance for the Mortgaged Property.
Title Policy means, individually and collectively, the mortgagees loan policies of title insurance issued by the Title Company from time to time in connection with the Advances and insuring the lien of the Security Instrument as set forth therein, as approved by Lender, including any endorsements attached thereto.
Master Credit Facility Agreement | Form 6001.MCFA | Page 33 | ||
Schedule 1 (Definitions Schedule) | 11-20 | © 2020 Fannie Mae | ||
[Resources/ CBRE 2021] |
Transfer means:
(a) as used with respect to Ownership Interests, (1) a sale, assignment, pledge, grant or creation of a lien, encumbrance or security interest, transfer or other disposition (whether voluntary, involuntary, or by operation of law) in any right, title or interest in any Ownership Interest in a Borrower Entity or Identified Party, or (2) the issuance or other creation of new Ownership Interests in a Borrower Entity, or (3) a merger or consolidation of Borrower Entity or Identified Party into another entity or of another entity into Borrower Entity or Identified Party as the case may be, or (4) the dissolution, Division, or liquidation of any Borrower Entity, or (5) the conversion of a Borrower Entity or Identified Party from one type of entity to another type of entity, or (6) the amendment, modification or any other change in the governing instrument or instruments of Borrower Entity or Identified Party which has the effect of changing the relative powers, rights, privileges, voting rights or economic interests of the Ownership Interests in such Borrower Entity or Identified Party; or (7) the withdrawal, removal or involuntary resignation of any owner or manager of any Borrower Entity or Identified Party;
(b) as used with respect to a Mortgaged Property, (1) a sale, assignment, lease, pledge, transfer or other disposition (whether voluntary or by operation of law) other than Residential Leases, Material Commercial Leases or non-Material Commercial Leases permitted by this Master Agreement, or (2) a grant, pledge, creation or attachment of a lien (other than a Permitted Encumbrance), encumbrance or security interest (whether voluntary, involuntary, or by operation of law) in, any estate, rights, title or interest in the Mortgaged Property, or any portion thereof.
Transfer Fee means a fee equal to one percent (1%) of the unpaid principal balance of the Advances Outstanding (or such lesser amount as determined by Lender) payable to Lender.
Treasury Regulations means regulations, revenue rulings and other public interpretations of the Internal Revenue Code by the Internal Revenue Service, as such regulations, rulings and interpretations may be amended or otherwise revised from time to time.
UCC has the meaning set forth in the Security Instrument.
UCC Collateral has the meaning set forth in the Security Instrument.
Unadjusted Index Replacement means, with respect to a Variable Advance, the Index Replacement excluding the Index Replacement Adjustment.
Underwriting and Servicing Requirements means Lenders overall requirements for Multifamily Residential Properties in connection with similar loans sold or anticipated to be sold to Fannie Mae, pursuant to Fannie Maes then current guidelines, including, requirements relating to appraisals, property condition assessments, environmental site assessments, and servicing and asset management, as such requirements may be amended, modified, updated, superseded, supplemented or replaced from time to time.
Master Credit Facility Agreement | Form 6001.MCFA | Page 34 | ||
Schedule 1 (Definitions Schedule) | 11-20 | © 2020 Fannie Mae | ||
[Resources/ CBRE 2021] |
Valuation means the value determined by Lender pursuant to the Underwriting and Servicing Requirements. The Initial Valuation for any Mortgaged Property shall be held for at least twelve (12) months after the Effective Date such Mortgaged Property was added to the Collateral Pool unless if, in Lenders reasonable judgment, changed market or property conditions warrant a redetermination of Valuation or any other event has occurred that invalidates the determination from such Effective Date.
Variable Advance means any variable rate execution approved by Lender evidenced by a Variable Note.
Variable Fee means for any Variable Advance, the number of basis points per annum determined at the time of funding of such Variable Advance by Lender as the Variable Fee for such Variable Advance.
Variable Note means the promissory note (together with all schedules, riders, allonges, addenda, renewals, extensions, amendments and modifications thereto), which will be issued by Borrower to Lender, concurrently with the funding of each Variable Advance, and which promissory note will be the same or substantially similar in form to the then current form of promissory note utilized by Fannie Mae for variable rate loans with the applicable type of loan execution.
Variable Structured ARM Advance means a loan made by Lender to Borrower that is anticipated to be sold to Fannie Mae under the Fannie Mae Structured Adjustable Rate Mortgage Program.
Voidable Transfer means any fraudulent conveyance, preference or other voidable or recoverable payment of money or transfer of property.
Yield Maintenance Period End Date or Prepayment Premium Period End Date for any Advance has the meaning set forth in the applicable Schedule of Advance Terms.
Yield Maintenance Period Term or Prepayment Premium Period Term for any Advance has the meaning set forth in the applicable Schedule of Advance Terms.
[Remainder of Page Intentionally Blank]
Master Credit Facility Agreement | Form 6001.MCFA | Page 35 | ||
Schedule 1 (Definitions Schedule) | 11-20 | © 2020 Fannie Mae | ||
[Resources/ CBRE 2021] |
SCHEDULE 2
TO MASTER CREDIT FACILITY AGREEMENT
Summary of Master Terms
I. GENERAL PARTY AND MULTIFAMILY PROJECT INFORMATION | ||
Borrower | 1. RRE ADDISON PLACE HOLDINGS, LLC, a Delaware limited liability company 2. RRE GILBERT HOLDINGS, LLC, a Delaware limited liability company 3. RRE PROVIDENCE HOLDINGS, LLC, a Delaware limited liability company 4. RRE WOODMOOR HOLDINGS, LLC, a Delaware limited liability company 5. RRE CENTENNIAL HOLDINGS, LLC, a Delaware limited liability company 6. RRE BRENTDALE HOLDINGS, LLC, a Delaware limited liability company 7. RRE BRECKENRIDGE HOLDINGS, LLC, a Delaware limited liability company 8. RRE BEAR CREEK HOLDINGS, LLC, a Delaware limited liability company 9. RRE FAIRWAYS OF BENT TREE HOLDINGS, LLC, a Delaware limited liability company 10. RRE MONTCLAIR TERRACE HOLDINGS, LLC, a Delaware limited liability company 11. RRE SANTA ROSA HOLDINGS, LLC, a Delaware limited liability company 12. RRE BUCKHEAD HOLDINGS, LLC, a Delaware limited liability company 13. RRE FNM1 LLC, a Delaware limited liability company 14. RRE FNM2 LLC, a Delaware limited liability company 15. RRE FNM3 LLC, a Delaware limited liability company 16. RRE FNM4 LLC, a Delaware limited liability company | |
Lender | CBRE MULTIFAMILY CAPITAL, Inc., a Delaware corporation |
Master Credit Facility Agreement | Form 6001.MCFA | Page 1 | ||
Schedule 2 (Summary of Master Terms) | 11-20 | © 2020 Fannie Mae | ||
[Resources/ CBRE 2021] |
Key Principal | Resource REIT, Inc. | |
Guarantor | N/A | |
Multifamily Project | Estates at Johns Creek Heritage Pointe Providence in the Park South Lamar Village Verona Apartments Westside 81 Fifty at West Hills Adair off Addison I & II Montclair Terrace Palmer at Las Colinas Uptown Buckhead | |
Affordable Housing Property | X No For All Properties as of the Initial Effective Date | |
ADDRESSES | ||
Borrowers General Business Address | c/o Resource Real Estate, LLC 1845 Walnut Street, 17th Floor Philadelphia, Pennsylvania 19103 Attn: Shelle Weisbaum | |
Borrowers Notice Address | c/o Resource Real Estate, LLC 1845 Walnut Street, 17th Floor Philadelphia, Pennsylvania 19103 Attn: Shelle Weisbaum, Esq. Email: sweisbaum@resourcereit.com and a copy to: DLA Piper LLP (US) 444 West Lake Street, Suite 900 Chicago, Illinois 60601 Attention: Heidi J. Azulay, Esq. Email: heidi.azulay@us.dlapiper.com |
Master Credit Facility Agreement | Form 6001.MCFA | Page 2 | ||
Schedule 2 (Summary of Master Terms) | 11-20 | © 2020 Fannie Mae | ||
[Resources/ CBRE 2021] |
Multifamily Project Address | Estates at Johns Creek | 2100 Addison Ln. Johns Creek, GA 30005 | ||
Heritage Pointe | 275 West Juniper Ave. Gilbert, AZ 85233 | |||
Providence in the Park | 1601 W Arbrook Blvd. Arlington, TX 76015 | |||
South Lamar Village | 3505 S Lamar Blvd. Austin, TX 78704 | |||
Verona Apartments | 2961 W Centennial Dr. Littleton, CO 80123 | |||
Westside | 1515 Rio Grande Dr. Plano, TX 85075 | |||
81 Fifty at West Hills | 8150 SW Barnes Rd. Portland, OR 97225 | |||
Adair off Addison I & II | 15905 Bent Tree Forest Circle Dallas, TX 75248 | |||
Montclair Terrace | 4835 SW Oleson Rd. Portland, OR 97225 | |||
Palmer at Las Colinas | 2940 W Royal Ln. Irving, TX 75063 | |||
Uptown Buckhead | 3707 Roswell Rd. NE Atlanta, GA 30342 |
Key Principals General Business Address |
c/o Resource Real Estate, LLC 1845 Walnut Street, 17th Floor Philadelphia, Pennsylvania 19103 Attn: Shelle Weisbaum, Esq. | |
Key Principals Notice Address | c/o Resource Real Estate, LLC 1845 Walnut Street, 17th Floor Philadelphia, Pennsylvania 19103 Attn: Shelle Weisbaum, Esq. Email: sweisbaum@resourcereit.com and a copy to:
DLA Piper LLP (US) 444 West Lake Street, Suite 900 Chicago, Illinois 60601 Attention: Heidi J. Azulay, Esq. Email: heidi.azulay@us.dlapiper.com |
Master Credit Facility Agreement | Form 6001.MCFA | Page 3 | ||
Schedule 2 (Summary of Master Terms) | 11-20 | © 2020 Fannie Mae | ||
[Resources/ CBRE 2021] |
Guarantors General Business Address | N/A | |
Guarantors Notice Address | N/A | |
Lenders General Business Address | CBRE Multifamily Capital, Inc. 929 Gessner Road, Suite 1700 Houston, Texas 77024 | |
Lenders Notice Address | CBRE Multifamily Capital, Inc. c/o CBRE Loan Services, Inc. 929 Gessner Road, Suite 1700 Houston, Texas 77024 Attn: Chief Legal Officer Email Address: CBRELSCustomerService@cbre.com | |
Lenders Payment Address | CBRE Multifamily Capital, Inc. c/o CBRE Loan Services, Inc. PO Box 973788 Dallas, Texas 75397-3788 | |
II. RESERVE INFORMATION | ||
Completion Period | As set forth on the Required Repair Schedule | |
Initial Replacement Reserve Deposit | As set forth on the Required Replacement Schedule | |
Maximum Inspection Fee | $350.00 | |
Maximum Repair Disbursement Interval | One (1) time per calendar month | |
Maximum Replacement Reserve Disbursement Interval | One (1) time per calendar month |
Master Credit Facility Agreement | Form 6001.MCFA | Page 4 | ||
Schedule 2 (Summary of Master Terms) | 11-20 | © 2020 Fannie Mae | ||
[Resources/ CBRE 2021] |
Maximum Restoration Reserve Disbursement Interval | One (1) time per calendar month | |
Minimum Repairs Disbursement Amount | $1,000 | |
Minimum Replacement Reserve Disbursement Amount | $5,000 | |
Minimum Restoration Reserve Disbursement Amount | $1,000 | |
Monthly Replacement Reserve Deposit | As set forth on the Required Replacement Schedule | |
Repair Threshold | $10,000 | |
Repairs Escrow Account Administration Fee | $250, payable one time | |
Repairs Escrow Deposit | Waived | |
Replacement Reserve Account Administration Fee | $250, payable one time | |
Replacement Reserve Account Interest Disbursement Frequency | Quarterly | |
Replacement Threshold | $10,000 | |
Restoration Reserve Account Administration Fee | $250, payable one time | |
Restoration Threshold | $10,000 |
[Remainder of Page Intentionally Blank]
Master Credit Facility Agreement | Form 6001.MCFA | Page 5 | ||
Schedule 2 (Summary of Master Terms) | 11-20 | © 2020 Fannie Mae | ||
[Resources/ CBRE 2021] |
SCHEDULE 3.1
TO MASTER CREDIT FACILITY AGREEMENT
Schedule of Advance Terms
FIXED ADVANCES
I. INFORMATION FOR $235,205,000 FIXED ADVANCE MADE January 28, 2021 | ||
Advance Amount |
$235,205,000 | |
Advance Term |
120 months | |
Advance Year |
The period beginning on the Effective Date and ending on the last day of January, 2022, and each successive twelve (12) month period thereafter | |
Amortization Type |
[Select only one:]
☐ Amortizing ☒ Full Term Interest Only ☐ Partial Interest Only
| |
Effective Date |
January 28, 2021 | |
First Payment Date |
The first day of March 1, 2021 | |
First Principal and Interest Payment Date |
N/A | |
Fixed Rate |
2.790% | |
Interest Accrual Method |
[Select only one:]
☐ 30/360 (computed on the basis of a three hundred sixty (360) day year consisting of twelve (12) thirty (30) day months) or ☒ Actual/360 (computed on the basis of a three hundred sixty (360) day year and the actual number of calendar days during the applicable month, calculated by multiplying the unpaid principal balance of the Advance by the Interest Rate, dividing the product by three hundred sixty (360), and multiplying the quotient obtained by the actual number of days elapsed in the applicable month) |
Master Credit Facility Agreement | Form 6001.MCFA | Page 1 | ||
Schedule 3.1 (Schedule of Advance Terms) | 11-20 | © 2020 Fannie Mae | ||
[Resources/ CBRE 2021] |
Interest Only Term |
120 months | |
Interest Rate |
The Fixed Rate | |
Interest Rate Type |
Fixed Rate | |
Last Interest Only Payment Date |
N/A | |
Maturity Date |
The first day of February, 2031, or any earlier date on which the unpaid principal balance of the Advance becomes due and payable by acceleration or otherwise | |
Monthly Debt Service Payment |
(i) $510,394.85 for the First Payment Date; and
(ii) for each Payment Date thereafter until the Advance is fully paid:
(a) $510,394.85 if the prior month was a 28-day month;
(b) $528,623.24 if the prior month was a 29-day month;
(c) $546,851.63 if the prior month was a 30-day month; and
(d) $565,080.01 if the prior month was a 31-day month | |
Prepayment Lockout Period |
The 0 Advance Year of the term of the Advance | |
Remaining Amortization Period |
N/A | |
II. YIELD MAINTENANCE/PREPAYMENT PREMIUM INFORMATION | ||
Yield Maintenance Period End Date |
The last day of July, 2030 | |
Yield Maintenance Period Term |
114 months |
Master Credit Facility Agreement | Form 6001.MCFA | Page 2 | ||
Schedule 3.1 (Schedule of Advance Terms) | 11-20 | © 2020 Fannie Mae | ||
[Resources/ CBRE 2021] |
SCHEDULE 3.2
TO MASTER CREDIT FACILITY AGREEMENT
Schedule of Advance Terms
FIXED ADVANCES
I. INFORMATION FOR $235,205,000 FIXED ADVANCE MADE January 28, 2021 | ||
Advance Amount |
$235,205,000 | |
Advance Term |
84 months | |
Advance Year |
The period beginning on the Effective Date and ending on the last day of January, 2022, and each successive twelve (12) month period thereafter | |
Amortization Type |
[Select only one:]
☐ Amortizing ☒ Full Term Interest Only ☐ Partial Interest Only | |
Effective Date |
January 28, 2021 | |
First Payment Date |
The first day of March 1, 2021 | |
First Principal and Interest Payment Date | N/A | |
Fixed Rate |
2.620% | |
Interest Accrual Method |
[Select only one:]
☐ 30/360 (computed on the basis of a three hundred sixty (360) day year consisting of twelve (12) thirty (30) day months) or ☒ Actual/360 (computed on the basis of a three hundred sixty (360) day year and the actual number of calendar days during the applicable month, calculated by multiplying the unpaid principal balance of the Advance by the Interest Rate, dividing the product by three hundred sixty (360), and multiplying the quotient obtained by the actual number of days elapsed in the applicable month) |
Master Credit Facility Agreement | Form 6001.MCFA | Page 1 | ||
Schedule 3. (Schedule of Advance Terms) | 11-20 | © 2020 Fannie Mae | ||
Resources/ CBRE (2021) |
Interest Only Term |
84 months | |
Interest Rate |
The Fixed Rate | |
Interest Rate Type |
Fixed Rate | |
Last Interest Only Payment Date |
N/A | |
Maturity Date |
The first day of February, 2028, or any earlier date on which the unpaid principal balance of the Advance becomes due and payable by acceleration or otherwise | |
Monthly Debt Service Payment |
(i) $479,295.52 for the First Payment Date; and
(ii) for each Payment Date thereafter until the Advance is fully paid:
(a) $479,295.52 if the prior month was a 28-day month;
(b) $496,413.22 if the prior month was a 29-day month;
(c) $513,530.92 if the prior month was a 30-day month; and
(d) $530,648.61 if the prior month was a 31-day month | |
Prepayment Lockout Period |
The 0 Advance Year of the term of the Advance | |
Remaining Amortization Period |
N/A | |
II. YIELD MAINTENANCE/PREPAYMENT PREMIUM INFORMATION | ||
Yield Maintenance Period End Date |
The last day of July, 2027 | |
Yield Maintenance Period Term |
78 months |
Master Credit Facility Agreement | Form 6001.MCFA | Page 2 | ||
Schedule 3. (Schedule of Advance Terms) | 11-20 | © 2020 Fannie Mae | ||
\Resources/ CBRE( 2021) |
SCHEDULE 3.3
TO MASTER CREDIT FACILITY AGREEMENT
Schedule of Advance Terms
VARIABLE STRUCTURED ARM (SOFR) ADVANCE
I. INFORMATION FOR $24,760,000 VARIABLE/SARM ADVANCE MADE JANUARY 28, 2021 | ||
Adjustable Rate |
Until the first Rate Change Date, the Initial Adjustable Rate, and from and after each Rate Change Date following the first Rate Change Date until the next Rate Change Date, a per annum interest rate that is the sum of (i) the Current Index, and (ii) the Margin, which sum is then rounded to the nearest three (3) decimal places; provided, however, the Adjustable Rate shall never be less than the Margin | |
Advance Amount |
$24,760,000 | |
Advance Term |
120 months | |
Advance Year |
The period beginning on the Effective Date and ending on the last day of January, 2022, and each successive twelve (12) month period thereafter | |
Advance Minimum Underwriting Strike Rate | 3% | |
Amortization Type |
[Select only one:]
☐ Amortizing ☒ Full Term Interest Only ☐ Partial Interest Only | |
Current Index |
The Index that is effective on the Business Day immediately preceding the applicable Rate Change Date | |
Effective Date |
January 28, 2021 |
Master Credit Facility Agreement | Form 6001.MCFA | Page 1 | ||
Schedule 3.3 (Schedule of Advance Terms) | 11-20 | © 2020 Fannie Mae | ||
[Resources/ CBRE 2021] |
First Payment Date |
The first day of March, 2021 | |
First Principal and Interest Payment Date |
N/A | |
Fixed Monthly Principal Component |
N/A | |
Fixed Rate Amortization Factor |
2.79% per annum | |
Index |
30-Day Average SOFR; provided that, if an Index Transition Event and its related Index Replacement Date have occurred, then the Index shall mean the Index Replacement determined pursuant to the terms of the Master Agreement | |
Initial Adjustable Rate |
2.146% per annum | |
Initial Monthly Debt Service Payment |
$41,327.19 | |
Interest Accrual Method |
Actual/360 (computed on the basis of a three hundred sixty (360) day year and the actual number of calendar days during the applicable month, calculated by multiplying the unpaid principal balance of the Advance by the Interest Rate, dividing the product by three hundred sixty (360), and multiplying the quotient obtained by the actual number of days elapsed in the applicable month) | |
Interest Only Term |
120 months | |
Interest Rate Type |
Structured ARM | |
Last Interest Only Payment Date |
N/A | |
Margin |
2.060% |
Master Credit Facility Agreement | Form 6001.MCFA | Page 2 | ||
Schedule 3.3 (Schedule of Advance Terms) | 11-20 | © 2020 Fannie Mae | ||
[Resources/ CBRE 2021] |
Maturity Date |
The first day of February, 2031, or any later date to which the Maturity Date may be extended (if at all) in connection with Borrowers exercise of the Conversion or any earlier date on which the unpaid principal balance of the Advance becomes due and payable by acceleration or otherwise | |
Monthly Debt Service Payment |
(i) for the First Payment Date, the Initial Monthly Debt Service Payment, and
(ii) for each Payment Date thereafter until the Advance is fully paid, the amount obtained by multiplying the unpaid principal balance of the Advance by the Adjustable Rate, dividing the product by three hundred sixty (360), and multiplying the quotient by the actual number of days elapsed in the applicable month | |
Payment Change Date |
The first day of the month following each Rate Change Date until the Advance is fully paid | |
Prepayment Lockout Period |
The first Advance Year of the term of the Advance | |
Rate Change Date |
The First Payment Date and the first day of each month thereafter until the Advance is fully paid, subject to any Index Replacement Conforming Changes required upon implementation of any Index Replacement | |
Remaining Amortization Period |
N/A | |
II.YIELD MAINTENANCE/PREPAYMENT PREMIUM INFORMATION | ||
Prepayment Premium Term |
The period beginning on the Effective Date and ending on the last calendar day of the fourth month prior to the month in which the Maturity Date occurs |
[Remainder of Page Intentionally Blank]
Master Credit Facility Agreement | Form 6001.MCFA | Page 3 | ||
Schedule 3.3 (Schedule of Advance Terms) | 11-20 | © 2020 Fannie Mae | ||
[Resources/ CBRE 2021] |
SCHEDULE 4.1
TO MASTER CREDIT FACILITY AGREEMENT
Prepayment Premium Schedule
(Standard Yield Maintenance Fixed Rate)
1. | Defined Terms. |
All capitalized terms used but not defined in this Prepayment Premium Schedule shall have the meanings assigned to them in this Master Agreement.
2. | Prepayment Premium. |
Any Prepayment Premium payable under Section 2.04 (Prepayment; Prepayment Lockout; Prepayment Premium) of this Master Agreement shall be computed as follows:
(a) If the prepayment is made at any time after the Effective Date and before the Yield Maintenance Period End Date, the Prepayment Premium shall be the greater of:
(1) one percent (1%) of the amount of principal being prepaid; or
(2) the product obtained by multiplying:
(A) the amount of principal being prepaid,
by
(B) the difference obtained by subtracting from the Fixed Rate on the Advance, the Yield Rate (as defined below) on the twenty-fifth Business Day preceding (i) the Intended Prepayment Date, or (ii) the date Lender accelerates the Advance or otherwise accepts a prepayment pursuant to Section 2.06 (Application of Collateral) of this Master Agreement,
by
(C) the present value factor calculated using the following formula:
[r = |
Yield Rate | |
n = |
the number of months remaining between (i) either of the following: (x) in the case of a voluntary prepayment, the last day of the month in which the prepayment is made, or (y) in any other case, the date on which Lender accelerates the unpaid principal balance of the Advance and (ii) the Yield Maintenance Period End Date. |
Master Credit Facility Agreement | Form 6104.01 | Page 1 | ||
Schedule 4.1 (Prepayment Premium Schedule) | 05-20 | © 2020 Fannie Mae | ||
[Resources/ CBRE 2021] |
For purposes of this clause (2), the Yield Rate means the yield calculated by interpolating the yields for the immediately shorter and longer term United States Treasury constant maturities (as reported in the Federal Reserve Statistical Release H.15 Selected Interest Rates (the Fed Release) under the heading United States government securities) closest to the remaining term of the Yield Maintenance Period Term, as follows (rounded to three (3) decimal places): | ||
![]() | ||
a = the yield for the longer United States Treasury constant maturity | ||
b = the yield for the shorter United States Treasury constant maturity | ||
x = the term of the longer United States Treasury constant maturity | ||
y = the term of the shorter United States Treasury constant maturity | ||
z = n (as defined in the present value factor calculation above) divided by twelve (12). | ||
For purposes of this clause (2), if the Yield Rate is calculated to be zero, the number 0.00001 shall be deemed to be the Yield Rate. | ||
Notwithstanding any provision to the contrary, if z equals a term reported under the United States Treasury constant maturities subheading in the Fed Release, the yield for such term shall be used, and interpolation shall not be necessary. If publication of the Fed Release is discontinued by the Federal Reserve Board, Lender shall determine the Yield Rate from another source selected by Lender. Any determination of the Yield Rate by Lender will be binding absent manifest error.] |
Master Credit Facility Agreement | Form 6104.01 | Page 2 | ||
Schedule 4.1 (Prepayment Premium Schedule) | 05-20 | © 2020 Fannie Mae | ||
[Resources/ CBRE 2021] |
(b) If the prepayment is made on or after the Yield Maintenance Period End Date but before the last calendar day of the fourth month prior to the month in which the Maturity Date occurs, the Prepayment Premium shall be one percent (1%) of the amount of principal being prepaid.
(c) Notwithstanding the provisions of Section 2.04 (Prepayment; Prepayment Lockout; Prepayment Premium) of this Master Agreement, no Prepayment Premium shall be payable with respect to any prepayment made on or after the last calendar day of the fourth month prior to the month in which the Maturity Date occurs.
[Remainder of Page Intentionally Blank]
Master Credit Facility Agreement | Form 6104.01 | Page 3 | ||
Schedule 4.1 (Prepayment Premium Schedule) | 05-20 | © 2020 Fannie Mae | ||
Resources/ CBRE (2021) |
SCHEDULE 4.2
TO MASTER CREDIT FACILITY AGREEMENT
Prepayment Premium Schedule
(Standard Yield Maintenance Fixed Rate)
3. | Defined Terms. |
All capitalized terms used but not defined in this Prepayment Premium Schedule shall have the meanings assigned to them in this Master Agreement.
4. | Prepayment Premium. |
Any Prepayment Premium payable under Section 2.04 (Prepayment; Prepayment Lockout; Prepayment Premium) of this Master Agreement shall be computed as follows:
(a) If the prepayment is made at any time after the Effective Date and before the Yield Maintenance Period End Date, the Prepayment Premium shall be the greater of:
(1) one percent (1%) of the amount of principal being prepaid; or
(2) the product obtained by multiplying:
(A) the amount of principal being prepaid,
by
(B) the difference obtained by subtracting from the Fixed Rate on the Advance, the Yield Rate (as defined below) on the twenty-fifth Business Day preceding (i) the Intended Prepayment Date, or (ii) the date Lender accelerates the Advance or otherwise accepts a prepayment pursuant to Section 2.06 (Application of Collateral) of this Master Agreement,
by
(C) the present value factor calculated using the following formula:
[r = |
Yield Rate | |
n = |
the number of months remaining between (i) either of the following: (x) in the case of a voluntary prepayment, the last day of the month in which the prepayment is made, or (y) in any other case, the date on which Lender accelerates the unpaid principal balance of the Advance and (ii) the Yield Maintenance Period End Date. |
Master Credit Facility Agreement | Form 6104.01 | Page 1 | ||
Schedule 4.2 (Prepayment Premium Schedule) | 05-20 | © 2020 Fannie Mae | ||
Resources/ CBRE (2021) |
For purposes of this clause (2), the Yield Rate means the yield calculated by interpolating the yields for the immediately shorter and longer term United States Treasury constant maturities (as reported in the Federal Reserve Statistical Release H.15 Selected Interest Rates (the Fed Release) under the heading United States government securities) closest to the remaining term of the Yield Maintenance Period Term, as follows (rounded to three (3) decimal places): | ||
![]() | ||
a = the yield for the longer United States Treasury constant maturity | ||
b = the yield for the shorter United States Treasury constant maturity | ||
x = the term of the longer United States Treasury constant maturity | ||
y = the term of the shorter United States Treasury constant maturity | ||
z = n (as defined in the present value factor calculation above) divided by twelve (12). | ||
For purposes of this clause (2), if the Yield Rate is calculated to be zero, the number 0.00001 shall be deemed to be the Yield Rate. | ||
Notwithstanding any provision to the contrary, if z equals a term reported under the United States Treasury constant maturities subheading in the Fed Release, the yield for such term shall be used, and interpolation shall not be necessary. If publication of the Fed Release is discontinued by the Federal Reserve Board, Lender shall determine the Yield Rate from another source selected by Lender. Any determination of the Yield Rate by Lender will be binding absent manifest error.] |
Master Credit Facility Agreement | Form 6104.01 | Page 2 | ||
Schedule 4.2 (Prepayment Premium Schedule) | 05-20 | © 2020 Fannie Mae | ||
Resources/ CBRE (2021) |
(b) If the prepayment is made on or after the Yield Maintenance Period End Date but before the last calendar day of the fourth month prior to the month in which the Maturity Date occurs, the Prepayment Premium shall be one percent (1%) of the amount of principal being prepaid.
(c) Notwithstanding the provisions of Section 2.04 (Prepayment; Prepayment Lockout; Prepayment Premium) of this Master Agreement, no Prepayment Premium shall be payable with respect to any prepayment made on or after the last calendar day of the fourth month prior to the month in which the Maturity Date occurs.
[Remainder of Page Intentionally Blank]
Master Credit Facility Agreement | Form 6104.01 | Page 3 | ||
Schedule 4.2 (Prepayment Premium Schedule) | 05-20 | © 2020 Fannie Mae | ||
Resources/ CBRE (2021) |
SCHEDULE 4.3
TO MASTER CREDIT FACILITY AGREEMENT
Prepayment Premium Schedule
(1% Prepayment Premium ARM, SARM)
1. | Defined Terms. |
All capitalized terms used but not defined in this Prepayment Premium Schedule shall have the meanings assigned to them in this Master Agreement.
2. | Prepayment Premium. |
(a) Any Prepayment Premium payable under Section 2.04 (Prepayment; Prepayment Lockout; Prepayment Premium) of this Master Agreement shall be equal to the following percentage of the amount of principal being prepaid at the time of such prepayment, acceleration or application:
Prepayment Lockout Period |
5.00 | % | ||
Second Advance Year, and each Advance Year thereafter |
1.00 | % |
(b) Notwithstanding the provisions of Section 2.04 (Prepayment; Prepayment Lockout; Prepayment Premium) of this Master Agreement or anything to the contrary in this Prepayment Premium Schedule, no Prepayment Premium shall be payable with respect to any prepayment made on or after the last calendar day of the fourth month prior to the month in which the Maturity Date occurs.
[Remainder of Page Intentionally Blank]
Master Credit Facility Agreement | Form 6104.11 | Page 1 | ||
Schedule 4.3 (Prepayment Premium Schedule) |
01-11 | © 2011 Fannie Mae | ||
[Resources/ CBRE 2021] |
SCHEDULE 5
TO MASTER CREDIT FACILITY AGREEMENT
Required Replacement Schedule
Mortgaged Property |
Initial Replacement Reserve Deposit |
Monthly Replacement Reserve Deposit |
||||||
81 Fifty at West Hills |
$ | 0 | $ | 8,896 | ||||
Adair Off Addison I & II |
$ | 0 | $ | 8,302 | ||||
Estates at Johns Creek |
$ | 0 | $ | 9,538 | ||||
Heritage Pointe |
$ | 0 | $ | 10,382 | ||||
Montclair Terrace |
$ | 0 | $ | 4,387 | ||||
Palmer at Las Colinas |
$ | 0 | $ | 10,274 | ||||
Providence in the Park |
$ | 0 | $ | 12,009 | ||||
South Lamar Village |
$ | 0 | $ | 4,299 | ||||
Uptown Buckhead |
$ | 0 | $ | 4,698 | ||||
Verona Apartments |
$ | 0 | $ | 8,004 | ||||
Westside |
$ | 0 | $ | 9,305 |
As to 81 Fifty at West Hills, List of Replacements for Replacement Reserve
Description of Item |
Site |
Asphalt seal coat and striping |
Structural Frame and Building Envelope (Architectural Components) |
Painting, Exterior |
Proactive roof maintenance (tile roofs) |
Mechanical / Electrical / Plumbing Systems |
Individual Unit Domestic Hot Water Heater |
Interior Elements (Dwelling Units / Common Area) |
Carpet |
Vinyl plank flooring |
Kitchen: Dishwasher |
Kitchen: Range/Stove |
Kitchen: Refrigerator |
Unit Laundry: Dryer |
Unit Laundry: Washing machine |
Common area floors, carpet |
Miscellaneous/Other |
Pool/ spa plaster liner |
Pool/ spa heat and filtration equipment |
Master Credit Facility Agreement | Form 6001.MCFA | Page 1 | ||
Schedule 5 (Required Replacement Schedule) | 11-20 | © 2020 Fannie Mae | ||
[Resources/ CBRE 2021] |
As to Adair Off Addison I & II, List of Replacements for Replacement Reserve
Description of Item |
Site |
Asphalt seal coat and striping |
Structural Frame and Building Envelope (Architectural Components) |
Painting, Exterior |
Mechanical / Electrical / Plumbing Systems |
Fan coil unit / furnace |
Split system condenser |
Central Domestic Water Boiler |
Water Storage Tank |
Interior Elements (Dwelling Units / Common Area) |
Carpet |
Vinyl flooring |
Kitchen: Dishwasher |
Kitchen: Range/Stove |
Kitchen: Refrigerator |
Kitchen: Refrigerator |
Common Area Flooring |
Miscellaneous/Other |
Pool/ spa plaster liner |
Pool/ spa heat and filtration equipment |
As to Estates at Johns Creek, List of Replacements for Replacement Reserve
Description of Item |
Site |
Asphalt seal coat and striping |
Structural Frame and Building Envelope (Architectural Components) |
Painting, Exterior |
Asphalt shingle (3-tab) |
Mechanical / Electrical / Plumbing Systems |
Fan coil unit / furnace |
Split system condenser |
Individual Unit Domestic Hot Water Heater |
Interior Elements (Dwelling Units / Common Area) |
Vinyl Plank/Strip Flooring |
Carpet |
Kitchen: Dishwasher |
Kitchen: Range/Stove |
Kitchen: Refrigerator |
Kitchen: Microwave |
Unit Laundry: Dryer |
Unit Laundry: Washing machine |
Miscellaneous/Other |
Pool/ spa plaster liner |
Pool/ spa heat and filtration equipment |
Master Credit Facility Agreement | Form 6001.MCFA | Page 2 | ||
Schedule 5 (Required Replacement Schedule) | 11-20 | © 2020 Fannie Mae | ||
[Resources/ CBRE 2021] |
As to Heritage Pointe, List of Replacements for Replacement Reserve
Description of Item |
Site |
Asphalt seal coat and striping |
Structural Frame and Building Envelope (Architectural Components) |
Painting, Exterior |
Mechanical / Electrical / Plumbing Systems |
Fan coil unit / furnace |
Split system condenser |
Interior Elements (Dwelling Units / Common Area) |
Carpet |
Vinyl plank flooring |
Kitchen: Dishwasher |
Kitchen: Range/Stove |
Kitchen: Refrigerator |
Kitchen: Microwave |
Unit Laundry: Dryer |
Unit Laundry: Washing machine |
Common area floors, carpet |
Common Area Seating, FF&E, Tables, Etc. |
Miscellaneous/Other |
Pool/ spa plaster liner |
Pool/ spa heat and filtration equipment |
As to Montclair Terrace, List of Replacements for Replacement Reserve
Description of Item |
Site |
Asphalt pavement |
Asphalt seal coat and striping |
Structural Frame and Building Envelope (Architectural Components) |
Painting, Exterior |
Vinyl siding |
Asphalt shingle (3-tab) |
Mechanical / Electrical / Plumbing Systems |
Fan coil unit / furnace |
Split system condenser |
A/C window unit or through wall |
Galvanized iron supply piping repair allowance |
Individual Unit Domestic Hot Water Heater |
Central Domestic Hot Water Heater |
Interior Elements (Dwelling Units / Common Area) |
Carpet |
Vinyl plank flooring |
Kitchen: Dishwasher |
Kitchen: Range/Stove |
Kitchen: Refrigerator |
Unit Laundry: Dryer |
Unit Laundry: Washing machine |
Common area floors, carpet |
Common area floors - tile, vinyl |
Miscellaneous/Other |
Pool/ spa plaster liner |
Pool/ spa heat and filtration equipment |
Master Credit Facility Agreement | Form 6001.MCFA | Page 3 | ||
Schedule 5 (Required Replacement Schedule) | 11-20 | © 2020 Fannie Mae | ||
[Resources/ CBRE 2021] |
As to Palmer at Las Colinas, List of Replacements for Replacement Reserve
Description of Item |
Site |
Asphalt seal coat and striping |
Structural Frame and Building Envelope (Architectural Components) |
Painting, Exterior |
Mechanical / Electrical / Plumbing Systems |
Fan coil unit / furnace |
Split system condenser |
Individual Unit Domestic Hot Water Heater |
Interior Elements (Dwelling Units / Common Area) |
Carpet |
Vinyl Flooring |
Kitchen: Dishwasher |
Kitchen: Range/Stove |
Kitchen: Refrigerator |
Kitchen: Microwave |
Unit Laundry: Dryer |
Unit Laundry: Washing machine |
Common area floors - tile, vinyl |
Miscellaneous/Other |
Pool/ spa plaster liner |
Pool/ spa heat and filtration equipment |
As to Providence in the Park, List of Replacements for Replacement Reserve
Description of Item |
Site |
Parking, stall striping |
Structural Frame and Building Envelope (Architectural Components) |
Painting, Exterior |
Mechanical / Electrical / Plumbing Systems |
Fan coil unit / furnace |
Split system condenser |
Individual Unit Domestic Hot Water Heater |
Interior Elements (Dwelling Units / Common Area) |
Carpet |
Vinyl plank flooring |
Kitchen: Dishwasher |
Kitchen: Range/Stove |
Kitchen: Refrigerator |
Kitchen: Microwave |
Common area floors tile, vinyl |
Miscellaneous/Other |
Pool/ spa plaster liner |
Pool/ spa heat and filtration equipment |
Master Credit Facility Agreement | Form 6001.MCFA | Page 4 | ||
Schedule 5 (Required Replacement Schedule) | 11-20 | © 2020 Fannie Mae | ||
[Resources/ CBRE 2021] |
As to South Lamar Village, List of Replacements for Replacement Reserve
Description of Item |
Site |
Asphalt seal coat and striping |
Structural Frame and Building Envelope (Architectural Components) |
Painting, Exterior |
Windows |
Mechanical / Electrical / Plumbing Systems |
Fan coil unit / furnace |
Split system condenser |
Interior Elements (Dwelling Units / Common Area) |
Carpet |
Vinyl Flooring |
Unit Wall and Ceiling Finishes |
Kitchen: Dishwasher |
Kitchen: Range/Stove |
Kitchen: Refrigerator |
Kitchen: Microwave |
Unit Laundry: Dryer |
Unit Laundry: Washing machine |
Kitchen: Cabinets (particle board) |
Bathroom: Vanity and Countertop |
Common area floors, carpet |
Miscellaneous/Other |
Pool/ spa plaster liner |
Pool/ spa heat and filtration equipment |
As to Uptown Buckhead, List of Replacements for Replacement Reserve
Description of Item |
Site |
Asphalt seal coat and striping |
Structural Frame and Building Envelope (Architectural Components) |
Painting, Exterior |
Mechanical / Electrical / Plumbing Systems |
Fan coil unit / furnace |
Split system condenser |
Individual Unit Domestic Hot Water Heater |
Interior Elements (Dwelling Units / Common Area) |
Carpet |
Vinyl Flooring |
Unit Wall and Ceiling Finishes |
Kitchen: Dishwasher |
Kitchen: Range/Stove |
Kitchen: Refrigerator |
Kitchen: Microwave |
Unit Laundry: Dryer |
Unit Laundry: Washing machine |
Miscellaneous/Other |
Pool/ spa plaster liner |
Pool/ spa heat and filtration equipment |
Master Credit Facility Agreement | Form 6001.MCFA | Page 5 | ||
Schedule 5 (Required Replacement Schedule) | 11-20 | © 2020 Fannie Mae | ||
[Resources/ CBRE 2021] |
As to Verona Apartments, List of Replacements for Replacement Reserve
Description of Item |
Site |
Asphalt seal coat and striping |
Structural Frame and Building Envelope (Architectural Components) |
Painting, Exterior |
Composite Siding |
Mechanical / Electrical / Plumbing Systems |
Fan coil unit / furnace |
A/C window unit or through wall |
Individual Unit Domestic Hot Water Heater |
Interior Elements (Dwelling Units / Common Area) |
Carpet |
Vinyl Flooring |
Kitchen: Dishwasher |
Kitchen: Range/Stove |
Kitchen: Refrigerator |
Unit Laundry: Dryer |
Unit Laundry: Washing machine |
Common area floors, carpet |
Miscellaneous/Other |
Pool/ spa plaster liner |
Pool/ spa heat and filtration equipment |
As to Westside, List of Replacements for Replacement Reserve
Description of Item |
Site |
Parking, stall striping |
Structural Frame and Building Envelope (Architectural Components) |
Painting, Exterior |
Mechanical / Electrical / Plumbing Systems |
Fan coil unit / furnace |
Split system condenser |
Central Domestic Water Boiler |
Water Storage Tank |
Interior Elements (Dwelling Units / Common Area) |
Carpet |
Vinyl Flooring |
Kitchen: Dishwasher |
Kitchen: Range/Stove |
Kitchen: Refrigerator |
Kitchen: Microwave |
Common area floors - tile, vinyl |
Miscellaneous/Other |
Pool/ spa plaster liner |
Pool/ spa heat and filtration equipment |
Tennis Court / Sport Court resurfacing (acrylic emulsion) |
Tot-Lot |
[Remainder of Page Intentionally Blank]
Master Credit Facility Agreement | Form 6001.MCFA | Page 6 | ||
Schedule 5 (Required Replacement Schedule) | 11-20 | © 2020 Fannie Mae | ||
[Resources/ CBRE 2021] |
SCHEDULE 6
TO MASTER CREDIT FACILITY AGREEMENT
Required Repair Schedule
Mortgaged Property Name: [***]
Repairs Escrow Deposit: Waived
Repair Description |
Estimated Cost | Amount of Escrow | Completion Date | |||||||
[***] | $[***] | [***] | [***] | |||||||
|
|
|||||||||
Total Escrow |
Waived | |||||||||
|
|
Master Credit Facility Agreement | Form 6001.MCFA | Page 1 | ||
Schedule 6 (Required Repair Schedule) | 11-20 | © 2020 Fannie Mae | ||
[Resources/ CBRE 2021] |
SCHEDULE 7
TO MASTER CREDIT FACILITY AGREEMENT
General Conditions Schedule
Borrowers right to close any transaction requested in a Request (other than a Termination Request) shall be subject to satisfaction of the following General Conditions precedent, in addition to any other applicable conditions precedent contained in this Master Agreement:
(a) | No Material Adverse Effect. |
There has been no Material Adverse Effect since the later of the Initial Effective Date and the date of the last amendment to this Master Agreement, and the effective date of the then most recent Collateral Event.
(b) | No Default. |
There shall exist no Event of Default or Potential Event of Default (that is not otherwise cured by the closing of such Request). The closing of such Request shall not result in an Event of Default or Potential Event of Default.
(c) | No Insolvency. |
Receipt by Lender on the Effective Date for the Request of evidence satisfactory to Lender that neither Borrower nor any general partner or sole member of Borrower, if applicable, is Insolvent or will be rendered Insolvent by the transactions contemplated by the Loan Documents or, after giving effect to such transactions, will be left with an unreasonably small capital with which to engage in its business or undertakings, or will have intended to incur, or believe that it has incurred, debts beyond its ability to pay such debts as they mature or will have intended to hinder, delay or defraud any existing or future creditor; provided, however, that this subparagraph (c) shall not apply to any Borrower that does not own a Mortgaged Property unless and until such Borrower becomes the owner of a Mortgaged Property.
(d) | Representations and Warranties. |
All representations and warranties made by Borrower and Guarantor in the Loan Documents shall be true and correct on the Effective Date for the Request with the same force and effect as if such representations and warranties had been made on and as of the Effective Date for the Request, subject to (i) changes in facts or circumstances rendering such representations and warranties untrue, provided that such changes cannot be of a nature that would cause Borrower to be in default under the Loan Documents or that would cause Lender and/or Fannie Mae, in its respective customary practice, to refuse to extend additional credit to borrowers under similar circumstances, which, in either case, is not otherwise cured by the closing of such Request, and (ii) changes to representations and warranties resulting from operations of the Mortgaged Property which are expressly permitted under the terms of this Master Agreement shall not constitute a failure of this condition.
Master Credit Facility Agreement | Form 6001.MCFA | Page 1 | ||
Schedule 7 (General Conditions Schedule) | 11-20 | © 2020 Fannie Mae | ||
[Resources/ CBRE 2021] |
(e) | Payment of Expenses. |
The payment by Borrower of Lenders and Fannie Maes reasonable third party out-of-pocket fees and expenses payable in accordance with this Master Agreement, including the legal fees and expenses described in Section 4.02(g) (Payment of Costs, Fees, and Expenses) of this Master Agreement whether or not the Request closes; provided, however, if Borrower makes a Request and fails to close on a Request for any reason other than the default by Lender, then Borrower shall also pay to Lender and Fannie Mae all actual damages incurred by Lender and Fannie Mae in connection with the failure to close.
(f) | No Untrue Statements. |
The Loan Documents shall not contain any untrue or misleading statement of a material fact and shall not fail to state a material fact necessary to make the information contained therein not misleading.
(g) | Covenants. |
Borrower and Guarantor are in full compliance with each of the covenants contained in the Loan Documents, without giving effect to any notice and cure rights of Borrower and Guarantor.
(h) | Delivery of Closing Documents. |
The receipt by Lender of the following, each dated as of the Effective Date for the Request, in form and substance satisfactory to Lender in all respects:
(1) the Loan Documents relating to such Request including an Organizational Certificate; and
(2) such other documents, instruments, approvals (and, if requested by Lender, certified duplicates of executed copies thereof) and opinions as Lender may reasonably request.
[Remainder of Page Intentionally Blank]
Master Credit Facility Agreement | Form 6001.MCFA | Page 2 | ||
Schedule 7 (General Conditions Schedule) | 11-20 | © 2020 Fannie Mae | ||
[Resources/ CBRE 2021] |
SCHEDULE 8
TO MASTER CREDIT FACILITY AGREEMENT
Property-Related Documents Schedule
With respect to any Additional Mortgaged Property or Future Advance, it shall be a condition precedent that Lender receive from Borrower each of the documents and reports required by Lender in connection with the addition of such Mortgaged Property to the Collateral Pool or making of such Future Advance and, each of the following, each dated as of the applicable Effective Date, in form and substance satisfactory to Lender in all respects (the Property-Related Documents):
(a) a commitment for the Title Policy applicable to each Mortgaged Property being added and a pro forma Title Policy based on the commitment in the amount of title insurance afforded by the Title Policy for each Mortgaged Property being added to the Collateral Pool (1) if tie-in endorsements are available for all or a portion of the Mortgaged Properties, in an aggregate amount equal to the combined Allocable Facility Amounts for all of the Mortgaged Properties covered by the tie-in endorsements, not to exceed the amount of the aggregate original principal amount of all Advances Outstanding, or (2) if a tie-in endorsement is not available for any Mortgaged Property, then with respect to such Mortgaged Properties not subject to the tie-in endorsement an amount equal to one hundred percent (100%) of the Valuation of such Mortgaged Property not subject to the tie-in endorsement (or such lesser amount that is the maximum allowed by law or regulation); provided, however, for Mortgaged Properties located in any jurisdiction in which a tie-in endorsement is not available, including, without limitation, New York, Pennsylvania, Minnesota and Florida, the Title Policy for such Mortgaged Property shall provide title insurance in an amount equal to one hundred thirty percent (130%) of the Allocable Facility Amount of such Mortgaged Property.
(b) a Security Instrument for each Additional Mortgaged Property. The amount secured by each Security Instrument shall be equal to the aggregate original principal amount of all Advances Outstanding in effect from time to time;
(c) a title instruction letter directing the Title Company to file and/or record in all applicable jurisdictions, all applicable Loan Documents required by Lender to be filed or recorded, including duly executed and delivered original copies of the Security Instruments covering the applicable Mortgaged Properties and UCC-1 Financing Statements covering the portion of the Collateral comprised of personal property, and other appropriate instruments, in form and substance satisfactory to Lender and in form proper for recordation, as may be necessary in the opinion of Lender to perfect the Liens created by the applicable Security Instruments and any other Loan Documents creating a Lien in favor of Lender, and the payment of all taxes, fees and other charges payable in connection with such execution, delivery, recording and filing;
Master Credit Facility Agreement | Form 6001.MCFA | Page 1 | ||
Schedule 8 (Property-Related Documents Schedule) | 11-20 | © 2020 Fannie Mae | ||
[Resources/ CBRE 2021] |
(d) if the Title Policy for an Additional Mortgaged Property contains a tie-in endorsement (as available), an endorsement to each Title Policy for each Mortgaged Property in the Collateral Pool containing a tie-in endorsement, adding a reference to the Additional Mortgaged Property;
(e) if required by Lender
(1) amendments to this Master Agreement, the Notes and the existing Security Instruments reflecting any Addition, Substitution or Future Advance and increase in the secured amount of each Security Instrument, if applicable; and
(2) as to any Security Instrument or Note so amended or if Lender determines that an endorsement to the Title Policy is necessary to maintain the priority of the Lien created in favor of Lender with respect to the Outstanding Indebtedness or to maintain the validity of any Title Policy, the receipt by Lender of an endorsement to each Title Policy insuring the amended Security Instruments, amending the effective date of each Title Policy to the Effective Date and showing no additional exceptions to coverage other than the exceptions shown on the Initial Effective Date for such Mortgaged Property, Permitted Encumbrances and other exceptions approved by Lender, together with any reinsurance agreements required by Lender;
(f) clean UCC searches, judgment searches and tax lien searches on Borrower, Borrowers sole member, managing member, or general partner (as applicable), and SPE Owner;
(g) the Insurance Policy (or a certified copy of the Insurance Policy) applicable to the Additional Mortgaged Property;
(h) unless waived by Lender, the Survey applicable to the Additional Mortgaged Property and approved by Lender (which shall be last revised no more than forty-five (45) days prior to the applicable Effective Date);
(i) either (1) (A)(x) letters or other evidence with respect to the Additional Mortgaged Property from the appropriate Governmental Authority concerning applicable zoning and building laws or (y) a PZR or Zoning Info or other similar third party report on zoning compliance, and (B) a zoning endorsement to the Title Policy (if available in the applicable jurisdiction) or (2) a zoning opinion letter, in each case in substance satisfactory to Lender;
(j) intentionally omitted;
(k) a Contribution Agreement or an amendment thereto;
(l) an Environmental Indemnity Agreement, amendment thereto or Confirmation of Environmental Indemnity Agreement, as required by Lender;
Master Credit Facility Agreement | Form 6001.MCFA | Page 2 | ||
Schedule 8 (Property-Related Documents Schedule) | 11-20 | © 2020 Fannie Mae | ||
[Resources/ CBRE 2021] |
(m) an Assignment of Management Agreement or an amendment thereto applicable to the Additional Mortgaged Property, on the standard form required by Lender;
(n) an assignment of leases and rents applicable to the Additional Mortgaged Property, if Lender determines one to be necessary or desirable;
(o) any required subordination, non-disturbance and attornment agreements and/or estoppel certificates with respect to any commercial leases, master leases and/or ground lease (if any) affecting the Additional Mortgaged Property; and
(p) such other documents, instruments and approvals (and if requested by Lender, certified duplicates of executed copies thereof) as Lender may reasonably request.
[Remainder of Page Intentionally Blank]
Master Credit Facility Agreement | Form 6001.MCFA | Page 3 | ||
Schedule 8 (Property-Related Documents Schedule) | 11-20 | © 2020 Fannie Mae | ||
[Resources/ CBRE 2021] |
SCHEDULE 9
TO MASTER CREDIT FACILITY AGREEMENT
Conversion Schedule
The procedure for converting all or any portion of a Variable Note to a Fixed Note contained in this Conversion Schedule shall apply to all Conversion of Variable Notes to Fixed Notes which are permitted during the Conversion Period.
(a) | Procedures for Conversion. |
(1) | Conversion Request; Conversion Eligibility Determination. |
(A) Subject to the terms herein, if Borrower desires to exercise a Conversion, Borrower shall submit a Conversion Request to Lender. Each Conversion Request shall (i) designate the amount of the Variable Note Outstanding to be converted, (ii) be in the minimum amount of $5,000,000 or such other amount permitted by Lender, and (iii) include Borrowers selection of a Fixed Rate Option. Borrower shall deliver the Conversion Request no earlier than the first day of the Conversion Request Period and no later than the last day of the Conversion Request Period, unless otherwise agreed to by Lender.
(B) The Conversion Request shall be accompanied by the Re-Underwriting Fee in the form of a check payable to Lender or by wire transfer to an account designated by Lender, which Re-Underwriting Fee shall be deemed earned by Lender and non-refundable upon receipt.
(C) Borrower shall submit to Lender, within five (5) days after receipt of a request therefor, all information relating to the operation of the Mortgaged Property required by Lender to determine whether the Coverage and LTV Test would be satisfied immediately after such Conversion. If Borrower fails to provide such information within such period, Borrowers Conversion Request shall be deemed canceled.
(D) Within fifteen (15) days after receipt of a Conversion Request (or, if Lender requests additional information from Borrower pursuant to Section (a)(1)(C) of this Conversion Schedule, within fifteen (15) days after Lenders receipt of such additional information), Lender shall determine whether the Coverage and LTV Test would be satisfied immediately after the Conversion.
(2) | Exercise of Conversion; Rate Lock Request. |
(A) If, after receipt of Lenders confirmation that the Coverage and LTV Test would be satisfied immediately after the Conversion Borrower desires to exercise the Conversion, Borrower shall, no later than thirty-five (35) days prior to the last day of the Conversion Period (unless otherwise agreed to by Lender, provided that in no event shall the rate lock described below take place later than the date one month prior to the last day of the Conversion Period):
Master Credit Facility Agreement | Form 6001.MCFA | Page 1 | ||
Schedule 9 (Conversion Schedule) | 11-20 | © 2020 Fannie Mae | ||
[Resources/ CBRE 2021] |
(i) pay to Lender the Conversion Good Faith Deposit; and
(ii) make a Conversion Rate Lock Request.
(B) Borrower shall lock the Fixed Rate in the manner prescribed by Lender and the date of such rate lock shall be deemed the Conversion Exercise Date. In no event shall the Conversion Exercise Date be earlier than the date two (2) months prior to the Conversion Effective Date nor later than the date one (1) month prior to the Conversion Effective Date. The Conversion Closing Date shall be determined by Lender and shall be no later than ten (10) days after the Conversion Exercise Date.
(b) | Underwriting and Terms of Conversion. |
(1) | Coverage and LTV Tests; Failure to Underwrite. |
After giving effect to the requested Conversion, the Coverage and LTV Tests shall be satisfied. In the event that the Coverage and LTV Tests would not be satisfied after the proposed Conversion, if Borrower continues to elect the Conversion, Borrower shall prepay such Advances or a portion of an Advance to meet the Coverage and LTV Tests and shall pay all Prepayment Premiums and other fees associated with such prepayment.
(2) | Maturity Date of Converted Advances. |
Upon Conversion, such converted Note shall have a Maturity Date specified by Borrower, provided that such Maturity Date shall be subject to Section 2.03(a)(5) (Maturity Dates).
(3) | Interest Rate and Terms for Converted Note. |
(A) The Interest Rate for such converted Note shall be determined by Lender at the time of the rate lock of the Conversion.
(B) For Variable Notes that are full-term interest-only, the Amortization Period from and after the Conversion Effective Date shall be three hundred sixty (360) months. For all other Variable Notes, including Variable Notes that are partial interest-only or amortizing, the Amortization Period from and after the Conversion Effective Date shall be:
(i) three hundred sixty (360) months, if (x) subject to the limitations in Section 2.03(a)(5)(B) (Maturity Dates), Borrower selects a Fixed Rate Option having a term greater than or equal to the original term of the Variable Note from the Effective Date of such Note through the Maturity Date, and (y) the most recent inspection of the Mortgaged Property by Lender resulted in a rating of either 1 or 2; or
Master Credit Facility Agreement | Form 6001.MCFA | Page 2 | ||
Schedule 9 (Conversion Schedule) | 11-20 | © 2020 Fannie Mae | ||
[Resources/ CBRE 2021] |
(ii) in all other cases, the number of months equal to (x) three hundred sixty (360) months, minus (y) the number of Monthly Debt Service Payments that have elapsed since the Effective Date of such Variable Note.
Notwithstanding the foregoing, if Lender permits the interest-only period to continue after Conversion and (1) the Variable Note converts to a Fixed Note during an interest-only period, and (2) Borrower elects a Fixed Rate Option with a Fixed Note term greater than or equal to the original term of the original Variable Note, the remaining portion of the interest-only period shall carry over to the Fixed Note and the Amortization Period shall commence following the completion of the interest-only period.
(C) The Monthly Debt Service Payment following a Conversion shall be in an amount required to pay the unpaid principal balance of the Advance subject to such Conversion immediately prior to the Initial Fixed Rate Payment Date in equal monthly installments, including accrued interest at the Fixed Rate, over the Amortization Period utilizing the 30/360 Interest Accrual Method even if Actual/360 is the Interest Accrual Method.
(D) Borrower acknowledges and agrees that the existing MBS for the Variable Note shall be repaid and a new MBS shall be issued for the term of such converted Fixed Note. The closing of the Conversion is subject to the precondition that Lender must confirm with Fannie Mae that Fannie Mae is generally offering to purchase in the marketplace MBS of this execution type at the time Borrower delivers the Conversion Request to Lender and at the time the Conversion is rate locked. The Conversion Good Faith Deposit will be returned to Borrower after the issuance of the new MBS.
(c) | Conditions Precedent. |
The Conversion of all or a portion of a Variable Note to a Fixed Note shall be subject to satisfaction of the following conditions precedent as of the Conversion Closing Date:
(1) satisfaction of the tests set forth in (b) (Underwriting and Terms of Conversion) of this Conversion Schedule;
(2) receipt by Lender of:
(A) if required by Lender, an endorsement to each Title Policy, amending the effective date of the Title Policy to the Conversion Closing Date and showing no additional exceptions to coverage other than the exceptions shown on the effective date that each Title Policy was issued, Permitted Encumbrances and other exceptions approved by Lender;
Master Credit Facility Agreement | Form 6001.MCFA | Page 3 | ||
Schedule 9 (Conversion Schedule) | 11-20 | © 2020 Fannie Mae | ||
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(B) clean UCC searches, judgment searches and tax lien searches on Borrower, Borrowers sole member, managing member, or general partner (as applicable), and SPE Owner;
(C) the Conversion Fee and the non-refundable Re-Underwriting Fee;
(D) a Request Opinion; and
(E) one (1) or more executed, original counterparts of all Conversion Documents, dated as of the Conversion Closing Date, each of which shall be in full force and effect and in form and substance satisfactory to Lender in all respects; and
(3) satisfaction of all General Conditions.
Borrower shall pay to Lender on the Conversion Closing Date and as a condition to closing of the Conversion all of Lenders out-of-pocket costs (including reasonable attorneys fees) incurred in reviewing and preparing any and all documents in connection with the Conversion, regardless of whether the Conversion is closed.
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Master Credit Facility Agreement | Form 6001.MCFA | Page 4 | ||
Schedule 9 (Conversion Schedule) | 11-20 | © 2020 Fannie Mae | ||
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SCHEDULE 10
TO MASTER CREDIT FACILITY AGREEMENT
Mortgaged Property Release Schedule
Any Mortgaged Property released from the Collateral Pool pursuant to Section 2.10 (Collateral Events) of this Master Agreement shall be subject to the terms of this Master Agreement including this Mortgaged Property Release Schedule.
(a) | Request. |
(1) To obtain a Release of a Mortgaged Property from the Collateral Pool, Borrower shall deliver a Release Request to Lender. Borrower shall not be permitted to re-borrow any amounts that will be prepaid in connection with the Release and any prepayments associated with such release shall automatically result in a permanent reduction of the Advances Outstanding.
(2) In connection with a Substitution, Borrower shall simultaneously deliver to Lender both a completed and executed Release Request and Addition Request pursuant to the Mortgaged Property Addition Schedule (unless the substitute Additional Mortgaged Property has not been identified by Borrower, in which case Borrower shall submit the Addition Request not less than sixty (60) Calendar Days prior to the date on which Borrower desires to add such Additional Mortgaged Property, but not later than sixty (60) Calendar Days prior to the Property Delivery Deadline). The Release Request shall indicate whether Borrower is requesting a simultaneous Substitution or a Staggered Substitution (as described in Section (e)(2)(A)(ii) (Closing) of the Mortgaged Property Addition Schedule).
(b) | Underwriting. |
Lender shall release a Release Mortgaged Property pursuant to a Release Request if all of the following conditions are satisfied:
(1) the resulting Collateral Pool satisfies the Coverage and LTV Tests;
(2) the Aggregate Debt Service Coverage Ratio will not be reduced immediately after the Release and the Aggregate Loan to Value Ratio will not be increased immediately after the Release as a result of such Release (the Release AGOB Test).
Notwithstanding the foregoing, the conditions in Section b(2), containing the Release AGOB Test shall be waived:
(A) at any time the Borrow Up Availability Period has expired, if after giving effect to such Release the Collateral Pool satisfies the Alternate Coverage and LTV Tests, provided that all other conditions in this Mortgaged Property Release Schedule are satisfied, or
Master Credit Facility Agreement | Form 6001.MCFA | Page 1 | ||
Schedule 10 (Mortgaged Property Release Schedule) | 11-20 | © 2020 Fannie Mae | ||
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(B) if Borrower has elected the Elected Coverage and LTV Tests and such Release occurs on or before the fifth (5th) anniversary of the Initial Closing Date and all other conditions in this Mortgaged Property Release Schedule are satisfied, or
(C) on the first five (5) Mortgaged Properties Released from the Collateral Pool (inclusive of those released in connection with a Substitution) provided the Release is completed prior to the third (3rd) anniversary of the Initial Effective Date.
Notwithstanding the foregoing, in the event the applicable conditions of Section (b)(Underwriting) in this Mortgaged Property Release Schedule are not satisfied, Borrower shall have the right to prepay any amount necessary to satisfy such conditions for any future Release of a Mortgaged Property or any other Collateral Event, subject to the terms of Section 2.04 of this Master Agreement.
(c) | Release Price. |
(1) The Release Price for each Release Mortgaged Property means the greater of
(A) one hundred percent (100%) of the Allocable Facility Amount for the Release Mortgaged Property; and
(B) one hundred percent (100%) of the amount, if any, of Advances Outstanding that are required to be repaid by Borrower to Lender in connection with the proposed Release of the Release Mortgaged Property from the Collateral Pool so that, immediately after the Release, the provisions of Section (b) (Underwriting) of this Mortgaged Property Release Schedule shall be satisfied.
Notwithstanding the foregoing, anytime the Borrow Up Availability Period is not in effect, if after giving effect to such Release of a Mortgaged Property the Collateral Pool satisfies the Alternate Coverage and LTV Tests and all other conditions in this Mortgaged Property Release Schedule are satisfied, then the Release Price for such Release Mortgaged Property shall be $0.00. Lender acknowledges that Borrower may satisfy the Alternate Coverage and LTV Tests by repaying all or a portion of an Advance and any associated Prepayment Premiums.
(2) In addition to the Release Price, Borrower shall pay to Lender all associated Prepayment Premiums and other amounts then due and payable under the Notes evidencing the Advances being repaid. In connection with a Staggered Substitution, Borrower shall post a Substitution Deposit (which shall include the Release Price) pursuant to the terms of this Mortgaged Property Release Schedule.
Master Credit Facility Agreement | Form 6001.MCFA | Page 2 | ||
Schedule 10 (Mortgaged Property Release Schedule) | 11-20 | © 2020 Fannie Mae | ||
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(d) | Application of Release Price. |
(1) The Release Price for the Release Mortgaged Property shall be applied in reduction of the principal amounts of the Advances Outstanding in the order selected by Borrower, provided that (A) any amount of the Note that Borrower elects to prepay must be prepaid in full or, if the Release Price is not sufficient to do so, the Note shall be the only Note partially prepaid; (B) prepayment is permitted under such Note; (C) any Prepayment Premium due and owing is paid; and (D) interest is paid through the end of the month. If Borrower does not give Lender direction with respect to the application of the Release Price or if the selected Note does not comply with the provisions of (A) and (B) above, then the Release Price shall be applied:
(i) first against any Variable Advances Outstanding so long as the prepayment is permitted under the Variable Note (and any Prepayment Premium due and owing is paid), until any Variable Advance is no longer Outstanding (provided that, in the event there are multiple Variable Advances Outstanding, Lender shall determine the order of application of the Release Price taking into account factors including the unpaid principal balances of the Variable Notes, and which Variable Note Outstanding has the lowest prepayment costs or highest interest rate);
(ii) then against any Fixed Advances Outstanding, so long as prepayment is permitted under the applicable Fixed Note (and any Prepayment Premium due and owing is paid) (provided that, in the event there are multiple Fixed Advances Outstanding, Lender shall determine the order of application of the Release Price taking into account factors including the unpaid principal balances of the Fixed Notes, and which Fixed Note Outstanding has the lowest prepayment costs or the highest interest rate).
The Note to be prepaid or partially prepaid as determined pursuant to this Section (d) (Application of Release Price), shall be referred to as the Selected Advance.
(2) In connection with a Substitution, Borrower may substitute a Mortgaged Property that has an estimated Allocable Facility Amount that is less than the Allocable Facility Amount of the Release Mortgaged Property so long as Borrower pays the Release Price associated with the difference between such Allocable Facility Amounts.
Master Credit Facility Agreement | Form 6001.MCFA | Page 3 | ||
Schedule 10 (Mortgaged Property Release Schedule) | 11-20 | © 2020 Fannie Mae | ||
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(e) | Conditions Precedent. |
The Release of a Mortgaged Property from the Collateral Pool is subject to the satisfaction of the following conditions precedent on or before the Effective Date:
(1) the Selected Advance must be prepayable as of the Effective Date of the Release of such Mortgaged Property;
(2) receipt by Lender of the fully executed Release Request;
(3) immediately after giving effect to the requested Release, the provisions of Section (b) (Underwriting) of this Mortgaged Property Release Schedule are satisfied;
(4) receipt by Lender of the Release Price and all amounts owing under Section (c) (Release Price) of this Mortgaged Property Release Schedule, or, in connection with a Staggered Substitution, receipt by Lender of the Substitution Deposit (inclusive of the Substitution Cost Deposit) to the extent necessary under Section (g)(1) (The Substitution Deposit) of this Mortgaged Property Release Schedule;
(5) receipt by Lender of the Release Fee (which in connection with a Staggered Substitution will be applied to the Substitution Fee due upon closing), or in connection with a Simultaneous Substitution, receipt by Lender of the Substitution Fee; provided no Release Fee shall be due in connection with the repayment of all Indebtedness and termination of the Master Agreement;
(6) receipt by Lender of all reasonable legal fees and expenses in connection with a Release Request;
(7) receipt by Lender of one (1) or more executed, original counterparts of all Release Documents, dated as of the Effective Date, each of which shall be in full force and effect, in form and substance satisfactory to Lender in all respects;
(8) if required by Lender, amendments to this Master Agreement, the Notes and the Security Instruments, reflecting the release of the Release Mortgaged Property from the Collateral Pool and, as to any Security Instrument or Note so amended or if Lender determines that such endorsement is necessary to maintain the priority of the Lien created in favor of Lender with respect to the Outstanding Indebtedness or to maintain the validity of any Title Policy, the receipt by Lender of an endorsement to each Title Policy insuring the Security Instruments, amending the effective date of each Title Policy to the Effective Date and showing no additional exceptions to coverage other than the exceptions shown on the initial Effective Date for such Mortgaged Property, Permitted Encumbrances and other exceptions approved by Lender; provided that, subject to the requirement that the Release shall not result in a significant modification, as defined under applicable Treasury Regulations, Lender agrees to reasonably cooperate with Borrower in connection with the Release of a Mortgaged Property in New York, Minnesota, or any other state where significant tax savings can be achieved upon the splitting of one or more Notes and assignment of the applicable Note to a successor Lender;
Master Credit Facility Agreement | Form 6001.MCFA | Page 4 | ||
Schedule 9 (Conversion Schedule) | 11-20 | © 2020 Fannie Mae | ||
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(9) satisfaction of all applicable General Conditions;
(10) if the Release Mortgaged Property is one phase of a project, and one or more other phases of the project are Mortgaged Properties which will remain in the Collateral Pool (Remaining Mortgaged Properties), the Remaining Mortgaged Properties must be able to be operated separately from the Release Mortgaged Property and any other phases of the project which are not Mortgaged Properties, taking into account any cross use agreements or easements, access, utilities, marketability, community services, ownership and operation of the Remaining Mortgaged Properties and any other relevant factors pursuant to the Underwriting and Servicing Requirements. Borrower shall deliver to Lender evidence satisfactory to Lender that this condition precedent is satisfied prior to the closing of the transaction that is the subject of the Request. Borrower acknowledges that none of the Initial Mortgaged Properties are part of a phase of a project;
(11) after the Release no Borrower owns the Release Mortgaged Property or any portion thereof, and any remaining SPE Owner continues to satisfy the SPE Requirements;
(12) receipt by Lender of endorsements to the tie-in endorsements of the Title Policies, if deemed necessary by Lender, to reflect the Release. Notwithstanding anything to the contrary herein, no Release of any Mortgaged Property in the Collateral Pool shall be made unless Borrower has confirmed that each remaining Mortgaged Property in the Collateral Pool has title insurance to Lender (taking into account title insurance coverage provided by any tie-in endorsements) in an amount equal to or greater than one hundred percent (100%) of the Initial Valuation of such Mortgaged Properties; provided, however, for Mortgaged Properties located in a jurisdiction where tie-in endorsements are not available, including New York, Pennsylvania, Minnesota or Florida, the Title Policy for such Mortgaged Property shall provide title insurance in an amount equal to one hundred thirty percent (130%) of the Allocable Facility Amount of such Mortgaged Property;
(13) receipt by Lender on the Effective Date of a Confirmation of Obligations and a Confirmation of Guaranty, if applicable; and
(14) confirmation that the provisions of Section 2.03(a)(2)(B) (Interest Accrual and Computation; Amortization; Interest Rate Cap) shall be satisfied as they relate to the waiver of an Interest Rate Cap.
Master Credit Facility Agreement | Form 6001.MCFA | Page 5 | ||
Schedule 10 (Mortgaged Property Release Schedule) | 11-20 | © 2020 Fannie Mae | ||
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(f) Closing.
If all conditions precedent contained in this Master Agreement are satisfied, Lender shall cause the Release Mortgaged Property to be Released on an Effective Date selected by Lender, and occurring within thirty (30) days after Lenders receipt of the Release Request (or on such other date as Borrower and Lender may agree), by executing and delivering, and causing all applicable parties to execute and deliver, all at the sole cost and expense of Borrower, the Release Documents. If approved by Lender, Borrower may prepare the Release Documents and submit them to Lender for its review.
(g) Staggered Substitution Specific Terms.
The following provisions are applicable to Staggered Substitutions only. Borrower may elect a Staggered Substitution if (x) at the time of the Release at least one Note is prepayable (i.e., not all Notes are subject to a Lockout Period) and (y) the Release Price does not exceed the aggregate amount of all Notes that are open to prepayment. No other Requests may be closed until the Staggered Substitution is completed.
(1) | The Substitution Deposit. |
If a Substitution is a Staggered Substitution, on or before the Effective Date of the Release of the Release Mortgaged Property, Borrower shall deposit with Lender the Substitution Deposit described below in the form of cash in a non-interest bearing account held by Lender as additional Collateral. In lieu of (or in addition to) depositing cash for the Substitution Deposit, Borrower may post a Letter of Credit as additional Collateral issued by a financial institution reasonably acceptable to Lender in accordance with the Letter of Credit Schedule, with a face amount available to be drawn equal to the Substitution Deposit (less any amount deposited in cash) as additional Collateral.
(2) | Substitution Deposit Amount. |
(A) The Substitution Deposit for each proposed Staggered Substitution shall be an amount equal to the sum of:
(i) the Release Price relating to the Release Mortgaged Property; plus
(ii) any and all Prepayment Premiums, as applicable, for the Selected Advance determined in accordance with the conditions set forth in Section (d) (Application of Release Price) of this Mortgaged Property Release Schedule, as the Advance(s) that shall be prepaid if the Substitution fails to take place. The Prepayment Premium shall be calculated as of the end of the month in which the Property Delivery Deadline occurs, as if the Selected Advance were to be prepaid in such month; plus
(iii) estimated costs, expenses and fees of Lender and Fannie Mae pertaining to the Substitution (such costs, fees and expenses, the Substitution Cost Deposit).
Master Credit Facility Agreement | Form 6001.MCFA | Page 6 | ||
Schedule 10 (Mortgaged Property Release Schedule) | 11-20 | © 2020 Fannie Mae | ||
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The amount of the required Substitution Deposit shall be recalculated by Lender in the event the Property Delivery Deadline is extended pursuant to Section (e) (Closing) of the Mortgaged Property Addition Schedule, and in the event a Substitution is partially satisfied by the Addition of an Additional Mortgaged Property, as further set forth in Section (f)(2) (Substitution Deposit Disbursement and Recalculation) of the Mortgaged Property Addition Schedule.
(B) The Substitution Cost Deposit shall be used by Lender to cover all reasonable out-of-pocket costs and expenses incurred by Lender and Fannie Mae, including any out-of-pocket legal fees and expenses incurred by Fannie Mae and Lender in connection with such Substitution whether such Substitution actually closes (the Substitution Costs).
(3) | Continued Obligations; Restriction on Borrowings. |
(A) Borrower shall continue to be obligated to make any regularly scheduled payments of principal and interest due under all Notes Outstanding during the Staggered Substitution period. Until the completion of the Staggered Substitution, no Future Advances will be permitted unless and until the provisions of Section (f)(1) (Failure to Close Substitution) of the Mortgaged Property Addition Schedule are satisfied.
(B) In connection with a Staggered Substitution, until the Addition of the Additional Mortgaged Property to the Collateral Pool and closing of the Substitution occurs, no Future Advances or other Requests will be permitted, provided that a Termination Request shall be permitted subject to satisfaction of the conditions in Section 2.11 (Termination of Master Agreement), and a Conversion pursuant to a Conversion Request shall be permitted subject to satisfaction of the conditions in the Conversion Schedule; provided further, however, with respect to any Conversion, the Substitution Deposit shall be recalculated based on the provisions in Section (g) (Staggered Substitution Specific Terms) of this Mortgaged Property Release Schedule and Borrower shall deposit with Lender as additional Collateral all increases, if any, in such Substitution Deposit within five (5) days after receipt of notice of the same.
(C) Notwithstanding anything to the contrary in this Master Agreement, no Staggered Substitution shall be permitted unless immediately after the Release of the Release Mortgaged Property the requirements in Section 2.10(e) (Limitation on Collateral Events) are satisfied.
Master Credit Facility Agreement | Form 6001.MCFA | Page 7 | ||
Schedule 10 (Mortgaged Property Release Schedule) | 11-20 | © 2020 Fannie Mae | ||
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(h) Release of Borrower and Guarantor.
Except for any provisions of this Master Agreement and the other Loan Documents that are expressly stated to survive any release or termination or for any liabilities or obligations of such Borrower or Guarantor which arose prior to the Effective Date of such Release, upon the Release of a Mortgaged Property, Borrower that is the owner of such Release Mortgaged Property (assuming Borrower owns no other Mortgaged Property in the Collateral Pool) shall be released automatically of all obligations under the Loan Documents, and Guarantor shall be released automatically of all obligations solely related to the Release Mortgaged Property as set forth in this Master Agreement and the other Loan Documents.
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Master Credit Facility Agreement | Form 6001.MCFA | Page 8 | ||
Schedule 10 (Mortgaged Property Release Schedule) | 11-20 | © 2020 Fannie Mae | ||
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SCHEDULE 11
TO MASTER CREDIT FACILITY AGREEMENT
Mortgaged Property Addition Schedule
Any Mortgaged Property (including a Mortgaged Property added in connection with a Substitution) added to the Collateral Pool pursuant to Section 2.10 (Collateral Events) of this Master Agreement shall be subject to the terms of this Master Agreement including this Mortgaged Property Addition Schedule.
(a) Request.
(1) From time to time, Borrower may deliver to Lender an Addition Request to add one (1) or more Additional Mortgaged Properties to the Collateral Pool.
(2) Any Addition Request shall be accompanied by the Additional Due Diligence Fees and Additional Due Diligence Fee Deposits. Borrower shall provide Lender information similar to the property-related information required by Lender in connection with the Initial Advances made hereunder and any additional information Lender may reasonably request.
(b) Underwriting.
(1) The following tests shall be satisfied as of the Effective Date:
(A) the proposed Additional Mortgaged Property satisfies the Individual Property Coverage and LTV Tests;
(B) immediately after such Addition, the Collateral Pool satisfies the Coverage and LTV Tests;
(C) in connection with a Substitution, the Aggregate Debt Service Coverage Ratio of the Collateral Pool immediately after the Substitution will not be less than the Aggregate Debt Service Coverage Ratio of the Collateral Pool immediately prior to the Release component of the Substitution (taking into account any paydown Borrower may make in order to comply with such ratio, subject to the terms of this Master Agreement);
(D) in connection with a Substitution, the Aggregate Loan to Value Ratio of the Collateral Pool immediately after the Substitution will not be greater than the Aggregate Loan to Value Ratio of the Collateral Pool immediately prior to the Release component of the Substitution (taking into account any paydown Borrower may make in order to comply with such ratio, subject to the terms of this Master Agreement) (together with the test in (C) above, the Substitution AGOB Test).
Master Credit Facility Agreement | Form 6001.MCFA | Page 1 | ||
Schedule 11 (Mortgaged Property Addition Schedule) | 11-20 | © 2020 Fannie Mae | ||
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Notwithstanding the foregoing, in connection with a Substitution, the Substitution AGOB Test shall be waived (the AGOB Exception):
(i) if at any time after the expiration of the Borrow Up Availability Period, immediately after giving effect to such Substitution the Collateral Pool satisfies the Alternate Coverage and LTV Tests and all other conditions in this Mortgaged Property Addition Schedule are satisfied, or
(ii) if Borrower has elected the Elected Coverage and LTV Tests and such Substitution occurs on or before the fifth (5th) anniversary of the Initial Closing Date and all other applicable conditions in this Mortgaged Property Addition Schedule are satisfied, or
(iii) on the first five (5) Mortgaged Properties released from the Collateral Pool (inclusive of those released as part of a Substitution) provided the Substitution is complete (e.g. the Addition of the Substitute Mortgaged Property closes or the Release Price is applied as if there was a Release rather than a Substitution) prior to the third (3rd) anniversary of the Initial Effective Date.
Notwithstanding anything to the contrary in this Master Agreement, no Collateral Event shall be permitted unless immediately after such Collateral Event the provisions of Section 2.10(e) (Limitation on Collateral Events) shall be satisfied.
(2) Lender shall evaluate the proposed Additional Mortgaged Property in accordance with the Underwriting and Servicing Requirements. Lender shall determine the Loan to Value Ratio of the proposed Additional Mortgaged Property and the Aggregate Loan to Value Ratio applicable to the Collateral Pool on the basis of the lesser of:
(A) the acquisition price of the proposed Additional Mortgaged Property, if purchased by Borrower within twelve (12) months of the related Addition Request, and
(B) a Valuation made with respect to the proposed Additional Mortgaged Property.
(3) After receipt of the Addition Request and all reports, certificates and documents required by Lender to determine compliance with this Mortgaged Property Addition Schedule, Lender shall notify Borrower whether the proposed Additional Mortgaged Property meets the requirements for Additions set forth in this Mortgaged Property Addition Schedule.
(4) If the proposed Additional Mortgaged Property meets the conditions set forth in this Mortgaged Property Addition Schedule, Lender shall notify Borrower of the Aggregate Debt Service Coverage Ratio, the Aggregate Loan to Value Ratio, and (in connection with any Future Advance made in connection with an Addition) the Advance amount that shall result from the Addition.
Master Credit Facility Agreement | Form 6001.MCFA | Page 2 | ||
Schedule 11 (Mortgaged Property Addition Schedule) | 11-20 | © 2020 Fannie Mae | ||
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(c) Additional Borrower.
On the Effective Date of the Addition of an Additional Mortgaged Property, the owner of such Additional Mortgaged Property, if such owner is an Additional Borrower, shall become a party to the Contribution Agreement in a manner satisfactory to Lender. Any Additional Borrower shall join into this Master Agreement and other Loan Documents and shall execute and deliver to Lender an amendment adding such Additional Borrower as a party to this Master Agreement and revising the Schedules and Exhibits hereto, as applicable, to reflect the Additional Mortgaged Property and Additional Borrower, in each case satisfactory to Lender. Any Additional Borrower and any SPE Owner must comply with the provisions of this Master Agreement, including the Single Purpose requirements of Section 4.01(h) (Borrower Status Representations and Warranties Single Purpose Status) unless otherwise waived by Lender.
(d) Conditions Precedent.
The Addition of an Additional Mortgaged Property to the Collateral Pool on the applicable Effective Date is subject to the satisfaction of the following conditions precedent:
(1) satisfaction of the provisions of Section (b) (Underwriting) of this Mortgaged Property Addition Schedule;
(2) receipt by Lender of the Additional Due Diligence Fee and the Additional Due Diligence Fee Deposit;
(3) satisfaction of all General Conditions;
(4) receipt by Lender of all Property-Related Documents;
(5) receipt by Lender of a Request Opinion; and
(6) receipt by Lender of certificates of insurance and duplicate original Insurance Policies currently in effect.
(e) Closing.
(1) | Additions. |
Other than in connection with a Substitution, if the proposed Additional Mortgaged Property meets the conditions set forth in this Mortgaged Property Addition Schedule, and Borrower timely elects to add the proposed Additional Mortgaged Property to a Collateral Pool, the proposed Additional Mortgaged Property shall be added to the Collateral Pool on an Effective Date selected by Lender, occurring within thirty (30) calendar days after all of the conditions for an Addition have been satisfied (or on such other date as Borrower and Lender may agree).
Master Credit Facility Agreement | Form 6001.MCFA | Page 3 | ||
Schedule 11 (Mortgaged Property Addition Schedule ) | 11-20 | © 2020 Fannie Mae | ||
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(2) | Substitutions. |
(A) In connection with a Substitution, if the Additional Mortgaged Property satisfies the conditions set forth herein and Borrower timely elects to proceed with the Substitution, the proposed Additional Mortgaged Property shall be added in replacement of the Mortgaged Property being released on an Effective Date selected by Lender and occurring:
(i) if the Substitution of the proposed Additional Mortgaged Property is to occur simultaneously with the release of the Release Mortgaged Property, within sixty (60) days after Lenders receipt of Borrowers Release Request indicating there is to be a Substitution (or on such other date to which Borrower and Lender may agree); or
(ii) if the Substitution is a Staggered Substitution, within ninety (90) days after the release of such Release Mortgaged Property (provided such date shall be extended an additional ninety (90) days if Borrower provides reasonable evidence of Borrowers diligent efforts in finding a suitable proposed Additional Mortgaged Property) (the Property Delivery Deadline) in accordance with the terms of the Mortgaged Property Release Schedule and this Mortgaged Property Addition Schedule.
(B) In the event that the Substitute Mortgaged Property would qualify for loan proceeds in excess of the Release Price of the Release Mortgaged Property, Borrower may request an Advance as further described in the Future Advance Schedule and such Advance shall not be considered a Borrow Up.
(f) Staggered Substitutions.
(1) | Failure to Close Substitution. |
If the Substitution of the proposed Additional Mortgaged Property does not occur by the Property Delivery Deadline, then such Borrower shall have irrevocably waived its right to substitute such Release Mortgaged Property with the proposed Additional Mortgaged Property, and the release of the Release Mortgaged Property shall be deemed to be a Release pursuant to the terms of the Mortgaged Property Release Schedule and shall trigger payment pursuant to the terms of the Mortgaged Property Release Schedule, plus the Release Fee.
Master Credit Facility Agreement | Form 6001.MCFA | Page 4 | ||
Schedule 11 (Mortgaged Property Addition Schedule) | 11-20 | © 2020 Fannie Mae | ||
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(2) | Substitution Deposit Disbursement and Recalculation. |
(A) On or prior to the Effective Date of the Substitution, Lender shall notify Borrower of the actual amount of the Substitution Costs incurred by Lender and Fannie Mae in connection with the Substitution and Borrower shall, on or before the Effective Date of the Substitution, pay to Lender the remainder of such Substitution Costs (if the actual amount of the Substitution Costs exceed the Substitution Cost Deposit (as defined in Section (g) (Staggered Substitution Specific Terms) of the Mortgaged Property Release Schedule) and the other amounts previously deposited with Lender by Borrower) or Lender shall promptly refund to Borrower any Substitution Cost Deposit deposited with Lender by Borrower in excess of the Substitution Costs (if the actual amount of the Substitution Costs is less than the Substitution Cost Deposit deposited with Lender by Borrower).
(B) At closing of the Substitution, Lender shall disburse or return the Substitution Deposit (as defined in Section (g) (Staggered Substitution Specific Terms) of the Mortgaged Property Release Schedule), as applicable (less any portion of the Substitution Cost Deposit used by Lender to cover all reasonable out-of-pocket costs and expenses incurred by Lender and Fannie Mae, including any out-of-pocket legal fees and expenses incurred by Fannie Mae and Lender in connection with such Substitution), directly to Borrower at such time as the conditions precedent for the Substitution have been satisfied, which must occur no later than the Property Delivery Deadline.
(C) If, pursuant to Section (b) (Underwriting) of this Mortgaged Property Addition Schedule, Borrower substitutes a Mortgaged Property and the resulting Collateral Pool does not satisfy the provisions of Section (b)(1)(B) and Sections (b)(1)(C) and (b)(1)(D) hereof (or, if applicable, the AGOB Exception), and Borrower notifies Lender that no further property will be substituted or Borrower fails to timely identify an additional replacement Mortgaged Property necessary to satisfy such provisions, then Lender shall:
(i) apply any or all of the Substitution Deposit necessary to satisfy the provisions of Section (b)(1)(B) and Sections (b)(1)(C) and (b)(1)(D) hereof (or, if applicable, the AGOB Exception), and Section (d) (Application of Release Price) of the Mortgaged Property Release Schedule; and
(ii) disburse to Borrower the remainder, if any, of the Substitution Deposit after such application (less any portion of the Substitution Cost Deposit used by Lender to cover all reasonable out-of-pocket costs and expenses incurred by Lender and Fannie Mae, including any out-of-pocket legal fees and expenses incurred by Fannie Mae and Lender in connection with such Substitution).
Master Credit Facility Agreement | Form 6001.MCFA | Page 5 | ||
Schedule 11 (Mortgaged Property Addition Schedule) | 11-20 | © 2020 Fannie Mae | ||
[Resources/ CBRE 2021] |
(D) Notwithstanding the foregoing, in the event that (i) the Property Delivery Deadline is extended pursuant to Section (e)(2)(A)(ii) (Closing) of this Mortgaged Property Addition Schedule or (ii) Borrower adds an Additional Mortgaged Property to the Collateral Pool prior to the Property Delivery Deadline but the addition of such Additional Mortgaged Property has not in and of itself satisfied the requirements of this Mortgaged Property Addition Schedule, Lender shall recalculate the Substitution Deposit. Any reduction, if any, in the Substitution Deposit shall be returned to Borrower, or in the case of a Letter of Credit, such Letter of Credit shall be reduced by such reduction in the Substitution Deposit. Any increase, if any, in the Substitution Deposit shall be paid by Borrower to Lender within three (3) Business Days of notice from Lender.
[Remainder of Page Intentionally Blank]
Master Credit Facility Agreement | Form 6001.MCFA | Page 6 | ||
Schedule 11 (Mortgaged Property Addition Schedule) | 11-20 | © 2020 Fannie Mae | ||
[Resources/ CBRE 2021] |
SCHEDULE 12
TO MASTER CREDIT FACILITY AGREEMENT
[Intentionally Deleted]
[Remainder of Page Intentionally Blank]
Master Credit Facility Agreement | Form 6001.MCFA | Page 1 | ||
Schedule 12 [Intentionally Deleted] | 11-20 | © 2020 Fannie Mae | ||
[Resources/ CBRE 2021] |
SCHEDULE 13
TO MASTER CREDIT FACILITY AGREEMENT
Ownership Interests Schedule
[See Attached]
Master Credit Facility Agreement | Form 6001.MCFA | Page 1 | ||
Schedule 13 (Ownership Interests Schedule) | 11-20 | © 2020 Fannie Mae | ||
[Resources/ CBRE 2021] |
Master Credit Facility Agreement | Form 6001.MCFA | Page 1 | ||
Schedule 13 (Ownership Interests Schedule) | 11-20 | © 2020 Fannie Mae | ||
[Resources/ CBRE 2021] |
Comments/Footnotes to Chart
*Guarantor is a publicly held real estate investment trust. The shareholders of Guarantor include all of the shareholders of Guarantor prior to the mergers plus all of the former shareholders of Resource Real Estate Opportunity REIT, Inc. and Resource Apartment REIT III, Inc.
There are no individuals or entities excluded from the organizational chart which are either non-U.S. individuals or entities with a 10% or greater aggregate direct or indirect ownership interest in Borrower or U.S. individuals or entities with a 25% or greater aggregate direct or indirect ownership interest in Borrower.
The Directors of Guarantor are: Alan F. Feldman, Gary Lichtenstein, Thomas Ikeler, Andrew Ceitlin, Lee Shlifer and Robert Lieber.(all U.S. Individuals). The Board of Directors of Guarantor is elected annually by its public shareholders. The Board of Directors of Guarantor is responsible for the management of Guarantor.
RRE Opportunity Holdings, LLC, Revolution I Merger Sub LLC, and RRE Opportunity Holdings II, LLC are all member managed by Guarantor.
RRE Opportunity OP II, LP is managed by Guarantor, as its general partner
All Borrowers are managed by their boards of directors, who are appointed by Guarantor, as the general partner of RRE Opportunity OP II, LP, the sole member of each Borrower.
Indirect Ownership in each Borrower is as follows:
| Guarantor owns in the aggregate 95.441% |
| RRE Opportunity Holdings, LLC owns 52.183% |
| Revolution I Merger Sub, LLC owns in the aggregate 52.235% |
| RRE Opportunity Holdings II, LLC owns 43.170% |
| Other Third Party Investors own in the aggregate 4.559% |
Master Credit Facility Agreement | Form 6001.MCFA | Page 1 | ||
Schedule 13 (Ownership Interests Schedule) | 11-20 | © 2020 Fannie Mae | ||
[Resources/ CBRE 2021] |
Borrowers (Fannie Mae Credit Facility)
RRE GILBERT HOLDINGS, LLC RRE CENTENNIAL HOLDINGS, LLC RRE BRENTDALE HOLDINGS, LLC RRE ADDISON PLACE HOLDINGS, LLC RRE WOODMOOR HOLDINGS, LLC RRE PROVIDENCE HOLDINGS, LLC |
RRE SANTA ROSA HOLDINGS, LLC RRE BUCKHEAD HOLDINGS, LLC RRE MONTCLAIR TERRACE HOLDINGS, LLC RRE BEAR CREEK HOLDINGS, LLC RRE FAIRWAYS AT BENT TREE HOLDINGS, LLC RRE BRECKENRIDGE HOLDINGS, LLC |
RRE FNMI LLC RRE FNM2 LLC RRE FNM3 LLC RRE FNM4 LLC |
* | The directors of all Borrowers are Alan F. Feldman and Thomas C. Elliott, both U.S. individuals |
Master Credit Facility Agreement | Form 6001.MCFA | Page 1 | ||
Schedule 13 (Ownership Interests Schedule) | 11-20 | © 2020 Fannie Mae | ||
[Resources/ CBRE 2021] |
SCHEDULE 14
TO MASTER CREDIT FACILITY AGREEMENT
Future Advance Schedule
Any Future Advance made under this Master Agreement shall be subject to the terms of this Master Agreement including this Future Advance Schedule. The Interest Rate for any Note in connection with a Future Advance shall be determined by Lender at the time of the Future Advance.
(a) Request.
Borrower shall deliver a Future Advance Request to Lender. Any Future Advance Request for a Future Advance shall be in the minimum amount of $5,000,000 or such other amount permitted by Lender.
(b) Underwriting.
Any Future Advance shall be subject to satisfaction of the Underwriting and Servicing Requirements and one of the following tests:
(1) if the Future Advance is a Borrow Up or a refinance of an Outstanding Advance, the Coverage and LTV Tests would be satisfied;
(2) if the Future Advance is being made in connection with the Addition of an Additional Mortgaged Property, the conditions of Section (b) (Underwriting) of the Mortgaged Property Addition Schedule would be satisfied; or
(3) if the Future Advance is being made in connection with a Substitution, in the event that the Substitute Mortgaged Property would qualify for an Advance that is higher than the Release Price of the Release Mortgaged Property, Borrower may request an Advance in an amount equal to the difference between what the Advance proceeds would be if the Substitute Mortgage Property were added as a new Additional Mortgaged Property independent of the Substitution (as determined pursuant to the conditions of Sections (b)(1) and (b)(2) (Underwriting) of the Mortgaged Property Addition Schedule) and the Release Price (as determined pursuant to the Mortgaged Property Release Schedule). Any such Advance shall not be considered a Borrow Up under this Master Agreement.
(c) Conditions Precedent.
The funding of any Future Advance on the applicable Effective Date is subject to the satisfaction of the following conditions precedent:
(1) satisfaction of the underwriting tests set forth in (b) (Underwriting) above;
Master Credit Facility Agreement | Form 6001.MCFA | Page 1 | ||
Schedule 14 (Future Advance Schedule) | 11-20 | © 2020 Fannie Mae | ||
[Resources/ CBRE 2021] |
(2) Lenders determination that the proposed borrower, key principal, and guarantor meet all of Lenders eligibility, credit, management and other standards customarily applied by Lender in connection with the origination or purchase of similar mortgage finance structures on similar Multifamily Residential Properties at the time of the Future Advance Request for the Future Advance;
(3) if required by Lender, if the Future Advance is a Variable Advance, receipt by Lender at least five (5) days prior to the applicable Effective Date of the confirmation of an Interest Rate Cap commitment, in accordance with the Cap Security Agreement, effective as of the Effective Date;
(4) if required by Lender, if the Future Advance is a Variable Advance, receipt by Lender, within fifteen (15) days after the applicable Effective Date, of Interest Rate Cap Documents, in accordance with the Cap Security Agreement, effective as of the Effective Date;
(5) if the Future Advance is a Fixed Advance, delivery of one or more Fixed Notes, duly executed by Borrower, in the amount and reflecting all of the terms of the Fixed Advance;
(6) if the Future Advance is a Variable Advance, delivery of one or more Variable Notes, duly executed by Borrower, in the amount and reflecting all of the terms of the Variable Advance;
(7) receipt by Lender of the completed Schedule of Advance Terms and Prepayment Premium Schedule, in each case applicable to the Future Advance, together with an amendment to this Master Agreement in form and substance acceptable to Lender incorporating such Schedules in their entirety to this Master Agreement;
(8) if the Future Advance is made in connection with the Addition of a Mortgaged Property, satisfaction of the conditions set forth in the Mortgaged Property Addition Schedule including payment receipt by Lender of all fees required pursuant to the Mortgaged Property Addition Schedule;
(9) receipt by Lender of the Additional Origination Fee;
(10) if the Future Advance is a Borrow Up, receipt by Lender of the non-refundable Re-Underwriting Fee;
(11) receipt by Lender of any other costs and expenses including all legal fees incurred by Lender and Fannie Mae;
(12) satisfaction of all General Conditions;
(13) receipt by Lender of a Request Opinion; and
Master Credit Facility Agreement | Form 6001.MCFA | Page 2 | ||
Schedule 14 (Future Advance Schedule) | 11-20 | © 2020 Fannie Mae | ||
[Resources/ CBRE 2021] |
(14) receipt by Lender of all applicable Property-Related Documents, if applicable.
(d) Closing of Future Advance.
If the conditions set forth in Section 2.02 (Advances Generally) for a Future Advance are satisfied, Lender shall make the requested Future Advance on an Effective Date selected by Lender (or on such other date as Borrower and Lender may agree).
[Remainder of Page Intentionally Blank]
Master Credit Facility Agreement | Form 6001.MCFA | Page 3 | ||
Schedule 14 (Future Advance Schedule) | 11-20 | © 2020 Fannie Mae | ||
[Resources/ CBRE 2021] |
SCHEDULE 15
TO MASTER CREDIT FACILITY AGREEMENT
Letter of Credit Schedule
Any Letter of Credit required or permitted pursuant to this Master Agreement shall be subject to the terms of this Master Agreement and this Letter of Credit Schedule. Any Letter of Credit must be issued by a financial institution satisfactory to Fannie Mae (Issuer).
(a) Issuer; Letter of Credit Requirements.
The Letter of Credit shall be in form and substance satisfactory to Lender and Lender shall be entitled (pursuant to Section (b) (Draws Under Letter of Credit) below) to draw under such Letter of Credit solely upon presentation of a sight draft to the Issuer. Any Letter of Credit shall be for a term of at least three hundred sixty-four (364) days (provided that in connection with a Substitution, the term of any Letter of Credit shall be no earlier than the date ten (10) Business Days after the Property Delivery Deadline).
(b) Draws Under Letter of Credit.
Lender shall have the right to draw monies under the Letter of Credit:
(1) upon the occurrence of an Event of Default;
(2) if thirty (30) days prior to the expiration of the Letter of Credit, either the Letter of Credit has not been extended for a term of at least three hundred sixty-four (364) days (provided that in connection with a Substitution, the term of any Letter of Credit shall be at least until the date ten (10) Business Days after the Property Delivery Deadline) or Borrower has not replaced the Letter of Credit with substitute cash collateral in the amount required by Lender;
(3) upon the downgrading of the ratings of the long-term or short-term debt obligations of the Issuer below a level satisfactory to Fannie Mae, the failure of Borrower within five (5) days after notice of such downgrading to deliver to Lender either (A) an acceptable replacement Letter of Credit or (B) substitute cash collateral in the amount required by Lender; or
(4) upon the failure to close a Substitution pursuant to Section (f)(1) (Failure to Close Substitution) of the Mortgaged Property Addition Schedule.
(c) Deposit to Cash Collateral Agreement.
If Lender draws under the Letter of Credit pursuant to this Master Agreement or Section (b) (Draws Under Letter of Credit) above for reasons other than an Event of Default, Lender shall deposit such draw monies into a Cash Collateral Account until the earliest of the following events occurs:
Master Credit Facility Agreement | Form 6001.MCFA | Page 1 | ||
Schedule 15 (Letter of Credit Schedule) | 11-20 | © 2020 Fannie Mae | ||
[Resources/ CBRE 2021] |
(1) Borrower presents an acceptable replacement Letter of Credit and Lender agrees to accept such Letter of Credit (provided that any agreement by Lender to accept a replacement Letter of Credit will be conditioned upon Borrowers payment of all administrative and legal costs incurred by Lender and Fannie Mae in connection with the replacement of the Letter of Credit);
(2) the applicable provisions of this Master Agreement pursuant to which the Letter of Credit was provided are satisfied;
(3) Borrower pays all amounts due and payable under the Loan Documents and Lender releases the liens of all Security Instruments;
(4) Lender consents to Borrowers request to apply the funds to the principal balance of a Note specified by Borrower and to any Prepayment Premium due in connection with such application; or
(5) an Event of Default occurs and Lender elects to apply the proceeds as described below in Section (d) (Default Draws) of this Letter of Credit Schedule.
(d) Default Draws.
If Lender draws under the Letter of Credit pursuant to Section (b) (Draws Under Letter of Credit) of this Letter of Credit Schedule as a result of an Event of Default, Lender shall have the right to use monies drawn under the Letter of Credit for any of the following purposes:
(1) to pay any amounts required to be paid by Borrower under the Loan Documents (including, without limitation, any amounts required to be paid to Lender under this Master Agreement);
(2) to prepay any Note (on Borrowers behalf, or on its own behalf, if Lender becomes the owner of any Mortgaged Property) in whole or in part, including any Prepayment Premium;
(3) to deposit monies into the Cash Collateral Account; or
(4) to exercise any other remedies available to Lender pursuant to this Master Agreement.
(e) Legal Opinion.
Prior to or simultaneous with the delivery of any new Letter of Credit (but not the extension of any existing Letter of Credit), Borrower shall cause the Issuers counsel to deliver a legal opinion satisfactory in form and substance to Lender.
[Remainder of Page Intentionally Blank]
Master Credit Facility Agreement | Form 6001.MCFA | Page 2 | ||
Schedule 15 (Letter of Credit Schedule) | 11-20 | © 2020 Fannie Mae | ||
[Resources/ CBRE 2021] |
SCHEDULE 16
TO MASTER CREDIT FACILITY AGREEMENT
Exceptions to Representations and Warranties Schedule
Exception to Section 10.01(a) Montclair Terrace had a prior condemnation
Mary Cheshire v. RRE Buckhead Holdings, LLC, et al, U.S. District Court, Northern District of Georgia, 1:20-CV-05085
[Remainder of Page Intentionally Blank]
Master Credit Facility Agreement | Form 6001.MCFA | Page 1 | ||
Schedule 16 (Exceptions to Representations and Warranties Schedule) | 11-20 | © 2020 Fannie Mae | ||
[Resources/ CBRE 2021] |
SCHEDULE 17
TO MASTER CREDIT FACILITY AGREEMENT
SPE Requirements Schedule
Each Borrower under this Master Agreement is required to comply with the terms of this SPE Requirements Schedule. Borrowers may not be general partnerships, individuals or trusts. If a Borrower is a corporation or multi-member limited liability company (whose beneficial ownership interests are not ultimately held by a single entity), then none of the shareholders or members are required to be SPE Owners. If an entity Controlling Borrower is a trust, the beneficiaries are not required to be SPE Owners in compliance with the terms hereof. If Borrower satisfies the terms below, no other direct or indirect entity Controlling Borrower are required to be SPE Owners. Otherwise, all other entities Controlling Borrower, directly or indirectly, must be SPE Owners as set forth below until the requirements herein are satisfied.
Each Borrower and any SPE Owner (which shall be a corporation, limited partnership or limited liability company) shall comply with the following requirements:
(a) since the date of its formation and at all times on and after the date thereof, has complied with Section 4.01(h) (Borrower Status Representations and Warranties Single Purpose Status) of this Master Agreement;
(b) at all times on and after the date the applicable Borrower becomes party to this Master Agreement, shall comply with the requirements in Section 4.02(d) (Borrower Status Covenants Single Purpose Status) of this Master Agreement;
(c) if such entity is a limited partnership, it has and shall have at least one general partner and has and shall have, as its only general partners, SPE Owners each of which is a (1) corporation, (2) single-member limited liability company in compliance with the requirements of (d) below, or (3) a limited partnership in compliance with (c)(1) and (c)(2) above. General partners may not be individuals or trusts; and
(d) if such entity is a single-member limited liability company:
(1) it shall have two (2) natural persons or one (1) entity that is not a member of the company, that has signed its limited liability company agreement and that, under the terms of such limited liability company agreement, becomes a member of the company immediately prior to the withdrawal or dissolution of the last remaining member of the company;
(2) it shall include in its limited liability agreement or operating agreement requisite language under Applicable Law (if any) to prevent premature dissolution or liquidation; and
(3) for non-Delaware single-member limited liability companies, Borrower shall provide an opinion of counsel (acceptable to Lender) that the provisions of the limited liability company agreement or operating agreement relating to the springing member provisions in (d)(1) and dissolution provisions in (d)(2) above are consistent with Applicable Law and enforceable against Borrower and its sole member.
Master Credit Facility Agreement | Form 6001.MCFA | Page 1 | ||
Schedule 17 (SPE Requirements Schedule) | 11-20 | © 2020 Fannie Mae | ||
[Resources/ CBRE 2021] |
The sole member of an entity may be an individual provided the provisions of this Section (d) are satisfied.
Notwithstanding the foregoing, the provisions of this Section (d) shall not apply to any Borrower that does not own a Mortgaged Property unless and until such Borrower becomes an owner of a Mortgaged Property.
[Remainder of Page Intentionally Blank]
Master Credit Facility Agreement | Form 6001.MCFA | Page 2 | ||
Schedule 17 (SPE Requirements Schedule) | 11-20 | © 2020 Fannie Mae | ||
[Resources/ CBRE 2021] |
SCHEDULE 18
TO MASTER CREDIT FACILITY AGREEMENT
Waiver of Imposition Deposits
The foregoing Master Agreement is hereby modified as follows:
1. Capitalized terms used and not specifically defined herein have the meanings given to such terms in this Master Agreement.
2. The Definitions Schedule is hereby amended by adding the following new definitions in the appropriate alphabetical order:
Insurance Impositions means the premiums for maintaining all Required Insurance Coverage.
Required Insurance Coverage means the insurance coverage required pursuant to Article 9 (Insurance) of this Master Agreement and under any other Loan Document.
3. Section 12.02 (Impositions Covenants) of this Master Agreement is hereby amended by adding the following provisions to the end thereof:
(b) Conditional Waiver of Collection of Imposition Deposits.
(1) Notwithstanding anything contained in this Section 12.02 (Impositions Covenants) to the contrary, Lender hereby agrees to waive the collection of Imposition Deposits for Taxes, provided, that:
(A) Borrower shall pay all Taxes directly to the appropriate taxing authority at least ten (10) days prior to the date such Taxes would be delinquent subject to Borrowers right to contest Taxes pursuant to the terms of this Master Agreement;
(B) Borrower shall provide Lender with evidence acceptable to Lender of payments of Taxes within five (5) Business Days after the date such Taxes are paid; and
(C) if Borrower does not provide the evidence in (B) above timely, Borrower shall pay the cost of a third party tax search service firm engaged by Lender to confirm payment of the Taxes prior to delinquency.
(2) Notwithstanding anything contained in this Section 12.02 (Impositions Covenants) to the contrary, Lender hereby agrees to waive the collection of Imposition Deposits for Insurance Impositions, provided, that:
Master Credit Facility Agreement | Form 6228 [modified] | Page 1 | ||
Schedule 18 (Waiver of Imposition Deposits) | 4-12 | © 2012 Fannie Mae | ||
[Resources/ CBRE 2021] |
(A) Borrower shall pay such Insurance Impositions directly to the carrier or agent prior to expiration or as necessary to prevent the Required Insurance Coverage from lapsing due to non-payment of premiums;
(B) Borrower shall provide Lender with proof of payment acceptable to Lender of all Insurance Impositions (or evidence acceptable to Lender that such Insurance will not lapse prior to the expiration of such policy); and
(C) Borrower shall cause its insurance agent to provide Lender with such certifications regarding the Required Insurance Coverage as Lender may request from time to time evidencing that the Insurance Impositions have been paid in a timely manner and that all of the Required Insurance Coverage is in full force and effect.
(3) Lender reserves the right to require Borrower to deposit the Imposition Deposits with Lender on each Payment Date for Taxes and Insurance Impositions in accordance with this Section 12.02 (Impositions Covenants) upon:
(A) Borrowers failure to pay Taxes or Insurance Impositions or to provide Lender with proof of payment of Taxes and Insurance Impositions as required in this Section 12.02(b) (Conditional Waiver of Collection of Imposition Deposits);
(B) Borrowers failure to maintain insurance coverage in accordance with the requirements of Article 9 (Insurance);
(C) the occurrence of any Transfer which is not permitted by the Loan Documents, or any Transfer of membership interests of Borrower or Transfer of Collateral Pool which require Lenders consent; or
(D) the occurrence of an Event of Default under any of the other terms, conditions and covenants set forth in this Master Agreement or any of the other Loan Documents.
(4) Except as specifically provided in this Section 12.02(b) (Conditional Waiver of Collection of Imposition Deposits), the provisions of Article 9 (Insurance) shall remain in full force and effect.
[Remainder of Page Intentionally Blank]
Master Credit Facility Agreement | Form 6228 [modified] | Page 2 | ||
Schedule 18 (Waiver of Imposition Deposits) | 04-12 | © 2012 Fannie Mae | ||
[Resources/ CBRE 2021] |
SCHEDULE 19
TO MASTER CREDIT FACILITY AGREEMENT
Replacement Reserve Waiver
The foregoing Master Agreement is hereby modified as follows:
1. Capitalized terms used and not specifically defined herein have the meanings given to such terms in this Master Agreement.
2. The Definitions Schedule is hereby amended by adding the following new definition in the appropriate alphabetical order:
Reduced Monthly Replacement Reserve Deposit has the meaning set forth in the Summary of Master Terms.
3. Section 13.01(b) (Monthly Replacement Reserve Deposits) of this Master Agreement is hereby amended by adding the following provisions to the end thereof:
(1) | Partial or Full Waiver of Monthly Replacement Reserve Deposit. |
Notwithstanding the foregoing or anything in this Master Agreement to the contrary, on the Effective Date, Lender has agreed to partially reduce, defer or fully waive Borrowers obligation to make full Monthly Replacement Reserve Deposits. Subject to the provisions of Section 13.01(b)(2) (Reinstatement of Monthly Replacement Reserve Deposit), Borrower shall deposit the applicable Reduced Monthly Replacement Reserve Deposit into the Replacement Reserve Account on each Payment Date.
(2) | Reinstatement of Monthly Replacement Reserve Deposit. |
In the event that (A) at any time during the Term of this Master Agreement Lender provides written notice to Borrower that the Mortgaged Property is not being maintained in accordance with the requirements set forth in the Loan Documents, or (B) an Event of Default has occurred and is continuing under any of the Loan Documents, then upon the earlier of (i) the date specified by Lender in such written notice to Borrower or (ii) the first day of the first calendar month after the occurrence of such Event of Default, Borrower shall commence paying the full Monthly Replacement Reserve Deposits throughout the remaining Term of this Master Agreement.
[Remainder of Page Intentionally Blank]
Master Credit Facility Agreement | Form 6228 [modified] | Page 1 | ||
Schedule 19 ( Replacement Reserve Waiver) | 08-14 | © 2014 Fannie Mae | ||
[Resources/ CBRE 2021] |
SCHEDULE 19-A
TO MASTER CREDIT FACILITY AGREEMENT
ADDENDA TO SCHEDULE 2 SUMMARY OF MASTER TERMS
Replacement Reserve Waiver
III.REPLACEMENT RESERVE DEPOSITS PARTIALLY OR FULLY WAIVED |
||||
Reduced Monthly Replacement Reserve Deposit |
$ | 0 |
[Remainder of Page Intentionally Blank]
Master Credit Facility Agreement | Form 6102.04 [modified] | Page 1 | ||
Schedule 19-A (Addenda to Schedule 2 - Replacement Reserve Waiver) | 04-12 | © 2020 Fannie Mae | ||
[Resources/ CBRE 2021] |
SCHEDULE 20
TO MASTER CREDIT FACILITY AGREEMENT
Additional Reserve Escrows
The foregoing Master Agreement is hereby modified with respect to Advance(s) described on Schedule 20-A attached hereto (individually and collectively, the Advance Subject to P&I Reserves).
1. Capitalized terms used and not specifically defined herein have the meanings given to such terms in the Master Agreement.
2. The Definitions Schedule is hereby amended by adding the following new definitions in the appropriate alphabetical order:
Additional Reserve Coverage Test means the Aggregate Debt Service Coverage Ratio is not less than 1.35:1.0 with respect to the amount of the Fixed Advances (calculated in a manner consistent with the definition of Facility Debt Service in this Master Agreement), and 1.10:1.0 with respect to the amount of the Variable Advances (calculated in a manner consistent with the definition of Facility Debt Service in this Master Agreement).
Deposit Vesting Date for any Advance Subject to P&I Reserve, has the meaning set forth on Schedule 20-A.
Latest P&I Hold Date for any Advance Subject to P&I Reserve, has the meaning set forth on Schedule 20-A.
Look Back Period for any Advance Subject to P&I Reserve, has the meaning set forth on Schedule 20-A.
P&I Reserve Account means a custodial account established by Lender into which the P&I Reserve Deposits are deposited.
P&I Reserve Account Funds means the funds on deposit from time to time in the P&I Reserve Account.
P&I Reserve Deposit for any Advance Subject to P&I Reserve, means the amount set forth on Schedule 20-A to be deposited into the P&I Reserve Account.
P&I Shortfall means any amount of principal and/or interest due under the Loan Documents that cannot be funded from the operation of the Mortgaged Property.
Master Credit Facility Agreement Schedule 20 (Additional Reserve Escrows) |
Form 6268.MCFA | Page 2 | ||
Fannie Mae [Resources/ CBRE 2021] |
09-20 | © 2020 Fannie Mae |
3. The following article is hereby added to the Master Agreement as Article 16 (Additional Reserve Escrows):
Article 16
ADDITIONAL RESERVE ESCROWS
Section 16.01 P&I Reserve.
(a) | Deposit to P&I Reserve Account. |
(1) In connection with any Advance Subject to P&I Reserve, on the applicable Effective Date, Borrower shall pay to Lender the P&I Reserve Deposit for deposit into the P&I Reserve Account. The P&I Reserve Account will provide Lender with a contingent source of funding in the event of a P&I Shortfall.
(2) In connection with any Release, Lender shall determine whether any additional P&I Reserve Deposit is required in accordance with the Underwriting and Servicing Requirements. If required, on the applicable Effective Date, Borrower shall pay to Lender the additional P&I Reserve Deposit for deposit into the P&I Reserve Account.
(b) | Administrative Fees and Expenses; Costs of Collection. |
Borrower shall pay within ten (10) days of request from Lender (1) all reasonable costs and expenses incurred by Lender in connection with collecting, holding and disbursing the P&I Reserve Account Funds pursuant to this Section 16.01 (P&I Reserve); and (2) all costs and expenses incurred by Lender (including court costs and attorneys fees and expenses) in exercising any of Lenders rights or obligations pursuant to the terms of this Master Agreement or holding the P&I Reserve Account Funds.
(c) | Accounts, Deposits and Disbursements. |
(1) | Custodial Account. |
The P&I Reserve Account shall be deemed a Collateral Account under this Master Agreement and any P&I Reserve Account Funds shall be deemed part of the Collateral Account Funds under this Master Agreement. The P&I Reserve Account shall meet the standards for custodial accounts as required by Lender from time to time. In no event shall Lender be obligated to disburse funds from the P&I Reserve Account if an Event of Default has occurred and is continuing at the time the disbursement request is made, other than an Event of Default occurring due to the failure of Borrower to make any required payment of principal and interest that would be cured by a disbursement from the P&I Reserve Account.
Master Credit Facility Agreement Schedule 20 (Additional Reserve Escrows) |
Form 6268.MCFA | Page 3 | ||
Fannie Mae [Resources/ CBRE 2021] |
09-20 | © 2020 Fannie Mae |
(2) | Disbursements from P&I Reserve Account. |
(A) In the event of a P&I Shortfall, upon a written request from Borrower (in accordance with the terms of Section 16.01(c)(3) (Disbursement Requests) below) and satisfaction of the requirements set forth in this Section 16.01(c)(2) (Disbursements from P&I Reserve Account), Lender shall disburse funds from the P&I Reserve Account to pay such P&I Shortfall.
(B) Nothing in this Master Agreement shall obligate Lender to apply all or any portion of the P&I Reserve Account Funds to cure any Event of Default, other than an Event of Default occurring due to a P&I Shortfall that would be cured by a disbursement from the P&I Reserve Account, or to reduce the Indebtedness.
(C) Lender shall not disburse funds from the P&I Reserve Account for any costs which are to be reimbursed from any other Reserve/Escrow Account or other Collateral Account. Disbursement from the P&I Reserve Account shall not be made more frequently than once a month.
(3) | Disbursement Requests. |
(A) Each request for disbursement from the P&I Reserve Account shall be in writing and must be received by Lender no later than ten (10) Business Days before the next Monthly Debt Service Payment date. Each request shall:
(i) specify the amount of the disbursement that Borrower requires to cover the P&I Shortfall;
(ii) unless already delivered to Lender, include certified current financial statements from Borrowers operation of the Mortgaged Property, for the prior month, and reconciled bank statements for the three (3) months preceding such request;
Master Credit Facility Agreement Schedule 20 (Additional Reserve Escrows) |
Form 6268.MCFA | Page 4 | ||
Fannie Mae [Resources/ CBRE 2021] |
09-20 | © 2020 Fannie Mae |
(iii) a written explanation of the circumstances causing such P&I Shortfall, together with Borrowers written plans, to the extent available, to correct such circumstances;
(iv) a certification by Borrower that no Event of Default has occurred and is continuing under the Loan Documents (other than an Event of Default that would be cured with the disbursement to fund the P&I Shortfall); and
(v) such other information regarding the Mortgaged Property as Lender reasonably requests (collectively, the P&I Disbursement Request Supporting Information).
(B) Lender shall review the P&I Disbursement Request Supporting Information to verify the amount of the P&I Shortfall. Lender may adjust the requested amount of the disbursement from the P&I Reserve Account if Borrowers calculation of the amount of the P&I Shortfall or the required disbursement is incorrect.
(C) Borrower hereby acknowledges and agrees that any disbursement from the P&I Reserve Account by Lender shall be in accordance with the terms set forth in this Section 16.01(c) (Accounts, Deposits and Disbursements). Borrower authorizes and directs Lender to make disbursements from the P&I Reserve Account and to apply such disbursements against P&I Shortfalls. All disbursements shall be expressly conditioned upon no Event of Default or Potential Event of Default (other than any resulting Event of Default that would be cured with the requested disbursement), existing at either the time Borrower requests a disbursement from the P&I Reserve Account or the time of such disbursement. Borrower is and shall remain obligated and responsible for the payment of all amounts due under the Loan Documents regardless of whether any disbursements from the P&I Reserve Account are made by Lender pursuant to the terms of this Master Agreement.
Master Credit Facility Agreement Schedule 20 (Additional Reserve Escrows) |
Form 6268.MCFA | Page 5 | ||
Fannie Mae [Resources/ CBRE 2021] |
09-20 | © 2020 Fannie Mae |
(d) | Additional Disbursements of P&I Reserve Account Funds. |
(1) | Disbursement Upon Repayment of Advances. |
Unless previously released or applied by Lender pursuant to the terms of this Section 16.01(d) (Additional Disbursements of P&I Reserve Account Funds), in connection with any repayment (in whole or in part) of any Advance pursuant to the terms of this Master Agreement, Lender shall redetermine the aggregate P&I Reserve Account Funds required in accordance with the Underwriting and Servicing Requirements. If an additional P&I Reserve Deposit is required, on the applicable Effective Date, Borrower shall pay to Lender the additional P&I Reserve Deposit for deposit into the P&I Reserve Account. If the actual P&I Reserve Account Funds exceed (1) the aggregate P&I Reserve Account Funds required in accordance with the Underwriting and Servicing Requirements, or (2) ten percent (10%) of the Outstanding Advances (after taking into account such repayment), Lender shall disburse to Borrower any such overage.
(2) | Final Disbursement. |
Unless previously released or applied by Lender pursuant to the terms of this Section 16.01 (P&I Reserve), Lender shall disburse to Borrower any and all remaining P&I Reserve Account Funds in the P&I Deposit Account attributable to a specific Advance Subject to P&I Reserves on the earlier of:
(A) the date thirty (30) days following Borrowers written request for such disbursement provided the following conditions are satisfied:
(i) such request is not made before the Deposit Vesting Date for such Advance Subject to P&I Reserves; and
(ii) the Collateral Pool has satisfied the Additional Reserve Coverage Test for the Look Back Period for such Advance Subject to P&I Reserves immediately prior to such request (with Net Cash Flows for such period determined on an annualized basis); or
(B) the Latest P&I Hold Date for such Advance Subject to P&I Reserves.
Section 16.02 Lender as Attorney-In-Fact.
Borrower hereby authorizes and appoints Lender as attorney-in-fact pursuant to Section 14.03(c) (Appointment of Lender as Attorney-In-Fact).
[Remainder of Page Intentionally Blank]
Master Credit Facility Agreement Schedule 20 (Additional Reserve Escrows) |
Form 6268.MCFA | Page 6 | ||
Fannie Mae [Resources/ CBRE 2021] |
09-20 | © 2020 Fannie Mae |
SCHEDULE 20-A
TO MASTER CREDIT FACILITY AGREEMENT
ADDENDA TO SCHEDULE 2 SUMMARY OF ADVANCE TERMS
(Additional Reserve Escrows)
IV.ADDITIONAL RESERVE ESCROWS | ||
P&I Reserve Deposit | $3,353,848.63 | |
Look Back Period | One full calendar quarter | |
Deposit Vesting Date | The date that is the first day of the calendar month following the date that is (i) six (6) months after the Initial Effective Date, plus (ii) one (1) full quarter in which the Additional Reserve Coverage Test has been met. | |
Latest P&I Hold Date | The day that is the first day of the calendar month following the date thirty-six (36) months after the Initial Effective Date, which is February 1, 2024 |
[Remainder of Page Intentionally Blank]
Master Credit Facility Agreement | Form 6268.MCFA | Page 1 | ||
Schedule 20 A (Additional Reserve Escrows) | 11-20 | © 2020 Fannie Mae | ||
[Resources/ CBRE 2021] |
SCHEDULE 21
TO MASTER CREDIT FACILITY AGREEMENT
Oil, Gas, and Mineral Rights
The foregoing Master Agreement is hereby modified with respect to the Mortgaged Property known as Providence in the Park, South Lamar Village, and Adair Off Addison I & II:
1. Capitalized terms used and not specifically defined herein have the meanings given to such terms in the Master Agreement.
2. Section 6.01(b) (Property Characteristics) is hereby amended by adding the following provision to the end thereof:
No surface or subsurface activity relating to the exploration, excavation, or removal of oil, gas, or other minerals from or about the Mortgaged Property is on-going and, to Borrowers knowledge, none is planned by any Person.
3. Section 6.02(b) (Property Maintenance) is hereby amended by adding the following provision to the end thereof:
(8) give written notice to Lender of any notice received or knowledge obtained that any Person intends to conduct surface or subsurface activity on, or use the Mortgaged Property for, the exploration, excavation, or removal of oil, gas, or other minerals from or about the Mortgaged Property. Borrower shall indemnify and hold Lender harmless for, from, and against any and all actions, suits, claims, demands, liabilities, losses, damages, obligations, costs, or expenses, including litigation costs and reasonable attorneys fees, arising from, or in any way connected with or related to, any surface or subsurface activity on, or use of, the Mortgaged Property for the exploration, excavation, or removal of oil, gas, or other minerals from or about the Mortgaged Property.
Master Credit Facility Agreement | Form 6262 | Page 1 | ||
Schedule 21 (Oil, Gas and Mineral Rights) | 12-17 | © 2019 Fannie Mae | ||
[Resources/ CBRE 2021] |
EXHIBIT A TO MASTER CREDIT FACILITY AGREEMENT
SCHEDULE OF INITIAL MORTGAGED PROPERTIES
AND INITIAL VALUATIONS
PROPERTY |
LOCATION |
OWNER |
INITIAL VALUATION |
INITIAL ALLOCABLE FACILITY AMOUNT |
||||||||||
1. | Estates at Johns Creek | 2100 Addison Ln. Johns Creek, GA 30005 (Fulton County) |
RRE Addison Place Holdings, LLC | $ | 101,000,000 | $ | 65,650,000 | |||||||
2. | Heritage Pointe | 275 West Juniper Ave. Gilbert, AZ 85233 (Maricopa County) |
RRE Gilbert Holdings, LLC | $ | 92,900,000 | $ | 60,760,000 | |||||||
3. | Providence in the Park | 1601 W Arbrook Blvd. Arlington, TX 76015 (Tarrant County) |
RRE Providence Holdings, LLC | $ | 85,000,000 | $ | 55,250,000 | |||||||
4. | South Lamar Village | 3505 S Lamar Blvd. Austin, TX 78704 (Travis County) |
RRE Woodmoor Holdings, LLC | $ | 35,600,000 | $ | 23,140,000 | |||||||
5. | Verona Apartments | 2961 W Centennial Dr. Littleton, CO 80123 (Arapahoe County) |
RRE Centennial Holdings, LLC | $ | 63,500,000 | $ | 41,275,000 | |||||||
6. | Westside | 1515 Rio Grande Dr. Plano, TX 85075 (Collin County) |
RRE Brentdale Holdings, LLC | $ | 59,700,000 | $ | 38,805,000 |
Master Credit Facility Agreement | Form 6001.MCFA | Page 2 | ||
Exhibit A | 04-18 | © 2018 Fannie Mae | ||
Resources/ CBRE (2021) |
7. | 81 Fifty at West Hills | 8150 SW Barnes Rd. Portland, OR 97225 (Washington County) |
RRE Breckenridge Holdings, LLC | $ | 90,000,000 | $ | 58,500,000 | |||||||
8. | Adair off Addison I & II | 15905 Bent Tree Forest Circle Dallas, TX 75248 (Dallas County) |
RRE Bear Creek Holdings, LLC and RRE Fairways Of Bent Tree Holdings, LLC |
$ | 57,100,000 | $ | 37,115,000 | |||||||
9. | Montclair Terrace | 4835 SW Oleson Rd. Portland, OR 97225 (Washington County) |
RRE Montclair Terrace Holdings, LLC | $ | 46,800,000 | $ | 30,420,000 | |||||||
10. | Palmer at Las Colinas | 2940 W Royal Ln. Irving, TX 75063 (Dallas County) |
RRE Santa Rosa Holdings, LLC | $ | 90,600,000 | $ | 58,515,000 | |||||||
11. | Uptown Buckhead | 3707 Roswell Rd. NE Atlanta, GA 30342 (Fulton County) |
RRE Buckhead Holdings, LLC | $ | 39,600,000 | $ | 25,740,000 | |||||||
12. | N/A | N/A | RRE FNM1 LLC | N/A | N/A | |||||||||
13. | N/A | N/A | RRE FNM2 LLC | N/A | N/A | |||||||||
14. | N/A | N/A | RRE FNM3 LLC | N/A | N/A | |||||||||
15. | N/A | N/A | RRE FNM4 LLC | N/A | N/A |
Master Credit Facility Agreement | Form 6001.MCFA | Page 3 | ||
Exhibit A | 04-18 | © 2018 Fannie Mae | ||
Resources/ CBRE (2021) |
EXHIBIT B TO MASTER CREDIT FACILITY AGREEMENT
CONVERSION REQUEST
VIA: _______________________
CBRE Multifamily Capital, Inc.,
a Delaware corporation (Lender)
c/o CBRE Loan Services, Inc.
929 Gessner Road, Suite 1700
Houston, Texas 77024
Attn: Chief Legal Officer
[Note: Subject to change in the event Lender or its address changes]
Re: | CONVERSION REQUEST issued pursuant to that certain Master Credit Facility Agreement, dated as of January 28, 2021, by and among the undersigned (Borrower) and Lender (as amended, restated or otherwise modified from time to time, the Master Agreement). |
Ladies and Gentlemen:
This constitutes a Conversion Request pursuant to the terms of the above-referenced Master Agreement.
Section 1. Request. Borrower hereby requests that there occur a conversion of all or a portion of a Variable Note to a Fixed Note in accordance with the terms of the Master Agreement. Following is the information required by the Master Agreement with respect to this Request:
(a) Designation of Amount of Conversion. The amount of the conversion shall be $_________________________.
(b) Prepayment of Advances. (If any) The Advances Outstanding (or portion thereof) which will be prepaid on the Effective Date for the conversion are as follows:
Master Credit Facility Agreement | Form 6001.MCFA | Page 1 | ||
Exhibit B | 04-18 | © 2018 Fannie Mae | ||
Resources/ CBRE (2021) |
Maturity Date of Note to be prepaid:
Amount to be prepaid:
(c) Accompanying Documents. All documents, instruments and certificates required to be delivered pursuant to the conditions contained in Section 2.10(a) (Conversion from Variable Note to Fixed Note) and the Conversion Schedule of the Master Agreement, including (1) the Conversion Documents, as well as (2) an Organizational Certificate will be delivered on or before the Effective Date.
Section 2. Conversion Fee. Pursuant to the terms of the Master Agreement, Borrower shall pay the Conversion Fee as a condition to the closing of the Conversion.
Section 3. Capitalized Terms. All capitalized terms used but not defined in this Request shall have the meanings ascribed to such terms in the Master Agreement.
[Remainder of Page Intentionally Blank]
Master Credit Facility Agreement | Form 6001.MCFA | Page 2 | ||
Exhibit B | 04-18 | © 2018 Fannie Mae | ||
Resources/ CBRE (2021) |
Sincerely, | ||||
BORROWER: | ||||
[INSERT BORROWER SIGNATURE BLOCK(S)] | ||||
By: |
|
(SEAL) | ||
Name: |
| |||
Title: |
|
Master Credit Facility Agreement | Form 6001.MCFA | Page 3 | ||
Exhibit B | 04-18 | © 2018 Fannie Mae | ||
Resources/ CBRE (2021) |
EXHIBIT C TO MASTER CREDIT FACILITY AGREEMENT
RELEASE REQUEST
CBRE Multifamily Capital, Inc.,
a Delaware corporation (Lender)
c/o CBRE Loan Services, Inc.
929 Gessner Road, Suite 1700
Houston, Texas 77024
Attn: Chief Legal Officer
[Note: Subject to change in the event Lender or its address changes]
Re: | REQUEST issued pursuant to that certain Master Credit Facility Agreement, dated as of January 28, 2021, by and among the undersigned (Borrower) and Lender (as amended, restated or otherwise modified from time to time, the Master Agreement) |
Ladies and Gentlemen:
This constitutes a Release Request pursuant to the terms of the above-referenced Master Agreement.
Section 1. Release Request. Borrower hereby requests that the Release Mortgaged Property described in this Request be released from the Collateral Pool in accordance with the terms of the Master Agreement. Following is the information required by the Master Agreement with respect to this Request:
(a) Description of Release Mortgaged Property. The name, address and location (county and state) of the Mortgaged Property, or other designation of the proposed Release Mortgaged Property is as follows:
Name: _____________________________________________
Address: _____________________________________________
Master Credit Facility Agreement | Form 6001.MCFA | Page 1 | ||
Exhibit C | 04-18 | © 2018 Fannie Mae | ||
Resources/ CBRE (2021) |
Location: _____________________________________________
(b) Type of Release. This Request is being delivered in connection with:
☐ | a Release |
☐ | a simultaneous Substitution |
☐ | a Staggered Substitution |
(c) Accompanying Documents. All documents, instruments and certificates required to be delivered pursuant to the conditions contained in Section 2.10(b) (Right to Obtain Releases of Mortgaged Property) of the Master Agreement and the Mortgaged Property Release Schedule will be delivered on or before the Effective Date.
Section 2. [FOR A RELEASE: Release Price and Release Fee. Pursuant to the terms of the Master Agreement, Borrower shall pay the Release Price, if applicable, and the Release Fee as a condition to the closing of the release of the Release Mortgaged Property from the Collateral Pool.]
Section 2. [FOR A SUBSTITUTION: Substitution Deposit and Substitution Fee. Pursuant to the terms of the Master Agreement, Borrower shall deposit with Lender the Substitution Deposit, if applicable, and pay the Substitution Fee as a condition to the closing of the release of the Release Mortgaged Property from the Collateral Pool.]
Section 3. Capitalized Terms. All capitalized terms used but not defined in this Request shall have the meanings ascribed to such terms in the Master Agreement.
[Remainder of Page Intentionally Blank]
Master Credit Facility Agreement | Form 6001.MCFA | Page 2 | ||
Exhibit C | 04-18 | © 2018 Fannie Mae | ||
Resources/ CBRE (2021) |
Sincerely, | ||||
BORROWER: | ||||
[INSERT BORROWER SIGNATURE BLOCK(S)] | ||||
By: |
|
(SEAL) | ||
Name: |
| |||
Title: |
|
Master Credit Facility Agreement | Form 6001.MCFA | Page 3 | ||
Exhibit C | 04-18 | © 2018 Fannie Mae | ||
Resources/ CBRE (2021) |
EXHIBIT D TO MASTER CREDIT FACILITY AGREEMENT
ADDITION REQUEST
CBRE Multifamily Capital, Inc.,
a Delaware corporation (Lender)
c/o CBRE Loan Services, Inc.
929 Gessner Road, Suite 1700
Houston, Texas 77024
Attn: Chief Legal Officer
[Note: Subject to change in the event Lender or its address changes]
Re: | REQUEST issued pursuant to that certain Master Credit Facility Agreement, dated as of January 28, 2021, by and among the undersigned (Borrower) and Lender (as amended, restated or otherwise modified from time to time, the Master Agreement) |
Ladies and Gentlemen:
This constitutes an Addition Request pursuant to the terms of the above-referenced Master Agreement.
Section 1. Addition Request. Borrower hereby requests that the Multifamily Residential Property described in this Request be added to the Collateral Pool [in connection with a Substitution of Collateral] in accordance with the terms of the Master Agreement. Following is the information required by the Master Agreement with respect to this Request:
(a) Property Description Package. Attached to this Request is the information and documents relating to the proposed Additional Mortgaged Property required by Lender and the Master Agreement;
(b) Due Diligence Fees. Enclosed with this Request is a check in payment of the Additional Due Diligence Fees and Additional Due Diligence Fee Deposits required to be submitted with this Request pursuant to the Mortgaged Property Addition Schedule; and
Master Credit Facility Agreement | Form 6001.MCFA | Page 1 | ||
Exhibit D | 04-18 | © 2018 Fannie Mae | ||
Resources/ CBRE (2021) |
(c) Accompanying Documents. All reports, certificates and documents required to be delivered pursuant to the conditions contained in [Section 2.10(c) (Right to Add Additional Mortgaged Properties as Collateral) and the Mortgaged Property Addition Schedule of the Master Agreement] [or in connection with a Substitution, Section 2.10(d) (Right to Substitutions) and the Mortgaged Property Addition Schedule of the Master Agreement] will be delivered on or before the Effective Date of the [Addition][Substitution].
Section 2. Capitalized Terms. All capitalized terms used but not defined in this Request shall have the meanings ascribed to such terms in the Master Agreement.
[Remainder of Page Intentionally Blank]
Master Credit Facility Agreement | Form 6001.MCFA | Page 2 | ||
Exhibit D | 04-18 | © 2018 Fannie Mae | ||
Resources/ CBRE (2021) |
Sincerely, | ||
BORROWER: | ||
[INSERT BORROWER SIGNATURE BLOCK(S)] | ||
By: | (SEAL) | |
Name: |
| |
Title: |
|
Master Credit Facility Agreement | Form 6001.MCFA | Page 3 | ||
Exhibit D | 04-18 | © 2018 Fannie Mae | ||
Resources/ CBRE (2021) |
EXHIBIT E TO MASTER CREDIT FACILITY AGREEMENT
FUTURE ADVANCE REQUEST
CBRE Multifamily Capital, Inc.,
a Delaware corporation (Lender)
c/o CBRE Loan Services, Inc.
929 Gessner Road, Suite 1700
Houston, Texas 77024
Attn: Chief Legal Officer
[Note: Subject to change in the event Lender or its address changes]
Re: | FUTURE ADVANCE REQUEST issued pursuant to that certain Master Credit Facility Agreement, dated as of January 28, 2021, by and among the undersigned (Borrower) and Lender (as amended, restated or otherwise modified from time to time, the Master Agreement) |
Ladies and Gentlemen:
This constitutes a Future Advance Request pursuant to the terms of the above-referenced Master Agreement.
Section 1. Request. Borrower hereby requests that Lender make a Future Advance in accordance with the terms of the Master Agreement. Following is the information required by the Master Agreement with respect to this Request:
(a) Amount. The amount of the Future Advance shall be $_____________.
(b) Designation of Advance. The Future Advance is a: [Check one]
☐ | Fixed Advance |
☐ | Variable Advance |
Master Credit Facility Agreement | Form 6001.MCFA | Page 1 | ||
Exhibit E | 04-18 | © 2018 Fannie Mae | ||
Resources/ CBRE (2021) |
(c) Maturity Date. The Maturity Date of the Future Advance is as follows: _____________.
(d) Accompanying Documents. All documents, instruments and certificates required to be delivered pursuant to the conditions contained in Section 2.02 (Advances) of the Master Agreement, including (1) a Variable Note (for Variable Advances), (2) a Fixed Note (for Fixed Advances), and (3) an Organizational Certificate, will be delivered on or before the Effective Date.
Section 2. Fees. Pursuant to the terms of the Master Agreement, Borrower shall pay the Additional Origination Fee and, if applicable, the Re-Underwriting Fee, as a condition to the closing of the Future Advance.
Section 3. Capitalized Terms. All capitalized terms used but not defined in this Request shall have the meanings ascribed to such terms in the Master Agreement.
[Remainder of Page Intentionally Blank]
Master Credit Facility Agreement | Form 6001.MCFA | Page 2 | ||
Exhibit E | 04-18 | © 2018 Fannie Mae | ||
Resources/ CBRE (2021) |
Sincerely, | ||
BORROWER: | ||
[INSERT BORROWER SIGNATURE BLOCK(S)] | ||
By: | (SEAL) | |
Name: |
| |
Title: |
|
Master Credit Facility Agreement | Form 6001.MCFA | Page 3 | ||
Exhibit E | 04-18 | © 2018 Fannie Mae | ||
Resources/ CBRE (2021) |
EXHIBIT F TO MASTER CREDIT FACILITY AGREEMENT
TERMINATION REQUEST
CBRE Multifamily Capital, Inc.,
a Delaware corporation (Lender)
c/o CBRE Loan Services, Inc.
929 Gessner Road, Suite 1700
Houston, Texas 77024
Attn: Chief Legal Officer
[Note: Subject to change in the event Lender or its address changes]
Re: | TERMINATION REQUEST issued pursuant to that certain Master Credit Facility Agreement, dated as of January 28, 2021 by and among the undersigned (Borrower) and Lender (as amended, restated or otherwise modified from time to time, the Master Agreement) |
Ladies and Gentlemen:
This constitutes a Termination Request pursuant to the terms of the above-referenced Master Agreement.
Section 1. Request. Borrower hereby requests a termination of the Master Agreement in accordance with the terms of the Master Agreement. All documents, instruments and certificates required to be delivered pursuant to the conditions contained in Section 2.11 (Termination of Master Agreement) of the Master Agreement will be delivered on or before the Effective Date.
Section 2. Prepayments. Borrower shall, in accordance with the terms of the Master Agreement, pay in full all Outstanding Indebtedness, including all Notes Outstanding, and any required prepayment premiums as a condition to the termination of the Master Agreement.
Section 3. Capitalized Terms. All capitalized terms used but not defined in this Request shall have the meanings ascribed to such terms in the Master Agreement.
[Remainder of Page Intentionally Blank]
Master Credit Facility Agreement | Form 6001.MCFA | Page 1 | ||
Exhibit F | 04-18 | © 2018 Fannie Mae | ||
Resources/ CBRE (2021) |
Sincerely, | ||
BORROWER: | ||
[INSERT BORROWER SIGNATURE BLOCK(S)] | ||
By: (SEAL) | ||
Name: | ||
Title: |
Master Credit Facility Agreement | Form 6001.MCFA | Page 3 | ||
Exhibit F | 04-18 | © 2020 Fannie Mae | ||
Resources/ CBRE (2021) |
EXHIBIT G TO MASTER CREDIT FACILITY AGREEMENT
ANNUAL CERTIFICATION
(Borrower)
Credit Facility:
Property Names:
The undersigned, ______________________, a _____________________ (Borrower) certifies to FANNIE MAE the following:
1. Capitalized terms used and not specifically defined in this Annual Certification (the Certificate) have the meanings given to such terms in the Master Agreement.
2. All statements made in this Certificate and all statements and information set forth in the attachments to this Certificate are true, complete, and accurate in all material respects, in each case, as of their respective dates, to the best of the undersigneds knowledge.
3. Attached to this Certificate are the following with respect to calendar year _______:
(a) if Borrower is an individual or a trust established for estate-planning purposes, a personal financial statement (including a statement of all contingent liabilities if requested by Lender), dated ________, _____;
(b) if Borrower is an entity, a statement of income and expenses for Borrower, dated ________, _____;
(c) if Borrower is an entity, statement of cash flows of Borrower, dated ________, _____;
(d) a Rent Roll, dated ________, _____;
(e) if Borrower is an entity, a balance sheet showing all assets and liabilities of Borrower (including a statement of all contingent liabilities) as of the end of such calendar year, dated ________, _____;
(f) a property management or leasing report for the Mortgaged Property, showing for the period requested by Lender (i) the amount of all deposits received from tenants or prospective tenants for such period, and (ii) any other information requested by Lender that is prepared by or on behalf of Borrower in the ordinary course with respect to the Mortgaged Property, dated ________, _____;
Master Credit Facility Agreement | Form 6001.MCFA | Page 1 | ||
Exhibit G | 04-18 | © 2018 Fannie Mae | ||
Resources/ CBRE (2021) |
(g) a statement of income and expenses for Borrowers operation of the Mortgaged Property on a year-to-date basis as of the end of each month for such period as requested by Lender, which statement shall be delivered within thirty (30) days after the end of such month requested by Lender;
(h) a statement of real estate owned directly or indirectly by Borrower for such period as requested by Lender, which statement shall be delivered within thirty (30) days after the end of such month requested by Lender; and
(i) such other statement as set forth below and for the period indicated:
(i) ____________________________________;
(ii) ____________________________________; and
(iii) ____________________________________.
4. If an energy consumption metric is required to be reported for the Mortgaged Property to any Governmental Authority, Borrower certifies that it has reported such energy consumption metric and either:
(a) attached hereto is the Fannie Mae Performance Metric report as generated by ENERGY STAR® Portfolio Manager showing:
(i) the ENERGY STAR score, including the month and year ending period for such ENERGY STAR score,
(ii) the Source Energy Use Intensity (EUI), including the month and year ending period for such Source Energy Use Intensity, and
(iii) the ENERGY STAR Portfolio Manager Property Identification Number, or
(b) if the Governmental Authority does not require the use of ENERGY STAR Portfolio Manager for the reporting of the energy consumption metric and Borrower does not use ENERGY STAR Portfolio Manager, then Borrower hereby certifies that the Source Energy Use Intensity for the Mortgaged Property is ____________ for the calendar year ___________ [DRAFTING NOTE: LIST ALL MORTGAGED PROPERTIES].
5. Borrower certifies that, other than provisions of Section 4.02(d) (Borrower Status Covenants Single Purpose Status) regarding Borrowers single purpose status that have been specifically waived by Lender, Borrower has taken no action in violation of Section 4.02(d) (Borrower Status Covenants Single Purpose Status) of the Master Agreement;
Master Credit Facility Agreement | Form 6001.MCFA | Page 2 | ||
Exhibit G | 04-18 | © 2018 Fannie Mae | ||
Resources/ CBRE (2021) |
6. Borrower certifies as of the date hereof [DRAFTING NOTE: BORROWER AND EITHER AN AFFILIATED PROPERTY OPERATOR OR PROPERTY OPERATOR MUST PROVIDE THE CERTIFICATIONS BELOW AS APPLICABLE]:
YES | NO | |||||||
(a) | ☐ | ☐ | Borrower has received no notice of any building code violation, which if adversely determined (individually or in the aggregate) reasonably would be expected to Materially Adverse Effect; | |||||
IF NO, | ||||||||
☐Borrower has received notice of a building code violation, which if adversely determined (individually or in the aggregate) reasonably would be expected to Materially Adverse Effect which has not been remediated and plans for remediation are attached hereto as Schedule 1; | ||||||||
OR | ||||||||
☐Borrower has received notice of a building code violation which if adversely determined (individually or in the aggregate) reasonably would be expected to Materially Adverse Effect and such notice and evidence of remediation are attached hereto as Schedule 1; | ||||||||
YES | NO | |||||||
(b) | ☐ | ☐ | Borrower has made no application for rezoning and has not received any notice that any Mortgaged Property has been or is being rezoned; | |||||
(c) | ☐ | ☐ | Borrower has taken no action and has no knowledge of any action that would violate the provisions of Section 11.02(b)(1)(F) (Transfers Mortgaged Property) of the Master Agreement regarding Liens encumbering any Mortgaged Property; | |||||
(d) | ☐ | ☐ | there has been no change since the later of the delivery of the last Certificate and the Initial Effective Date that would materially adversely affect any Mortgaged Property or the validity, enforceability or the ability of Borrower to perform its obligations under the Master Agreement or any other Loan Document. |
Master Credit Facility Agreement | Form 6001.MCFA | Page 3 | ||
Exhibit G | 04-18 | © 2018 Fannie Mae | ||
Resources/ CBRE (2021) |
[If NO is checked on any of the above questions, attach additional
explanations as Schedule 1.]
[Remainder of Page Intentionally Blank]
Master Credit Facility Agreement | Form 6001.MCFA | Page 4 | ||
Exhibit G | 04-18 | © 2018 Fannie Mae | ||
Resources/ CBRE (2021) |
IN WITNESS WHEREOF, Borrower has signed and delivered this Certificate or has caused this Certificate to be signed and delivered by its duly authorized representatives under seal (where applicable).
Date:
BORROWER: | ||
[INSERT BORROWER SIGNATURE BLOCK(S)] | ||
By: | (SEAL) | |
Name: |
| |
Title: |
|
Master Credit Facility Agreement | Form 6001.MCFA | Page 5 | ||
Exhibit G | 04-18 | © 2018 Fannie Mae | ||
Resources/ CBRE (2021) |
SCHEDULE 1
If applicable, complete an explanation of any relevant matters
involving this Certificate. |
Master Credit Facility Agreement | Form 6001.MCFA | Page 6 | ||
Exhibit G | 04-18 | © 2018 Fannie Mae | ||
Resources/ CBRE (2021) |
EXHIBIT H TO MASTER CREDIT FACILITY AGREEMENT
Intentionally Omitted
Master Credit Facility Agreement | Form 6001.MCFA | Page 1 | ||
Exhibit H | 04-18 | © 2018 Fannie Mae | ||
Resources/ CBRE (2021) |
EXHIBIT I TO MASTER CREDIT FACILITY AGREEMENT
Intentionally Omitted
Master Credit Facility Agreement | Form 6001.MCFA | Page 1 | ||
Exhibit I | 04-18 | © 2018 Fannie Mae | ||
Resources/ CBRE (2021) |
EXHIBIT J TO MASTER CREDIT FACILITY AGREEMENT
CONFIRMATION OF ENVIRONMENTAL INDEMNITY AGREEMENT
This CONFIRMATION OF ENVIRONMENTAL INDEMNITY AGREEMENT is made as of __________________, by [BORROWER], a ____________________ (individually and collectively, Borrower), for the benefit of (i) CBRE MULTIFAMILY CAPITAL, INC., a Delaware corporation (Lender) and (ii) FANNIE MAE, the corporation duly organized and existing under the laws of the United States (Fannie Mae).
Borrower entered into that certain Environmental Indemnity Agreement dated as of January 28, 2021, for the benefit of Lender (as amended, restated or otherwise modified from time to time, the Environmental Indemnity Agreement) under that certain Master Credit Facility Agreement dated as of January 28, 2021, by and among Borrower and Lender (as amended, restated or otherwise modified from time to time, the Master Agreement).
All Lenders right, title and interest in the Master Agreement and the Loan Documents executed in connection with the Master Agreement or the transactions contemplated by the Master Agreement have been assigned to Fannie Mae pursuant to that certain Assignment of Master Credit Facility Agreement and Other Loan Documents, dated as of January 28, 2021, (the Assignment). Fannie Mae has not assumed (i) any of the obligations of Lender once an agreement is made for Lender to make a Future Advance under the Master Agreement to make Future Advances or (ii) any of the obligations of Lender which are servicing obligations delegated to Lender as servicer of the Advances. Fannie Mae has designated Lender as the servicer of the Advances contemplated by the Master Agreement.
[Borrower, Lender and Fannie Mae have modified the credit facility under the Master Agreement and made certain other changes to the terms and conditions of the Master Agreement pursuant to that certain [__________] Amendment to Master Credit Facility Agreement dated as of even date herewith (the [__________] Amendment). As a condition to entering into the [__________] Amendment, Borrower is required to confirm its obligations under the Environmental Indemnity Agreement.][Pursuant to the [________] Amendment, new borrowers are joining into the Master Agreement and other Loan Documents (individually and collectively, the Additional Borrower) and new properties are being added as security for the Advances (the Additional Mortgaged Property).] [Lender has agreed to make the Future Advance to Borrower under the Master Agreement. As a condition to making the Future Advance, Borrower is required to confirm its obligations under the Environmental Indemnity Agreement.]
Borrower hereby (a) acknowledges and consents to the [addition of the Additional Borrower to the Environmental Indemnity Agreement] [addition of the Additional Mortgaged Property to the schedule to the Environmental Indemnity Agreement] [making of the Future Advance], [(b) acknowledges and consents to the [explain change] other changes and the terms and conditions of the Master Agreement all as set forth in the [__________] Amendment,] and (c) confirms to Lender and Fannie Mae that the terms and provisions of the Environmental Indemnity Agreement remain in full force and effect.
Master Credit Facility Agreement | Form 6001.MCFA | Page 1 | ||
Exhibit J | 04-18 | © 2018 Fannie Mae | ||
Resources/ CBRE (2021) |
Borrower hereby confirms and ratifies the Loan Documents it has previously executed in connection with the Master Agreement.
All capitalized terms used but not defined in this Confirmation of Environmental Indemnity Agreement shall have the meanings ascribed to such terms in the Master Agreement.
[Remainder of Page Intentionally Blank]
Master Credit Facility Agreement | Form 6001.MCFA | Page 2 | ||
Exhibit J | 04-18 | © 2018 Fannie Mae | ||
Resources/ CBRE (2021) |
BORROWER: | ||
[INSERT BORROWER SIGNATURE BLOCK(S)] | ||
By: | (SEAL) | |
Name: | ||
Title: |
Master Credit Facility Agreement | Form 6001.MCFA | Page 3 | ||
Exhibit J | 04-18 | © 2018 Fannie Mae | ||
Resources/ CBRE (2021) |
EXHIBIT K-1 TO MASTER CREDIT FACILITY AGREEMENT
ORGANIZATIONAL CERTIFICATE
(Borrower)
I, the undersigned, ______________________, hereby certify as follows:
Section 1. Position. I am the [Secretary/Officer] of [BORROWER], a ____________________ (Borrower), and I am authorized to deliver this Certificate on behalf of Borrower.
Section 2. Master Agreement. Borrower entered into that certain Master Credit Facility Agreement, dated as of January 28, 2021, by and among Borrower and CBRE MULTIFAMILY CAPITAL, INC., a Delaware corporation (Lender) (as amended, restated or otherwise modified from time to time, the Master Agreement). The rights of Lender under the Master Agreement have been assigned to Fannie Mae. This Certificate is issued pursuant to the terms of the Master Agreement.
Section 3. Due Authorization of Request. I hereby certify that no action by the [directors, general partners, manager, members or trustees, as applicable CHECK ORGANIZATIONAL DOCUMENTS], of Borrower is necessary to duly authorize the execution and delivery of, and the consummation of the transaction contemplated by the Request with respect to which this Certificate is delivered, or, if necessary, that attached as Exhibit A to this Certificate is a true copy of resolutions duly adopted at a meeting of the board of directors, partners or members, as the case may be, that authorize the action. Any such resolutions are in full force and effect and are unmodified as of the date of this Certificate.
Section 4. No Changes. Since the date of the most recent Organizational Certificate delivered to Lender, or, if there are none, since the date of the Master Agreement, there have been no changes in any of the Organizational Documents of Borrower, except as set forth in Exhibit B to this Certificate, and Borrower remains duly qualified in the jurisdictions in which it is required to be qualified under the terms of the Master Agreement.
Section 5. Incumbency Certificate. One or more of the persons authorized to execute and deliver any documents required to be delivered in connection with the Request are set forth below:
Name |
Title | |||||
|
Section 6. Capitalized Terms. All capitalized terms used but not defined in this Certificate shall have the meanings ascribed to such terms in the Master Agreement.
Dated: ___________________, ____
[Remainder of Page Intentionally Blank]
Master Credit Facility Agreement | Form 6001.MCFA | Page 1 | ||
Exhibit K-1 | 04-18 | © 2018 Fannie Mae | ||
Resources/ CBRE (2021) |
By: |
| |
Name: |
| |
Title: | [Secretary/Officer] |
Master Credit Facility Agreement | Form 6001.MCFA | Page 2 | ||
Exhibit K-1 | 04-18 | © 2018 Fannie Mae | ||
Resources/ CBRE (2021) |
Exhibit A
Resolutions
See attached.
Master Credit Facility Agreement | Form 6001.MCFA | Page 3 | ||
Exhibit K-1 | 04-18 | © 2018 Fannie Mae | ||
Resources/ CBRE( 2021) |
Exhibit B
Changes to Organizational Documents
Master Credit Facility Agreement | Form 6001.MCFA | Page 4 | ||
Exhibit K-1 | 04-18 | © 2018 Fannie Mae | ||
Resources/ CBRE (2021) |
EXHIBIT K-2 TO MASTER CREDIT FACILITY AGREEMENT
Intentionally Omitted
Master Credit Facility Agreement | Form 6001.MCFA | Page 1 | ||
Exhibit K-2 | 04-18 | © 2018 Fannie Mae | ||
Resources/ CBRE (2021) |
EXHIBIT L TO MASTER CREDIT FACILITY AGREEMENT
CONFIRMATION OF OBLIGATIONS
This CONFIRMATION OF OBLIGATIONS (the Confirmation of Obligations) is made as of __________________, by and among [BORROWER], a ____________________ (Borrower) for the benefit of CBRE MULTIFAMILY CAPITAL, INC., a Delaware corporation (Lender) and Fannie Mae.
RECITALS
A. Borrower and Lender are parties to that certain Master Credit Facility Agreement, dated as of January 28, 2021, (as amended, restated or otherwise modified from time to time, the Master Agreement).
B. All Lenders right, title and interest in the Master Agreement and the Loan Documents executed in connection with the Master Agreement or the transactions contemplated by the Master Agreement have been assigned to Fannie Mae pursuant to that certain Assignment of Master Credit Facility Agreement and Other Loan Documents, dated as of January 28, 2021, (the Assignment). Fannie Mae has not assumed (i) any of the obligations of Lender once an agreement is made for Lender to make a Future Advance under the Master Agreement to make Future Advances or (ii) any of the obligations of Lender which are servicing obligations delegated to Lender as servicer of the Advances. Fannie Mae has designated Lender as the servicer of the Advances contemplated by the Master Agreement.
C. Borrower has delivered to Lender a Release Request pursuant to the Master Agreement to release a Release Property from the Collateral Pool.
D. Lender has consented to the Release Request.
E. The parties are executing this Confirmation of Obligations pursuant to the Master Agreement to confirm that each remains liable for all of its obligations under the Master Agreement and the other Loan Documents notwithstanding the release of the Release Property from the Collateral Pool.
NOW, THEREFORE, Borrower, in consideration of Lenders consent to the release of the Release Property from the Collateral Pool and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, hereby agree as follows:
Master Credit Facility Agreement | Form 6001.MCFA | Page 1 | ||
Exhibit K-2 | 04-18 | © 2018 Fannie Mae | ||
Resources/ CBRE (2021) |
Section 1. Confirmation of Obligations. Borrower confirms that, except with respect to the Release Property, none of its respective obligations under the Master Agreement and the Loan Documents is affected by the release of the Release Property from the Collateral Pool, and each of its respective obligations under the Master Agreement and the Loan Documents shall remain in full force and effect, and it shall be fully liable for the observance of all such obligations, notwithstanding the release of the Release Property from the Collateral Pool.
Section 2. Beneficiaries. This Confirmation of Obligations is made for the express benefit of both Lender and Fannie Mae.
Section 3. Capitalized Terms. All capitalized terms used in this Confirmation of Obligations which are not specifically defined herein shall have the respective meanings set forth in the Master Agreement.
Section 4. Counterparts. This Confirmation of Obligations may be executed in counterparts by the parties hereto, and each such counterpart shall be considered an original and all such counterparts shall constitute one and the same instrument.
[Remainder of Page Intentionally Blank]
Master Credit Facility Agreement | Form 6001.MCFA | Page 2 | ||
Exhibit K-2 | 04-18 | © 2018 Fannie Mae | ||
Resources/ CBRE (2021) |
IN WITNESS WHEREOF, the parties hereto have executed the Confirmation of Obligations as an instrument under seal as of the day and year first above written.
BORROWER: | ||
[INSERT BORROWER SIGNATURE BLOCK(S)] | ||
By: | (SEAL) | |
Name: | ||
Title: |
Master Credit Facility Agreement | Form 6001.MCFA | Page 3 | ||
Exhibit K-2 | 04-18 | © 2018 Fannie Mae | ||
Resources/ CBRE (2021) |
Exhibit 99.1
Resource REIT, Inc. Completes Merger of Three REITs
Transactions create a $3 Billion self-managed apartment REIT
Philadelphia, PA (January 29, 2021) Resource REIT, Inc. (Resource), formerly known as Resource Real Estate Opportunity REIT II, Inc., announced today that it has completed its mergers with Resource Real Estate Opportunity REIT, Inc. (Resource REIT I) and with Resource Apartment REIT III, Inc. (Resource REIT III).
We are extremely excited about the completion of the mergers and the strategic positioning of the combined company for the future, said Alan Feldman, chairman and CEO of Resource. This has been a long, difficult and unrelenting past year for the country and for those around the world. At Resource, our team has been laser focused on operating our assets expertly throughout the pandemic and simultaneously working towards the successful completion of the mergers. The combined $3 billion company with 51 apartment communities, located in some of the strongest suburban markets in the country, is well-positioned to take advantage of multifamily investment opportunities in the coming years.
About Resource REIT, Inc.
Resource REIT is a self-managed real estate investment trust that owns a diverse portfolio of suburban apartment communities in targeted markets across the United States. Focused on long-term returns to generate income, the REIT owns approximately $3 billion of multifamily properties across 15 states as of December 31, 2020.
Forward-looking Statements
This press release contains statements that constitute forward-looking statements, as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and such statements are intended to be covered by the safe harbor provided by the same. These statements are based on managements current expectations and beliefs and are subject to a number of trends and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements; no assurance can be given that these expectations will be attained. Factors that could cause actual results to differ materially from these expectations include, but are not limited to, the potential adverse impact of the ongoing pandemic related to COVID-19 and the related measures put in place to help control the spread of the virus on the operations of the REIT and its tenants, which impact remains highly uncertain; availability of suitable investment opportunities; changes in interest rates; the availability and terms of financing; general economic conditions; market conditions; legislative and regulatory changes that could adversely affect the business; and other factors, including those set forth in the Risk Factors section of the REITs most recent Annual Report on Form 10-K for the year ended December 31, 2019, as updated by the subsequent Quarterly Reports on Form 10-Q for the periods ended September 30, 2020 and filed with the SEC, and other reports filed by the REIT with the SEC, copies of which are available on the SECs website, www.sec.gov. Resource undertakes no obligation to update these statements for revisions or changes after the date of this communication, except as required by law.
Contacts
Marianne McGuire
Chief Marketing Officer
T: 267-256-5964
E: mmcguire@resourcereit.com
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