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Section 1: 8-K (8-K)

8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): October 15, 2018 (October 10, 2018)

 

 

New Senior Investment Group Inc.

(Exact Name of Registrant as Specified in Charter)

 

 

 

Delaware   001-36499   80-0912734

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(I.R.S. Employer

Identification Number)

1345 Avenue of the Americas, 45th Floor

New York, New York

  10105
(Address of principal executive offices)   (Zip code)

212-479-3140

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K 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

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act

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.

On October 10, 2018, certain wholly owned subsidiaries of New Senior Investment Group Inc. (the “Company”), as borrowers (collectively, the “Borrowers”), entered into a seven-year term loan with KeyBank National Association (“Lender”) in the original principal amount of $720 million (the “Loan” and the agreements evidencing the same, the “Loan Documents”), which is secured by 50 independent living senior housing facilities owned by the Company and managed by Holiday Retirement (the “Holiday Portfolio”). A copy of the Company’s press release is attached to this Current Report on Form 8-K as Exhibit 99.1 and is incorporated herein by reference.

The Loan bears interest at a rate per annum equal to the sum of (i) LIBOR and (ii) 2.32%. The Loan is subject to a 0.75% origination fee and certain exit fees payable to the originating Lender for prepayment under certain circumstances. The Loan Documents contain customary representations, warranties and covenants and include customary events of default for financings of this type (with customary grace periods, as applicable).

Pursuant to the Loan Documents, the Company has guaranteed certain of the Borrowers’ obligations. Pursuant to such guaranty, the Company is required to maintain a minimum net worth of $150 million and liquidity of at least $15 million.

On October 10, 2018, the Company used the funds from the Loan to prepay all amounts due and owing under the one-year term loan with JPMorgan Chase Bank, National Association, as lender, in the original principal amount of $720 million, which was entered into on May 14, 2018 and secured by the Holiday Portfolio.

The foregoing description of the Loan Documents and the transactions contemplated thereby does not purport to be complete and is qualified in its entirety by reference to the Master Multifamily Loan and Security Agreement – Senior Housing, dated as of October 10, 2018, by and among the Borrowers and Lender, and the Multifamily Note—Floating Rate, dated as of October 10, 2018, executed by the Borrowers in favor of Lender, copies of which are filed as Exhibit 10.1 and Exhibit 10.2 hereto and are incorporated herein by reference.

 

Item 1.02

Termination of a Material Definitive Agreement.

The information set forth above in Item 1.01 is incorporated herein by reference.

 

Item 2.03

Creation of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement of a Registrant.

The information set forth above in Item 1.01 is incorporated herein by reference.

 

Item 9.01

Financial Statements and Exhibits.

(d) Exhibits.

The following exhibits are being filed herewith:

 

Exhibit
No.

  

Description

10.1    Master Multifamily Loan and Security Agreement – Senior Housing, dated as of October 10, 2018, by and among the entities listed on Schedule 1 thereto, as borrowers, and Lender
10.2    Multifamily Note - Floating Rate, dated as of October 10, 2018, executed by Borrowers in favor of Lender
99.1    Press Release, dated October 12, 2018


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 thereunto duly authorized.

 

    NEW SENIOR INVESTMENT GROUP INC.
Date: October 15, 2018     By:  

/s/ Bhairav Patel

      Bhairav Patel
      Interim Chief Financial Officer, Treasurer, and Chief Accounting Officer
(Back To Top)

Section 2: EX-10.1 (EX-10.1)

EX-10.1

Exhibit 10.1

Freddie Mac Component Loan Numbers: 503001112 & 503001120

Freddie Mac Property-Level Loan Number: See Schedule 1

Property Names: See Schedule 1

MASTER MULTIFAMILY LOAN AND SECURITY AGREEMENT –

SENIORS HOUSING

(Revised XX-XX-2018)

 

Borrower:                Individually and collectively, each Individual Borrower (as defined in this Loan Agreement)
Lender:    KEYBANK NATIONAL ASSOCIATION, a national banking association
Date:    October 10, 2018
Loan Amount:    $720,000,000

Rate Cap Agreement

(See Article III)

 

Rate Cap Agreement Required                      Yes    ☐  No

Reserve Fund Information

(See Article IV)

 

 

 

 

 

Imposition Reserves    (fill in “Collect” or “Deferred” as appropriate for each item)

Deferred

   Insurance

Collect

   Taxes

Deferred

   Water/Sewer

Deferred

   Ground Rents

Deferred

 

   Assessments/Other Charges
Repairs & Repair Reserve    Repairs required?    Yes    ☐  No
   If No, is radon testing required?    ☐ Yes    ☐  No
   If Yes, is a Reserve required?    Yes    ☐  No
   Green Improvements required?    ☐  Yes    ☒  No
   If Yes, is a Reserve required?    ☐  Yes    ☐  No

If Yes to Repairs and/or Green Improvements, is a Letter of Credit required?

 

Replacement Reserve   

  Yes

☐  No

  

If Yes:         ☒  Funded

                    ☐   Deferred


Rental Achievement Reserve    ☐  Yes    If Yes:          Cash ______Letter of Credit
     No
Rate Cap Agreement Reserve      Yes    ☐  No     
Other Reserve(s)    ☐  Yes    ☒  No   

If Yes, specify:                                                                                                                                                                                                                                    

 

Lease-Up Transaction    ☐  Yes      No   
   If Yes, is a Reserve required?    ☐  Yes    ☐  No
   If Yes, is a Letter of Credit required?    ☐  Yes    ☐  No


Attached Riders

(See Article XIII)

Name of Rider

   Date Revised      Applicable Property
Number(s)
 

Rider to Multifamily Loan and

Security Agreement –

Cooperation with Rating

Agencies and Investors

     8-1-2018        502796413,        502795409,  
        502795417,        502795425,  
        502795433,        502795441,  
        502795468,        502795476,  
        502795484,        502795492,  
        502795506,        502795522,  
        502795549,        502795557,  
        502795611,        502795654,  
        502796081,        502795735,  
        502795786,        502795603,  
        502795662,        502795697,  
        502795751,        502795832,  
        502795859,        502796103,  
        502796006,        502796030,  
        502796057,        502796073,  
        502795824,        502795883,  
        502795921,        502795956,  
        502796049,        502795948,  
        502795875,        502795808,  
        502795778,        502795727,  
        502795689,        502795638,  
        502795913,        502795867,  
        502795840,        502795794,  
        502795743,        502795700,  
        502795670,        502795646  

Rider to Multifamily Loan and

Security Agreement –

Additional Provisions – Sale or

Securitization of Loan

     8-1-2018        502796413,        502795409,  
        502795417,        502795425,  
        502795433,        502795441,  
        502795468,        502795476,  
        502795484,        502795492,  
        502795506,        502795522,  
        502795549,        502795557,  
        502795611,        502795654,  
        502796081,        502795735,  
        502795786,        502795603,  
        502795662,        502795697,  
        502795751,        502795832,  


        502795859,        502796103,  
        502796006,        502796030,  
        502796057,        502796073,  
        502795824,        502795883,  
        502795921,        502795956,  
        502796049,        502795948,  
        502795875,        502795808,  
        502795778,        502795727,  
        502795689,        502795638,  
        502795913,        502795867,  
        502795840,        502795794,  
        502795743,        502795700,  
        502795670,        502795646  

Rider to Multifamily Loan and

Security Agreement – Repair

Reserve Fund

     8-1-2018        502795492,        502795549,  
        502796081,        502795735,  
        502795662,        502795859,  
        502795883,        502795840,  
        502795794,        502795700  

Rider to Multifamily Loan and

Security Agreement –

Replacement Reserve Fund –

Immediate Deposits

     8-1-2018        502796413,        502795409,  
        502795417,        502795425,  
        502795433,        502795441,  
        502795468,        502795476,  
        502795484,        502795492,  
        502795506,        502795522,  
        502795549,        502795557,  
        502795611,        502795654,  
        502796081,        502795735,  
        502795786,        502795603,  
        502795662,        502795697,  
        502795751,        502795832,  
        502795859,        502796103,  
        502796006,        502796030,  
        502796057,        502796073,  
        502795824,        502795883,  
        502795921,        502795956,  
        502796049,        502795948,  
        502795875,        502795808,  
        502795778,        502795727,  
        502795689,        502795638,  
        502795913,        502795867,  
        502795840,        502795794,  
        502795743,        502795700,  
        502795670,        502795646  


Rider to Multifamily Loan and

Security Agreement –

Recycled Borrower

     4-19-2018        502795549,        502795832  
        
        

Rider to Multifamily Loan and

Security Agreement –

Recycled SPE Equity Owner

     7-12-2016        502795549,        502795832  
        
        

Rider to Multifamily Loan and

Security Agreement – Repair –

No Repair Established

     8-1-2018        502796413,        502795409,  
        502795417,        502795425,  
        502795433,        502795441,  
        502795468,        502795476,  
        502795484,        502795557,  
        502795611,        502795654,  
        502795786,        502795832,  
        502796103,        502796030,  
        502795824,        502795956,  
        502796049,        502795948,  
        502795875,        502795778,  
        502795913,        502795867,  
        502795743     

Rider to Multifamily Loan and

Security Agreement –

Recycled Borrower –

Converted Entity

     4-19-2018        502795549     

Rider to Multifamily Loan and

Security Agreement –

Recycled Borrower –

Converted Entity

     4-19-2018        502795832     

Rider to Multifamily Loan and

Security Agreement – Ground

Fault Interrupter Outlet

Replacements No

Disbursement from

Repair Reserve Fund

     3-1-2014        502796413,        502795786,  
        502796103,        502795824,  
        502795956,        502796049  
        
        
        

Rider to Multifamily Loan and

Security Agreement – Ground

Lease Mortgage

     3-1-2014        502795859,        502795670  
        
        

Rider to Multifamily Loan and

Security Agreement – Termite

or Wood Damaging Insect

Control

     3-1-2014        502795468,        502796081,  
        502795662,        502795883,  
        502795670,        502795743,  
        502796103     

Rider to Multifamily Loan and

Security Agreement – Units

     2-16-2017        502796413,        502795409,  
        502795417,        502795425,  
        502795433,        502795468,  


With Outstanding Occupancy

Authorization

        502795476,        502795484,  
        502795611,        502795735,  
        502795697,        502795832,  
        502796030,        502796057,  
        502796073,        502795727,  
        502795638,        502795913,  
        502795743     

Rider to Multifamily Loan and

Security Agreement –

Commingling of Accounts

     1-30-2018        502796413,        502795409,  
        502795417,        502795425,  
        502795433,        502795441,  
        502795468,        502795476,  
        502795484,        502795492,  
        502795506,        502795522,  
        502795549,        502795557,  
        502795611,        502795654,  
        502796081,        502795735,  
        502795786,        502795603,  
        502795662,        502795697,  
        502795751,        502795832,  
        502795859,        502796103,  
        502796006,        502796030,  
        502796057,        502796073,  
        502795824,        502795883,  
        502795921,        502795956,  
        502796049,        502795948,  
        502795875,        502795808,  
        502795778,        502795727,  
        502795689,        502795638,  
        502795913,        502795867,  
        502795840,        502795794,  
        502795743,        502795700,  
        502795670,        502795646  

Rider to Multifamily Loan and

Security Agreement –

Guarantor Requirements

     2-13-2017        502796413,        502795409,  
        502795417,        502795425,  
        502795433,        502795441,  
        502795468,        502795476,  
        502795484,        502795492,  
        502795506,        502795522,  
        502795549,        502795557,  
        502795611,        502795654,  
        502796081,        502795735,  
        502795786,        502795603,  
        502795662,        502795697,  
        502795751,        502795832,  
        502795859,        502796103,  
        502796006,        502796030,  


        502796057,        502796073,  
        502795824,        502795883,  
        502795921,        502795956,  
        502796049,        502795948,  
        502795875,        502795808,  
        502795778,        502795727,  
        502795689,        502795638,  
        502795913,        502795867,  
        502795840,        502795794,  
        502795743,        502795700,  
        502795670,        502795646  

Exhibit B Modifications

(See Article XIV)

 

Are any Exhibit B modifications attached?      Yes    ☐  No

 


TABLE OF CONTENTS

 

         Page  

ARTICLE I DEFINED TERMS; CONSTRUCTION

     1  

1.01

  Defined Terms      1  

1.02

  Construction      1  

ARTICLE II LOAN.

     3  

2.01

  Loan Terms      3  

2.02

  Prepayment Premium      3  

2.03

  Exculpation      4  

2.04

  Application of Payments      4  

2.05

  Usury Savings      4  

2.06

  Floating Rate Mortgage—Cap Agreement      4  

ARTICLE III LOAN SECURITY AND GUARANTY

     5  

3.01

  Security Instrument      5  

3.02

  Reserve Funds      5  

3.03

  Uniform Commercial Code Security Agreement      5  

3.04

  Cap Agreement and Cap Collateral Assignment      6  

3.05

  Guaranty      7  

3.06

  Assignment of Licenses, Certificates and Permits      7  

3.07

  Reserved      7  

3.08

  Reserved      7  

3.09

  Reserved      7  

ARTICLE IV RESERVE FUNDS AND REQUIREMENTS

     8  

4.01

  Reserves Generally      8  

4.02

  Reserves for Taxes, Insurance and Other Charges      8  

4.03

  Repairs; Repair Reserve Fund      10  

4.04

  Replacement Reserve Fund      10  

4.05

  Rental Achievement Provisions      10  

4.06

  Debt Service Reserve      10  

4.07

  Rate Cap Agreement Reserve Fund      10  

4.08

  through 4.20 are Reserved      11  

ARTICLE V REPRESENTATIONS AND WARRANTIES

     11  

5.01

  Review of Documents      11  

5.02

  Condition of Mortgaged Property      11  

5.03

  No Condemnation      11  

5.04

  Actions; Suits; Proceedings      11  

5.05

  Environmental      12  

5.06

  Commencement of Work; No Labor or Materialmen’s Claims      13  

5.07

  Compliance with Applicable Laws and Regulations      14  

5.08

  Access; Utilities; Tax Parcels      15  

 

i


5.09

  Licenses and Permits      15  

5.10

  No Other Interests      16  

5.11

  Term of Leases      16  

5.12

  No Prior Assignment; Prepayment of Rents      16  

5.13

  Illegal Activity      17  

5.14

  Taxes Paid      17  

5.15

  Title Exceptions      17  

5.16

  No Change in Facts or Circumstances      17  

5.17

  Financial Statements      17  

5.18

  ERISA – Borrower Status      17  

5.19

  No Fraudulent Transfer or Preference      18  

5.20

  No Insolvency or Judgment      18  

5.21

  Working Capital      18  

5.22

  Cap Collateral      19  

5.23

  Ground Lease      19  

5.24

  Purpose of Loan      19  

5.25

  Intended Use      20  

5.26

  Furniture, Fixtures, Equipment, and Motor Vehicles      21  

5.27

  Participant in Federal Programs      21  

5.28

  Certificate of Need      21  

5.29

  Contracts      21  

5.30

  Material Contracts      21  

5.31

  No Financing Statements      22  

5.32

  Governmental Payor Programs      22  

5.33

  Third-Party Payor Programs and Private Commercial Insurance Managed Care and Employee Assistance Programs      23  

5.34

  No Transfer or Pledge of Licenses      23  

5.35

  No Pledge of Receivables      24  

5.36

  Patient and Resident Care Agreements      24  

5.37

  Patient and Resident Records      24  

5.38

  No Facility Deficiencies, Enforcement Actions or Violations      24  

5.39

  Seniors Housing Operator      24  

5.40

  Recycled SPE Borrower      24  

5.41

  Recycled SPE Equity Owner      24  

5.42

  through 5.50 are Reserved      24  

5.51

  Survival      24  

5.52

  through 5.57 are Reserved      24  

5.58

  Prohibited Parties Lists      24  

5.59

  AML Laws      25  

5.60

  Internal Controls      25  

5.61

  Crowdfunding      25  

5.62

  through 5.65 are Reserved      25  

ARTICLE VI BORROWER COVENANTS

     25  

6.01

  Compliance with Laws      25  

6.02

  Compliance with Organizational Documents      26  

 

ii


6.03

  Use of Mortgaged Property      26  

6.04

  Non-Residential Leases      27  

6.05

  Prepayment of Rents      28  

6.06

  Inspection      28  

6.07

  Books and Records; Financial Reporting      29  

6.08

  Taxes; Operating Expenses; Ground Rents      33  

6.09

  Preservation, Management and Maintenance of Mortgaged Property      34  

6.10

  Insurance      38  

6.11

  Condemnation      44  

6.12

  Environmental Hazards      47  

6.13

  Single Purpose Entity Requirements      50  

6.14

  Repairs and Capital Replacements      55  

6.15

  Residential Leases Affecting the Mortgaged Property      56  

6.16

  Litigation; Government Proceedings      57  

6.17

  Further Assurances and Estoppel Certificates; Lender’s Expenses      57  

6.18

  Cap Collateral      58  

6.19

  Ground Lease      58  

6.20

  ERISA Requirements      58  

6.21

  Operation of the Facility      59  

6.22

  Facility Reporting      59  

6.23

  Covenants Regarding Material Contracts      61  

6.24

  Pledge of Receivables      61  

6.25

  Property Manager and Operator of the Facility      61  

6.26

  Residential Leases and Agreements      62  

6.27

  Performance Under Leases      62  

6.28

  Governmental Payor Programs      62  

6.29

  Additional Covenants Regarding Operator      64  

6.30

  Lender’s Right To Use Trade Name      64  

6.31

  through 6.52 are Reserved      64  

6.53

  Economic Sanctions Laws; AML Laws      64  

6.54

  Crowdfunding      65  

6.55

  through 6.58 are Reserved      65  

6.59

  Third-Party Payor Programs and Private Commercial Insurance Managed Care and Employee Assistance Programs      65  

ARTICLE VII TRANSFERS OF THE MORTGAGED PROPERTY OR INTERESTS IN BORROWER

     65  

7.01

  Permitted Transfers      65  

7.02

  Prohibited Transfers      66  

7.03

  Conditionally Permitted Transfers      67  

7.04

  Preapproved Intrafamily Transfers      72  

7.05

  Lender’s Consent to Prohibited Transfers      72  

7.06

  SPE Equity Owner Requirement Following Transfer      76  

7.07

  Additional Transfer Requirements—External Cap Agreement      77  

7.08

  Reserved      77  

7.09

  Reserved      77  

 

iii


7.10

  Releases of Individual Properties      77  

7.11

  Reserved      85  

7.12

  Reserved      85  

ARTICLE VIII SUBROGATION

     85  

ARTICLE IX EVENTS OF DEFAULT AND REMEDIES

     85  

9.01

  Events of Default      85  

9.02

  Protection of Lender’s Security; Security Instrument Secures Future Advances      89  

9.03

  Remedies      90  

9.04

  Forbearance      91  

9.05

  Waiver of Marshalling      92  

9.06

  Cross-Default/Single Loan      92  

ARTICLE X RELEASE; INDEMNITY

     92  

10.01

  Release      92  

10.02

  Indemnity      93  

10.03

  Reserved      97  

ARTICLE XI MISCELLANEOUS PROVISIONS

     97  

11.01

  Waiver of Statute of Limitations, Offsets and Counterclaims      97  

11.02

  Governing Law; Consent to Jurisdiction and Venue      98  

11.03

  Notice      99  

11.04

  Successors and Assigns Bound      100  

11.05

  Joint and Several (and Solidary) Liability      100  

11.06

  Relationship of Parties; No Third Party Beneficiary      100  

11.07

  Severability; Amendments      100  

11.08

  Disclosure of Information      101  

11.09

  Determinations by Lender      101  

11.10

  Sale of Note; Change in Servicer; Loan Servicing      101  

11.11

  Supplemental Financing      102  

11.12

  Defeasance      108  

11.13

  Lender’s Rights to Sell or Securitize      114  

11.14

  Cooperation with Rating Agencies and Investors      115  

11.15

  Letter of Credit Requirements      115  

11.16

  Reserved      116  

11.17

  Reserved      116  

11.18

  Reserved      116  

11.19

  State Specific Provisions      116  

11.20

  Time is of the Essence      117  

11.21

  Electronic Signatures      117  

11.22

  Lender’s Right to Sever Loan Agreement and Sever Note      118  

 

iv


ARTICLE XII DEFINITIONS

     121  

ARTICLE XIII INCORPORATION OF ATTACHED RIDERS

     147  

ARTICLE XIV INCORPORATION OF ATTACHED SCHEDULES AND EXHIBITS

     147  

 

 

v


MASTER MULTIFAMILY LOAN AND SECURITY AGREEMENT –

SENIORS HOUSING

THIS MASTER MULTIFAMILY LOAN AND SECURITY AGREEMENT – Seniors Housing (“Loan Agreement”) is dated as of the 10th day of October, 2018 and is made by and between each entity on Schedule 1 attached hereto and incorporated into this Loan Agreement by reference (each, an “Individual Borrower”; each Individual Borrower, individually and collectively, jointly, and severally, “Borrower”), and KEYBANK NATIONAL ASSOCIATION a national banking association (together with its successors and assigns, “Lender”).

RECITALS

 

A.

Lender has agreed to make and Borrower has agreed to accept a loan in the original principal amount of $720,000,000.00 (“Loan”). Lender is willing to make the Loan to Borrower upon the terms and subject to the conditions set forth in this Loan Agreement.

 

B.

Each Individual Borrower is an affiliate of each of the other Individual Borrowers and will receive a direct and material benefit from the making of the Loan to the other Individual Borrowers.

 

C.

Each Individual Borrower acknowledges Lender is willing to make the Loan only if each Individual Borrower agrees to the terms and conditions of this Loan Agreement and the other Loan Documents, which provide, among other things, that each Individual Borrower will be primarily, jointly, and severally liable with each of the other Individual Borrowers for the payment and performance of the Loan and the obligations under the Loan Documents, and that each Individual Property will serve as collateral for the Loan.

 

D.

Each Individual Borrower further acknowledges that the benefits derived by such Individual Borrower agreeing to be primarily, jointly, and severally liable are equivalent to the burdens imposed upon such Individual Borrower and the Mortgaged Property owned by such Individual Borrower by such agreement, notwithstanding that the Allocated Loan Amount with respect to each Individual Property may be of differing amounts.

AGREEMENT

NOW, THEREFORE, in consideration of these promises, the mutual covenants contained in this Loan Agreement and other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the parties agree as follows:

ARTICLE I DEFINED TERMS; CONSTRUCTION.

 

1.01

Defined Terms. Each defined term in this Loan Agreement will have the meaning ascribed to that term in Article XII unless otherwise defined in this Loan Agreement.

 

1.02

Construction.

 

  (a)

The captions and headings of the Articles and Sections of this Loan Agreement are for convenience only and will be disregarded in construing this Loan Agreement.

 

Master Multifamily Loan and Security Agreement    Page 1


  (b)

Any reference in this Loan Agreement to an “Exhibit,” an “Article” or a “Section” will, unless otherwise explicitly provided, be construed as referring, respectively, to an Exhibit attached to this Loan Agreement or to an Article or Section of this Loan Agreement.

 

  (c)

All Schedules, Exhibits and Riders attached to or referred to in this Loan Agreement are incorporated by reference in this Loan Agreement.

 

  (d)

Any reference in this Loan Agreement to a statute or regulation will be construed as referring to that statute or regulation as amended from time to time.

 

  (e)

Use of the singular in this Loan Agreement includes the plural and use of the plural includes the singular.

 

  (f)

As used in this Loan Agreement, the term “including” means “including, but not limited to” and the term “includes” means “includes without limitation.”

 

  (g)

The use of one gender includes the other gender, as the context may require.

 

  (h)

Unless the context requires otherwise, (i) any definition of or reference to any agreement, instrument or other document in this Loan Agreement will be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth in this Loan Agreement), and (ii) any reference in this Loan Agreement to any Person will be construed to include such Person’s successors and assigns.

 

  (i)

Any reference in this Loan Agreement to “Lender’s requirements,” “as required by Lender,” or similar references will be construed, after Securitization, to mean Lender’s requirements or standards as determined in accordance with Lender’s and Loan Servicer’s obligations under the terms of the Securitization documents.

 

  (j)

Except as expressly set forth in this Loan Agreement:

 

  (i)

The defined term “Borrower” will refer both to each Individual Borrower and collectively to all Individual Borrowers. It is the intent of the parties that in making any determination under this Loan Agreement, including, without limitation, in determining whether (A) a breach of a representation, warranty or a covenant has occurred, (B) an Event of Default or a Transfer has occurred, or (C) an event has occurred which would create recourse obligations or indemnification obligations under the Loan Documents, that any such breach, occurrence or event with respect to any Individual Borrower will be deemed to be such a breach, occurrence or event with respect to all Individual Borrowers and that all Individual Borrowers need not have been involved with such breach, occurrence or event in order for the same to be deemed such a breach, occurrence or event with respect to every Individual Borrower.

 

Master Multifamily Loan and Security Agreement    Page 2


  (ii)

The defined term “Mortgaged Property” will refer both to each Individual Property and collectively to all Individual Properties. It is the intent of the parties in making any determinations under this Loan Agreement, including without limitation, in determining whether (A) a breach of a representation, warranty or a covenant has occurred, (B) an Event of Default or a Transfer has occurred, or (C) an event has occurred which would create recourse obligations or indemnification obligations under the Loan Documents, that any such breach, occurrence or event with respect to any Individual Property will be deemed to be such a breach, occurrence or event with respect to the Loan.

 

  (iii)

The defined term “Facility Operator” will refer both to each individual Facility Operator for any Individual Facility and collectively to all Facility Operators for all Individual Facilities. It is the intent of the parties that in making any determination under this Loan Agreement, including, without limitation, in determining whether (A) a breach of a representation, warranty or a covenant has occurred, (B) an Event of Default or a Transfer has occurred, or (C) an event has occurred which would create recourse obligations or indemnification obligations under the Loan Documents, that any such breach, occurrence or event with respect to any individual Facility Operator will be deemed to be such a breach, occurrence or event with respect to all Facility Operators and that all individual Facility Operators need not have been involved with such breach, occurrence or event in order for the same to be deemed such a breach, occurrence or event with respect to every Facility Operator.

 

  (iv)

The defined term “Facility” will refer both to each Individual Facility and collectively to all Individual Facilities. It is the intent of the parties in making any determinations under this Loan Agreement, including without limitation, in determining whether (A) a breach of a representation, warranty or a covenant has occurred, (B) an Event of Default or a Transfer has occurred, or (C) an event has occurred which would create recourse obligations or indemnification obligations under the Loan Documents, that any such breach, occurrence or event with respect to any Individual Facility will be deemed to be such a breach, occurrence or event with respect to the Loan.

ARTICLE II LOAN.

 

2.01

Loan Terms. The Loan will be evidenced by the Note and will bear interest and be paid in accordance with the payment terms set forth in the Note.

 

2.02

Prepayment Premium. Borrower will be required to pay a prepayment premium in connection with certain prepayments of the Indebtedness, including a payment made after Lender’s exercise of any right of acceleration of the Indebtedness, as provided in the Note, and a prepayment in connection with releases pursuant to Section 7.10 of this Loan Agreement.

 

Master Multifamily Loan and Security Agreement    Page 3


2.03

Exculpation. Borrower’s personal liability for payment of the Indebtedness and for performance of the other obligations to be performed by it under this Loan Agreement is limited in the manner, and to the extent, provided in the Note.

 

2.04

Application of Payments. If at any time Lender receives, from Borrower or otherwise, any amount applicable to the Indebtedness which is less than all amounts due and payable at such time, then Lender may apply that payment to amounts then due and payable in any manner and in any order determined by Lender (unless otherwise required by applicable law), in Lender’s sole and absolute discretion. Neither Lender’s acceptance of an amount that is less than all amounts then due and payable, nor Lender’s application of such payment in the manner authorized, will constitute or be deemed to constitute either a waiver of the unpaid amounts or an accord and satisfaction. Notwithstanding the application of any such amount to the Indebtedness, Borrower’s obligations under this Loan Agreement, the Note and all other Loan Documents will remain unchanged.

 

2.05

Usury Savings. If any applicable law limiting the amount of interest or other charges permitted to be collected from Borrower is interpreted so that any charge provided for in any Loan Document, whether considered separately or together with other charges levied in connection with any other Loan Document, violates that law, and Borrower is entitled to the benefit of that law, that charge is reduced to the extent necessary to eliminate that violation. The amounts, if any, previously paid to Lender in excess of the permitted amounts will be applied by Lender to reduce the principal amount of the Indebtedness. For the purpose of determining whether any applicable law limiting the amount of interest or other charges permitted to be collected from Borrower has been violated, all Indebtedness which constitutes interest, as well as all other charges levied in connection with the Indebtedness which constitute interest, will be deemed to be allocated and spread ratably over the stated term of the Note. Unless otherwise required by applicable law, such allocation and spreading will be effected in such a manner that the rate of interest so computed is uniform throughout the stated term of the Note.

 

2.06

Floating Rate Mortgage - Cap Agreement. If (a) the Note does not provide for interest to accrue at a floating or variable interest rate (other than during any Extension Period, if applicable) for any portion of the Indebtedness, and (b) a Cap Agreement is not required for any portion of the Indebtedness, then this Section 2.06 and Section 3.04 will be of no force or effect.

 

  (a)

So long as there is no Event of Default, Lender or Loan Servicer will remit to Borrower each Cap Payment received by Lender or Loan Servicer with respect to any month for which Borrower has paid in full the monthly installment of principal and interest or interest only, as applicable, due under the Note. Alternatively, at Lender’s option, so long as there is no Event of Default, Lender may apply a Cap Payment received by Lender or Loan Servicer with respect to any month to the applicable monthly payment of accrued interest due under the Note if Borrower has paid in full the remaining portion of such monthly payment of principal and interest or interest only, as applicable.

 

Master Multifamily Loan and Security Agreement    Page 4


  (b)

Neither the existence of a Cap Agreement nor anything in this Loan Agreement will relieve Borrower of its primary obligation to timely pay in full all amounts due under the Note and otherwise due on account of the Indebtedness.

ARTICLE III LOAN SECURITY AND GUARANTY.

 

3.01

Security Instrument. Each Individual Borrower will execute the applicable Security Instrument dated of even date with this Loan Agreement. Each Security Instrument will be recorded in the applicable land records in the Property Jurisdiction.

 

3.02

Reserve Funds.

 

  (a)

Security Interest. To secure Borrower’s obligations under this Loan Agreement and to further secure Borrower’s obligations under the Note and the other Loan Documents, Borrower conveys, pledges, transfers and grants to Lender a security interest pursuant to the Uniform Commercial Code or any other applicable law in and to all money in the Reserve Funds, as the same may increase or decrease from time to time, all interest and dividends thereon and all proceeds thereof.

 

  (b)

Supplemental Loan. If this Loan Agreement is entered into in connection with a Supplemental Loan and if the same Person is or becomes both Senior Lender and Supplemental Lender, then:

 

  (i)

Borrower assigns and grants to Supplemental Lender a security interest in the Reserve Funds established in connection with the Senior Indebtedness as additional security for all of Borrower’s obligations under the Supplemental Note.

 

  (ii)

In addition, Borrower assigns and grants to Senior Lender a security interest in the Reserve Funds established in connection with the Supplemental Indebtedness as additional security for all of Borrower’s obligations under the Senior Note.

 

  (iii)

It is the intention of Borrower that all amounts deposited by Borrower in connection with either the Senior Loan Documents, the Supplemental Loan Documents, or both, constitute collateral for the Supplemental Indebtedness secured by the Supplemental Instrument and the Senior Indebtedness secured by the Senior Instrument, with the application of such amounts to such Senior Indebtedness or Supplemental Indebtedness to be at the discretion of Senior Lender and Supplemental Lender.

 

3.03

Uniform Commercial Code Security Agreement. This Loan Agreement is also a security agreement under the Uniform Commercial Code for any of the Mortgaged Property which, under applicable law, may be subjected to a security interest under the Uniform Commercial Code, for the purpose of securing Borrower’s obligations under this Loan Agreement and to further secure Borrower’s obligations under the Note, Security Instrument and other Loan Documents, whether such Mortgaged Property is owned now or acquired in the future, and all products and cash and non-cash proceeds thereof (collectively, “UCC Collateral”), and by this Loan Agreement, Borrower grants to Lender a security interest in the UCC Collateral.

 

Master Multifamily Loan and Security Agreement    Page 5


3.04

Cap Agreement and Cap Collateral Assignment.

 

  (a)

Cap Agreement. To protect against fluctuations in interest rates, Borrower must obtain and maintain a Cap Agreement at all times so long as the Loan is outstanding. The initial Cap Agreement must be successfully bid no later than the Closing Date and be effective for an initial term ending not earlier than the third anniversary of the Closing Date. Subject to Section 11.22, the initial Cap Agreement must be in a Notional Amount not less than the principal amount of the Loan on the Closing Date and have a Strike Rate that does not exceed the Original Strike Rate. The Cap Agreement, including any Replacement Cap Agreement, must be from a Cap Provider, be in a form acceptable to Lender, and obligate the Cap Provider to make monthly payments directly to Lender or to Loan Servicer on behalf of Lender in an amount equal to the excess of (i) the interest on the Notional Amount at the Rate Cap Index Rate over (ii) interest on the Notional Amount at the Strike Rate.

 

  (b)

Replacement Cap Agreement. At least 60 days prior to the date on which an existing Cap Agreement terminates, Borrower must give Notice to and provide evidence satisfactory to Lender that Borrower will deliver a Replacement Cap Agreement. Borrower must ensure that the Replacement Cap Agreement is in full force and effect not later than the day immediately following the expiration of the then-existing Cap Agreement. Any Replacement Cap Agreement must satisfy the requirements for a Cap Agreement in this Loan Agreement and (i) have a term expiring not earlier than one year from its effective date, (ii) have a Strike Rate that does not exceed the Original Strike Rate, and (iii) subject to Section 11.22, be in a Notional Amount equal to the outstanding principal balance due under the Note on the effective date of the Replacement Cap Agreement.

 

  (c)

Attorneys’ Fees and Costs. Borrower must pay or reimburse Lender, upon demand, for all costs and expenses in connection with the initial Cap Agreement and any Replacement Cap Agreement, including, but not limited to, (i) all Attorneys’ Fees and Costs incurred by Lender, and (ii) the cost of the cap broker, if any.

 

  (d)

Cap Collateral. To secure Borrower’s payment obligations under the Loan, Borrower grants to Lender a first priority continuing security interest in the Cap Collateral, including any Replacement Cap Agreement.

 

  (e)

Allocation among Individual Borrowers. Each Individual Borrower must contribute its proportionate share of the cost of each Cap Agreement required under this Loan Agreement, and all costs associated with the purchase of each Cap Agreement required under this Loan Agreement must be reasonably allocated among Individual Borrowers.

 

Master Multifamily Loan and Security Agreement    Page 6


  (f)

Master Rate Cap. Borrower and Lender acknowledge and agree that Borrower’s obligation pursuant to this Loan Agreement to obtain, maintain and collaterally assign to Lender a Cap Agreement (including any Replacement Cap Agreement) may be satisfied by the purchase of a rate cap (a “Master Rate Cap”) by an entity related to each Individual Borrower which directly or indirectly holds a controlling interest in each Individual Borrower and is approved by Lender (“Cap Purchaser”), provided that such Master Rate Cap: (i) satisfies all of the requirements for the Cap Agreement provided herein in Lender’s Discretion, and (ii) is collaterally assigned to Lender pursuant to a hedge assignment and security agreement satisfactory to Lender by and among Cap Purchaser, Lender, and Borrower. Borrower acknowledges that upon termination of the Master Rate Cap without a replacement Master Rate Cap in place, or if the Master Rate Cap fails at any time to satisfy the requirements of this Loan Agreement relating to the Cap Agreement, such termination or failure will be an Event of Default hereunder.

 

3.05

Guaranty. Borrower will cause each Guarantor (if any) to execute a Guaranty of all or a portion of Borrower’s obligations under the Loan Documents effective as of the date of this Loan Agreement.

 

3.06

Assignment of Licenses, Certificates and Permits.

 

  (a)

Assignment of the Licenses. As additional security for the Loan, to the extent they are assignable, Borrower hereby transfers, sets over and assigns to Lender, and hereby grants to Lender a security interest in, all of Borrower’s right, title and interest in and to the Licenses and any and all renewals or extensions of the Licenses, together with all cash and non-cash proceeds thereof.

 

  (b)

Lender’s Right Upon Event of Default. Without limiting Lender’s rights described elsewhere, if an Event of Default exists under any Loan Document, then to the extent permitted by applicable law, Lender will have the right to exercise all the rights under the Licenses that any Individual Borrower has. Lender does not assume any obligations or duties of Borrower concerning the Licenses.

 

  (c)

Attorney-in-Fact. Each Individual Borrower irrevocably constitutes and appoints Lender as such Individual Borrower’s attorney-in-fact to demand, receive and enforce such Individual Borrower’s rights with respect to the Licenses and to do any and all acts in such Individual Borrower’s name or in the name of Lender with the same force and effect as such Individual Borrower could do if this Loan Agreement had not been made. This appointment will be deemed to be coupled with an interest and irrevocable.

 

3.07

Reserved.

 

3.08

Reserved.

 

3.09

Reserved.

 

Master Multifamily Loan and Security Agreement    Page 7


ARTICLE IV RESERVE FUNDS AND REQUIREMENTS.

 

4.01

Reserves Generally.

 

  (a)

Establishment of Reserve Funds; Investment of Deposits. Unless otherwise provided in Section 4.03 and/or Section 4.04, each Reserve Fund will be established on the date of this Loan Agreement and each of the following will apply:

 

  (i)

All Reserve Funds will be deposited in an Eligible Account at an Eligible Institution or invested in “permitted investments” as then defined and required by the Rating Agencies.

 

  (ii)

Lender will not be obligated to open additional accounts or deposit Reserve Funds in additional institutions when the amount of any Reserve Fund exceeds the maximum amount of the federal deposit insurance or guaranty. Borrower acknowledges and agrees that it will not have the right to direct Lender as to any specific investment of monies in any Reserve Fund. Lender will not be responsible for any losses resulting from investment of monies in any Reserve Fund or for obtaining any specific level or percentage of earnings on such investment.

 

  (b)

Interest on Reserve Funds; Trust Funds. Unless applicable law requires, Lender will not be required to pay Borrower any interest, earnings or profits on the Reserve Funds. Any amounts deposited with Lender under this Article IV will not be trust funds, nor will they operate to reduce the Indebtedness, unless applied by Lender for that purpose pursuant to the terms of this Loan Agreement.

 

  (c)

©Use of Reserve Funds. Each Reserve Fund will, except as otherwise provided in this Loan Agreement, be used for the sole purpose of paying, or reimbursing Borrower for payment of, the item(s) for which the applicable Reserve Fund was established. Borrower acknowledges and agrees that, except as specified in this Loan Agreement, monies in one Reserve Fund will not be used to pay, or reimburse Borrower for, matters for which another Reserve Fund has been established.

 

  (d)

Termination of Reserve Funds. Upon the payment in full of the Indebtedness, Lender will pay to Borrower all funds remaining in any Reserve Funds.

 

  (e)

Reserved.

 

4.02

Reserves for Taxes, Insurance and Other Charges.

 

  (a)

Deposits to Imposition Reserve Deposits. Borrower will deposit with Lender on the day monthly installments of principal or interest, or both, are due under the Note (or on another day designated in writing by Lender), until the Indebtedness is paid in full, an additional amount sufficient to accumulate with Lender the entire sum required to pay, when due, the items marked “Collect” below. Except as provided in Section 4.02(e), Lender will not require Borrower to make Imposition Reserve Deposits with respect to the items marked “Deferred” below.

[Deferred] Property Insurance premiums or premiums for other Insurance required by Lender under Section 6.10

 

Master Multifamily Loan and Security Agreement    Page 8


[Collect] Taxes and payments in lieu of taxes

[Deferred] water and sewer charges that could become a Lien on the Mortgaged Property

[Deferred] Ground Rents

[Deferred] assessments or other charges that could become a Lien on the Mortgaged Property, including home owner association dues

The amounts deposited pursuant to this Section 4.02(a) are collectively referred to in this Loan Agreement as the “Imposition Reserve Deposits.” The obligations of Borrower for which the Imposition Reserve Deposits are required are collectively referred to in this Loan Agreement as “Impositions.” The amount of the Imposition Reserve Deposits must be sufficient 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. Lender will maintain records indicating how much of the monthly Imposition Reserve Deposits and how much of the aggregate Imposition Reserve Deposits held by Lender are held for the purpose of paying Taxes, Insurance premiums, Ground Rent (if applicable) and each other Imposition.

 

  (b)

Disbursement of Imposition Reserve Deposits. Lender will apply the Imposition Reserve Deposits to pay Impositions so long as no Event of Default has occurred and is continuing. Lender will pay all Impositions from the Imposition Reserve Deposits held by Lender upon Lender’s receipt of a bill or invoice for an Imposition. If Borrower holds a ground lessee interest in the Mortgaged Property and Imposition Reserve Deposits are collected for Ground Rent, then Lender will pay the monthly or other periodic installments of Ground Rent from the Imposition Reserve Deposits, whether or not Lender receives a bill or invoice for such installments. Lender will have no obligation to pay any Imposition to the extent it exceeds the amount of the Imposition Reserve Deposits then held by Lender. Lender may pay an Imposition according to any bill, statement or estimate from the appropriate public office, Ground Lessor (if applicable) or insurance company without inquiring into the accuracy of the bill, statement or estimate or into the validity of the Imposition.

 

  (c)

©Excess or Deficiency of Imposition Reserve Deposits. If at any time the amount of the Imposition Reserve Deposits held by Lender for payment of a specific Imposition exceeds the amount reasonably deemed necessary by Lender, the excess will be credited against future installments of Imposition Reserve Deposits. If at any time the amount of the Imposition Reserve Deposits held by Lender for payment of a specific Imposition is less than the amount reasonably estimated by Lender to be necessary, Borrower will pay to Lender the amount of the deficiency within 15 days after Notice from Lender.

 

  (d)

Delivery of Invoices. Borrower will promptly deliver to Lender a copy of all notices of, and invoices for, Impositions.

 

Master Multifamily Loan and Security Agreement    Page 9


  (e)

Deferral of Collection of Any Imposition Reserve Deposits; Delivery of Receipts. If Lender does not collect an Imposition Reserve Deposit with respect to an Imposition either marked “Deferred” in Section 4.02(a) or pursuant to a separate written deferral by Lender, then on or before the earlier of the date each such Imposition is due, or the date this Loan Agreement requires each such Imposition to be paid, Borrower will provide Lender with proof of payment of each such Imposition. Upon Notice to Borrower, Lender may revoke its deferral and require Borrower to deposit with Lender any or all of the Imposition Reserve Deposits listed in Section 4.02(a), regardless of whether any such item is marked “Deferred” (i) if Borrower does not timely pay any of the Impositions, (ii) if Borrower fails to provide timely proof to Lender of such payment, (iii) at any time during the existence of an Event of Default or (iv) upon placement of a Supplemental Loan in accordance with Section 11.11.

 

  (f)

through (i) are Reserved.

 

4.03

Repairs; Repair Reserve Fund. Reserved.

 

4.04

Replacement Reserve Fund. Reserved.

 

4.05

Rental Achievement Provisions. Reserved.

 

4.06

Debt Service Reserve. Reserved.

 

4.07

Rate Cap Agreement Reserve Fund. As a condition to making the Loan, Lender has required Borrower to establish the Rate Cap Agreement Reserve Fund to ensure that adequate funds are available for, among other things, the purchase, if applicable, of any Replacement Cap Agreement.

 

  (a)

Deposits to Rate Cap Agreement Reserve Fund. If the initial Cap Agreement terminates prior to the Maturity Date, Lender will establish the Rate Cap Agreement Reserve Fund on the Closing Date. Commencing on the date the first installment of principal and/or interest is due under the Note and continuing on the same day for each successive month until the purchase of the last Replacement Cap Agreement, Borrower must pay to Lender an amount equal to the Rate Cap Reserve Deposit. The delivery of a Master Rate Cap does not negate the Borrower’s obligation to make Rate Cap Reserve Deposit payments.

 

  (b)

Adjustments to Rate Cap Reserve Deposit. Lender will re-compute the amount of the Rate Cap Reserve Deposit every 6 months based on the prevailing cost of the Rate Cap at that time and the anticipated outstanding principal balance due under the Note immediately prior to termination of the then-existing Cap Agreement. Lender will provide Notice to Borrower of any revised Rate Cap Reserve Deposit.

 

  (c)

Disbursements from Rate Cap Agreement Reserve Fund. Lender will apply the funds in the Rate Cap Agreement Reserve Fund to the cost of the Replacement Cap Agreement, unless an Event of Default has occurred and is continuing, in which case Lender at its option may apply such funds to the Indebtedness in any amount

 

Master Multifamily Loan and Security Agreement    Page 10


  and in any order as Lender determines in Lender’s Discretion. To the extent there are funds in the Rate Cap Agreement Reserve Fund in excess of the cost of the Replacement Cap Agreement, such funds may be applied to pay costs and expenses, including but not limited to, Attorneys’ Fees and Costs related to the Replacement Cap Agreement and to pay the cap broker, if any. In the event that, for any reason, there are insufficient funds in the Rate Cap Agreement Reserve Fund to purchase a Replacement Cap Agreement, Borrower must fund the amount of any such deficiency, including all costs and expenses, including but not limited to, necessary to pay Attorneys’ Fees and Costs and the cost of the cap broker, if any.

 

  (d)

Termination of Rate Cap Agreement Reserve Fund. Upon purchase by Borrower of a Replacement Cap Agreement with an expiration date on or after the Maturity Date, Borrower will no longer be required to make Rate Cap Reserve Deposits. Any funds remaining in the Rate Cap Agreement Reserve Fund will be returned to Borrower upon the earlier to occur of (i) purchase of a Replacement Cap Agreement acceptable to Lender, provided no Event of Default has occurred and is continuing, or (ii) payment in full of the Indebtedness.

 

4.08

through 4.20 are Reserved.

ARTICLE V REPRESENTATIONS AND WARRANTIES.

Borrower represents and warrants to Lender, with respect to each Individual Borrower (both individually and collectively), with respect to each Individual Property (both individually and collectively), with respect to each Individual Facility (both individually and collectively) and with respect to each Facility Operator (both individually and collectively), as follows as of the date of this Loan Agreement:

 

5.01

Review of Documents. Borrower has reviewed: (a) the Note, (b) the Security Instrument, (c) the Commitment Letter, and (d) all other Loan Documents.

 

5.02

Condition of Mortgaged Property. Except as Borrower may have disclosed to Lender in writing in connection with the issuance of the Commitment Letter, the Mortgaged Property has not been damaged by fire, water, wind or other cause of loss, or any previous damage to the Mortgaged Property has been fully restored.

 

5.03

No Condemnation. No part of the Mortgaged Property has been taken in Condemnation or other like proceeding, and, to the best of Borrower’s knowledge after due inquiry and investigation, no such proceeding is pending or threatened for the partial or total Condemnation or other taking of the Mortgaged Property.

 

5.04

Actions; Suits; Proceedings.

 

  (a)

There are no judicial, administrative, mediation or arbitration actions, suits or proceedings pending or, to the best of Borrower’s knowledge, threatened in writing against or affecting Borrower (and, if Borrower is a limited partnership, any of its general partners or if Borrower is a limited liability company, any member of Borrower) or the Mortgaged Property which, if adversely determined, would have a Material Adverse Effect.

 

Master Multifamily Loan and Security Agreement    Page 11


  (b)

Without limiting the generality of subsection (a) above, none of Borrower (and, if any Individual Borrower is a limited partnership, any of its general partners or if any Individual Borrower is a limited liability company, any member of such Individual Borrower), any Facility Operator, or the Facility are subject to any proceeding, suit or investigation by any Governmental Authority. Neither any Individual Borrower nor any Facility Operator has received any notice from any Governmental Authority which may, directly or indirectly, or with the passage of time, have a Material Adverse Effect or otherwise result in any of the following:

 

  (i)

The imposition of a fine, interim sanction, or final sanction.

 

  (ii)

A lower reimbursement rate for services rendered to eligible residents.

 

  (iii)

The Downgrade, revocation, transfer, surrender or suspension, or non-renewal or reissuance, or any other impairment of any License.

 

  (iv)

The appointment of a receiver or trustee.

 

  (v)

Impairment of any Individual Borrower’s or any Facility Operator’s ability to accept and retain residents.

 

  (vi)

Impairment of any Individual Borrower’s or Facility Operator’s continued participation in any Governmental Payor Program, or any successor programs thereto, at current rate certifications.

 

5.05

Environmental. Except as previously disclosed by Borrower to Lender in writing (which written disclosure may be in certain environmental assessments and other written reports accepted by Lender in connection with the funding of the Indebtedness and dated prior to the date of this Loan Agreement), each of the following is true:

 

  (a)

Borrower has not at any time engaged in, caused or permitted any Prohibited Activities or Conditions on the Mortgaged Property.

 

  (b)

To the best of Borrower’s knowledge after due inquiry and investigation, no Prohibited Activities or Conditions exist or have existed on the Mortgaged Property.

 

  (c)

The Mortgaged Property does not now contain any underground storage tanks, and, to the best of Borrower’s knowledge after due inquiry and investigation, the Mortgaged Property has not contained any underground storage tanks in the past. If there is an underground storage tank located on the Mortgaged Property that has been previously disclosed by Borrower to Lender in writing, that tank complies with all requirements of Hazardous Materials Laws.

 

Master Multifamily Loan and Security Agreement    Page 12


  (d)

To the best of Borrower’s knowledge after due inquiry and investigation, Borrower has complied with all Hazardous Materials Laws, including all requirements for notification regarding releases of Hazardous Materials. Without limiting the generality of the foregoing, all Environmental Permits required for the operation of the Mortgaged Property in accordance with Hazardous Materials Laws now in effect have been obtained and all such Environmental Permits are in full force and effect.

 

  (e)

To the best of Borrower’s knowledge after due inquiry and investigation, no event has occurred with respect to the Mortgaged Property that constitutes, or with the passage of time or the giving of notice, or both, would constitute noncompliance with the terms of any Environmental Permit.

 

  (f)

There are no actions, suits, claims or proceedings pending or, to the best of Borrower’s knowledge after due inquiry and investigation, threatened in writing that involve the Mortgaged Property and allege, arise out of, or relate to any Prohibited Activity or Condition.

 

  (g)

Borrower has received no actual or constructive notice of any written complaint, order, notice of violation or other communication from any Governmental Authority with regard to air emissions, water discharges, noise emissions or Hazardous Materials, or any other environmental, health or safety matters affecting the Mortgaged Property or any property that is adjacent to the Mortgaged Property.

 

5.06

Commencement of Work; No Labor or Materialmens Claims. Except as set forth on Exhibit E, prior to the recordation of the applicable Security Instrument, no work of any kind has been or will be commenced or performed upon the Mortgaged Property, and no materials or equipment have been or will be delivered to or upon the Mortgaged Property, for which the contractor, subcontractor or vendor continues to have any rights including the existence of or right to assert or file a mechanic’s or materialmen’s Lien. If any such work of any kind has been commenced or performed upon the Mortgaged Property, or if any such materials or equipment have been ordered or delivered to or upon the Mortgaged Property, then prior to the execution of the applicable Security Instrument, Borrower has satisfied each of the following conditions:

 

  (a)

Borrower has fully disclosed in writing to both the Lender and the title company issuing the applicable Title Policy that work has been commenced or performed on the Mortgaged Property, or materials or equipment have been ordered or delivered to or upon the Mortgaged Property.

 

  (b)

Borrower has obtained and delivered to Lender and the title company issuing the applicable Title Policy Lien waivers from all contractors, subcontractors, suppliers or any other applicable party, pertaining to all work commenced or performed on the Mortgaged Property, or materials or equipment ordered or delivered to or upon the Mortgaged Property.

 

Master Multifamily Loan and Security Agreement    Page 13


Borrower represents and warrants that all parties furnishing labor and materials for which a Lien or claim of Lien may be filed against the Mortgaged Property have been paid in full and, except for such Liens or claims insured against by the applicable Title Policy (which Borrower has disclosed pursuant to Section 5.06(a) and which are identified on Exhibit E), there are no mechanics’, laborers’ or materialmen’s Liens or claims outstanding for work, labor or materials affecting the Mortgaged Property, whether prior to, equal with or subordinate to the Lien of the Security Instrument.

 

5.07

Compliance with Applicable Laws and Regulations.

 

  (a)

To the best of Borrower’s knowledge after due inquiry and investigation, each of the following is true:

 

  (i)

All Improvements and the use of the Mortgaged Property comply with all applicable statutes, rules and regulations, including all applicable statutes, rules and regulations pertaining to requirements for equal opportunity, anti-discrimination, fair housing, environmental protection, zoning and land use (“legal, non-conforming” status with respect to uses or structures will be considered to comply with zoning and land use requirements for the purposes of this representation).

 

  (ii)

The Improvements comply with applicable health, fire, and building codes.

 

  (iii)

There is no evidence of any illegal activities relating to controlled substances on the Mortgaged Property.

 

  (b)

Without limiting the generality of subsection (a) above, each Individual Borrower, each Facility Operator, and each Individual Facility (and its operation) and all residential care agreements and residential Leases are in compliance with the applicable provisions of all laws, regulations, ordinances, orders or standards of any Governmental Authority having jurisdiction over the operation of the applicable Individual Facility (including any Governmental Payor Program requirements and disclosure of ownership and related information requirements), including:

 

  (i)

Healthcare Laws, Privacy Laws, fire and safety codes and building codes (and no waivers of such requirements exist at any Individual Facility).

 

  (ii)

Laws, rules, regulations and published interpretations thereof regulating the preparation and serving of food.

 

  (iii)

Laws, rules, regulations and published interpretations thereof regulating the handling and disposal of medical or biological waste.

 

  (iv)

The applicable provisions of all laws, rules, regulations and published interpretations thereof to which any Individual Borrower or Individual Facility is subject by virtue of its Intended Use.

 

Master Multifamily Loan and Security Agreement    Page 14


  (v)

All criteria established to classify the Facility as housing for older persons under the Fair Housing Amendments Act of 1988.

 

  (c)

No Individual Borrower has received notice of, or is not aware of, any violation of applicable antitrust laws or securities laws relating to any Individual Facility, any Individual Borrower, or any Facility Operator.

 

5.08

Access; Utilities; Tax Parcels. The Mortgaged Property (a) has ingress and egress via a publicly dedicated right of way or via an irrevocable easement permitting ingress and egress, (b) is served by public utilities and services generally available in the surrounding community or otherwise appropriate for the use in which the Mortgaged Property is currently being utilized, and (c) constitutes one or more separate tax parcels.

 

5.09

Licenses and Permits.

 

  (a)

With respect to each Individual Property, the applicable Individual Borrower, any applicable Facility Operator and any applicable Property Manager, and to the best of Borrower’s knowledge, any commercial tenant of the applicable Individual Property, is in possession of all material licenses, permits and authorizations required for use of such Individual Property, which are valid and in full force and effect as of the date of this Loan Agreement.

 

  (b)

Without limiting the generality of subsection (a) above, with respect to each Individual Property, each Individual Borrower has obtained or has caused any applicable Facility Operator to obtain all Licenses necessary to use, occupy or operate such Individual Facility for its Intended Use (such Licenses being in the name of the applicable Individual Borrower or in the name of a Facility Operator, if any, and in any event in the names of the Persons required by the applicable Governmental Authorities), and all such Licenses are in full force and effect. Borrower has provided Lender with complete and accurate copies of all Licenses. The Intended Use of each Individual Facility is in conformity with all certificates of occupancy and Licenses and any other restrictions or covenants affecting such Individual Facility. Each Individual Facility has all equipment, staff and supplies necessary to use and operate such Individual Facility for its Intended Use.

 

  (c)

Borrower has timely filed or has caused to be timely filed all reports and other information that the Licenses require to be filed.

 

  (d)

Each License, and the name of the Person in whose name each License is issued is identified on Exhibit K, and a true and complete copy of each License is attached as Exhibit K.

 

  (e)

As of the Closing Date, the Licenses attached as Exhibit K are current and no Individual Borrower has been subject to or received notice of any pending inquiry, audit, investigative demand or violation that has not been brought to Lender’s attention in writing.

 

Master Multifamily Loan and Security Agreement    Page 15


  (f)

Borrower is not aware of any deficiencies, actions or inactions that, in the aggregate, could result in a suspension, Downgrade, revocation, termination, restriction, or conditioning of any License.

 

  (g)

There has been no previous assignment or encumbrance of any Licenses except assignments or encumbrances terminated prior to Borrower entering into this Loan Agreement or collateral assignments or encumbrances terminated by any Facility Operator prior to Borrower entering into this Loan Agreement.

 

  (h)

Except as set forth on Exhibit K, other than the Licenses attached as Exhibit K, as of the Closing Date, no other Licenses are required to operate the Facility as it is currently being operated and for its Intended Use.

 

  (i)

Neither the execution and delivery of the Note, this Loan Agreement, any Security Instrument nor any other Loan Document, Borrower’s performance under the Loan Documents, nor the recordation of any Security Instrument, nor the exercise of any remedies by Lender pursuant to the Loan Documents, at law or in equity, will adversely affect the Licenses.

 

5.10

No Other Interests. To the best of Borrower’s knowledge after due inquiry and investigation, no Person has (a) any possessory interest in the Mortgaged Property or right to occupy the Mortgaged Property except under and pursuant to the provisions of existing Leases by and between tenants and Borrower (a form of residential lease having been previously provided to Lender together with the material terms of any and all Non-Residential Leases at the Mortgaged Property), or (b) an option to purchase all or a portion of the Mortgaged Property or an interest in the Mortgaged Property, except as has been disclosed to and approved in writing by Lender.

 

5.11

Term of Leases. All Leases for residential units with respect to the Mortgaged Property satisfy each of the following conditions:

 

  (a)

They are on forms that are customary for similar senior housing facilities in the Property Jurisdiction.

 

  (b)

They are for initial terms of at least 1 month and not more than 2 years (unless otherwise approved in writing by Lender).

 

  (c)

They do not include any Corporate Leases (unless otherwise approved in writing by Lender).

 

  (d)

They do not include options to purchase.

 

5.12

No Prior Assignment; Prepayment of Rents. Borrower has (a) not executed any prior assignment of Rents (other than an assignment of Rents securing any prior indebtedness that is being assigned to Lender, or that is being paid off and discharged with the proceeds of the Loan evidenced by the Note or, if this Loan Agreement is entered into in connection with a Supplemental Loan, other than an assignment of Rents securing any Senior Indebtedness), and (b) not performed any acts and has not executed, and will not execute,

 

Master Multifamily Loan and Security Agreement    Page 16


  any instrument which would prevent Lender from exercising its rights under any Loan Document. At the time of execution of this Loan Agreement, unless otherwise approved by Lender in writing, there has been no prepayment of any Rents for more than 2 months prior to the due dates of such Rents other than the last month’s rent, if collected at the time a tenant enters into a Lease.

 

5.13

Illegal Activity. No portion of the Mortgaged Property has been or will be purchased with the proceeds of any illegal activity.

 

5.14

Taxes Paid. Borrower has filed all federal, state, county and municipal tax returns required to have been filed by Borrower, and has paid all Taxes which have become due pursuant to such returns or to any notice of assessment received by Borrower, and Borrower has no knowledge of any basis for additional assessment with respect to such Taxes. To the best of Borrower’s knowledge after due inquiry and investigation, there are not presently pending any special assessments against the Mortgaged Property or any part of the Mortgaged Property.

 

5.15

Title Exceptions. To the best of Borrower’s knowledge after due inquiry and investigation, none of the items shown in the schedule of exceptions to coverage in any Title Policy will have a Material Adverse Effect on the (a) ability of Borrower to pay the Loan in full, (b) ability of Borrower to use all or any part of the Mortgaged Property in the manner in which the Mortgaged Property is being used on the Closing Date, except as set forth in Section 6.03, (c) operation of the Mortgaged Property, or (d) value of the Mortgaged Property.

 

5.16

No Change in Facts or Circumstances.

 

  (a)

All information in the application for the Loan submitted to Lender, including all financial statements for the Mortgaged Property, Borrower, and any Borrower Principal, and all Rent Schedules, reports, certificates, and any other documents submitted in connection with the application (collectively, “Loan Application”) is complete and accurate in all material respects as of the date such information was submitted to Lender.

 

  (b)

There has been no change in any fact or circumstance since the Loan Application was submitted to Lender that would make any information submitted as part of the Loan Application materially incomplete or inaccurate.

 

  (c)

The organizational structure of Borrower is as set forth in Exhibit H.

 

5.17

Financial Statements. The financial statements of Borrower and each Borrower Principal furnished to Lender as part of the Loan Application reflect in each case a positive net worth as of the date of the applicable financial statement.

 

5.18

ERISA – Borrower Status. Borrower represents as follows:

 

  (a)

Borrower is not an “investment company,” or a company under the Control of an “investment company,” as such terms are defined in the Investment Company Act of 1940, as amended.

 

Master Multifamily Loan and Security Agreement    Page 17


  (b)

Borrower is not an “employee benefit plan,” as defined in Section 3(3) of ERISA, which is subject to Title I of ERISA or a “plan” to which Section 4975 of the Tax Code applies, and the assets of Borrower do not constitute “plan assets” of one or more such plans within the meaning of 29 C.F.R. Section 2510.3-101, as modified by Section 3(42) of ERISA.

 

  (c)

Borrower is not a “governmental plan” within the meaning of Section 3(32) of ERISA, and is not subject to state statutes regulating investments or fiduciary obligations with respect to governmental plans.

 

5.19

No Fraudulent Transfer or Preference. No Individual Borrower or Borrower Principal (a) has made, or is making in connection with and as security for the Loan, a transfer of an interest in the property of Borrower or Borrower Principal to or for the benefit of Lender or otherwise as security for any of the obligations under the Loan Documents which is or could constitute a voidable preference under federal bankruptcy, state insolvency or similar applicable creditors’ rights laws, or (b) has made, or is making in connection with the Loan, a transfer (including any transfer to or for the benefit of an insider under an employment contract) of an interest of Borrower or any Borrower Principal in property which is or could constitute a voidable preference under federal bankruptcy, state insolvency or similar applicable creditors’ rights laws, or (c) has incurred, or is incurring in connection with the Loan, any obligation (including any obligation to or for the benefit of an insider under an employment contract) which is or could constitute a fraudulent transfer under federal bankruptcy, state insolvency, or similar applicable creditors’ rights laws.

 

5.20

No Insolvency or Judgment.

 

  (a)

No Pending Proceedings or Judgments. No Individual Borrower or Borrower Principal is (i) the subject of or a party to (other than as a creditor) any completed or pending bankruptcy, reorganization or insolvency proceeding, or (ii) the subject of any judgment unsatisfied of record or docketed in any court located in the United States.

 

  (b)

Insolvency. Borrower is not presently insolvent, and the Loan will not render Borrower insolvent. As used in this Section, the term “insolvent” means that the total of all of a Person’s liabilities (whether secured or unsecured, contingent or fixed, or liquidated or unliquidated) is in excess of the value of all of the assets of the Person that are available to satisfy claims of creditors.

 

5.21

Working Capital. After the Loan is made, Borrower intends to have sufficient working capital, including cash flow from the Mortgaged Property or other sources, not only to adequately maintain the Mortgaged Property, but also to pay all of Borrower’s outstanding debts as they come due (other than any balloon payment due upon the maturity of the Loan). Lender acknowledges that no members or partners of Borrower or any Borrower Principal will be obligated to contribute equity to Borrower for purposes of providing working capital to maintain the Mortgaged Property or to pay Borrower’s outstanding debts except as may otherwise be required under their organizational documents.

 

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5.22

Cap Collateral.

 

  (a)

Borrower has instructed each Cap Provider and any guarantor of a Cap Provider’s obligations to make Cap Payments directly to Lender or to Loan Servicer on behalf of Lender.

 

  (b)

Borrower (or Cap Purchaser) has complied with the applicable requirements of the Dodd-Frank Act in purchasing the initial Cap Agreement.

 

5.23

Ground Lease. Reserved.

 

5.24

Purpose of Loan. The purpose of the Loan is as indicated by the checked boxes below and on Exhibit Q:

 

  [X]

Refinance Loan: The Loan is a refinancing of existing indebtedness and, except to the extent specifically required by Lender, there is to be no change in the ownership of either the Mortgaged Property or Borrower Principals. The intended use of any cash received by Borrower from Lender, to the extent applicable, in connection with the refinancing has been fully disclosed to Lender.

 

  [    ]

Acquisition Loan – Mortgaged Property: All of the consideration given or received or to be given or received in connection with the acquisition of the Mortgaged Property has been fully disclosed to Lender. The Mortgaged Property was or will be purchased from the applicable “Property Seller” identified on Exhibit Q.

No Individual Borrower or Borrower Principal has or had, directly or indirectly (through a family member or otherwise), any interest in any Property Seller and the acquisition of the Mortgaged Property is an arm’s-length transaction. To the best of Borrower’s knowledge after due inquiry and investigation, the purchase price of the Mortgaged Property represents the fair market value of the Mortgaged Property and each Property Seller is not or will not be insolvent subsequent to the sale of the Mortgaged Property.

 

  [    ]

Acquisition Loan – Membership Interests: All of the consideration given or received or to be given or received in connection with the acquisition of 100% of the direct or indirect membership interests of the Borrower (“Membership Interests”) has been fully disclosed to Lender. The Membership Interests were or will be purchased from the applicable “Membership Interests Seller” identified on Exhibit Q.

No Borrower Principal has or had, directly or indirectly (through a family member or otherwise), any interest in any Membership Interests Seller and the acquisition of the Membership Interests is an arm’s-length transaction. To the best of Borrower’s knowledge after due inquiry and investigation, the purchase price of the Membership Interests represents the fair market value of the Membership Interests and each Membership Interest Seller is not or will not be insolvent subsequent to the sale of the Membership Interest.

 

Master Multifamily Loan and Security Agreement    Page 19


  [    ]

Supplemental Loan: The Loan is a Supplemental Loan and, except to the extent specifically required or approved by Lender, there has been no change in the ownership of either the Mortgaged Property or Borrower Principals since the date of the Senior Note. The intended use of any cash received by Borrower from Lender, to the extent applicable, in connection with the Supplemental Loan has been fully disclosed to Lender.

 

5.25

Intended Use.

 

  (a)

With respect to each Individual Facility, the residential units in such Individual Facility are allocated as set forth on Exhibit P (“Intended Use”).

 

  (b)

The number of units set aside as Assisted Living Residences and Independent Living Units may be increased or decreased without Lender’s consent, subject to Section 5.25(c).

 

  (c)

For the purposes of this Section 5.25(c), an “Increase in Acuity Mix” means, with respect to any Individual Facility, (A) the conversion of Independent Living Units to either Assisted Living Residences which are not devoted to Alzheimer’s care, dementia care and/or memory care, or Assisted Living Residences which are devoted to Alzheimer’s care, dementia care and/or memory care, or (B) the conversion of Assisted Living Residences which are not devoted to Alzheimer’s care, dementia care and/or memory care to Assisted Living Residences which are devoted to Alzheimer’s care, dementia care and/or memory care. A “Decrease in Acuity Mix” means, with respect to any Individual Facility, (A) the conversion of Assisted Living Residences which are not devoted to Alzheimer’s care, dementia care and/or memory care to Independent Living Units, or (B) the conversion of Assisted Living Residences which are devoted to Alzheimer’s care, dementia care and/or memory care to either Independent Living Units or Assisted Living Residences which are not devoted to Alzheimer’s care, dementia care and/or memory care. Without Lender’s prior consent, Borrower may not convert units at any Individual Facility if the accumulated change after giving effect to the conversion, as a percentage of the total number of units in the applicable Individual Facility on the Closing Date, would be greater than:

 

  (i)

25% with respect to the accumulated Increase in Acuity Mix; or

 

  (ii)

10% with respect to the accumulated Decrease in Acuity Mix.

 

  (d)

The bed count identified in the Intended Use as “Assisted Living Residences devoted to Alzheimer’s care, dementia care and/or memory care” may vary up to the limits allowed in the current licensing for the applicable Individual Facility, provided that no more than 40% of the beds at the applicable Independent Facility (including any beds added by the construction of any additional units) may be dedicated to the care of residents with Alzheimer’s disease or other dementia.

 

  (e)

Reserved.

 

Master Multifamily Loan and Security Agreement    Page 20


5.26

Furniture, Fixtures, Equipment, and Motor Vehicles. As of the Closing Date, all furniture, Fixtures, equipment, and motor vehicles located on or used in connection with the Mortgaged Property, and the name of the Person that owns and/or leases each item, if other than the applicable Individual Borrower, is listed on Exhibit L, and such list is true and complete.

 

5.27

Participant in Federal Programs. Neither Borrower nor any Facility Operator is a participant in any federal program under which any Governmental Authority may have the right to recover funds by reason of the advance of federal funds.

 

5.28

Certificate of Need. Under applicable laws and regulations as in effect on the date of this Loan Agreement, if any existing management agreement or operating lease is terminated or Lender acquires any Individual Facility through foreclosure or otherwise, none of Borrower, Lender, any subsequent operator or management agent, or any subsequent purchaser (through foreclosure or otherwise) must obtain a certificate of need from any Governmental Authority (other than giving of any notice required under the applicable state law or regulation) prior to applying for any License, so long as neither the type of service nor any unit complement is changed.

 

5.29

Contracts.

 

  (a)

Exhibit M lists all Contracts in effect as of the date of this Loan Agreement, the names of the parties to such Contracts and the dates of such Contracts.

 

  (b)

With regard to each Contract listed in Exhibit M, (i) the Contract is in full force and effect in accordance with its terms, and (ii) there is no default by any party under the Contract.

 

  (c)

Borrower has delivered to Lender a copy of each Contract, together with all amendments, modifications, supplements and renewals thereto in effect as of the date of this Loan Agreement.

 

  (d)

Except as set forth on Exhibit M, each Contract listed in Exhibit M provides that it is terminable by Borrower or any Facility Operator upon not more than 30 days’ notice without the necessity of establishing cause and without payment of a penalty or termination fee by Borrower or any Facility Operator or their respective successors or assigns, except only Third Party Provider Agreements.

 

5.30

Material Contracts.

 

  (a)

Exhibit N lists all Material Contracts in effect as of the date of this Loan Agreement.

 

  (b)

With regard to each Material Contract listed in Exhibit N: (i) the Material Contract is assignable by the applicable Individual Borrower, or if no Individual Borrower is a party thereto, by a Facility Operator, without the consent of the other party thereto (or the applicable Individual Borrower and any Facility Operator, as applicable, has obtained express written consent to the assignment from the other party thereto), except only Third Party Provider Agreements; (ii) no previous

 

Master Multifamily Loan and Security Agreement    Page 21


  assignment of any Individual Borrower’s or any Facility Operator’s interest in the Material Contract has been made except such assignments that have been properly terminated prior to or concurrently with the execution and delivery of this Loan Agreement; (iii) the Material Contract is in full force and effect in accordance with its terms; and (iv) there is no default by any party under the Material Contract.

 

  (c)

Borrower has delivered to Lender a copy of each Material Contract, together with all amendments, modifications, supplements and renewals thereto in effect as of the date of this Loan Agreement.

 

  (d)

Each Material Contract listed in Exhibit N provides that it is terminable upon not more than 30 days notice without the necessity of establishing cause and without payment of a penalty or termination fee by Borrower or any Facility Operator or their respective successors or assigns, except only Third Party Provider Agreements.

 

5.31

No Financing Statements. Except for termination statements and continuation statements, during the 45-day period prior to the date of this Loan Agreement, there have been no UCC financing statements filed with respect to any of the UCC Collateral listing as debtor any Individual Borrower, any Facility Operator, or any Individual Facility’s common name.

 

5.32

Governmental Payor Programs. If Borrower or any Facility Operator or Property Manager participates in any Governmental Payor Program in connection with the operation of any Individual Facility, all of the following are true:

 

  (a)

The applicable Individual Facility is in compliance in all material respects with the requirements for participation in the Governmental Payor Program, including the Medicare and Medicaid Patient Protection Act of 1987.

 

  (b)

The applicable Individual Facility conforms in all material respects to all insurance, reimbursement and cost reporting requirements, and has a current provider agreement under Title XVIII and/or XIX of the Social Security Act or any other applicable laws for reimbursement necessary for its Intended Use.

 

  (c)

There is no action pending or threatened to terminate the applicable Individual Facility’s participation in the Governmental Payor Program nor is there any decision not to renew any provider agreement related to such Individual Facility, nor is there any action pending or threatened to impose material intermediate or alternative sanctions with respect to such Individual Facility.

 

  (d)

All Governmental Payor Program cost reports and financial reports submitted by Borrower, any Facility Operator, or any Property Manager for the applicable Individual Facility are materially accurate and complete and have not been misleading in any material respects.

 

  (e)

No cost reports for the applicable Individual Facility remain “open” or unsettled, except as otherwise disclosed in writing to Lender.

 

Master Multifamily Loan and Security Agreement    Page 22


  (f)

The execution and delivery of the Note, this Loan Agreement, the Security Instrument, or any other Loan Document, Borrower’s performance under the Loan Documents, the recordation of the Security Instrument, and the exercise of any remedies by Lender, will not do any of the following:

 

  (i)

Adversely affect the right by Borrower, a Facility Operator, or the applicable Individual Facility to receive Governmental Payor Program payments and reimbursements with respect to the Facility.

 

  (ii)

Materially reduce the Governmental Payor Program payments and reimbursements which Borrower or a Facility Operator is receiving as of the date of this Loan Agreement.

 

  (g)

If any existing management agreement or operating lease is terminated or Lender acquires the applicable Individual Facility through foreclosure or otherwise, none of the Borrower, Lender, any subsequent management agent, any subsequent operator of the Facility, or any subsequent purchaser (through foreclosure or otherwise) will be required to obtain a certificate of need from any Governmental Authority (other than giving of any notice required under the applicable state law or regulation) prior to receiving certification to receive Governmental Payor Program payments (or any successor programs) for residents having coverage under any Governmental Payor Program so long as neither the type of service nor any unit complement is changed.

 

5.33

Third-Party Payor Programs and Private Commercial Insurance Managed Care and Employee Assistance Programs.

 

  (a)

The Facility conforms in all material respects with all insurance, reimbursement and cost reporting requirements.

 

  (b)

There is no threatened or pending revocation, suspension, termination, probation, restriction, limitation or nonrenewal affecting Borrower or any Facility Operator, of any private commercial insurance managed care or employee assistance program to which Borrower or any Facility Operator is subject.

 

  (c)

All private insurance cost reports and financial reports submitted by Borrower, any Facility Operator, or any Property Manager for the Facility are materially accurate and complete and have not been misleading in any material respects.

 

  (d)

No cost reports for the Facility remain “open” or unsettled, except as otherwise disclosed in writing to Lender.

 

5.34

No Transfer or Pledge of Licenses. The Licenses, including the certificate of need, may not be, and have not been, transferred to any location other than the applicable Individual Facility, have not been pledged as collateral security for any other loan or indebtedness, and are held free from restrictions or known conflicts that would materially impair the use or operation of the applicable Individual Facility for its Intended Use, and are not provisional, probationary, or restricted in any way.

 

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5.35

No Pledge of Receivables. Neither Borrower nor any Facility Operator has pledged its receivables as collateral security for any other loan or indebtedness.

 

5.36

Patient and Resident Care Agreements. There are no patient or resident care agreements with patients or residents or with any other Persons that deviate in any material adverse respect from the standard form customarily used at a comparable facility or which conflict with any statutory or regulatory requirements.

 

5.37

Patient and Resident Records. All patient or resident records at each Individual Facility, including patient or resident trust fund accounts, are true and correct in all material respects.

 

5.38

No Facility Deficiencies, Enforcement Actions or Violations.

 

  (a)

No Individual Facility has received a “Level A” (or equivalent) violation, and no statement of charges or deficiencies has been made or penalty enforcement action has been undertaken against any Individual Facility, any Property Manager, any Facility Operator or any Individual Borrower (or any officer, director or stockholder of any of the foregoing) by any Governmental Authority during the last 3 calendar years, and there have been no violations over the past 3 calendar years which have threatened any certification of any Individual Facility, any Property Manager, any Facility Operator or any Individual Borrower for participation in any Governmental Payor Program.

 

  (b)

Reserved.

 

5.39

Seniors Housing Operator. Reserved.

 

5.40

Recycled SPE Borrower. Reserved.

 

5.41

Recycled SPE Equity Owner. Reserved.

 

5.42

through 5.50 are Reserved.

 

5.51

Survival. The representations and warranties set forth in this Loan Agreement will survive until the Indebtedness is paid in full; however, the representations and warranties set forth in Section 5.05 will survive beyond repayment of the entire Indebtedness, to the extent provided in Section 10.02(i).

 

5.52

through 5.57 are Reserved.

 

5.58

Prohibited Parties Lists.

 

  (a)

Borrower is not identified and to the best of Borrower’s knowledge after due inquiry and investigation, no Borrower Principal nor any Non-U.S. Equity Holder is identified on the OFAC Lists.

 

  (b)

Borrower is not listed and to the best of Borrower’s knowledge after due inquiry and investigation, no Borrower Principal is listed on the FHFA SCP List.

 

Master Multifamily Loan and Security Agreement    Page 24


5.59

AML Laws. None of Borrower or to the best of Borrower’s knowledge after due inquiry and investigation, any Borrower Principal or any Non-U.S. Equity Holder:

 

  (a)

Has been convicted of a violation of the AML Laws or been the subject of a final enforcement action relating to the AML Laws.

 

  (b)

Is the subject of any pending proceedings for any violation of the AML Laws.

 

5.60

Internal Controls. Borrower has in place and to the best of Borrower’s knowledge after due inquiry and investigation, Borrower has determined that each Borrower Principal has in place, practices and procedures for the admission of investors which prevent the admission of:

 

  (a)

Any investor that is in violation of any criminal or civil law or regulation intended to prevent money laundering or the funding of terrorist or illegal drug trafficking activities.

 

  (b)

Any Person that will have a 25% or more direct or indirect ownership (or other economic) interest in (i) any Individual Borrower or (ii) the aggregate of all Individual Borrowers (any such interest, a “25% Equity Interest” and any such Person, a “25% Equity Holder”) that is on the Prohibited Parties Lists.

 

  (c)

Any Non-U.S. Equity Holder that is on the OFAC Lists.

 

5.61

Crowdfunding. Except as has been disclosed in writing to and approved in writing by Lender, no 25% Equity Interest has been marketed or sold to investors through any form of Crowdfunding.

 

5.62

through 5.65 are Reserved.

ARTICLE VI BORROWER COVENANTS.

Borrower covenants and agrees with Lender, with respect to each Individual Borrower (both individually and collectively), with respect to each Individual Property (both individually and collectively), with respect to each Individual Facility (both individually and collectively) and with respect to each Facility Operator (both individually and collectively),, as follows:

 

6.01

Compliance with Laws. Borrower will comply with all laws, ordinances, rules, regulations and requirements of any Governmental Authority having jurisdiction over the Mortgaged Property and all licenses and permits and all recorded covenants and agreements relating to or affecting the Mortgaged Property, including all laws, ordinances, regulations, requirements and covenants pertaining to health and safety, construction of improvements on the Mortgaged Property, Repairs, Capital Replacements, fair housing, disability accommodation, zoning and land use, applicable building codes, special use permits and environmental regulations, Leases and the maintenance and disposition of tenant security deposits. Borrower will take appropriate measures to prevent, and will not engage in or knowingly permit, any illegal activities at the Mortgaged Property, including those that could endanger tenants or visitors, result in damage to the Mortgaged Property, result in forfeiture of the Mortgaged Property, or otherwise materially impair the Lien created by the Security Instrument or Lender’s interest in the Mortgaged Property. Borrower will at all times maintain records sufficient to demonstrate compliance with the provisions of this Section 6.01.

 

Master Multifamily Loan and Security Agreement    Page 25


6.02

Compliance with Organizational Documents. Borrower will at all times comply with all laws, regulations and requirements of any Governmental Authority relating to Borrower’s formation, continued existence and good standing in its state of formation and, if different, in the Property Jurisdiction. Borrower will at all times comply with its organizational documents, including its partnership agreement (if Borrower is a partnership), its by-laws (if Borrower is a corporation or housing cooperative corporation or association) or its operating agreement (if Borrower is a limited liability company or tenancy-in-common). If Borrower is a housing cooperative corporation or association, Borrower will at all times maintain its status as a “cooperative housing corporation” as such term is defined in Section 216(b) of the Internal Revenue Code of 1986, as amended, or any successor statute thereto.

 

6.03

Use of Mortgaged Property.

 

  (a)

Unless required by applicable law, without the prior written consent of Lender, Borrower will not, and will not permit any Facility Operator to, take any of the following actions:

 

  (i)

Allow changes in the use for which all or any part of the Mortgaged Property is being used at the time this Loan Agreement is executed.

 

  (ii)

Convert any individual dwelling units or common areas to commercial use.

 

  (iii)

Initiate a change in the zoning classification of the Mortgaged Property or acquiesce to a change in the zoning classification of the Mortgaged Property.

 

  (iv)

Establish any condominium or cooperative regime with respect to the Mortgaged Property beyond any which may be in existence on the date of this Loan Agreement.

 

  (v)

Combine all or any part of the Mortgaged Property with all or any part of a tax parcel which is not part of the Mortgaged Property.

 

  (vi)

Subdivide or otherwise split any tax parcel constituting all or any part of the Mortgaged Property.

 

  (vii)

Add to or change any location at which any of the Mortgaged Property is stored, held or located unless Borrower (A) gives Notice to Lender within 30 days after the occurrence of such addition or change, (B) executes and delivers to Lender any modifications of or supplements to this Loan Agreement that Lender may require, and (C) authorizes the filing of any financing statement which may be filed in connection with this Loan Agreement, as Lender may require.

 

Master Multifamily Loan and Security Agreement    Page 26


  (viii)

Convert, in whole or in part, any non-residential income producing units to non-income producing units.

 

  (b)

Without the prior written consent of Lender, which may be granted or withheld in Lender’s discretion, Borrower will not, and will not permit any Facility Operator to, provide or contract for skilled nursing care, assisted living care, Alzheimer’s care, memory care or dementia care for any of the residents other than that level of care which both (i) is consistent with the Intended Use and (ii) is permissible for the applicable Individual Borrower or Facility Operator to provide at the applicable Individual Facility under (A) applicable Healthcare Laws, and (B) applicable Licenses.

 

  (c)

Notwithstanding anything contained in this Section to the contrary, if Borrower is a housing cooperative corporation or association, Lender acknowledges and consents to Borrower’s use of the Mortgaged Property as a housing cooperative.

 

6.04

Non-Residential Leases.

 

  (a)

Prohibited New Non-Residential Leases or Modified Non-Residential Leases. Borrower will not enter into any New Non-Residential Lease, enter into any Modified Non-Residential Lease or terminate any Non-Residential Lease (including any Non-Residential Lease in existence on the date of this Loan Agreement) without the prior written consent of Lender.

 

  (b)

Reserved.

 

  (c)

Executed Copies of Non-Residential Leases. Borrower will, without request by Lender, deliver a fully executed copy of each Non-Residential Lease to Lender promptly after such Non-Residential Lease is signed.

 

  (d)

Subordination and Attornment Requirements. All Non-Residential Leases entered into after the date of this Loan Agreement, regardless of whether Lender’s consent or approval is required, will specifically include the following provisions:

 

  (i)

The tenant will attorn to Lender and any purchaser at a foreclosure sale, such attornment to be self-executing and effective upon acquisition of title to the Mortgaged Property by any purchaser at a foreclosure sale or by Lender in any manner.

 

  (ii)

The tenant agrees to execute such further evidences of attornment as Lender or any purchaser at a foreclosure sale may from time to time request.

 

  (iii)

The tenant will, upon receipt of a written request from Lender following the occurrence of and during the continuance of an Event of Default, pay all Rents payable under the Lease to Lender.

 

  (iv)

If Lender or a purchaser at a foreclosure sale so elects, the Lease will not be terminated by foreclosure or any other transfer of the Mortgaged Property.

 

Master Multifamily Loan and Security Agreement    Page 27


  (v)

After a foreclosure sale of the Mortgaged Property, Lender or any other purchaser at such foreclosure sale may, at Lender’s or such purchaser’s option, accept or terminate such Lease without payment of any fee or penalty.

 

6.05

Prepayment of Rents. Borrower will not receive or accept Rent under any Lease (whether a residential Lease or a Non-Residential Lease) for more than 2 months in advance.

 

6.06

Inspection.

 

  (a)

Right of Entry. Subject to the rights of tenants under Leases, Borrower will permit Lender, its agents, representatives and designees and any interested Governmental Authority to make or cause to be made entries upon and inspections of the Mortgaged Property to inspect, among other things: (i) Repairs, (ii) Capital Replacements, (iii) Restorations, (iv) Property Improvement Alterations, and (v) any other Improvements, both in process and upon completion (including environmental inspections and tests performed by professional inspection engineers) during normal business hours, or at any other reasonable time, upon reasonable Notice to Borrower if the inspection is to include occupied residential units (which Notice need not be in writing). During normal business hours, or at any other reasonable time, Borrower will also permit Lender to examine all books and records and contracts and bills pertaining to the foregoing. Notice to Borrower will not be required in the case of an emergency, as determined in Lender’s Discretion, or when an Event of Default has occurred and is continuing.

 

  (b)

Inspection of Mold. If Lender determines that Mold has or may have developed as a result of a water intrusion event or leak, Lender, at Lender’s Discretion, may require that a professional inspector inspect the Mortgaged Property to confirm whether Mold has developed and, if so, thereafter as frequently as Lender determines is necessary until any issue with Mold and its cause(s) are resolved to Lender’s satisfaction. Such inspection will be limited to a visual and olfactory inspection of the area that has experienced the Mold, water intrusion event or leak. Borrower will be responsible for the cost of each such professional inspection and any remediation deemed to be necessary as a result of the professional inspection. After any issue with Mold is remedied to Lender’s satisfaction, Lender will not require a professional inspection any more frequently than once every 3 years unless Lender otherwise becomes aware of Mold as a result of a subsequent water intrusion event or leak.

 

  (c)

Certification in Lieu of Inspection. If Lender or Loan Servicer determines not to conduct an annual inspection of the Mortgaged Property, and in lieu thereof Lender requests a certification, Borrower will provide to Lender a factually correct certification, each year that the annual inspection is waived, to the following effect:

 

Master Multifamily Loan and Security Agreement    Page 28


Borrower has not received any written complaint, notice, letter or other written communication from any tenant, Property Manager, Facility Operator or governmental authority regarding mold, fungus, microbial contamination or pathogenic organisms (“Mold”) or any activity, condition, event or omission that causes or facilitates the growth of Mold on or in any part of the Mortgaged Property or, if Borrower has received any such written complaint, notice, letter or other written communication, that Borrower has investigated and determined that no Mold activity, condition or event exists or alternatively has fully and properly remediated such activity, condition, event or omission in compliance with the Moisture Management Plan for the Mortgaged Property.

If Borrower is unwilling or unable to provide such certification, Lender may require a professional inspection of the Mortgaged Property at Borrower’s expense.

 

6.07

Books and Records; Financial Reporting.

 

  (a)

Delivery of Books and Records.

 

  (i)

Borrower will keep and maintain at all times at the Mortgaged Property, Borrower’s main business office, or the Property Manager’s or Facility Operator’s office, and upon Lender’s request will make available at the Mortgaged Property (or, at Borrower’s option, at the Property Manager’s or Facility Operator’s office), complete and accurate books of account and records (including copies of supporting bills and invoices) adequate to reflect correctly the operation of the Mortgaged Property and copies of all written contracts, Leases, and other instruments which affect the Mortgaged Property. The books, records, contracts, Leases and other instruments will be subject to examination and inspection by Lender at any reasonable time (“Books and Records”).

 

  (ii)

Borrower will keep the Books and Records in accordance with one of the following accounting methods, consistently applied, and Borrower will promptly provide Lender Notice of any change in Borrower’s accounting methods:

 

  (A)

Generally accepted accounting principles (GAAP).

 

  (B)

Tax method of accounting, if under the tax method of accounting, the accrual basis is used for interest expense, real estate taxes and insurance expense, and the cash basis is used for all other items, including income, prepaid rent, utilities and payroll expense. Financial statements may exclude depreciation and amortization.

 

  (C)

Such other method that is acceptable to Lender.

 

  (b)

Delivery of Statement of Income and Expenses; Rent Schedule and Other Statements. Borrower will furnish to Lender each of the following:

 

Master Multifamily Loan and Security Agreement    Page 29


  (i)

Within 25 days after the end of each calendar quarter prior to Securitization and within 35 days after each calendar quarter after Securitization, each of the following:

 

  (A)

A Rent Schedule for each Individual Property dated no earlier than the date that is 5 days prior to the end of such quarter.

 

  (B)

A statement of income and expenses for Borrower (both on an individual and a consolidated basis) that is either of the following:

 

  (1)

For the 12 month period ending on the last day of such quarter.

 

  (2)

If at the end of such quarter Borrower or any Affiliate of Borrower has owned the Mortgaged Property for less than 12 months, for the period commencing with the acquisition of the Mortgaged Property by Borrower or its Affiliate, and ending on the last day of such quarter.

 

  (C)

When requested by Lender, a balance sheet showing all assets and liabilities of Borrower as of the end of that fiscal quarter.

 

  (ii)

Within 90 days after the end of each fiscal year of Borrower, each of the following:

 

  (A)

An annual statement of income and expenses for Borrower for that fiscal year (both on an individual and a consolidated basis).

 

  (B)

A balance sheet showing all assets and liabilities of Borrower as of the end of that fiscal year (for each Individual Borrower on an individual basis and for all Individual Borrowers on a consolidated basis).

 

  (C)

An accounting for each Individual Property of all security deposits held pursuant to all Leases, including the name of the institution (if any) and the names and identification numbers of the accounts (if any) in which such security deposits are held and the name of the person to contact at such financial institution, along with any authority or release necessary for Lender to access information regarding such accounts.

 

  (iii)

Within 30 days after the date of filing, copies of all tax returns filed by Borrower.

 

  (c)

Additional Reporting Requirements Upon Request. Borrower will furnish to Lender each of the following:

 

Master Multifamily Loan and Security Agreement    Page 30


  (i)

Upon Lender’s request, in Lender’s sole and absolute discretion prior to a Securitization, and thereafter upon Lender’s request in Lender’s Discretion, a monthly Rent Schedule for each Individual Property and a monthly statement of income and expenses for each Individual Borrower, in each case within 25 days after the end of each month.

 

  (ii)

Upon Lender’s request in Lender’s sole and absolute discretion prior to a Securitization, and thereafter upon Lender’s request in Lender’s Discretion, within 10 days after such a request from Lender, each of the following:

 

  (A)

A statement that identifies all Managers and owners of any direct interest in Borrower and any Designated Entity for Transfers and the interest held by each (unless Borrower or any Designated Entity for Transfers is a publicly-traded entity, in which case such statement of ownership will not be required), and if Borrower or a Designated Entity for Transfers is a corporation, then all officers and directors of Borrower and the Designated Entity for Transfers.

 

  (B)

To the extent not included in the statement provided under Section 6.07(c)(ii)(A), a statement that identifies (1) all 25% Equity Holders, and (2) all Non-U.S. Equity Holders.

 

  (iii)

Upon Lender’s request in Lender’s Discretion, such other financial information or property management information (including information on tenants under Leases to the extent such information is available to Borrower, copies of bank account statements from financial institutions where funds owned or controlled by Borrower are maintained, and an accounting of security deposits) as may be required by Lender from time to time, in each case within 30 days after such request.

 

  (iv)

Upon Lender’s request in Lender’s Discretion, a monthly property management report for each Individual Property, showing the number of inquiries made and rental applications received from tenants or prospective tenants and deposits received from tenants and any other information requested by Lender within 30 days after such request. However, Lender will not require the foregoing more frequently than quarterly except when there has been an Event of Default and such Event of Default is continuing, in which case Lender may require Borrower to furnish the foregoing more frequently.

 

  (d)

Form of Statements; Audited Financials. A natural person having authority to bind Borrower (or the SPE Equity Owner or Guarantor, as applicable), acting in his or her capacity as a manager, general partner or an officer of Borrower, SPE Equity Owner, or Guarantor and not in his or her individual capacity, will certify each of the statements, schedules and reports required by Sections 6.07(b), 6.07(c) and 6.07(f) to be complete and accurate. Each of the statements, schedules and reports required by Sections 6.07(b), 6.07(c) and 6.07(f) will be in such form and contain

 

Master Multifamily Loan and Security Agreement    Page 31


  such detail as Lender may reasonably require. Lender also may require that any of the statements, schedules or reports listed in Sections 6.07(b), 6.07(c) and 6.07(f) be audited at Borrower’s expense by independent certified public accountants acceptable to Lender, at any time when an Event of Default has occurred and is continuing or at any time that Lender, in its reasonable judgment, determines that audited financial statements are required for an accurate assessment of the financial condition of Borrower or of the Mortgaged Property.

 

  (e)

Failure to Timely Provide Financial Statements or Additional Reporting. If Borrower fails to provide in a timely manner the statements, schedules and reports required by Sections 6.07(b), 6.07(c) and 6.07(f), Lender will give Notice to Borrower specifying the statements, schedules and reports required by Sections 6.07(b), 6.07(c) and 6.07(f) that Borrower has failed to provide. If Borrower has not provided the required statements, schedules and reports within 10 Business Days following such Notice, then (i) Borrower will pay a late fee of $500 per Individual Property for each late statement, schedule or report, plus an additional $500 per Individual Property per month that any such statement, schedule or report continues to be late, and (ii) Lender will have the right to have Borrower’s books and records audited, at Borrower’s expense, by independent certified public accountants selected by Lender in order to obtain such statements, schedules and reports, and all related costs and expenses of Lender will become immediately due and payable and will become an additional part of the Indebtedness as provided in Section 9.02. Notice to Borrower of Lender’s exercise of its rights to require an audit will not be required in the case of an emergency, as determined in Lender’s Discretion, or when an Event of Default has occurred and is continuing.

 

  (f)

Delivery of Guarantor and SPE Equity Owner Financial Statements. Borrower will cause Guarantor and/or SPE Equity Owner to deliver each of the following to Lender within 10 Business Days following Lender’s request:

 

  (i)

Guarantor’s or SPE Equity Owner’s (as applicable) balance sheet and profit and loss statement (or if such party is a natural person, such party’s personal financial statements) as of the end of (A) the quarter that ended at least 30 days prior to the due date of the requested items, and/or (B) the fiscal year that ended at least 90 days prior to the due date of the requested items.

 

  (ii)

Other Guarantor or SPE Equity Owner (as applicable) financial statements as Lender may reasonably require.

 

  (iii)

Written updates on the status of all litigation proceedings that Guarantor or SPE Equity Owner (as applicable) disclosed or should have disclosed to Lender as of the Closing Date.

 

  (iv)

If an Event of Default has occurred and is continuing, copies of Guarantor’s or SPE Equity Owner’s (as applicable) most recent filed state and federal tax returns, including any current tax return extensions.

 

Master Multifamily Loan and Security Agreement    Page 32


  (g)

Reporting Upon Event of Default. If an Event of Default has occurred and is continuing, Borrower will deliver to Lender upon written demand all books and records relating to the Mortgaged Property or its operation.

 

  (h)

Credit Reports. Borrower authorizes Lender to obtain a credit report on Borrower at any time.

 

  (i)

Reserved.

 

  (j)

Reserved.

 

6.08

Taxes; Operating Expenses; Ground Rents.

 

  (a)

Payment of Taxes and Ground Rent. Subject to the provisions of Sections 6.08(c) and (d), Borrower will pay or cause to be paid (i) all Taxes when due and before the addition of any interest, fine, penalty or cost for nonpayment, and (ii) if Borrower’s interest in the Mortgaged Property is as a Ground Lessee, then the monthly or other periodic installments of Ground Rent before the last date upon which each such installment may be made without penalty or interest charges being added.

 

  (b)

Payment of Operating Expenses. Subject to the provisions of Section 6.08(c), Borrower will (i) pay the expenses of operating, managing, maintaining and repairing the Mortgaged Property (including utilities, Repairs and Capital Replacements) before the last date upon which each such payment may be made without any penalty or interest charge being added, and (ii) pay Insurance premiums prior to the expiration date of each policy of Insurance.

 

  (c)

Payment of Impositions and Reserve Funds. If Lender is collecting Imposition Reserve Deposits pursuant to Article IV, then so long as no Event of Default exists, Borrower will not be obligated to pay any Imposition for which Imposition Reserve Deposits are being collected, whether Taxes, Insurance premiums, Ground Rent (if applicable) or any other individual Impositions, but only to the extent that sufficient Imposition Reserve Deposits are held by Lender for the purpose of paying that specific Imposition and Borrower has timely delivered to Lender any bills or premium notices that it has received with respect to that specific Imposition (other than Ground Rent). Lender will have no liability to Borrower for failing to pay any Impositions to the extent that: (i) any Event of Default has occurred and is continuing, (ii) insufficient Imposition Reserve Deposits are held by Lender at the time an Imposition becomes due and payable, or (iii) Borrower has failed to provide Lender with bills and premium notices as provided in this Section.

 

  (d)

Right to Contest. Borrower, at its own expense, may contest by appropriate legal proceedings, conducted diligently and in good faith, the amount or validity of any Imposition other than Insurance premiums and Ground Rent (if applicable), if: (i) Borrower notifies Lender of the commencement or expected commencement of such proceedings, (ii) the Mortgaged Property is not in danger of being sold or forfeited, (iii) if Borrower has not already paid the Imposition, Borrower deposits

 

Master Multifamily Loan and Security Agreement    Page 33


  with Lender reserves sufficient to pay the contested Imposition, if requested by Lender, and (iv) Borrower furnishes whatever additional security is required in the proceedings or is reasonably requested by Lender, which may include the delivery to Lender of reserves established by Borrower to pay the contested Imposition.

 

6.09

Preservation, Management and Maintenance of Mortgaged Property.

 

  (a)

Maintenance of Mortgaged Property; No Waste. Borrower will keep the Mortgaged Property in good repair, including the replacement of Personalty and Fixtures with items of equal or better function and quality. Borrower will not commit waste or permit impairment or deterioration of the Mortgaged Property.

 

  (b)

Abandonment of Mortgaged Property. Borrower will not abandon the Mortgaged Property.

 

  (c)

Preservation of Mortgaged Property.

 

  (i)

Borrower will restore or repair promptly, in a good and workmanlike manner, any damaged part of the Mortgaged Property to the equivalent of its original condition, or such other condition as Lender may approve in writing, whether or not Insurance proceeds or Condemnation awards are available to cover any costs of such Restoration or repair; provided, however, that Borrower will not be obligated to perform such Restoration or repair if (A) no Event of Default has occurred and is continuing, and (B) Lender has elected to apply any available Insurance proceeds and/or Condemnation awards to the payment of Indebtedness pursuant to Section 6.10(l) or Section 6.11(d).

 

  (ii)

Borrower will give Notice to Lender of and, unless otherwise directed in writing by Lender, will appear in and defend any action or proceeding purporting to affect the Mortgaged Property, Lender’s security or Lender’s rights under this Loan Agreement.

 

  (d)

Property Management. Borrower will provide for professional management of the Mortgaged Property by the Property Manager at all times under a property management agreement approved by Lender in writing. Borrower will not surrender, terminate, cancel, modify, renew or extend its property management agreement, or enter into any other agreement relating to the management or operation of the Mortgaged Property with Property Manager or any other Person, or consent to the assignment by the Property Manager of its interest under such property management agreement, in each case without the consent of Lender, which consent will not be unreasonably withheld.

 

  (i)

If at any time Lender consents to the appointment of a new Property Manager, such new Property Manager and Borrower will, as a condition of Lender’s consent, execute an Assignment of Management Agreement in a form acceptable to Lender.

 

Master Multifamily Loan and Security Agreement    Page 34


  (ii)

If any such replacement Property Manager is an Affiliate of Borrower, and if a nonconsolidation opinion was delivered on the Closing Date, Borrower will deliver to Lender an updated nonconsolidation opinion in form and substance satisfactory to Lender with regard to nonconsolidation.

 

  (iii)

Reserved.

 

  (e)

Alteration of Mortgaged Property. Borrower will not (and will not permit any tenant or other Person to) remove, demolish or alter the Mortgaged Property or any part of the Mortgaged Property, including any removal, demolition or alteration occurring in connection with a rehabilitation of all or part of the Mortgaged Property, except that each of the following is permitted:

 

  (i)

Repairs or Capital Replacements in accordance with the terms and conditions of this Loan Agreement.

 

  (ii)

Any repairs or replacements made in connection with the replacement of tangible Personalty.

 

  (iii)

If Borrower is a cooperative housing corporation or association, repairs or replacements to the extent permitted with respect to individual dwelling units under the form of a proprietary lease or occupancy agreement.

 

  (iv)

Any repairs or replacements in connection with making an individual unit ready for a new occupant or pursuant to Sections 6.09(a) and (c).

 

  (v)

Property Improvement Alterations, provided that each of the following conditions is satisfied:

 

  (A)

At least 30 days prior to the commencement of any Property Improvement Alterations, Borrower must submit to Lender a Property Improvement Notice. The Property Improvement Notice must include all of the following information:

 

  (1)

The expected start date and completion date of the Property Improvement Alterations.

 

  (2)

A description of the anticipated Property Improvement Alterations to be made.

 

  (3)

The projected budget of the Property Improvement Alterations and the source of funding.

If any changes to Property Improvement Alterations as described in the Property Improvement Notice are made that extend beyond the overall scope and intent of the Property Improvement Alterations set forth in the Property Improvement Notice (e.g., renovations changed to renovate common areas but Property Improvement Notice only described renovations to the residential unit bathrooms), then Borrower must submit a new Property Improvement Notice to Lender in accordance with this Section 6.09(e)(v)(A).

 

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  (B)

The Property Improvement Alterations may not be commenced within 12 months prior to the Maturity Date without prior written consent of the Lender and must be completed at least 6 months prior to the Maturity Date.

 

  (C)

Neither the performance nor completion of the Property Improvement Alterations may result in any of the following:

 

  (1)

An adverse effect on any Major Building System.

 

  (2)

A change in residential unit configurations on a permanent basis.

 

  (3)

An increase or decrease in the total number of residential units.

 

  (4)

The demolition of any existing Improvements.

 

  (5)

A permanent obstruction of tenants’ access to units or a temporary obstruction of tenants’ access to units without a reasonable alternative access provided during the period of renovation which causes the obstruction.

 

  (D)

Reserved.

 

  (E)

The Leases used to calculate Minimum Occupancy for use in Section 6.09(e)(v)(I) must meet all of the following conditions:

 

  (1)

The Leases are with tenants that are not Affiliates of Borrower or Guarantor (except as otherwise expressly agreed by Lender in writing).

 

  (2)

The Leases are on arms’ length terms and conditions.

 

  (3)

The Leases otherwise satisfy the requirements of the Loan Documents.

 

  (F)

The Property Improvement Alterations must be completed in accordance with Section 6.14 and any reference to Repairs in Sections 6.06 and 6.14 will be deemed to include Property Improvement Alterations.

 

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  (G)

Upon completion of the applicable Property Improvement Alterations, Borrower must provide all of the following to the Lender:

 

  (1)

Borrower’s Certificate of Property Improvement Alterations Completion, in the form attached as Exhibit O (“Certificate of Completion”).

 

  (2)

Any other certificates or approval, acceptance or compliance required by Lender, including certificates of occupancy, from any Governmental Authority having jurisdiction over the Mortgaged Property and the Property Improvement Alterations and professional engineers certifications.

 

  (H)

Borrower must deliver to Lender within 10 days of Lender’s request a written status update on the Property Improvement Alterations.

 

  (I)

While Property Improvement Alterations that result in individual residential units not being available for leasing are ongoing, if a Rent Schedule shows that the occupancy of the applicable Individual Property being altered has decreased to less than the applicable Minimum Occupancy, Borrower must take each of the following actions:

 

  (1)

Complete all pending Property Improvement Alterations to such individual residential units in a timely manner until the applicable Individual Property satisfies the applicable Minimum Occupancy requirement.

 

  (2)

Suspend any additional Property Improvement Alterations on the applicable Individual Property which would cause residential units to be unavailable for leasing until the applicable Individual Property satisfies the applicable Minimum Occupancy requirement.

 

  (J)

If Borrower has commenced Property Improvement Alterations on the Mortgaged Property, then Borrower will deliver to Lender, upon Lender’s request, and in a timely manner, the Certificate of Completion together with such additional information as Lender may request.

 

  (K)

At no time during the term of the Loan may any outstanding amounts expended by Borrower for services and/or materials in connection with Property Improvement Alterations at an Individual Property that are then due and payable exceed 10% of the applicable Allocated Loan Amount.

 

  (vi)

Reserved.

 

Master Multifamily Loan and Security Agreement    Page 37


  (vii)

Reserved.

 

  (viii)

Reserved.

 

  (f)

Establishment of MMP. If required by Lender, Borrower will have or will establish and will adhere to the MMP. If Borrower is required to have an MMP, Borrower will keep all MMP documentation at the applicable Individual Property or at the Property Manager’s or Facility Operator’s office and available for review by Lender or the Loan Servicer during any annual assessment or other inspection of the applicable Individual Property that is required by Lender. At a minimum, the MMP must contain a provision for: (i) staff training, (ii) information to be provided to tenants, (iii) documentation of the plan, (iv) the appropriate protocol for incident response and remediation, and (v) routine, scheduled inspections of common space and unit interiors.

 

  (g)

No Reduction of Housing Cooperative Charges. If Borrower is a housing cooperative corporation or association, until the Indebtedness is paid in full, Borrower will not reduce the maintenance fees, charges or assessments payable by shareholders or residents under proprietary leases or occupancy agreements below a level which is sufficient to pay all expenses of such Individual Borrower, including all operating and other expenses for the applicable Individual Property and all payments due pursuant to the terms of the Note and any Loan Documents with respect to its Allocated Loan Amount.

 

  (h)

through (l) are reserved.

 

6.10

Insurance. At all times during the term of this Loan Agreement, Borrower will maintain at its sole cost and expense, for the mutual benefit of Borrower and Lender, all of the Insurance specified in this Section 6.10 with respect to each Individual Property, as required by Lender and applicable law, and in such amounts and with such maximum deductibles as Lender may require, as those requirements may change:

 

  (a)

Property Insurance. Borrower will keep the Improvements insured at all times against relevant physical hazards that may cause damage to the Mortgaged Property as Lender may require (“Property Insurance”). Required Property Insurance coverage may include any or all of the following:

 

  (i)

All Risks of Physical Loss. Insurance against loss or damage from fire, wind, hail, and other related perils within the scope of a “Special Causes of Loss” or “All Risk” policy, in an amount not less than the Replacement Cost of the Mortgaged Property.

 

  (ii)

Ordinance and Law. If any part of the Mortgaged Property is legal non-conforming under current building, zoning or land use laws or ordinances, then “Ordinance and Law Coverage” in the amount required by Lender.

 

  (iii)

Flood. If any of the Improvements are located in an area identified by the Federal Emergency Management Agency (or any successor to that agency) as a “Special Flood Hazard Area,” flood Insurance in the amount required by Lender.

 

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  (iv)

Windstorm. If windstorm and/or windstorm related perils and/or “named storm” (collectively, “Windstorm Coverage”), are excluded from the “Special Causes of Loss” policy required under Section 6.10(a)(i), then separate coverage for such risks, either through an endorsement or a separate policy. Windstorm Coverage will be written in an amount not less than the Replacement Cost of the Mortgaged Property.

 

  (v)

Boiler and Machinery/Equipment Breakdown. If the Mortgaged Property contains a central heating, ventilation and cooling system (“HVAC System”) where steam boilers and/or other pressurized systems are in operation and are regulated by the Property Jurisdiction, Insurance providing coverage in the amount required by Lender.

 

  (vi)

Builder’s Risk. During any period of construction or Restoration, builder’s risk Insurance (including fire and other perils within the scope of a policy known as “Causes of Loss – Special Form” or “All Risk” policy) in an amount not less than the sum of the related contractual arrangements.

 

  (vii)

Other. Insurance for other physical perils applicable to the Mortgaged Property as may be required by Lender including earthquake, sinkhole, mine subsidence, avalanche, mudslides, and volcanic eruption. If Lender reasonably requires any updated reports or other documentation to determine whether additional Insurance is necessary or prudent, Borrower will pay for the updated reports or other documentation at its sole cost and expense.

 

  (viii)

Professional Liability. Required if the Mortgaged Property has assisted living, Alzheimer’s care, or skilled nursing units. The policy may be written on a “Claims Made Policy” form or an “Occurrence-based Policy” form. Minimum coverage of $1,000,000 per occurrence and $2,000,000 in the general aggregate is required. If the professional liability policy covers multiple locations, aggregate limits apply per location. In addition, Borrower must maintain the following minimum umbrella or excess professional liability coverage:

 

Master Multifamily Loan and Security Agreement    Page 39


Total number of licensed beds

covered by the policy

   Minimum
Umbrella/
Excess Coverage
 

Less than or equal to 100

   $ 1 million  

100 to 500

   $ 5 million  

501 to 1,000

   $ 10 million  

Greater than 1,000

   $ 25 million  

The minimum coverage limits in this section may be satisfied with any combination of primary, umbrella and/or excess coverage.

 

  (ix)

Reserved.

 

  (x)

Motor Vehicle. If any motor vehicle is used in connection with the operation of the Mortgaged Property, vehicle liability Insurance of at least $1 million per accident.

 

  (b)

Business Income/Rental Value. Business income/rental value Insurance for all relevant perils to be covered in the amount required by Lender, but in no case less than the effective gross income attributable to the Mortgaged Property for the preceding 12 months, as determined by Lender in Lender’s Discretion.

 

  (c)

Commercial General Liability Insurance. Commercial general liability Insurance against legal liability claims for personal and bodily injury, property damage and contractual liability in such amounts and with such maximum deductibles as Lender may require, but not less than $1,000,000 per occurrence and $2,000,000 in the general aggregate on a per-location basis, plus excess and/or umbrella liability coverage in such amounts as Lender may require.

 

  (d)

Terrorism Insurance. Insurance required under Section 6.10(a), Section 6.10(b), and Section 6.10(c) will provide coverage for acts of terrorism. Terrorism coverage may be provided through one or more separate policies, which will be on terms (including amounts) consistent with those required under Section 6.10(a)(i) and (ii) and Section 6.10(b). If Insurance against acts of terrorism is not available at commercially reasonable rates and if the related hazards are not at the time commonly insured against for properties similar to the Mortgaged Property and located in or around the region in which the Mortgaged Property is located, then Lender may opt to temporarily suspend, cap or otherwise limit the requirement to have such terrorism insurance for a period not to exceed one year, unless such suspension or cap is renewed by Lender for additional one year increments.

 

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  (e)

Payment of Premiums. All Property Insurance premiums and premiums for other Insurance required under this Section 6.10 will be paid in the manner provided in Article IV, unless Lender has designated in writing another method of payment.

 

  (f)

Policy Requirements. The following requirements apply with respect to all Insurance required by this Section 6.10:

 

  (i)

All Insurance policies will be in a form approved by Lender.

 

  (ii)

All Insurance policies will be issued by Insurance companies authorized to do business in the Property Jurisdiction and/or acting as eligible surplus insurers in the Property Jurisdiction, which have a general policyholder’s rating satisfactory to Lender.

 

  (iii)

All Property Insurance policies will contain a standard mortgagee or mortgage holder’s clause and a loss payable clause, in favor of, and in a form approved by, Lender.

 

  (iv)

If any Insurance policy contains a coinsurance clause, the coinsurance clause will be offset by an agreed amount endorsement in an amount not less than the Replacement Cost.

 

  (v)

All commercial general liability and excess/umbrella liability policies will name Lender, its successors and/or assigns, as additional insured.

 

  (vi)

Professional liability policies will not include Lender, its successors and/or assigns, as additional insured.

 

  (vii)

All Insurance policies (with the exception of commercial general liability Insurance policies) will provide that the insurer will notify Lender in writing of cancelation of policies at least 10 days before the cancelation of the policy by the insurer for nonpayment of the premium or nonrenewal and at least 30 days before cancelation by the insurer for any other reason.

 

  (g)

Evidence of Insurance; Insurance Policy Renewals. Borrower will deliver to Lender a legible copy of each Insurance policy, and Borrower will promptly deliver to Lender a copy of all renewal and other notices received by Borrower with respect to the policies. Borrower will ensure that the Mortgaged Property is continuously covered by the required Insurance. Prior to the expiration date of each Insurance policy, Borrower will deliver to Lender evidence acceptable to Lender in Lender’s Discretion that each policy has been renewed. If the evidence of a renewal does not include a legible copy of the renewal policy, Borrower will deliver a legible copy of such renewal no later than the earlier of the following:

 

  (i)

60 days after the expiration date of the original policy.

 

  (ii)

The date of any Notice of an insured loss given to Lender under Section 6.10(i).

 

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  (h)

Compliance With Insurance Requirements. Borrower will comply with all Insurance requirements and will not permit any condition to exist on the Mortgaged Property that would invalidate any part of any Insurance coverage required under this Loan Agreement.

 

  (i)

Obligations Upon Casualty; Proof of Loss.

 

  (i)

If an insured loss occurs, then Borrower will give immediate written notice to the Insurance carrier and to Lender.

 

  (ii)

Borrower authorizes and appoints Lender as attorney in fact for Borrower to make proof of loss, to adjust and compromise any claims under policies of Property Insurance, to appear in and prosecute any action arising from such Property Insurance policies, to collect and receive the proceeds of Property Insurance, to hold the proceeds of Property Insurance, and to deduct from such proceeds Lender’s expenses incurred in the collection of such proceeds. This power of attorney is coupled with an interest and therefore is irrevocable. However, nothing contained in this Section 6.10 will require Lender to incur any expense or take any action.

 

  (j)

Lender’s Options Following a Casualty. Subject to Sections 6.10(k) and (l), Lender may, at Lender’s option, take one of the following actions:

 

  (i)

Require a “repair or replacement” settlement, in which case the proceeds will be used to reimburse Borrower for the cost of restoring and repairing the Mortgaged Property to the equivalent of its original condition or to a condition approved by Lender (“Restoration”). If Lender determines to require a repair or replacement settlement and to apply Insurance proceeds to Restoration, Lender will apply the proceeds in accordance with Lender’s then-current policies relating to the Restoration of casualty damage on similar multifamily properties. If Lender, in Lender’s Discretion, retains a professional inspection engineer or other qualified third party to inspect any Restoration items, Lender may charge Borrower an amount sufficient to pay all reasonable costs and expenses charged by such third party inspector.

 

  (ii)

Require an “actual cash value” settlement in which case the proceeds may be applied to the payment of the Indebtedness, whether or not then due.

 

  (k)

Borrower’s Options Following a Casualty. Subject to Section 6.10(l), Borrower may take the following actions:

 

  (i)

If a casualty results in damage to an Individual Property for which the cost of Repairs will be less than the applicable Borrower Proof of Loss Threshold, Borrower will have the sole right to make proof of loss, adjust and compromise the claim and collect and receive any proceeds directly without the approval or prior consent of Lender so long as the Insurance proceeds are used solely for the Restoration of the applicable Individual Property.

 

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  (ii)

If a casualty results in damage to an Individual Property for which the cost of Repairs will be more than the applicable Borrower Proof of Loss Threshold, but less than the applicable Borrower Proof of Loss Maximum, Borrower is authorized to make proof of loss and adjust and compromise the claim without the prior consent of Lender, and Lender will hold the applicable Insurance proceeds to be used to reimburse Borrower for the cost of Restoration of the applicable Individual Property and will not apply such proceeds to the payment of the Indebtedness.

 

  (iii)

If a casualty results in damage to an Individual Property for which the cost of Repairs will be more than the applicable Borrower Proof of Loss Maximum, Borrower must obtain the consent of Lender prior to making any proof of loss or adjusting or compromising the claim, and Lender will hold the applicable Insurance proceeds to be used to reimburse Borrower for the cost of Restoration of the applicable Individual Property and will not apply such proceeds to the payment of the Indebtedness.

 

  (l)

Lender’s Right to Apply Insurance Proceeds to Indebtedness. Lender will have the right to apply Insurance proceeds to the payment of the Indebtedness if Lender determines, in Lender’s Discretion, that any of the following conditions exist:

 

  (i)

An Event of Default (or any event, which, with the giving of Notice or the passage of time, or both, would constitute an Event of Default) has occurred and is continuing.

 

  (ii)

There will not be sufficient funds from Insurance proceeds, anticipated contributions of Borrower of its own funds or other sources acceptable to Lender to complete the Restoration.

 

  (iii)

The rental income from the applicable Individual Property after completion of the Restoration will not be sufficient to meet all operating costs and other expenses, deposits to Reserve Funds and Loan repayment obligations relating to the applicable Individual Property’s Allocated Loan Amount or the aggregate rental income from all Individual Properties after completion of the Restoration will not be sufficient to meet all operating costs and other expenses, deposits to Reserve Funds and Loan repayment obligations relating to all Individual Properties under the Loan.

 

  (iv)

The Restoration will be completed less than (A) 6 months prior to the Maturity Date if re-leasing will be completed prior to the Maturity Date, or (B) 12 months prior to the Maturity Date if re-leasing will not be completed prior to the Maturity Date.

 

  (v)

The Restoration will not be completed within one year after the date of the loss or casualty.

 

  (vi)

The casualty involved an actual or constructive loss of more than 30% of the fair market value of the applicable Individual Property, and rendered untenantable more than 30% of the residential units of the applicable Individual Property.

 

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  (vii)

After completion of the Restoration the fair market value of the applicable Individual Property is expected to be less than the fair market value of the applicable Individual Property immediately prior to such casualty (assuming the affected portion of the applicable Individual Property is re-let within a reasonable period after the date of such casualty).

 

  (viii)

Leases covering less than 35% of the residential units of the applicable Individual Property will remain in full force and effect during and after the completion of Restoration.

 

  (m)

Lender’s Succession to Insurance Policies. If any Individual Property is sold at a foreclosure sale or Lender acquires title to an Individual Property, Lender will automatically succeed to all rights of Borrower in and to any Insurance policies and unearned Insurance premiums and in and to the proceeds resulting from any damage to such Individual Property prior to such sale or acquisition.

 

  (n)

Payment of Installments After Application of Insurance Proceeds. Unless Lender otherwise agrees in writing, any application of any Insurance proceeds to the Indebtedness will not extend or postpone the due date of any monthly installments referred to in the Note, Article IV of this Loan Agreement or change the amount of such installments.

 

  (o)

Assignment of Insurance Proceeds. Borrower agrees to execute such further evidence of assignment of any Insurance proceeds as Lender may require.

 

  (p)

Borrower Acknowledgment of Lender’s Right to Change Insurance Requirements. Borrower acknowledges and agrees that Lender’s Insurance requirements may change from time to time throughout the term of the Indebtedness to include coverage for the kind of risks customarily insured against and in such minimum coverage amounts and maximum deductibles as are generally required by institutional lenders for properties comparable to the Mortgaged Property.

 

6.11

Condemnation.

 

  (a)

Rights Generally. Borrower will promptly notify Lender in writing of any action or proceeding or notice relating to any proposed or actual condemnation or other taking, or conveyance in lieu thereof, of all or any part of the Mortgaged Property, whether direct or indirect (“Condemnation”). Borrower will appear in and prosecute or defend any action or proceeding relating to any Condemnation unless otherwise directed by Lender in writing. Borrower authorizes and appoints Lender as attorney in fact for Borrower to commence, appear in and prosecute, in Lender’s or Borrower’s name, any action or proceeding relating to any Condemnation and to settle or compromise any claim in connection with any Condemnation, after consultation with Borrower and consistent with commercially reasonable standards of a prudent lender. This power of attorney is coupled with an interest and therefore

 

Master Multifamily Loan and Security Agreement    Page 44


  is irrevocable. However, nothing contained in this Section 6.11(a) will require Lender to incur any expense or take any action. Borrower transfers and assigns to Lender all right, title and interest of Borrower in and to any award or payment with respect to (i) any Condemnation, or any conveyance in lieu of Condemnation, and (ii) any damage to the Mortgaged Property caused by governmental action that does not result in a Condemnation.

 

  (b)

Application of Award. Lender may hold such awards or proceeds and apply such awards or proceeds, after the deduction of Lender’s expenses incurred in the collection of such amounts (including Attorneys’ Fees and Costs) at Lender’s option, to the Restoration or repair of the Mortgaged Property or to the payment of the Indebtedness, with the balance, if any, to Borrower. Unless Lender otherwise agrees in writing, any application of any awards or proceeds to the Indebtedness will not extend or postpone the due date of any monthly installments referred to in the Note or Article IV of this Loan Agreement, or change the amount of such installments. Borrower agrees to execute such further evidence of assignment of any Condemnation awards or proceeds as Lender may require.

 

  (c)

Borrower’s Right to Condemnation Proceeds. Notwithstanding any provision to the contrary in this Section 6.11, but subject to Section 6.11(e), in the event of a partial Condemnation of an Individual Property, as long as no Event of Default, or any event which, with the giving of Notice or the passage of time, or both, would constitute an Event of Default, has occurred and is continuing, in the event of a partial Condemnation resulting in proceeds or awards in the amount of less than $100,000, Borrower will have the sole right to make proof of loss, adjust and compromise the claim and collect and receive any proceeds directly without the approval or prior consent of Lender so long as the proceeds or awards are used solely for the Restoration of the applicable Individual Property.

 

  (d)

Right to Apply Condemnation Proceeds to Indebtedness. In the event of a partial Condemnation of an Individual Property resulting in proceeds or awards in the amount of $100,000 or more and subject to Section 6.11(e), Lender will have the right to apply Condemnation proceeds to the payment of the Indebtedness if Lender determines, in Lender’s Discretion, that any of the following conditions exist:

 

  (i)

An Event of Default (or any event, which, with the giving of Notice or the passage of time, or both, would constitute an Event of Default) has occurred and is continuing.

 

  (ii)

There will not be sufficient funds from Condemnation proceeds, anticipated contributions of Borrower of its own funds or other sources acceptable to Lender to complete the Restoration.

 

  (iii)

The rental income from the applicable Individual Property after completion of the Restoration will not be sufficient to meet all operating costs and other expenses, deposits to Reserve Funds and Loan repayment obligations relating to the applicable Individual Property and Allocated Loan Amount

 

Master Multifamily Loan and Security Agreement    Page 45


  or the rental income from all Individual Properties after completion of the Restoration will not be sufficient to meet all operating costs and other expenses, deposits to Reserve Funds and Loan repayment obligations relating to all Individual Properties under the Loan.

 

  (iv)

The Restoration will not be completed at least one year before the Maturity Date (or 6 months before the Maturity Date if re-leasing of the applicable Individual Property will be completed within such 6 month period).

 

  (v)

The Restoration will not be completed within one year after the date of the Condemnation.

 

  (vi)

The Condemnation involved an actual or constructive loss of more than 15% of the fair market value of the applicable Individual Property, and rendered untenantable more than 25% of the residential units of the applicable Individual Property.

 

  (vii)

After Restoration the fair market value of the applicable Individual Property is expected to be less than the fair market value of the applicable Individual Property immediately prior to the Condemnation (assuming the affected portion of the applicable Individual Property is re-let within a reasonable period after the date of the Condemnation).

 

  (viii)

Leases covering less than 35% of residential units of the applicable Individual Property will remain in full force and effect during and after the completion of Restoration.

 

  (e)

Right to Apply Condemnation Proceeds in Connection with a Partial Release. Notwithstanding anything to the contrary set forth in this Loan Agreement, including this Section 6.11, for so long as the Loan or any portion of the Loan is included in a Securitization in which the Note is assigned to a REMIC trust, then each of the following will apply:

 

  (i)

If any portion of the Mortgaged Property is released from the Lien of the Loan in connection with a Condemnation and if the ratio of (A) the unpaid principal balance of the Loan to (B) the value of all of the Mortgaged Properties in the aggregate (with the value of the Mortgaged Property first being reduced by the outstanding principal balance of any Senior Indebtedness or any indebtedness secured by the Mortgaged Property that is at the same level of priority with the Indebtedness and taking into account only the related land and buildings and not any personal property or going-concern value), as determined by Lender in its sole and absolute discretion based on a commercially reasonable valuation method permitted in connection with a Securitization, is greater than 125% immediately after such Condemnation and before any Restoration or repair of the Mortgaged Property (but taking into account any planned Restoration or repair of the Mortgaged Property as if such planned Restoration or repair were

 

Master Multifamily Loan and Security Agreement    Page 46


  completed), then Lender will apply any net proceeds or awards from such Condemnation, in full, to the payment of the principal of the Indebtedness whether or not then due and payable, unless Lender has received an opinion of counsel (acceptable to Lender if such opinion is provided by Borrower) that a different application of the net proceeds or awards will not cause such Securitization to fail to meet applicable federal income tax qualification requirements or subject such Securitization to any tax, and the net proceeds or awards are applied in the manner specified in such opinion.

 

  (ii)

If (A) neither Borrower nor Lender has the right to receive any or all net proceeds or awards as a result of the provisions of any agreement affecting the Mortgaged Property (including any Ground Lease (if applicable), condominium document, or reciprocal easement agreement) and, therefore cannot apply the net proceeds or awards to the payment of the principal of the Indebtedness as set forth above, or (B) Borrower receives any or all of the proceeds or awards described in Section 6.11(e)(ii)(A) and fails to apply the proceeds in accordance with Section 6.11(e)(i), then Borrower will prepay the Indebtedness in an amount which Lender, in its sole and absolute discretion, deems necessary to ensure that the Securitization will not fail to meet applicable federal income tax qualification requirements or be subject to any tax as a result of the Condemnation, unless Lender has received an opinion of counsel (acceptable to Lender if such opinion is provided by Borrower) that a different application of the net proceeds or awards will not cause such Securitization to fail to meet applicable federal income tax qualification requirements or subject such Securitization to any tax, and the net proceeds or awards are applied in the manner specified in such opinion.

 

  (f)

Succession to Condemnation Proceeds. If any Individual Property is sold at a foreclosure sale or Lender acquires title to any Individual Property, Lender will automatically succeed to all rights of Borrower in and to any Condemnation proceeds and awards prior to such sale or acquisition.

 

6.12

Environmental Hazards.

 

  (a)

Prohibited Activities and Conditions. Except for matters described in this Section 6.12, Borrower will not cause or permit Prohibited Activities or Conditions. Borrower will comply with all Hazardous Materials Laws applicable to the Mortgaged Property. Without limiting the generality of the previous sentence, Borrower will: (i) obtain and maintain all Environmental Permits required by Hazardous Materials Laws and comply with all conditions of such Environmental Permits, (ii) cooperate with any inquiry by any Governmental Authority, and (iii) subject to Section 6.12(g), comply with any governmental or judicial order that arises from any alleged Prohibited Activity or Condition.

 

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  (b)

Employees, Tenants and Contractors. Borrower will take all commercially reasonable actions (including the inclusion of appropriate provisions in any Leases executed after the date of this Loan Agreement) to prevent its employees, agents and contractors, and all tenants and other occupants from causing or permitting any Prohibited Activities or Conditions. Borrower will not lease or allow the sublease or use of all or any portion of the Mortgaged Property to any tenant or subtenant for nonresidential use by any user that, in the ordinary course of its business, would cause or permit any Prohibited Activity or Condition.

 

  (c)

O&M Programs. As required by Lender, Borrower will also have established a written operations and maintenance program with respect to certain Hazardous Materials. Each such operations and maintenance program and any additional or revised operations and maintenance programs established for the Mortgaged Property pursuant to this Section 6.12 must be approved by Lender and will be referred to in this Loan Agreement as an “O&M Program.” Borrower will comply in a timely manner with, and cause all employees, agents, and contractors of Borrower and any other Persons present on the Mortgaged Property to comply with each O&M Program. Borrower will pay all costs of performance of Borrower’s obligations under any O&M Program, and Lender’s out of pocket costs incurred in connection with the monitoring and review of each O&M Program must be paid by Borrower upon demand by Lender. Any such out-of-pocket costs of Lender that Borrower fails to pay promptly will become an additional part of the Indebtedness as provided in Section 9.02.

 

  (d)

Notice to Lender. Borrower will promptly give Notice to Lender upon the occurrence of any of the following events:

 

  (i)

Borrower’s discovery of any Prohibited Activity or Condition.

 

  (ii)

Borrower’s receipt of or knowledge of any written complaint, order, notice of violation or other communication from any tenant, Property Manager, Facility Operator, Governmental Authority or other Person with regard to present or future alleged Prohibited Activities or Conditions, or any other environmental, health or safety matters affecting the Mortgaged Property.

 

  (iii)

Borrower’s breach of any of its obligations under this Section 6.12.

Any such Notice given by Borrower will not relieve Borrower of, or result in a waiver of, any obligation under this Loan Agreement, the Note or any other Loan Document.

 

  (e)

Environmental Inspections, Tests and Audits. Borrower will pay promptly the costs of any environmental inspections, tests or audits, a purpose of which is to identify the extent or cause of or potential for a Prohibited Activity or Condition (“Environmental Inspections”), required by Lender in connection with any foreclosure or deed in lieu of foreclosure, or as a condition of Lender’s consent to any Transfer under Article VII, or required by Lender following a reasonable determination by Lender that Prohibited Activities or Conditions may exist. Any such costs incurred by Lender (including Attorneys’ Fees and Costs and the costs of technical consultants whether incurred in connection with any judicial or

 

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  administrative process or otherwise) that Borrower fails to pay promptly will become an additional part of the Indebtedness as provided in Section 9.02. As long as: (i) no Event of Default has occurred and is continuing, (ii) Borrower has actually paid for or reimbursed Lender for all costs of any such Environmental Inspections performed or required by Lender, and (iii) Lender is not prohibited by law, contract or otherwise from doing so, Lender will make available to Borrower, without representation of any kind, copies of Environmental Inspections prepared by third parties and delivered to Lender. Lender reserves the right, and Borrower expressly authorizes Lender, to make available to any party, including any prospective bidder at a foreclosure sale of the Mortgaged Property, the results of any Environmental Inspections made by or for Lender with respect to the Mortgaged Property. Borrower consents to Lender notifying any party (either as part of a notice of sale or otherwise) of the results of any Environmental Inspections made by or for Lender. Borrower acknowledges that Lender cannot control or otherwise ensure the truthfulness or accuracy of the results of any Environmental Inspections and that the release of such results to prospective bidders at a foreclosure sale of the Mortgaged Property may have a material and adverse effect upon the amount that a party may bid at such sale. Borrower agrees that Lender will have no liability whatsoever as a result of delivering the results of any Environmental Inspections made by or for Lender to any third party, and Borrower releases and forever discharges Lender from any and all claims, damages or causes of action arising out of, connected with or incidental to the results of the delivery of any Environmental Inspections made by or for Lender.

 

  (f)

Remedial Work. If any investigation, site monitoring, containment, clean-up, Restoration or other remedial work (“Remedial Work”) is necessary to comply with any Hazardous Materials Law or order of any Governmental Authority that has or acquires jurisdiction over the Mortgaged Property or the use, operation or improvement of the Mortgaged Property, or is otherwise required by Lender as a consequence of any Prohibited Activity or Condition or to prevent the occurrence of a Prohibited Activity or Condition, Borrower will, by the earlier of (i) the applicable deadline required by Hazardous Materials Law, or (ii) 30 days after Notice from Lender demanding such action, begin performing the Remedial Work, and thereafter diligently prosecute it to completion, and must in any event complete the work by the time required by applicable Hazardous Materials Law. If Borrower fails to begin on a timely basis or diligently prosecute any required Remedial Work, Lender may, at its option, cause the Remedial Work to be completed, in which case Borrower will reimburse Lender on demand for the cost of doing so. Any reimbursement due from Borrower to Lender will become part of the Indebtedness as provided in Section 9.02.

 

  (g)

Borrower Contest of Order. Notwithstanding Section 6.12(f), Borrower may contest the order of any Governmental Authority in good faith through appropriate proceedings, provided that (i) Borrower has demonstrated to Lender’s satisfaction that any delay in completing Remedial Work pending the outcome of such proceedings would not result in damage to the Mortgaged Property or to persons who use or occupy the Improvements, or otherwise impair Lender’s interest under

 

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  this Loan Agreement, and (ii) if any delay in completing the Remedial Work results or may result in a Lien against the Mortgaged Property, Borrower must promptly furnish to Lender a bond or other security satisfactory to Lender in an amount not less than 150% of the applicable claim.

 

6.13

Single Purpose Entity Requirements.

 

  (a)

Single Purpose Entity Requirements. Until the Indebtedness is paid in full, each Individual Borrower and any SPE Equity Owner will remain a “Single Purpose Entity,” which means at all times since its formation and thereafter it will satisfy each of the following conditions:

 

  (i)

It will not engage in any business or activity, other than the ownership, operation and maintenance of the Mortgaged Property owned by it and activities incidental thereto.

 

  (ii)

It will not acquire, own, hold, lease, operate, manage, maintain, develop or improve any assets other than the Mortgaged Property owned by it and such Personalty as may be necessary for the operation of the Mortgaged Property owned by it and will conduct and operate its business as presently conducted and operated.

 

  (iii)

It will preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the laws of the jurisdiction of its formation or organization and will do all things necessary to observe organizational formalities.

 

  (iv)

It will not merge or consolidate with any other Person.

 

  (v)

It will not take any action to dissolve, wind-up, terminate or liquidate in whole or in part; to sell, transfer or otherwise dispose of all or substantially all of its assets; to change its legal structure; transfer or permit the direct or indirect transfer of any partnership, membership or other equity interests, as applicable, other than Transfers permitted under this Loan Agreement; issue additional partnership, membership or other equity interests, as applicable, or seek to accomplish any of the foregoing.

 

  (vi)

It will not, without the prior unanimous written consent of all of its partners, members, or shareholders, as applicable, and, if applicable, the prior unanimous written consent of 100% of the members of the board of directors or of the board of Managers of such Individual Borrower or the applicable SPE Equity Owner, take any of the following actions:

 

  (A)

File any insolvency, or reorganization case or proceeding, to institute proceedings to have Borrower or any SPE Equity Owner be adjudicated bankrupt or insolvent.

 

  (B)

Institute proceedings under any applicable insolvency law.

 

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  (C)

Seek any relief under any law relating to relief from debts or the protection of debtors.

 

  (D)

Consent to the filing or institution of bankruptcy or insolvency proceedings against Borrower or any SPE Equity Owner.

 

  (E)

File a petition seeking, or consent to, reorganization or relief with respect to Borrower or any SPE Equity Owner under any applicable federal or state law relating to bankruptcy or insolvency.

 

  (F)

Seek or consent to the appointment of a receiver, liquidator, assignee, trustee, sequestrator, custodian, or any similar official for Borrower or a substantial part of its property or for any SPE Equity Owner or a substantial part of its property.

 

  (G)

Make any assignment for the benefit of creditors of Borrower or any SPE Equity Owner.

 

  (H)

Admit in writing Borrower’s or any SPE Equity Owner’s inability to pay its debts generally as they become due.

 

  (I)

Take action in furtherance of any of the foregoing.

 

  (vii)

It will not amend or restate its organizational documents if such change would cause the provisions set forth in those organizational documents not to comply with the requirements set forth in this Section 6.13.

 

  (viii)

It will not own any subsidiary or make any investment in, any other Person.

 

  (ix)

It will not commingle its assets with the assets of any other Person and will hold all of its assets in its own name.

 

  (x)

It will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation), other than the following:

 

  (A)

The Indebtedness and any further indebtedness as described in Section 11.11 with regard to Supplemental Instruments.

 

  (B)

Customary unsecured trade payables incurred in the ordinary course of owning and operating its Individual Property provided the same are not evidenced by a promissory note, do not exceed, in the aggregate, at any time a maximum amount of 2% of the applicable Allocated Loan Amount as of the date of this Loan Agreement, and are paid within 60 days of the date incurred.

 

  (C)

through (H) are reserved.

 

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  (I)

Financing of motor vehicles owned by Borrower and used in the operation of the Mortgaged Property, provided that the principal amount of such financing does not exceed, in the aggregate, at any time a maximum amount of $100,000 for any Individual Facility, and provided that all payments due under such financing are kept current.

 

  (xi)

It will maintain its records, books of account, bank accounts, financial statements, accounting records and other entity documents separate and apart from those of any other Person and will not list its assets as assets on the financial statement of any other Person; provided, however, that Borrower’s assets may be included in a consolidated financial statement of its Affiliate provided that (A) appropriate notation will be made on such consolidated financial statements to indicate the separateness of Borrower from such Affiliate and to indicate that, except as required by the Loan Documents, Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate or any other Person, and (B) such assets will also be listed on Borrower’s own separate balance sheet.

 

  (xii)

Except for capital contributions or capital distributions permitted under the terms and conditions of its organizational documents, it will only enter into any contract or agreement with any general partner, member, shareholder, principal or Affiliate of Borrower or any Guarantor, or any general partner, member, principal or Affiliate thereof, upon terms and conditions that are commercially reasonable and substantially similar to those that would be available on an arm’s-length basis with third parties.

 

  (xiii)

It will not maintain its assets in such a manner that will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person.

 

  (xiv)

Except as required by the Loan Documents, it will not assume or guaranty (excluding any guaranty that has been executed and delivered in connection with the Note) the debts or obligations of any other Person, hold itself out to be responsible for the debts of another Person, pledge its assets to secure the obligations of any other Person or otherwise pledge its assets for the benefit of any other Person, or hold out its credit as being available to satisfy the obligations of any other Person.

 

  (xv)

It will not make or permit to remain outstanding any loans or advances to any other Person except for those investments permitted under the Loan Documents and will not buy or hold evidence of indebtedness issued by any other Person (other than cash or investment-grade securities).

 

  (xvi)

It will file its own tax returns separate from those of any other Person, unless Borrower (A) is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under applicable law or (B) is required by applicable law to file consolidated tax returns, and will pay any taxes required to be paid under applicable law.

 

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  (xvii)

It will hold itself out to the public as a legal entity separate and distinct from any other Person and conduct its business solely in its own name, will correct any known misunderstanding regarding its separate identity and will not identify itself or any of its Affiliates as a division or department of any other Person.

 

  (xviii)

It will maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations and will pay its debts and liabilities from its own assets as the same become due; provided, however, that nothing in this Section 6.13(a)(xviii) will require any member or partner of Borrower or any Borrower Principal to make any equity contribution to Borrower.

 

  (xix)

It will allocate fairly and reasonably shared expenses with Affiliates (including shared office space) and use separate stationery, invoices and checks bearing its own name.

 

  (xx)

Except as required by the Loan Documents, it will pay (or cause the Property Manager or any Facility Operator to pay on behalf of such Individual Borrower from such Individual Borrower’s funds) its own liabilities (including salaries of its own employees) from its own funds; provided, however, that nothing in this Section 6.13(a)(xx) will require any member or partner of Borrower or any Borrower Principal to make any equity contribution to Borrower.

 

  (xxi)

It will not acquire obligations or securities of its partners, members, shareholders, or Affiliates, as applicable.

 

  (xxii)

Except as contemplated or permitted by the property management agreement with respect to the Property Manager or any operating lease or operating agreement with respect to any Facility Operator, it will not permit any Affiliate or constituent party independent access to its bank accounts.

 

  (xxiii)

It will maintain a sufficient number of employees (if any) in light of its contemplated business operations and pay the salaries of its own employees, if any, only from its own funds; provided, however, that nothing in this Section 6.13(a)(xxiii) will require any member or partner of Borrower or any Borrower Principal to make any equity contribution to Borrower.

 

  (xxiv)

If such entity is a single member limited liability company, such entity will satisfy each of the following conditions:

 

  (A)

Be formed and organized under Delaware law.

 

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  (B)

Have either one springing member that is a corporation or two springing members who are natural persons. If there is more than one springing member, only one springing member will be the sole member of Borrower or SPE Equity Owner (as applicable) at any one time, and the second springing member will become the sole member only upon the first springing member ceasing to be a member.

 

  (C)

Otherwise comply with all Rating Agencies’ criteria for single member limited liability companies (including the delivery of Delaware single member limited liability company opinions acceptable in all respects to Lender).

 

  (D)

At all times Borrower or SPE Equity Owner (as applicable) will have one and only one member.

 

  (xxv)

If such entity is a single member limited liability company that is board-managed, such entity will have a board of Managers separate from that of Guarantor and any other Person and will cause its board of Managers to keep minutes of board meetings and actions and observe all other Delaware limited liability company required formalities.

 

  (xxvi)

If an SPE Equity Owner is required pursuant to this Loan Agreement, if Borrower is (A) a limited liability company with more than one member, then Borrower has and will have at least one member that is an SPE Equity Owner that has satisfied and will satisfy the requirements of Section 6.13(b) and such member is its managing member, or (B) a limited partnership, then all of its general partners are SPE Equity Owners that have satisfied and will satisfy the requirements set forth in Section 6.13(b).

 

  (xxvii)

Reserved.

 

  (xxviii)

Reserved.

 

  (b)

SPE Equity Owner Requirements. Each SPE Equity Owner, if applicable, will at all times since its formation and thereafter comply in its own right (subject to the modifications set forth below), and will cause the applicable Individual Borrower to comply, with each of the requirements of a Single Purpose Entity. Upon the withdrawal or the disassociation of an SPE Equity Owner from an Individual Borrower, such Individual Borrower will immediately appoint a new SPE Equity Owner, whose organizational documents are substantially similar to those of the withdrawn or disassociated SPE Equity Owner, and deliver a new nonconsolidation opinion to Lender in form and substance satisfactory to Lender with regard to nonconsolidation by a bankruptcy court of the assets of each of the applicable Individual Borrower and SPE Equity Owner with those of its Affiliates.

 

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  (i)

With respect to Section 6.13(a)(i), the SPE Equity Owner will not engage in any business or activity other than being the managing member or general partner, as the case may be, of the applicable Individual Borrower and owning at least 0.5% equity interest in such Individual Borrower.

 

  (ii)

With respect to Section 6.13(a)(ii), the SPE Equity Owner has not and will not acquire or own any assets other than its equity interest in the applicable Individual Borrower and personal property related thereto.

 

  (iii)

With respect to Section 6.13(a)(viii), the SPE Equity Owner will not own any subsidiary or make any investment in any other Person, except for the applicable Individual Borrower.

 

  (iv)

With respect to Section 6.13(a)(x), the SPE Equity Owner has not and will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation), other than (A) customary unsecured payables incurred in the ordinary course of owning the applicable Individual Borrower provided the same are not evidenced by a promissory note, do not exceed, in the aggregate, at any time a maximum amount of $10,000 and are paid within 60 days of the date incurred, and (B) in its capacity as general partner of such Individual Borrower (if applicable).

 

  (v)

With respect to Section 6.13(a)(xiv), the SPE Equity Owner will not assume or guaranty the debts or obligations of any other Person, hold itself out to be responsible for the debts of another Person, pledge its assets to secure the obligations of any other Person or otherwise pledge its assets for the benefit of any other Person, or hold out its credit as being available to satisfy the obligations of any other Person, except for in its capacity as general partner of the applicable Individual Borrower (if applicable).

 

  (c)

Effect of Transfer on Single Purpose Entity Requirements. Notwithstanding anything to the contrary in this Loan Agreement, no Transfer will be permitted under Article VII unless the provisions of this Section 6.13 are satisfied at all times.

 

6.14

Repairs and Capital Replacements.

 

  (a)

Completion of Repairs. Borrower will commence any Repairs as soon as practicable after the date of this Loan Agreement and will diligently proceed with and complete such Repairs on or before the Completion Date. All Repairs and Capital Replacements will be completed in a good and workmanlike manner, with suitable materials, and in accordance with good building practices and all applicable laws, ordinances, rules, regulations, building setback lines and restrictions applicable to the Mortgaged Property. Borrower agrees to cause the replacement of any material or work that is defective, unworkmanlike or that does not comply with the requirements of this Loan Agreement, as determined by Lender.

 

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  (b)

Purchases. Without the prior written consent of Lender, no materials, machinery, equipment, fixtures or any other part of the Repairs or Capital Replacements will be purchased or installed under conditional sale contracts or lease agreements, or any other arrangement wherein title to such Repairs or Capital Replacements is retained or subjected to a purchase money security interest, or the right is reserved or accrues to anyone to remove or repossess any such Repairs or Capital Replacements, or to consider them as personal property.

 

  (c)

Lien Protection. Borrower will promptly pay or cause to be paid, when due, all costs, charges and expenses incurred in connection with the construction and completion of the Repairs or Capital Replacements, and will keep the Mortgaged Property free and clear of any and all Liens other than the Lien of the Security Instrument and any other Lien to which Lender has consented.

 

  (d)

Adverse Claims. Borrower will promptly advise Lender in writing of any litigation, Liens or claims affecting the Mortgaged Property and of all complaints and charges made by any Governmental Authority that may delay or adversely affect the Repairs or Capital Replacements.

 

6.15

Residential Leases Affecting the Mortgaged Property.

 

  (a)

Borrower will, promptly upon Lender’s request, deliver to Lender an executed copy of each residential Lease then in effect.

 

  (b)

All Leases for residential units will satisfy the following conditions:

 

  (i)

They will be on forms that are customary for similar seniors housing facilities in the Property Jurisdiction.

 

  (ii)

They will be for initial terms of at least 1 month and not more than 2 years (unless otherwise approved in writing by Lender).

 

  (iii)

They will not include any Corporate Leases (unless otherwise approved in writing by Lender).

 

  (iv)

They will not include options to purchase.

 

  (c)

If Borrower is a cooperative housing corporation or association, notwithstanding anything to the contrary contained in this Loan Agreement, so long as Borrower remains a cooperative housing corporation or association and is not in breach of any covenant of this Loan Agreement, Lender consents to each of the following:

 

  (i)

The execution of Leases for terms in excess of 2 years to a tenant shareholder of Borrower, so long as such Leases, including proprietary Leases, are and will remain subordinate to the Lien of the Security Instrument.

 

  (ii)

The surrender or termination of such Leases where the surrendered or terminated Lease is immediately replaced or where Borrower makes its best efforts to secure such immediate replacement by a newly-executed Lease of the same apartment to a tenant shareholder of Borrower. However, no

 

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  consent is given by Lender to any execution, surrender, termination or assignment of a Lease under terms that would waive or reduce the obligation of the resulting tenant shareholder under such Lease to pay cooperative assessments in full when due or the obligation of the former tenant shareholder to pay any unpaid portion of such assessments.

 

  (d)

Reserved.

 

6.16

Litigation; Government Proceedings. Borrower will give prompt Notice to Lender of any litigation or governmental proceedings pending or, to the best of Borrower’s knowledge, threatened in writing against Borrower or any Borrower Principal, Facility Operator or Property Manager which might have a Material Adverse Effect. As and when requested by Lender, Borrower will provide Lender with written updates on the status of all litigation proceedings affecting Borrower or any Borrower Principal, Facility Operator or Property Manager.

 

6.17

Further Assurances and Estoppel Certificates; Lenders Expenses. Within 10 days after a request from Lender, in Lender’s Discretion, Borrower will take each of the following actions:

 

  (a)

Deliver to Lender a written statement, signed and acknowledged by Borrower, certifying to Lender or any Person designated by Lender, as of the date of such statement: (i) that the Loan Documents are unmodified and in full force and effect (or, if there have been modifications, that the Loan Documents are in full force and effect as modified and setting forth such modifications), (ii) the unpaid principal balance of the Note and the Allocated Loan Amount for each Individual Property, (iii) the date to which interest under the Note has been paid, (iv) that Borrower is not in default in paying the Indebtedness or in performing or observing any of the covenants or agreements contained in this Loan Agreement or any of the other Loan Documents (or, if Borrower is in default, describing such default in reasonable detail), (v) whether there are any then-existing setoffs or defenses known to Borrower against the enforcement of any right or remedy of Lender under the Loan Documents, and (vi) any additional facts requested by Lender.

 

  (b)

Execute, acknowledge and/or deliver, at its sole cost and expense, all further acts, deeds, conveyances, assignments, estoppel certificates, financing statements or amendments, transfers and assurances as Lender may require from time to time in order to better assure, grant and convey to Lender the rights intended to be granted, now or in the future, to Lender under this Loan Agreement and the Loan Documents or in connection with Lender’s consent rights under Article VII.

Borrower acknowledges and agrees that, in connection with each request by Borrower under this Loan Agreement or any Loan Document, Borrower will pay all reasonable Attorneys’ Fees and Costs and expenses incurred by Lender and Loan Servicer, including any fees charged by the Rating Agencies, if applicable, regardless of whether the matter is approved, denied or withdrawn. Any amounts payable by Borrower under this Loan Agreement will be deemed a part of the Indebtedness, will be secured by the Security Instrument and will bear interest at the Default Rate if not fully paid within 10 days of written demand for payment.

 

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6.18

Cap Collateral.

 

  (a)

Obligation to Make Payments. Borrower will instruct or cause Cap Purchaser to instruct each Cap Provider and any guarantor of a Cap Provider’s obligations to make Cap Payments directly to Lender or to Loan Servicer on behalf of Lender.

 

  (b)

Dodd-Frank Act. Borrower will comply or cause Cap Purchaser to comply with the applicable requirements of the Dodd-Frank Act in purchasing any Replacement Cap Agreement.

 

6.19

Ground Lease. Reserved.

 

6.20

ERISA Requirements.

 

  (a)

Borrower will not engage in any transaction which would cause an obligation, or action taken or to be taken under this Loan Agreement (or the exercise by Lender of any of its rights under the Note, this Loan Agreement or any of the other Loan Documents) to be a non-exempt prohibited transaction under ERISA or Section 4975 of the Tax Code.

 

  (b)

Borrower will deliver to Lender such certifications or other evidence from time to time throughout the term of this Loan Agreement, as requested by Lender in Lender’s Discretion, confirming each of the following:

 

  (i)

Borrower is not an “employee benefit plan” as defined in Section 3(3) of ERISA, which is subject to Title I of ERISA, a “plan” to which Section 4975 of the Tax Code applies, or an entity whose underlying assets constitute “plan assets” of one or more of such plans.

 

  (ii)

Borrower is not a “governmental plan” within the meaning of Section 3(32) of ERISA.

 

  (iii)

Borrower is not subject to state statutes regulating investments or fiduciary obligations with respect to governmental plans.

 

  (iv)

One or more of the following circumstances is true:

 

  (A)

Equity interests in Borrower are publicly offered securities within the meaning of 29 C.F.R. Section 2510.3-101(b)(2), as amended from time to time or any successor provision.

 

  (B)

No 25% Equity Interest is held by “benefit plan investors” within the meaning of Section 3(42) of ERISA, as amended from time to time or any successor provision.

 

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  (C)

Borrower qualifies as either an “operating company” or a “real estate operating company” within the meaning of 29 C.F.R. Section 2510.3-101© or (e), as either may be amended from time to time or any successor provisions, or is an investment company registered under the Investment Company Act of 1940.

 

6.21

Operation of the Facility.

 

  (a)

Without limiting the generality of Section 6.03, Borrower will, or will cause any Facility Operator to, operate the Facility for its Intended Use and will, or will cause any Facility Operator to, provide, to Lender’s reasonable satisfaction, all of the facilities, services, staff, equipment and supplies required or normally associated with a typical high quality property devoted to the Intended Use.

 

  (b)

Borrower will, or will cause any Facility Operator to, operate the Facility in a manner such that all applicable Licenses now or hereafter in effect will remain in full force and effect. Borrower will not, and will not allow any Facility Operator to: (i) transfer any License (or any rights thereunder) to any location other than the Facility, (ii) pledge any License (or any rights thereunder) as collateral security for any other loan or indebtedness, (iii) terminate any License or permit any License not to be renewed or reissued as applicable, (iv) rescind, withdraw, revoke, amend, supplement, modify or otherwise alter the nature, tenor or scope of any License, or (v) permit any License to become the subject of any Downgrade, revocation, suspension, restriction, condition or probation (including any restriction on new admissions or residents).

 

  (c)

Borrower will, or as applicable, Borrower will cause any Facility Operator to, maintain and implement all compliance and procedures policies as may be required by any applicable Healthcare Laws or Governmental Authority. Upon request by Lender, Borrower will provide Lender with copies of Borrower’s, and if applicable, each Facility Operator’s, compliance manuals which evidence such compliance.

 

6.22

Facility Reporting.

 

  (a)

Borrower will, or will cause any Facility Operator to, furnish to Lender, within 10 days after receipt by Borrower or any Facility Operator, any and all written notices from any Governmental Authority that: (i) any License is being Downgraded, revoked, terminated, suspended, restricted or conditioned or may not be renewed or reissued or that action is pending or being considered to Downgrade, revoke, terminate, suspend, restrict or condition (or not renew or reissue) any such License, (ii) any violation, fine, finding, investigation or corrective action concerning any License is pending or being considered, rendered or adopted, or (iii) any Healthcare Law or any health or safety code or building code violation or other deficiency at the Mortgaged Property has been identified, but in each case only if the subject matter of such written notice (A) could materially impact the operation or value of any Individual Facility, or (B) requires additional formal or informal action by Borrower or Facility Operator that is more than development or implementation of a routine plan of correction, including participation in hearings concerning continued licensing or Medicare or Medicaid participation, entering into consent orders affecting licensing affecting the Facility, or engaging in oversight management.

 

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  (b)

Borrower will, or will cause any Facility Operator to, furnish to Lender, within 10 days after receipt by Borrower or any Facility Operator, a copy of any survey, report or statement of deficiencies by any Governmental Authority, but only if the subject matter of such survey, report or statement of deficiencies (i) could materially impact the operation or value of any Individual Facility, or (ii) requires additional formal or informal action by Borrower or Facility Operator that is more than development or implementation of a routine plan of correction, including participation in hearings concerning continued licensing or Medicare or Medicaid participation, entering into consent orders affecting licensing affecting the Facility, or engaging in oversight management. Within the time period specified by the Governmental Authority for furnishing a plan of correction, Borrower, or if applicable, a Facility Operator, will do so and will furnish or will cause to be furnished to Lender a copy of the plan of correction concurrently therewith. Borrower will correct or will cause to be corrected in a timely manner (and in all events by the date required by the Governmental Authority) any deficiency if the failure to do so could cause any License to be Downgraded, revoked, suspended, restricted, conditioned or not renewed or reissued.

 

  (c)

Upon Lender’s request and subject to Privacy Laws, Borrower will, or will cause the Facility Operator to, furnish to Lender true and correct rent rolls and copies of all Leases.

 

  (d)

Borrower will provide Lender with a copy of any License issued or renewed in the future by a Governmental Authority within 30 days after its issuance or renewal. To the extent that any such License is assignable, Borrower will assign it to Lender as additional security for the Indebtedness, using a form of assignment acceptable to Lender in its discretion. If any License is issued to a Facility Operator, to the extent such License is assignable, Borrower will cause such operator or management agent to assign the License to Lender as additional security for the Indebtedness, using a form of assignment acceptable to Lender in its discretion.

 

  (e)

Subject to Privacy Laws, Borrower will furnish, and will cause any Facility Operator to furnish, to Lender at Borrower’s expense all evidence, which Lender may from time to time reasonably request as to the continuing accuracy and validity of all representations and warranties made by Borrower in the Loan Documents and the continuing compliance with and satisfaction of all covenants and conditions contained in the Loan Documents.

 

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6.23

Covenants Regarding Material Contracts.

 

  (a)

Borrower will not, and will not permit any Facility Operator to, enter into any Material Contract, unless that Material Contract provides that it is terminable upon not more than 30 days notice by Borrower, or if Borrower is not a party to the Material Contract, the Facility Operator, and their respective successors and assigns, without the necessity of establishing cause and without payment of a penalty or termination fee or extra charge.

 

  (b)

Borrower will (or if Borrower is not a party thereto, will cause a Facility Operator to) fully perform all of its obligations under each Contract, and Borrower will not (and Borrower will not permit a Facility Operator to) enter into, terminate or amend, modify, assign or otherwise encumber its interest in any Material Contract without the prior written approval of Lender. If Borrower or a Facility Operator enters into any Material Contract in the future (with Lender’s consent thereto), Borrower will (or will cause the operator to), simultaneously with entering into the Material Contract, if requested by Lender (i) assign its rights under and interest in the Material Contract to Lender as additional security for the Indebtedness, and (ii) obtain and provide to Lender a consent to that assignment by the other party(ies) to the Material Contract. Both the assignment and the consent must be in a form acceptable to Lender in its discretion.

 

6.24

Pledge of Receivables. Borrower will not, and will not allow any Facility Operator to, pledge any receivables arising from the operation of the Facility (or any Leases or Contracts under which such receivables arise) as collateral security for any other loan or indebtedness.

 

6.25

Property Manager and Operator of the Facility. Borrower will not surrender, terminate, cancel, modify, renew or extend its property management agreement or any operating lease; permit the change of the Property Manager or any Facility Operator; enter into any other agreement relating to the management or operation of the Facility with Property Manager, the Facility Operator, or any other Person; or consent to the assignment by the Property Manager or Facility Operator of its interest under such property management agreement, operating lease or similar agreement, as applicable, in each case without the prior written approval of Lender, and in each such instance the approval by Lender of the property management agreement and/or operating lease (or similar) agreement, as applicable. If at any time Lender consents to the appointment of a new Property Manager or Facility Operator, such new Property Manager or Facility Operator and Borrower (or if Borrower is not a party thereto, a Facility Operator) will, as a condition of Lender’s consent, execute an Assignment of Management Agreement or assignment of operating agreement, as the case may be, in a form acceptable to Lender in its discretion. If any such replacement Property Manager or Facility Operator is an Affiliate of Borrower, and if a nonconsolidation opinion was delivered at the origination of the Loan, Borrower will deliver to Lender an updated nonconsolidation opinion in form and substance satisfactory to Lender with regard to nonconsolidation. Without limiting the foregoing, Borrower will not, and will not permit any Facility Operator to, enter into any New Non-Residential Lease, enter into any Modified Non-Residential Lease or terminate any Non-Residential Lease, or enter into, terminate, extend or amend any Contract to lease, manage or operate the Facility without in each instance Lender providing its prior written consent thereto, which may be conditioned upon Lender receiving an assignment thereof in a form acceptable to Lender.

 

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6.26

Residential Leases and Agreements.

 

  (a)

The form of residential Lease, occupancy agreement, and/or residential care agreement (“Residential Leases and Agreements”) or similar resident agreement approved by Lender prior to the date of this Loan Agreement with respect to the Facility will not be revised in any material respect (except as may be required by applicable Healthcare Laws) without Lender’s prior written consent. All Residential Leases and Agreements entered into after the date of this Loan Agreement will be on forms approved by Lender.

 

  (b)

Borrower or any Facility Operator will maintain all deposits by all residents of the Facility in accordance with all applicable laws and regulations pertaining thereto, and in accordance with the terms of each such resident’s Residential Lease and Agreement, and otherwise in accordance with the other provisions of this Loan Agreement and the other Loan Documents.

 

6.27

Performance Under Leases. Borrower or a Facility Operator, as applicable, will timely perform all of the obligations of such party under all Leases of the Facility or any Mortgaged Property.

 

6.28

Governmental Payor Programs.

 

  (a)

No more than 5% of the total number of beds at any Individual Facility may be allocated to residents who participate in a Governmental Payor Program. For purposes of determining whether the foregoing percentage has been exceeded, Lender will not include any then current resident who was originally admitted to an Individual Facility as a private pay resident, and who had at the time of admission neither been a participant in, nor been eligible for, any Governmental Payor Program, but became eligible for, and a participant in, a Governmental Payor Program subsequent to such resident’s admission to such Individual Facility.

 

  (b)

If Borrower violates the covenant in Section 6.28(a), then Borrower must immediately fund a transition reserve with cash in an amount equal to the aggregate of 6 months of principal and interest payments due under the terms of the Note for the next 6 months. If the Note provides for interest to accrue at a floating or variable interest rate (other than during the “Extension Period,” as defined in the Note, if applicable), then Lender will estimate the amount of the interest due during such 6-month period. Borrower must also enter into a transition reserve agreement acceptable to Lender in form and content.

 

  (c)

Borrower will furnish to Lender, within 10 days after receipt by Borrower, any Facility Operator or any Property Manager, any and all notices from any Governmental Authority which state that the Governmental Payor Program certification of any Individual Facility is being downgraded to a substandard category, revoked, or suspended, or that action is pending or being considered to downgrade any such certification.

 

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  (d)

Borrower will furnish to Lender, within 10 days after receipt by Borrower, any Facility Operator or any Property Manager, a copy of any survey, report or statement of deficiencies by any Governmental Authority administering Governmental Payor Program funds or programs. Within the time period specified by any such Governmental Authority for furnishing a plan of correction, Borrower will furnish to Lender a copy of the plan of correction. By the date required for cure by the Governmental Authority, Borrower will correct or will cause to be corrected any deficiency the curing of which is a condition of continued eligibility for Governmental Payor Program payment or reimbursement, including full participation in the Governmental Payor Program for existing residents and for new residents to be admitted with Governmental Payor Program coverage.

 

  (e)

Other than in the normal course of business, Borrower will not, and will not permit any Facility Operator or any Property Manager to, change the terms of any of the Governmental Payor Program or its normal billing payment and reimbursement policies and procedures with respect to such Governmental Payor Program (including the amount and timing of finance charges, fees and write-offs).

 

  (f)

All Governmental Payor Program cost reports and financial reports submitted by Borrower, any Facility Operator, or any Property Manager for the Facility will be materially accurate and complete and will not be misleading in any material respects. Within 10 days of the required filing of cost reports of an Individual Facility with the Governmental Payor Program agency or the date of actual filing of such cost report of the applicable Individual Facility with such agency, whichever is earlier, Borrower will provide Lender with a complete and accurate copy of the annual Governmental Payor Program cost report of such Individual Facility, which will be prepared by an independent certified public accountant or by an experienced cost report preparer acceptable to Lender, and will promptly furnish Lender any amendments filed with respect to such reports and all responses, audit reports or inquiries with respect to such reports.

 

  (g)

Borrower will permit and will cause any Property Manager or any Facility Operator to permit representatives appointed by Lender, including independent accountants, agents, attorneys, appraisers and any other persons, to visit and inspect any of the Facility during its normal business hours and at any other reasonable times, and to take photographs of the Facility, and to write down and record any information such representatives obtain, and will permit Lender or its representatives to investigate and verify the accuracy of the information furnished to Lender under or in connection with this Loan Agreement or any of the other Loan Documents and to discuss all such matters with its officers, employees and representatives.

 

  (h)

Borrower will furnish and will cause any management agent for the Facility or any Facility Operator to furnish to Lender, at Borrower’s expense, all evidence which Lender may from time to time reasonably request as to the accuracy and validity of or compliance with all representations and warranties made by Borrower in the Loan Documents and satisfaction of all conditions contained in the Loan Documents.

 

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  (i)

Any inspection or audit of the Facility or the books and records of Borrower, any Property Manager or any Facility Operator, or the procuring of documents and financial and other information, by or on behalf of Lender, will be for Lender’s protection only, and will not constitute any assumption of responsibility or liability by Lender to Borrower, any Property Manager or any Facility Operator or anyone else with regard to the condition, construction, maintenance or operation of the Facility. Lender’s approval of any certification given to Lender will not relieve Borrower, Property Manager, or a Facility Operator of any of their respective obligations.

 

  (j)

Within 120 days after the end of each fiscal quarter of Borrower, with respect to each Individual Facility, Borrower will deliver or cause Property Manager or the Facility Operator to deliver to Lender information in sufficient detail, as determined by Lender, to show by patient mix (i.e., private and Governmental Payor Program, if applicable) the average monthly census of such Individual Facility, occupancy rates and the amount of income attributed to reimbursements or payments from a Governmental Payor Program.

 

  (k)

After an Event of Default, Lender is authorized to give notice to all third party payors at Lender’s option, instructing them to pay all third party payments, including Medicare, Medicaid or TRICARE, which would be otherwise paid to Borrower or to a Facility Operator to Lender, to the extent permitted by law.

 

  (l)

Borrower will not and will not permit any breach or violation by any Person of any Healthcare Laws pertaining to the Facility or the operation of the Facility, including any Healthcare Laws pertaining to billing for goods or services by Borrower or any Facility Operator. Borrower will not and will not permit any circumstance to occur which would (i) cause Borrower, a Facility Operator or the Facility to be disqualified for participation in any Governmental Payor Program or (ii) cause the non-renewal or termination of Borrower, a Facility Operator or any Individual Facility’s participation in any such program, as applicable.

 

6.29

Additional Covenants Regarding Operator. Reserved.

 

6.30

Trade Name. Not applicable.

 

6.31

through 6.52 are Reserved.

 

6.53

Economic Sanctions Laws; AML Laws.

 

  (a)

Borrower will comply with the Economic Sanctions Laws and AML Laws, as applicable, and Borrower will take reasonable measures to ensure that each Borrower Principal will comply with the Economic Sanctions Laws and AML Laws, as applicable.

 

  (b)

Borrower and each Borrower Principal will have in place practices and procedures for the admission of investors which prevent the admission of:

 

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  (i)

Any Non-U.S. Equity Holder, or any 25% Equity Holder, and that has been convicted of a violation of the AML Laws, or been the subject of a final enforcement action relating to the AML Laws.

 

  (ii)

Any 25% Equity Holder that is on the Prohibited Parties Lists.

 

  (iii)

Any Non-U.S. Equity Holder that is on the OFAC Lists.

 

6.54

Crowdfunding. Borrower and each Borrower Principal will not permit any 25% Equity Interest that has been marketed or sold to investors through any form of Crowdfunding.

 

6.55

through 6.58 are Reserved.

 

6.59

Third-Party Payor Programs and Private Commercial Insurance Managed Care and Employee Assistance Programs. All private insurance cost reports and related financial reports submitted by Borrower, any Facility Operator, or any Property Manager for the Facility will be materially accurate and complete and will not be misleading in any material respects.

ARTICLE VII TRANSFERS OF THE MORTGAGED PROPERTY OR INTERESTS IN BORROWER.

Upon the occurrence of a Transfer prohibited by or requiring Lender’s approval (if applicable) under this Article VII, Lender may, in Lender’s Discretion, by Notice to Borrower and the proposed transferee(s), modify or render void, any or all of the negotiated modifications to the Loan Documents (and/or deferral of deposits to Reserve Funds) as a condition to Lender’s consent to the proposed Transfer.

 

7.01

Permitted Transfers. The occurrence of any of the following Transfers will not constitute an Event of Default under this Loan Agreement:

 

  (a)

A Transfer to which Lender has consented.

 

  (b)

A Transfer that is not a prohibited Transfer pursuant to Section 7.02.

 

  (c)

A Transfer that is conditionally permitted pursuant to Section 7.03 upon the satisfaction of all applicable conditions.

 

  (d)

The grant of a leasehold interest in an individual dwelling unit for a term of 2 years or less (or longer if approved by Lender in writing) not containing an option to purchase.

 

  (e)

Entering into any New Non-Residential Lease, or modifying or terminating any Non-Residential Lease, in each case in compliance with Section 6.04.

 

  (f)

A Condemnation with respect to which Borrower satisfies the requirements of Section 6.11.

 

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  (g)

A Transfer of obsolete or worn out Personalty or Fixtures that are contemporaneously replaced by items of equal or better function and quality, which are free of Liens, encumbrances and security interests other than those created by the Loan Documents or consented to by Lender.

 

  (h)

The creation of a mechanic’s, materialmen’s, or judgment Lien against the Mortgaged Property, which is released of record, bonded, or otherwise remedied to Lender’s satisfaction within 60 days of the date of creation, or is being contested as otherwise provided in this Loan Agreement; provided, however, if Borrower is diligently prosecuting such release or other remedy and advises Lender that such release or remedy cannot be consummated within such 60-day period, Borrower will have an additional period of time (not exceeding 120 days from the date of creation or such earlier time as may be required by applicable law in which the lienor must act to enforce the Lien) within which to obtain such release of record or consummate such other remedy.

 

  (i)

If Borrower is a housing cooperative corporation or association, the Transfer of the shares in the housing cooperative or the assignment of the occupancy agreements or Leases relating thereto to tenant shareholders of the housing cooperative or association.

 

  (j)

A Supplemental Instrument that complies with Section 11.11(if applicable) or Defeasance that complies with Section 11.12 (if applicable).

 

  (k)

Reserved.

 

  (l)

Reserved.

 

7.02

Prohibited Transfers. The occurrence of any of the following Transfers will constitute an Event of Default under this Loan Agreement:

 

  (a)

A Transfer of all or any part of the Mortgaged Property or any interest in the Mortgaged Property, including the grant, creation or existence of any Lien on the Mortgaged Property (whether voluntary, involuntary or by operation of law, and whether or not such Lien has priority over the Lien of any Security Instrument), other than the Lien of the applicable Security Instrument or, if this Loan Agreement is entered into in connection with a Supplemental Loan, the Lien of the Senior Instrument, or any other Lien to which Lender has consented.

 

  (b)

A Transfer or series of Transfers of any legal or equitable interest of any Guarantor which owns a direct or indirect interest in an Individual Borrower that result(s) in such Guarantor no longer owning any direct or indirect interest in such Individual Borrower.

 

  (c)

A Transfer or series of Transfers of any legal or equitable interest since the Closing Date that result(s) in a change of more than 50% of the ownership interests (or beneficial interests, if the applicable entity is a trust) in any Individual Borrower or any Designated Entity for Transfers.

 

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  (d)

A Transfer of any general partnership interest in a partnership, or any manager interest (whether a member manager or nonmember manager) in a limited liability company, or a change in the trustee of a trust other than as permitted in Section 7.04, if such partnership, limited liability company, or trust, as applicable, is a Borrower or a Designated Entity for Transfers. However, up to 50% of the general partnership interests in a Individual Borrower partnership or Designated Entity for Transfers, or the manager interests in a limited liability company Individual Borrower or Designated Entity for Transfers, which interests exist on the Closing Date, may be converted to limited partnership interests or non-managing membership interests, as applicable, and then transferred, subject to the provisions of this Loan Agreement.

 

  (e)

If any Individual Borrower or any Designated Entity for Transfers is a corporation whose outstanding voting stock is held by 100 or more shareholders, one or more Transfers by a single transferor within a 12-month period affecting an aggregate of 10% or more of that stock.

 

  (f)

The grant, creation or existence of any Lien, whether voluntary, involuntary or by operation of law, and whether or not such Lien has priority over the Lien of a Security Instrument, on any ownership interest in any Individual Borrower or any Designated Entity for Transfers, if the foreclosure of such Lien would result in a Transfer prohibited under Sections 7.02(b), (c), (d), or (e).

 

  (g)

If any Individual Borrower is a trust (i) the termination or revocation of the trust, or (ii) the removal, appointment or substitution of a trustee of the trust.

 

  (h)

Reserved.

 

  (i)

Reserved.

 

  (j)

Reserved.

 

7.03

Conditionally Permitted Transfers. The occurrence of any of the following Transfers will not constitute a prohibited Transfer under Section 7.02, provided that Borrower has complied with all applicable specified conditions in this Section.

 

  (a)

Transfer by Devise, Descent or Operation of Law. Upon the death of a natural person, a Transfer which occurs by devise, descent, or by operation of law to one or more Immediate Family Members of such natural person or to a trust or family conservatorship established for the benefit of such Immediate Family Members (each a “Beneficiary”), provided that each of the following conditions is satisfied:

 

  (i)

The Property Manager or Facility Operator, as applicable, continues to be responsible for the management of the Mortgaged Property, and such Transfer will not result in a change in the day-to-day operations of the Mortgaged Property.

 

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  (ii)

Lender receives confirmation acceptable to Lender, in Lender’s Discretion, that Borrower continues to satisfy the requirements of Section 6.13.

 

  (iii)

Each Guarantor executes such documents and agreements as Lender requires in Lender’s Discretion to evidence and effect the ratification of each Guaranty, or in the event of the death of any Guarantor, Borrower causes one of the following to occur:

 

  (A)

One or more Persons acceptable to Lender, in Lender’s Discretion, execute(s) and deliver(s) to Lender a guaranty in a form acceptable to Lender and in substantially the same form as the Guaranty executed on the Closing Date, without any cost or expense to Lender.

 

  (B)

The estate of the deceased Guarantor immediately ratifies the Guaranty in writing, and within 6 months after the date of the death of the deceased Guarantor one or more Persons, acceptable to Lender in Lender’s Discretion, execute(s) and deliver(s) to Lender a guaranty in a form acceptable to Lender and in substantially the same form as the Guaranty executed on the Closing Date, without any cost or expense to Lender.

 

  (iv)

Borrower gives Lender Notice of such Transfer together with copies of all documents effecting such Transfer not more than 30 calendar days after the date of such Transfer, and contemporaneously with the Notice, takes each of the following additional actions:

 

  (A)

Borrower reaffirms the representations and warranties under Article V.

 

  (B)

Borrower satisfies Lender, in Lender’s Discretion, that the Beneficiary’s organization, credit and experience in the management of similar properties are appropriate to the overall structure and documentation of the existing financing.

 

  (v)

Borrower or Beneficiary causes to be delivered to Lender such legal opinions as Lender deems necessary, in Lender’s Discretion, including a nonconsolidation opinion (if a nonconsolidation opinion was delivered on the Closing Date and if required by Lender), an opinion that the ratification of the Loan Documents and Guaranty (if applicable) have been duly authorized, executed, and delivered and that the ratification documents and Guaranty (if applicable) are enforceable as the obligations of Borrower, Beneficiary or Guarantor, as applicable.

 

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  (vi)

Borrower (A) pays the Transfer Processing Fee to Lender, and (B) pays or reimburses Lender, upon demand, for all costs and expenses including all Attorneys’ Fees and Costs, incurred by Lender in connection with such Transfer; provided, however, that Lender will not be entitled to collect a Transfer Fee.

 

  (b)

Easement, Restrictive Covenant or Other Encumbrance. The grant of an easement, restrictive covenant or other encumbrance, provided that each of the following conditions is satisfied:

 

  (i)

Borrower provides Lender with at least 30 days prior Notice of the proposed grant.

 

  (ii)

Prior to the grant, Lender determines, in Lender’s Discretion, that the easement, restrictive covenant or other encumbrance will not materially affect the operation or value of the Mortgaged Property or Lender’s interest in the Mortgaged Property.

 

  (iii)

Borrower pays or reimburses Lender, upon demand, for all costs and expenses, including all Attorneys’ Fees and Costs, incurred by Lender in connection with reviewing Borrower’s request for Lender’s review of such grant of easement, restrictive covenant or other encumbrance; provided, however, that Lender will not be entitled to collect a Transfer Fee.

 

  (iv)

If the Note is held by a REMIC trust, Lender may require an opinion of counsel which meets each of the following requirements:

 

  (A)

The counsel providing the opinion is acceptable to Lender.

 

  (B)

The opinion is addressed to Lender.

 

  (C)

The opinion is paid for by Borrower.

 

  (D)

The opinion is in form and substance satisfactory to Lender in its sole and absolute discretion.

 

  (E)

The opinion confirms each of the following:

 

  (1)

The grant of such easement has been effected in accordance with the requirements of Treasury Regulation Section 1.860G-2(a)(8) (as such regulation may be modified, amended or replaced from time to time).

 

  (2)

The qualification and status of the REMIC trust as a REMIC will not be adversely affected or impaired as a result of such grant.

 

  (3)

That there will be no imposition of a tax under applicable REMIC provisions as a result of such grant.

 

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  (c)

Publicly-Held Fund or Publicly-Held Real Estate Investment Trust. If a Designated Entity for Transfers is a publicly-held fund or a publicly-held real estate investment trust, either of the following:

 

  (i)

The public issuance of common stock, convertible debt, equity or other similar securities (“Public Fund/REIT Securities”) and the subsequent Transfer of such Public Fund/REIT Securities.

 

  (ii)

The acquisition by a single Public Fund/REIT Securities holder of an ownership percentage of 10% or more in the Designated Entity for Transfers, if within 30 days following the acquisition, Borrower does each of the following:

 

  (A)

Provides notice to Lender of that acquisition.

 

  (B)

Complies with each of the following conditions:

 

  (1)

Borrower certifies in writing to Lender that as of the date of the Transfer either (i) there will be no 25% Equity Holders or (ii) no Borrower Principal (A) is on any Prohibited Parties Lists, (B) has been convicted of any violation of the AML Laws, or (C) has been the subject of a final enforcement action relating to the AML Laws.

 

  (2)

Borrower certifies in writing to Lender that as of the date of the Transfer either (i) there will not be any Non-U.S. Equity Holders, or (ii) no Non-U.S. Equity Holder (A) is on the OFAC Lists, (B) has been convicted of any violation of the AML Laws, or (C) has been the subject of a final enforcement action relating to the AML Laws.

 

  (d)

Transaction Specific Transfers.

 

  (i)

through (v) are reserved.

 

  (vi)

Limited Partner or Non-Managing Member Transfer. A Transfer that results in the cumulative Transfer of more than 50% and up to 100% of the non-managing membership interests in or the limited partnership interests in any Individual Borrower or any Designated Entity for Transfer (“Investor Interests”) to third party transferees (“Investor Interest Transfer”), provided that each of the following conditions is satisfied:

 

  (A)

Borrower provides Lender with at least 30 days prior Notice of the proposed Investor Interest Transfer.

 

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  (B)

At the time of the proposed Investor Interest Transfer, no Event of Default has occurred and is continuing and no event or condition has occurred and is continuing that, with the giving of Notice or the passage of time, or both, would become an Event of Default.

 

  (C)

Following the Investor Interest Transfer, Control and management of the day-to-day operations of the applicable Individual Borrower continue to be held by the Person exercising such Control and management immediately prior to the Investor Interest Transfer and there is no change in the Guarantor, if applicable.

 

  (D)

The Investor Interest Transfer does not result in a Transfer of the type described in Section 7.02(b).

 

  (E)

At any time that one Person acquires 25% or more of the aggregate of direct or indirect Investor Interests as a result of the Investor Interest Transfer, Borrower must meet the following additional requirements:

 

  (1)

Borrower pays to Lender the Transfer Processing Fee at the time the Borrower provides Lender with the Notice set forth in Section 7.03(d)(vi)(A).

 

  (2)

Borrower pays or reimburses Lender, upon demand, for all costs and expenses, including all Attorneys’ Fees and Costs, incurred by Lender in connection with the Investor Interest Transfer.

 

  (3)

Lender receives confirmation acceptable to Lender that (X) the requirements of Section 6.13 continue to be satisfied, and (Y) the term of existence of the holder of 25% or more of the Investor Interests after the Investor Interest Transfer (exclusive of any unexercised extension options or rights) does not expire prior to the Maturity Date.

 

  (4)

Lender receives organizational charts reflecting the structure of Borrower prior to and after the Investor Interest Transfer and copies of the then-current organizational documents of Borrower and the entity in which Investor Interests were transferred, if different from Borrower, including any amendments.

 

  (5)

Each transferee with an interest of 25% or more delivers to Lender a certification that each of the following is true:

 

  (X)

He/she/it has not been convicted of fraud or a crime involving moral turpitude (or if an entity, then no principal of such entity has been convicted of fraud or a crime involving moral turpitude).

 

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  (Y)

He/she/it has not been involved in a bankruptcy or reorganization within the ten years preceding the date of the Investor Interest Transfer.

 

  (6)

Borrower certifies in writing to Lender that as of the date of the Transfer either (i) there will be not be any Person with a collective equity interest (whether direct or indirect) of 25% or more in any Individual Borrower, or (ii) no Borrower Principal (A) is on any Prohibited Parties Lists, (B) has been convicted of any violation of the AML Laws, or (C) has been the subject of a final enforcement action relating to the AML Laws.

 

  (7)

Borrower certifies in writing to Lender that as of the date of the Transfer either (i) there will not be any Non-U.S. Equity Holders, or (ii) no Non-U.S. Equity Holder (A) is on the OFAC Lists, (B) has been convicted of a violation of the AML Laws, or (C) has been the subject of a final enforcement action relating to the AML Laws.

 

  (8)

If a nonconsolidation opinion was delivered on the Closing Date and if, after giving effect to the Investor Interest Transfer and all prior Transfers, 50% or more in the aggregate of direct or indirect interests in any Individual Borrower are owned by any Person and its Affiliates that owned less than a 50% direct or indirect interest in such Individual Borrower as of the Closing Date, Borrower delivers to Lender an opinion of counsel for Borrower, in form and substance satisfactory to Lender, with regard to nonconsolidation.

 

  (vii)

through (xi) are reserved.

 

  (e)

through (k) are reserved.

 

7.04

Preapproved Intrafamily Transfers. Not applicable.

 

7.05

Lenders Consent to Prohibited Transfers.

 

  (a)

Conditions for Lender’s Consent. Subject to the terms and conditions set forth in Section 7.10 and this Section 7.05(a), with respect to a Transfer that would otherwise constitute an Event of Default under this Article VII, Lender will consent, without any adjustment to the rate at which the Indebtedness bears interest or to any other economic terms of the Indebtedness set forth in the Note, provided that, prior to such Transfer, each of the following requirements is satisfied:

 

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  (i)

Borrower has submitted to Lender all information required by Lender to make the determination required by this Section along with the Transfer Processing Fee.

 

  (ii)

No Event of Default has occurred and is continuing and no event or condition has occurred and is continuing that, with the giving of Notice or the passage of time, or both, would become an Event of Default unless such Transfer would cure the Event of Default.

 

  (iii)

Lender in Lender’s Discretion has determined that the transferee meets Lender’s eligibility, credit, management and other standards (including any standards with respect to previous relationships between Lender and the transferee).

 

  (iv)

Lender in Lender’s Discretion has determined that the transferee’s organization, credit and experience in the ownership and management of similar senior housing facilities is adequate and appropriate to the overall structure and documentation of the Loan.

 

  (v)

Lender in Lender’s Discretion has determined that each applicable Individual Property will be managed by a Property Manager meeting the requirements of Section 6.09(d), and, if applicable, an Operator whose organization, credit and experience in the operation of similar senior housing facilities is adequate and appropriate to the overall structure and documentation of the Loan. Any new or replacement Operator approved by Lender must either (A) assume the Loan Documents executed by the prior Operator, if applicable, or (B) execute Lender’s then-standard documents governing operators of senior housing facilities and transferee will execute any modifications to the Loan Documents required by Lender to document Operator’s role in the operation of the Facility and appropriately secure the Loan.

 

  (vi)

Lender in Lender’s Discretion has determined that the Mortgaged Property, at the time of the proposed Transfer, meets all of Lender’s standards as to its physical condition, occupancy, net operating income and the accumulation of reserves.

 

  (vii)

Lender has determined that no proposed Borrower Principal (A) is on any Prohibited Parties Lists, (B) has been convicted of a violation of the AML Law, or (C) has been the subject of a final enforcement action relating to the AML Laws.

 

  (viii)

Lender has determined that there will not be any Non-U.S. Equity Holders, or has confirmed that no Non-U.S. Equity Holder (A) is on the OFAC Lists, (B) has been convicted of a violation of the AML Laws, or (C) has been the subject of a final enforcement action relating to the AML Laws.

 

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  (ix)

Lender in Lender’s Discretion has determined that the transferee and any SPE Equity Owner of such transferee meet the requirements of Section 6.13.

 

  (x)

If any Supplemental Instrument is outstanding, Borrower has obtained the consent of each Supplemental Lender, if different from Lender.

 

  (xi)

Borrower and Guarantor execute such additional documents as Lender may require to evidence the Transfer.

 

  (xii)

In the case of a Transfer of all or any part of the Mortgaged Property, each of the following conditions is satisfied:

 

  (A)

The transferee executes Lender’s then-standard assumption agreement that, among other things, requires the transferee to perform all obligations of Borrower set forth in the Note, the Security Instrument, this Loan Agreement and any other Loan Document, and may require that the transferee comply with any provisions of this Loan Agreement or any other Loan Document which previously may have been waived or modified by Lender.

 

  (B)

If Lender requires, the transferee causes one or more Persons acceptable to Lender, in Lender’s Discretion, to execute and deliver to Lender a Guaranty in a form acceptable to Lender.

 

  (C)

The transferee executes such additional documentation (including filing financing statements, as applicable) as Lender may require.

 

  (xiii)

In the case of a Transfer of any interest in Borrower or a Designated Entity for Transfers, if a Guarantor requests that Lender release the Guarantor from its obligations under a Guaranty executed and delivered in connection with the Note, this Loan Agreement or any of the other Loan Documents, then Borrower causes one or more Persons acceptable to Lender, in Lender’s Discretion, to execute and deliver to Lender a Guaranty in a form acceptable to Lender.

 

  (xiv)

Lender has received such legal opinions as Lender deems necessary, including a nonconsolidation opinion (if a nonconsolidation opinion was delivered on the Closing Date and if required by Lender), an opinion that the assignment and assumption of the Loan Documents has been duly authorized, executed, and delivered and that the assignment documents and the Loan Documents are enforceable as the obligations of Borrower, transferee and Guarantor, as applicable.

 

  (xv)

Lender collects all costs, including the cost of all title searches, title insurance and recording costs, and all Attorneys’ Fees and Costs incurred in reviewing the Transfer request and any fees charged by the Rating Agencies, if applicable.

 

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  (xvi)

At the time of the Transfer, Borrower pays the Transfer Fee to Lender.

 

  (xvii)

The Transfer will not occur during any Extension Period, if applicable.

 

  (xviii)

Reserved.

 

  (xix)

With respect to an assumption of the Loan (“Loan Assumption”) in connection with the simultaneous Transfer of all of the Individual Properties (or a Transfer of direct or indirect interests in every Borrower) (“Whole Loan Assumption”):

 

  (A)

If after such Transfer there is more than one Assumption Borrower, each Assumption Borrower must be an affiliate of each of the other Assumption Borrower, and all of the Assumption Borrowers must have identical ultimate ownership and control.

 

  (B)

Lender must have determined that immediately prior to the Whole Loan Assumption, the Loan satisfies a minimum aggregate DSCR of 1.30:1 and a maximum aggregate LTV of 74%.

 

  (C)

Each Assumption Borrower must simultaneously assume any outstanding Supplemental Loan or Senior Indebtedness secured by any Mortgaged Property.

 

  (D)

The Assumption Borrowers must enter into one or more of the modifications of the Loan Documents described below, if required by Lender in its sole discretion:

 

  (1)

modifications to the provisions of Section 7.10 and 7.11 of this Loan Agreement, including, without limitation, requiring an increased Additional Release Payment or modifying any other conditions to Release.

 

  (2)

modifications imposing additional conditions related to the credit enhancement, valuation or security for the Loan as may be required by Lender in its sole discretion, including without limitation, one or more of the following: reserves, guaranties, valuation and/or performance covenants.

 

  (xx)

No Loan Assumption will be permitted other than in connection with a Whole Loan Assumption. A Transfer of less than all of the Individual Properties in connection with an assumption of a portion of the Loan (“Partial Loan Assumption”) will not be permitted.

 

  (b)

Continuing Liability of Borrower. If Borrower requests a release of its liability under the Loan Documents in connection with a Transfer of all of Borrower’s interest in the Mortgaged Property, and Lender approves the Transfer pursuant to Section 7.05(a), then one of the following will apply:

 

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  (i)

If Borrower delivers to Lender a current Site Assessment for an Individual Property which (A) is dated within 90 days prior to the date of the proposed Transfer, and (B) evidences no presence of Hazardous Materials on the Mortgaged Property and no other Prohibited Activities or Conditions with respect to the Mortgaged Property (“Clean Site Assessment”), then Lender will release Borrower from all of Borrower’s obligations under the Loan Documents with respect to such Individual Property except for any liability under Section 6.12 or Section 10.02(b) with respect to any loss, liability, damage, claim, cost or expense which directly or indirectly arises from or relates to any Prohibited Activities or Conditions existing prior to the date of the Transfer.

 

  (ii)

If Borrower does not deliver a Clean Site Assessment as described in Section 7.05(b)(i) for any Individual Property, then Lender will release Borrower from all of Borrower’s obligations under the Loan Documents with respect to such Individual Property except for liability under Section 6.12 or Section 10.02(b).

 

  (c)

Continuing Liability of Guarantor. If Guarantor requests a release of its liability under the Guaranty in connection with a Transfer which is permitted, preapproved, or approved by Lender pursuant to this Article VII, and Borrower has provided a replacement Guarantor acceptable to Lender under the terms of Section 7.05(a)(xii)(B), then one of the following will apply:

 

  (i)

If Borrower delivers to Lender a Clean Site Assessment for an Individual Property, then Lender will release Guarantor from all of Guarantor’s obligations with respect to such Individual Property except Guarantor’s obligation to guaranty Borrower’s liability under Section 6.12 or Section 10.02(b) with respect to any loss, liability, damage, claim, cost or expense which directly or indirectly arises from or relates to any Prohibited Activities or Conditions existing prior to the date of the Transfer.

 

  (ii)

If Borrower does not deliver a Clean Site Assessment as described in Section 7.05(b)(i) for any Individual Property, then Lender will release Guarantor from all of Guarantor’s obligations with respect to such Individual Property except for Guarantor’s obligation to guaranty Borrower’s liability under Section 6.12 or Section 10.02(b).

 

7.06

SPE Equity Owner Requirement Following Transfer. Following any Transfer pursuant to this Article VII, Borrower must satisfy the applicable conditions regarding an SPE Equity Owner set forth in Section 6.13(a)(xxvi) of this Loan Agreement.

 

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7.07

Additional Transfer Requirements - External Cap Agreement.

 

  (a)

Continuation of Cap Agreement. If a Transfer of all or part of the Mortgaged Property permitted by this Loan Agreement occurs, Borrower will ensure that any third-party Cap Agreement is transferred to the applicable transferee or, if the Cap Agreement is not transferable, Borrower will replace the third-party Cap Agreement in accordance with Lender’s then-current requirements.

 

  (b)

Establishment or Modification of Rate Cap Agreement Reserve Fund

 

  (i)

If the third-party Cap Agreement which will be in place immediately following the Transfer is scheduled to expire prior to the Maturity Date, Lender may require Borrower to establish a Rate Cap Agreement Reserve Fund.

 

  (ii)

If Borrower has previously established a Rate Cap Agreement Reserve Fund, then Lender will determine whether the balance of any existing Rate Cap Agreement Reserve Fund is sufficient under then-current market conditions to purchase a Replacement Cap Agreement, and may then take any of the following actions:

 

  (A)

Lender may require Borrower to make an additional deposit into the Rate Cap Agreement Reserve Fund.

 

  (B)

If funding of the Rate Cap Agreement Reserve Fund has been deferred, Lender may require Borrower to begin making monthly deposits into the Rate Cap Agreement Reserve Fund.

 

  (C)

Lender may require Borrower to increase the amount of monthly deposits to the Rate Cap Agreement Reserve Fund.

 

7.08

Reserved.

 

7.09

Reserved.

 

7.10

Releases of Individual Properties.

 

  (a)

Releases Generally. Notwithstanding anything to the contrary in this Loan Agreement or any of the other Loan Documents, except as set forth in Section 7.10(b) and 11.12, no Individual Property may be subject to Defeasance (if applicable) or otherwise released from the lien of the applicable Security Instrument and/or this Loan Agreement (a release from a Security Instrument and/or this Loan Agreement, a being a “Release”) except in connection with (i) the repayment in full of the Indebtedness and any outstanding Supplemental Loan or Senior Indebtedness secured by any Individual Property, (ii) if applicable, the simultaneous Defeasance of the Loan and any outstanding Supplemental Loan or Senior Indebtedness secured by any Individual Property in accordance with the provisions of Section 11.12 of this Loan Agreement, or (iii) the release of a portion of an Individual Property in connection with a Condemnation in accordance with Section 6.11.

 

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  (b)

Conditions for Release of Individual Properties. Lender will permit the Release of an Individual Property (each, a “Released Property”) provided each of the following conditions is satisfied:

 

  (i)

The Release does not occur during any of the following times:

 

  (A)

Before the date that is 12 months after the Closing Date unless such Release is a First 10% Release.

 

  (B)

Before the Cut-Off Date, if applicable.

 

  (C)

During the Lockout Period, if applicable, unless such Release is a First 10% Release.

 

  (D)

During the 6-month period preceding the Maturity Date.

 

  (ii)

Lender has received from Borrower at least 90 days’ prior written notice (“Release Notice”) of the date of the proposed Release (the date of Release is the “Release Date”), together with each of the following:

 

  (A)

A non-refundable administrative fee (“Release Processing Fee”) equal to $1,500 multiplied by the total number of Individual Properties that will remain as security for the remaining Indebtedness after such Release (“Remaining Properties”), subject, however, to a minimum Release Processing Fee of $15,000. If more than one Individual Property will be released simultaneously, only one Release Processing Fee will be due.

 

  (B)

Written notice of Borrower’s selection of the Valuation Method to be used to determine the values of each Released Property and each Remaining Property.

 

  (iii)

No Event of Default has occurred and no event or circumstance exists on the Release Date which with the giving of notice or the passage of time or both could constitute an Event of Default.

 

  (iv)

The Loan has been prepaid and/or defeased (if applicable) in an amount equal to the sum of the Base Release Payment and, if applicable, the Additional Release Payment (collectively, the “Total Release Payment”), in accordance with the following requirements:

 

  (A)        (1)

If the Note is not in the Defeasance Period (if applicable) and is permitted to be prepaid in full at the time of such Release, then the Note must be prepaid in an aggregate amount equal to the Total Release Payment.

 

               (2)

Reserved.

 

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  (B)

Lender will apply the Base Release Payment to the Allocated Loan Amount for the Released Property. Lender will apply the Additional Release Payment to reduce the Allocated Loan Amount of one or more of the Remaining Properties, as determined by Lender in Lender’s sole and absolute discretion.

In addition, any outstanding Supplemental Loan or Senior Indebtedness secured by the Released Property (or any portion thereof that is allocated to the Released Property and any other amounts required to be paid to release the Released Property from the loan documents evidencing such Supplemental Loan or Senior Indebtedness) has either been paid and/or defeased in full, as applicable.

 

  (v)

Borrower has paid to Lender on or before the Release Date, the applicable prepayment premium (if any) that may be due under the terms of the Note as a result of any prepayment of the Note pursuant to this Section 7.10 (including, without limitation, prepayment premiums resulting from the payment of the Additional Release Payment (collectively, the “Prepayment Premiums”), all accrued and unpaid interest on the amount of the Total Release Payment, and any other sums required to be paid under the Note that are past due or that would become past due if not paid on the Release Date (collectively, the “Interest and Outstanding Amounts”).

 

  (vi)

Borrower has paid to Lender all of Lender’s costs and expenses in connection with the Release, including Attorneys’ Fees and Costs and all costs and expenses associated with all Valuation Methods used in accordance with this Section 7.10, including the cost of appraisals, if required by Lender (collectively, “Release Costs”).

 

  (vii)

Subject to Section 7.10(b)(vii)(C), the Remaining Properties will satisfy the following loan-to-value and debt service coverage requirements (“LTV/DSCR Test”), immediately after the Release, taking into account the application of the Base Release Payment, but not the Additional Release Payment if applicable, as determined by Lender in its sole and absolute discretion in accordance with Section 7.10(f), which determination will be binding and conclusive absent manifest error:

 

  (A)

An aggregate debt service coverage ratio (“DSCR”) for the Remaining Properties as of the Release Date of not less than the greater of (x) the Aggregate DSCR at Origination and (y) the aggregate DSCR of all the Individual Properties immediately prior to the Release, as determined by Lender. Borrower must provide to Lender such financial statements and other information with respect to each of the Individual Properties as Lender may require to determine the DSCR, certified by an officer of the owner of each of the Remaining Properties as being true, correct and complete in all material respects.

 

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  (B)

An LTV of the Remaining Properties as of the Release Date that does not exceed the lesser of (x) the Aggregate LTV at Origination, and (y) the aggregate LTV of all the Individual Properties immediately prior to the Release, in each case as determined by Lender based on the Valuation Method.

A portion of the Indebtedness may be prepaid (together with any applicable prepayment premium) and/or defeased (if applicable) in accordance with Section 11.12 below in the amount required to satisfy the LTV/DSCR Test (“Balancing Payment”), provided that any such prepayment and/or defeasance, as applicable, occurs simultaneously with a Release in accordance with the terms of this Section 7.10. The amount of the Balancing Payment will be determined by Lender, and will be applied and allocated by Lender in the same manner as the Additional Release Payment in accordance with Section 7.10(b)(iv) above.

 

  (C)

Notwithstanding anything herein to the contrary, provided that all other requirements of Section 7.10(b) have been satisfied:

 

  (1)

First 10% Releases. The following terms apply with respect to each First 10% Release (collectively, the “First 10% Release Requirements”):

 

  (x)

Borrower must pay to Lender (i) the Release Processing Fee, (ii) the Base Release Payment, (iii) the Interest and Outstanding Amounts and (iv) Release Costs.

 

  (y)

Except as set forth in Section 7.10(b)(vii)(C)(3) and (4), (a) no Additional Release Payment will be due and payable, (b) as set forth in the Note, no Prepayment Premium will be due and payable as a result of the payment of the Base Release Payment and (c) the LTV/DSCR Test will be waived.

 

  (2)

Releases after Prepayment in Full of First 10% Prepayment Amount. The following terms apply with respect to each Release made after prepayment in full of the First 10% Prepayment Amount (collectively, the “Remaining Release Requirements”):

 

  (x)        (i)

Borrower must pay to Lender the (A) Release Processing Fee, (B) Base Release Payment, (C) except as set forth in Sections 7.10(b)(vii)(C)(2)(y), Additional Release Payment, (D) Prepayment Premiums, (E) Interest and Outstanding Amounts, and (F) Release Costs.

 

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              (ii)

Except as set forth in Sections 7.10(b)(vii)(C)(2)(y), the LTV/DSCR Test must be satisfied.

 

  (y)

Except as set forth in Section 7.10(b)(vii)(C)(4) and (5), (a) no Additional Release Payment will be due and payable and (b) the LTV/DSCR Test will be waived with respect to any such Release if the following conditions are satisfied:

 

  (a)

Immediately after the Release there will be more than five (5) Remaining Properties and Lender has determined that the Release Premium Pool Test has been satisfied.

 

  (b)

Immediately after the Release there will be five (5) or less Remaining Properties and Lender has determined that (1) the Release Premium Pool Test has been satisfied, (2) the LTV of each of the Remaining Properties as of the Release Date does not exceed 75% and (3) the DSCR for each of the Remaining Properties as of the Release Date is not less than 1.40:1, as determined by Lender in accordance with Section 7.10(f).

If the requirements set forth in this Section 7.10(b)(vii)(C)(2)(y) are not satisfied with respect to any Release made after prepayment in full of the First 10% Prepayment Amount, all of the conditions to Release set forth in Section 7.10(b) will apply, including without limitation, (i) payment of the Base Release Payment, the Additional Release Payment, all applicable Prepayment Premiums, Interest and Outstanding Amounts and Release Costs and (ii) satisfaction of the LTV/DSCR Test.

 

  (3)

Release of Simi Hills Notwithstanding the provisions of this Section 7.10(b)(vii)(C), all of the conditions to Release set forth in Section 7.10(b), including without limitation, (i) payment of the Base Release Payment, the Additional Release Payment, all applicable Prepayment Premiums, Interest and Outstanding Amounts and Release Costs and (ii) satisfaction of the LTV/DSCR Test, will apply to a Release of the Individual Property known as Simi Hills regardless of whether or not such Release is a First 10% Release or satisfies the conditions of Section 7.10(b)(vii)(C)(2).

 

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  (4)

Affiliate Sales. Notwithstanding the provisions of this Section 7.10(b)(vii)(C), all of the conditions to Release set forth in Section 7.10(b), including without limitation, (i) payment of the Base Release Payment, the Additional Release Payment, all applicable Prepayment Premiums, Interest and Outstanding Amounts and Release Costs and (ii) satisfaction of the LTV/DSCR Test, will apply to any Release made in connection with an Affiliate Sale regardless of whether or not the required prepayment in connection with such Release is part of the First 10% Prepayment Amount or such Release satisfies the conditions of Section 7.10(b)(vii)(C)(2).

Any waiver of the LTV/DSCR Test permitted under this Section 7.10(b)(vii)(C) does not constitute a waiver of (i) the loan-to-value ratio test or any other requirements pursuant to Section 7.10(b)(viii) or (ii) any other provision of this Loan Agreement. For the avoidance of doubt, the loan-to-value ratio test and any other requirements pursuant to Section 7.10(b)(viii) will always be applicable.

For purposes of Releases, if a portion of the prepayment of the applicable Base Release Payment in connection with a Release is in the First 10% Prepayment Amount and a portion exceeds the First 10% Prepayment Amount, the Remaining Release Requirements will apply.

 

  (viii)

If Securitization of the Loan has occurred:

 

  (A)

Immediately after the Release, the aggregate loan-to-value ratio of the Loan and the Remaining Properties, as determined by Lender in its sole and absolute discretion based on the Valuation Method, will not exceed 125% (provided that, for purposes of this calculation, the value of the Remaining Properties will be reduced by the outstanding principal balance of any Senior Indebtedness and a proportionate amount of any indebtedness secured by such Remaining Properties that is in parity with the Loan), or as otherwise may be required at such time by then-current REMIC Laws; and

 

  (B)

Unless waived by Lender, Lender has received an opinion of counsel that the Release will not cause such Securitization to fail to meet applicable federal income tax qualification requirements, including under the REMIC Laws, or subject such Securitization to tax.

 

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For the purposes of determining the loan-to-value ratio under this Section 7.10(b)(viii), the value will be based solely on the value of the real property collateral, and not any non-real property assets or going-concern value of any business conducted using the real property collateral.

 

  (ix)

Unless waived by Lender, Lender has received an endorsement to each Title Policy applicable to each of the Remaining Properties that re-dates the Title Policy to the date of the recording of the Release and confirms that notwithstanding the Release, the priority of the lien of the Security Instrument upon the applicable Remaining Property is unchanged and subject only to the exceptions to insurance contained in the Title Policy on the date of this Loan Agreement and any additional matters previously approved in writing by Lender.

 

  (x)

To the extent that a Released Property is on the same campus and/or shares facilities or amenities with any Remaining Property, such Remaining Property must meet the requirements for an Independent Property (as defined in the Freddie Mac Multifamily Seller/Servicer Guide).

 

  (xi)

Lender has received the following:

 

  (A)

An amendment to this Loan Agreement and, if requested by Lender, the Note executed by Borrower, to reflect the Remaining Properties, the Allocated Loan Amount with respect to each of the Remaining Properties, and all related prepayments under this Section 7.10.

 

  (B)

A reaffirmation and ratification agreement executed by Guarantor and each Individual Borrower owning all or part of any Remaining Property with respect to their respective obligations under the Note, the Guaranty, and the other Loan Documents, which modifications must be in form and substance acceptable to Lender.

 

  (C)

Such other modifications to the Loan Documents as may be required by Lender to evidence the Release of the Released Property and the release of each Individual Borrower owning the Released Property from its obligations under the Note, this Loan Agreement, and the other Loan Documents (provided, however, that if such Individual Borrower owns all or part of any Remaining Property it shall only be released from its obligations with respect to the Released Property).

 

  (D)

If required by Lender, such legal opinions as Lender deems necessary, including a nonconsolidation opinion (if a nonconsolidation opinion was delivered on the Closing Date and if required by Lender), an opinion that the modifications of the Loan Documents and the reaffirmation and ratification agreement have been duly authorized, executed, and delivered and are enforceable as the obligations of Borrower and Guarantor, as applicable, in accordance with their terms.

 

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  (xii)

Reserved.

 

  (c)

Continuing Liability. Notwithstanding any Release, no Individual Borrower will be released from liability pursuant to Section 6.12 and Section 10.02(b) of this Loan Agreement (and no Guarantor will be released from any related liability pursuant to Section 2(a)(ii) of the applicable Guaranty) with respect to any Released Property unless Borrower delivers to Lender a Clean Site Assessment meeting the requirements of Section 7.05(b) of this Loan Agreement with respect to such Released Property, in which case Lender will release Borrower from liability pursuant to Section 6.12 and Section 10.02(b) of this Loan Agreement and release Guarantor from its related liability pursuant to Section 2(a)(ii) of the Guaranty, in each case solely with respect to the Released Property except with respect to any loss, liability, damage, claim, cost or expense which directly or indirectly arises from or relates to any Prohibited Activities or Conditions existing prior to the Release Date.

 

  (d)

Reserved.

 

  (e)

Releases and Loan Assumptions. A Release in connection with a Partial Loan Assumption will not be permitted.

 

  (f)

Calculation of DSCR and LTV. Any determination by Lender of LTV and/or DSCR pursuant to this Section 7.10 will be binding and conclusive absent manifest error and will be subject to the following provisions:

 

  (i)

Any calculation of LTV and/or DSCR for an Individual Property will include any outstanding Supplemental Loan and any Senior Indebtedness secured by such Mortgaged Property.

 

  (ii)

In determining any LTV in connection with a Release, Lender will apply the same Valuation Method to the Released Property (or each Released Property if more than one Individual Property will be released simultaneously) and to each of the Remaining Properties. Notwithstanding the foregoing, Borrower must obtain an appraisal for each Released Property, and Lender may use the Appraisal Valuation Method with respect to the Released Property and the otherwise applicable Valuation Method with respect to the Remaining Properties.

 

  (iii)

When calculating DSCR, Lender will apply a 30-year amortization to such calculation and an interest rate equal to the Assumed Interest Rate.

 

  (iv)

When calculating LTV, the value will be based on the value of the real property collateral, including any going-concern value of any business conducted using the real property collateral. Notwithstanding this section (iv), nothing herein is meant to diminish or modify the requirements of Section 7.10(b)(viii).

 

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  (g)

Reserved.

 

  (h)

Reserved.

 

  (i)

No Waiver or Modification of Lockout Period or Defeasance Period. For the avoidance of doubt, nothing in this Section 7.10 or any other Section of this Loan Agreement will be deemed to permit the prepayment of all or any portion of the Note during the Lockout Period (other than the prepayments made in connection with First 10% Releases in accordance with the terms of the Note and Section 7.10(b)) or the Defeasance Period (if applicable), or to permit any Defeasance of all or any portion of the Note except during the Defeasance Period and otherwise in accordance with Section 11.12 below.

 

  (j)

Releases During First Year. If the Release Date is before the first anniversary of the Closing Date, and so long as the appraisals obtained by Lender in connection with the underwriting and origination of the Loan are no older than 18 months as of the Release Date, then notwithstanding anything to the contrary in this Loan Agreement, but subject to clause (x) of the definition of Valuation Method: (i) the “Valuation Method” will mean the Appraisal Valuation Method, and (ii) the appraisals used to determine the value will be the appraisals obtained by Lender prior to the Closing Date in connection with the underwriting and origination of the Loan.

 

7.11

Reserved.

 

7.12

Reserved.

ARTICLE VIII SUBROGATION.

If, and to the extent that, the proceeds of the Loan, or subsequent advances under Section 9.02, are used to pay, satisfy or discharge a Prior Lien, such Loan proceeds or advances will be deemed to have been advanced by Lender at Borrower’s request, and Lender will automatically, and without further action on its part, be subrogated to the rights, including Lien priority, of the owner or holder of the obligation secured by the Prior Lien, whether or not the Prior Lien is released.

ARTICLE IX EVENTS OF DEFAULT AND REMEDIES.

 

9.01

Events of Default. The occurrence of any one or more of the following will constitute an Event of Default under this Loan Agreement:

 

  (a)

Borrower fails to pay or deposit when due any amount required by the Note, this Loan Agreement or any other Loan Document.

 

  (b)

Borrower fails to maintain the Insurance coverage required by Section 6.10.

 

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  (c)

Borrower or any SPE Equity Owner fails to comply with the provisions of Section 6.13 or if any of the assumptions contained in any nonconsolidation opinions delivered to Lender at any time is or becomes untrue in any material respect.

 

  (d)

Borrower or any SPE Equity Owner, any of its officers, directors, trustees, general partners or managers or any Guarantor commits fraud or a material misrepresentation or material omission in connection with: (i) the application for or creation of the Indebtedness, (ii) any financial statement, Rent Schedule, or other report or information provided to Lender during the term of the Indebtedness, or (iii) any request for Lender’s consent to any proposed action, including a request for disbursement of funds under this Loan Agreement.

 

  (e)

Borrower fails to comply with the Condemnation provisions of Section 6.11.

 

  (f)

A Transfer occurs that violates the provisions of Article VII, whether or not any actual impairment of Lender’s security results from such Transfer.

 

  (g)

A forfeiture action or proceeding, whether civil or criminal, is commenced which could result in a forfeiture of the Mortgaged Property or otherwise materially impair the Lien created by any Security Instrument or Lender’s interest in the Mortgaged Property.

 

  (h)

Borrower fails to perform any of its obligations under this Loan Agreement (other than those specified in Section 9.01), as and when required, which failure continues for a period of 30 days after Notice of such failure by Lender to Borrower. However, if Borrower’s failure to perform its obligations as described in this Section 9.01(h) is of the nature that it cannot be cured within the 30 day cure period after such Notice from Lender but reasonably could be cured within 90 days, then Borrower will have additional time as determined by Lender in Lender’s Discretion, not to exceed an additional 60 days, in which to cure such default, provided that Borrower has diligently commenced to cure such default during the initial 30 day cure period and diligently pursues the cure of such default. However, no such Notice or cure periods will apply in the case of any such failure which could, in Lender’s judgment, absent immediate exercise by Lender of a right or remedy under this Loan Agreement, result in harm to Lender, danger to tenants or third parties, or impairment of the Note, any Security Instrument or this Loan Agreement or any other security given under any other Loan Document.

 

  (i)

Borrower fails to perform any of its obligations as and when required under any Loan Document other than this Loan Agreement which failure continues beyond the applicable cure period, if any, specified in that Loan Document.

 

  (j)

The holder of any other debt instrument secured by a mortgage, deed of trust or deed to secure debt on the Mortgaged Property exercises any right to declare all amounts due under that debt instrument immediately due and payable.

 

  (k)

Any of the following occurs:

 

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  (i)

Borrower or any SPE Equity Owner commences any case, Proceeding or other action under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization, conservatorship or relief of debtors (A) seeking to have an order for relief entered with respect to it, or seeking to adjudicate it bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debt, or (B) seeking appointment of a receiver, trustee, custodian, conservator or other similar official for it or for all or any substantial part of its assets.

 

  (ii)

Any party other than Lender commences any case, Proceeding, or other action of a nature referred to in Section 9.01(k)(i) against Borrower or any SPE Equity Owner which (A) results in the entry of an order for relief or any such adjudication or appointment, or (B) has not been dismissed, discharged or bonded for a period of 90 days.

 

  (iii)

Any case, Proceeding or other action is commenced against Borrower or any SPE Equity Owner seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets which results in the entry of any order by a court of competent jurisdiction for any such relief which is not vacated, discharged, or stayed or bonded pending appeal within 90 days from the entry thereof.

 

  (iv)

Borrower or any SPE Equity Owner takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in Section 9.01(k)(i), (ii) or (iii).

 

  (l)

Borrower or any SPE Equity Owner has made any representation or warranty in Article V or any other Section of this Loan Agreement that is false or misleading in any material respect.

 

  (m)

If the Loan is secured by an interest under a Ground Lease, Borrower fails to comply with the provisions of Section 6.19.

 

  (n)

If the Loan is a Supplemental Loan, any Event of Default occurs under (i) the Senior Note, the Senior Instrument or any other Senior Loan Document, or (ii) any loan document related to another loan in connection with the Mortgaged Property, regardless of whether Borrower has obtained Supplemental Lender’s approval of the placement of such Lien on the Mortgaged Property. In addition, if the Loan is a Supplemental Loan, as Borrower under both the Supplemental Instrument and the Senior Instrument, Borrower acknowledges and agrees that if there is an Event of Default under the Supplemental Note, the Supplemental Instrument or any other Supplemental Loan Document, such Event of Default will be an Event of Default under the terms of the Senior Instrument and will entitle Senior Lender to invoke any and all remedies permitted to Senior Lender by applicable law, the Senior Note, the Senior Instrument or any of the other Senior Loan Documents.

 

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  (o)

If the Mortgaged Property is subject to any covenants, conditions and/or restrictions, land use restriction agreements or similar agreements, Borrower fails to perform any of its obligations under any such agreement as and when required, and such failure continues beyond any applicable cure period.

 

  (p)

A Guarantor files for bankruptcy protection under the Bankruptcy Code or a Guarantor voluntarily becomes subject to any reorganization, receivership, insolvency proceeding or other similar proceeding pursuant to any other federal or state law affecting debtor and creditor rights, or any creditor (other than Lender) of a Guarantor commences any involuntary case against a Guarantor pursuant to the Bankruptcy Code or other federal or state law affecting debtor and creditor rights, unless each of the following conditions is satisfied:

 

  (i)

Borrower or Guarantor provides Notice of such action to Lender within 30 days after the filing of such action.

 

  (ii)

Either (A) the case is dismissed or discharged within 90 days after filing, or (B) within 90 days following the date of such filing or commencement, the affected Guarantor is replaced with one or more other Persons acceptable to Lender, in Lender’s Discretion, each of whom executes and delivers to Lender a replacement Guaranty in form and content acceptable to Lender, together with such legal opinions as Lender deems necessary.

 

  (iii)

If Borrower must provide a replacement Guarantor pursuant to Section 9.01(p)(ii), then Borrower pays the Transfer Processing Fee to Lender.

 

  (q)

With respect to a Guarantor, either of the following occurs:

 

  (i)

The death of any Guarantor who is a natural person, unless within 30 days following the Guarantor’s death, Borrower causes one of the following to occur:

 

  (A)

One or more Persons acceptable to Lender, in Lender’s Discretion, execute(s) and deliver(s) to Lender a guaranty in a form acceptable to Lender and in substantially the same form as the Guaranty executed on the Closing Date, without any cost or expense to Lender.

 

  (B)

The estate of the deceased Guarantor immediately ratifies the Guaranty in writing, and within 6 months after the date of the death of the deceased Guarantor one or more Persons, acceptable to Lender in Lender’s Discretion, execute(s) and deliver(s) to Lender a guaranty in a form acceptable to Lender and in substantially the same form as the Guaranty executed on the Closing Date, without any cost or expense to Lender.

 

  (ii)

The dissolution of any Guarantor who is an entity, unless each of the following conditions is satisfied:

 

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  (A)

Within 30 days following the dissolution of the Guarantor, Borrower causes one or more Persons acceptable to Lender, in Lender’s Discretion, to execute and deliver to Lender a guaranty in a form acceptable to Lender and in substantially the same form as the Guaranty executed on the Closing Date, without any cost or expense to Lender.

 

  (B)

Borrower pays the Transfer Processing Fee to Lender.

 

  (r)

If a Cap Agreement is required, Borrower fails to provide Lender with a Replacement Cap Agreement prior to the expiration of the then-existing Cap Agreement.

 

  (s)

Borrower or any Facility Operator fails, within the time deadlines set by any Governmental Authority, to correct any deficiency, which failure could result in an action by such Governmental Authority with respect to any Individual Facility that could have a Material Adverse Effect.

 

  (t)

A default under any of the Material Contracts by Borrower or by any Facility Operator, which continues beyond the expiration of any applicable cure period.

 

  (u)

Any Individual Facility is no longer classified as housing for older persons pursuant to the Fair Housing Amendments Act of 1988.

 

  (v)

Any Individual Borrower, a Facility Operator, or any Individual Facility is assessed fines or penalties in excess of $50,000.00 in the aggregate in any year by any state or any Medicare, Medicaid, TRICARE, health, reimbursement, or licensing agency having jurisdiction over such Individual Borrower, Facility Operator, or such Individual Facility.

 

  (w)

through (mm) are Reserved.

 

  (nn)

If a Guarantor is an entity whose term of existence expires prior to the Maturity Date, and such Guarantor does not comply with each of the requirements set forth in Section 22 of the Guaranty.

 

  (oo)

through (hhh) are Reserved.

 

9.02

Protection of Lenders Security; Security Instrument Secures Future Advances.

 

  (a)

If Borrower fails to perform any of its obligations under this Loan Agreement or any other Loan Document, or if any action or proceeding is commenced which purports to affect the Mortgaged Property, Lender’s security or Lender’s rights under this Loan Agreement, including eminent domain, insolvency, code enforcement, civil or criminal forfeiture, enforcement of Hazardous Materials Laws, fraudulent conveyance or reorganizations or proceedings involving a bankrupt or decedent, then Lender, in Lender’s Discretion, may make such appearances, file such documents, disburse such sums and take such actions as

 

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  Lender reasonably deems necessary to perform such obligations of Borrower and to protect Lender’s interest, including: (i) payment of Attorneys’ Fees and Costs, (ii) payment of fees and out-of-pocket expenses of accountants, inspectors and consultants, (iii) entry upon the Mortgaged Property to make Repairs or secure the Mortgaged Property, (iv) procurement of the Insurance required by Section 6.10, (v) payment of amounts which Borrower has failed to pay under Section 6.08, (vi) performance of Borrower’s obligations under Section 6.09, and (vii) advances made by Lender to pay, satisfy or discharge any obligation of Borrower for the payment of money that is secured by a Prior Lien.

 

  (b)

Any amounts disbursed by Lender under this Section 9.02, or under any other provision of this Loan Agreement that treats such disbursement as being made under this Section 9.02, will be secured by the Security Instrument, will be added to, and become part of, the principal component of the Indebtedness, will be immediately due and payable and will bear interest from the date of disbursement until paid at the Default Rate.

 

  (c)

Nothing in this Section 9.02 will require Lender to incur any expense or take any action.

 

9.03

Remedies.

 

  (a)

Upon an Event of Default, Lender may exercise any or all of its rights and remedies provided under the Loan Documents and Borrower will pay all costs associated therewith, including Attorneys’ Fees and Costs.

 

  (b)

Each right and remedy provided in this Loan Agreement is distinct from all other rights or remedies under this Loan Agreement or any other Loan Document or afforded by applicable law or equity, and each will be cumulative and may be exercised concurrently, independently or successively, in any order. Lender’s exercise of any particular right or remedy will not in any way prevent Lender from exercising any other right or remedy available to Lender. Lender may exercise any such remedies from time to time and as often as Lender chooses.

 

  (c)

Lender will have all remedies available to Lender under Revised Article 9 of the Uniform Commercial Code, the Loan Documents and under applicable law.

 

  (d)

Lender may also retain (i) all money in the Reserve Funds, including interest, and (ii) any Cap Payment, and in Lender’s sole and absolute discretion, may apply such amounts, without restriction and without any specific order of priority, to the payment of any and all Indebtedness.

 

  (e)

If a claim or adjudication is made that Lender has acted unreasonably or unreasonably delayed acting in any case where, by law or under this Loan Agreement or the other Loan Documents, Lender has an obligation to act reasonably or promptly, then Lender will not be liable for any monetary damages, and Borrower’s sole remedy will be limited to commencing an action seeking injunctive relief or declaratory judgment. Any action or proceeding to determine whether Lender has acted reasonably will be determined by an action seeking declaratory judgment.

 

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  (f)

Reserved.

 

9.04

Forbearance.

 

  (a)

Lender may (but will not be obligated to) agree with Borrower, from time to time, and without giving Notice to, or obtaining the consent of, or having any effect upon the obligations of, any Guarantor or other third party obligor, to take any of the following actions:

 

  (i)

Extend the time for payment of all or any part of the Indebtedness.

 

  (ii)

Reduce the payments due under this Loan Agreement, the Note or any other Loan Document.

 

  (iii)

Release anyone liable for the payment of any amounts under this Loan Agreement, the Note or any other Loan Document.

 

  (iv)

Accept a renewal of the Note.

 

  (v)

Modify the terms and time of payment of the Indebtedness.

 

  (vi)

Join in any extension or subordination agreement.

 

  (vii)

Release any portion of the Mortgaged Property.

 

  (viii)

Take or release other or additional security.

 

  (ix)

Modify the rate of interest or period of amortization of the Note or change the amount of the monthly installments payable under the Note.

 

  (x)

Otherwise modify this Loan Agreement, the Note or any other Loan Document.

 

  (b)

Any forbearance by Lender in exercising any right or remedy under the Note, this Loan Agreement or any other Loan Document or otherwise afforded by applicable law, will not be a waiver of or preclude the exercise of any other right or remedy, or the subsequent exercise of any right or remedy. The acceptance by Lender of payment of all or any part of the Indebtedness after the due date of such payment, or in an amount which is less than the required payment, will not be a waiver of Lender’s right to require prompt payment when due of all other payments on account of the Indebtedness or to exercise any remedies for any failure to make prompt payment. Enforcement by Lender of any security for the Indebtedness will not constitute an election by Lender of remedies so as to preclude the exercise of any other right available to Lender. Lender’s receipt of any awards or proceeds under Sections 6.10 and 6.11 will not operate to cure or waive any Event of Default.

 

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9.05

Waiver of Marshalling. Notwithstanding the existence of any other security interests in the Mortgaged Property held by Lender or by any other party, Lender will have the right to determine the order in which any or all of the Mortgaged Property will be subjected to the remedies provided in this Loan Agreement or any other Loan Document or applicable law. Lender will have the right to determine the order in which any or all portions of the Indebtedness are satisfied from the proceeds realized upon the exercise of such remedies. Borrower and any party who now or in the future acquires a security interest in the Mortgaged Property and who has actual or constructive notice of the Security Instrument waives any and all right to require the marshalling of assets or to require that any of the Mortgaged Property be sold in the inverse order of alienation or that any of the Mortgaged Property be sold in parcels or as an entirety in connection with the exercise of any of the remedies permitted by applicable law or provided in this Loan Agreement.

 

9.06

Cross-Default/Single Loan. Notwithstanding any Allocated Loan Amount as provided for herein or in the Note, each Individual Borrower acknowledges the Loan is a single indebtedness and that Lender has made the Loan to Borrower upon the security of Borrower’s collective interest in all of the Mortgaged Property and in reliance upon the aggregate of the Mortgaged Property taken together being of greater value as collateral security than the sum of each Individual Property taken separately. Borrower agrees that each Security Instrument is and will be cross-defaulted with each other so that (i) an Event of Default under any Security Instrument will constitute an Event of Default under each other Security Instrument; (ii) an Event of Default under the Note, this Loan Agreement or any of the other Loan Documents will constitute an Event of Default under each Security Instrument; (iii) each Security Instrument will constitute security for the Note as if a single blanket lien were placed on all of the Individual Properties as security for the Note; and (iv) such lien will in no event be deemed to constitute a fraudulent conveyance. Each Individual Borrower, for itself and its successors and assigns, hereby waives in the event of any exercise of rights or remedies by Lender hereunder (including without limitation in the event of foreclosure of any or all of the Security Instruments), any legal or equitable right otherwise available to any Individual Borrower which would require the separate sale of any of the Mortgaged Property or require Lender to exhaust its remedies against any Individual Property or any combination of the Mortgaged Property before proceeding against any other Individual Property or combination of the Mortgaged Property; and further in the event of such foreclosure or exercise of rights or remedies by Lender each Individual Borrower does hereby expressly consent to and authorize, at the option of Lender, the foreclosure and sale or other exercise of rights or remedies either separately or together of any combination of the Mortgaged Property.

ARTICLE X RELEASE; INDEMNITY.

 

10.01

Release. Borrower covenants and agrees that, in performing any of its duties under this Loan Agreement, none of Lender, Loan Servicer or any of their respective agents or employees will be liable for any losses, claims, damages, liabilities and expenses that may be incurred by any of them as a result of such performance, except that no party will be released from liability for any losses, claims, damages, liabilities or expenses arising out of the willful misconduct or gross negligence of such party.

 

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10.02

Indemnity.

 

  (a)

General Indemnity. Borrower agrees to indemnify, hold harmless and defend Lender, including any custodian, trustee and other fiduciaries who hold or have held a full or partial interest in the Loan for the benefit of third parties, any prior owner or holder of the Note, the Loan Servicer, any prior Loan Servicer, the officers, directors, shareholders, partners, employees and trustees of each of the foregoing, and the heirs, legal representatives, successors and assigns of each of the foregoing (collectively, “Indemnitees”) against any and all losses, claims, damages, liabilities and expenses including Attorneys’ Fees and Costs, which may be imposed or incurred by any of them directly or indirectly arising out of, or in any way relating to, or as a result of: (i) any failure of the Mortgaged Property to comply with the laws, regulations, ordinance, code or decree of any Governmental Authority, including those pertaining to the Americans with Disabilities Act, zoning, occupancy and subdivision of real property, (ii) any failure of Borrower or any Borrower Principal to comply with the Economic Sanctions Laws or AML Laws, as applicable, (iii) any obligation of Borrower under any Lease, and (iv) any accident, injury or death to any natural person on the Mortgaged Property or any damage to personal property located on the Mortgaged Property, except that no such party will be indemnified from liability for any losses, claims, damages, liabilities or expenses arising out of the willful misconduct or gross negligence of such party.

 

  (b)

Environmental Indemnity. Borrower agrees to indemnify, hold harmless and defend Indemnitees from and against all proceedings, claims, damages, penalties and costs (whether initiated or sought by Governmental Authorities or private parties), including Attorneys’ Fees and Costs and remediation costs, whether incurred in connection with any judicial or administrative process or otherwise, arising directly or indirectly from any of the following:

 

  (i)

Any breach of any representation or warranty of Borrower in Section 5.05.

 

  (ii)

Any failure by Borrower to perform any of its obligations under Section 6.12.

 

  (iii)

The existence or alleged existence of any Prohibited Activity or Condition.

 

  (iv)

The presence or alleged presence of Hazardous Materials on or under the Mortgaged Property or in any of the Improvements.

 

  (v)

The actual or alleged violation of any Hazardous Materials Law.

 

  (c)

Indemnification Regarding ERISA Covenants. BORROWER WILL INDEMNIFY LENDER AND DEFEND AND HOLD LENDER HARMLESS FROM AND AGAINST ALL CIVIL PENALTIES, EXCISE TAXES, OR OTHER LOSS, COST, DAMAGE AND EXPENSE (INCLUDING REASONABLE ATTORNEYS’ FEES AND COSTS INCURRED IN THE INVESTIGATION, DEFENSE AND SETTLEMENT OF CLAIMS AND

 

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  LOSSES INCURRED IN CORRECTING ANY PROHIBITED TRANSACTION OR IN THE SALE OF A PROHIBITED LOAN, AND IN OBTAINING ANY INDIVIDUAL PROHIBITED TRANSACTION EXEMPTION UNDER ERISA THAT MAY BE REQUIRED, IN LENDER’S SOLE AND ABSOLUTE DISCRETION) THAT LENDER MAY INCUR, DIRECTLY OR INDIRECTLY, AS A RESULT OF DEFAULT UNDER SECTION 6.20. THIS INDEMNITY WILL SURVIVE ANY TERMINATION, SATISFACTION OR FORECLOSURE OF THE SECURITY INSTRUMENT.

 

  (d)

Securitization Indemnification.

 

  (i)

Borrower agrees to indemnify, hold harmless and defend the Indemnified Parties from and against any and all proceedings, losses, claims, damages, liabilities, penalties, costs and expenses (whether initiated or sought by Governmental Authorities or private parties), including Attorneys’ Fees and Costs, which may be incurred by any Indemnified Party (either directly or indirectly), which arise out of, are in any way related to, or are as a result of a claim that the Borrower Information contains an untrue statement of any material fact or the Borrower Information omits to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading (collectively, the “Securitization Indemnification”).

 

  (ii)

Borrower will not be liable under the Securitization Indemnification if the claim is based on Borrower Information which Lender has materially misstated or materially misrepresented in the Disclosure Document.

 

  (iii)

For purposes of this Section 10.02(d):

 

  (A)

Borrower Information” includes any information provided at any time to Lender or Loan Servicer by Borrower, any SPE Equity Owner, any Facility Operator, any Guarantor, any Property Manager or any Affiliates of the foregoing with respect to any of the following:

 

  (1)

Any Person listed in Section 10.02(d)(iii)(A).

 

  (2)

The Loan.

 

  (3)

The Mortgaged Property.

Borrower Information includes: (i) representations and warranties made in the Loan Documents, (ii) financial statements of Borrower, any SPE Equity Owner, any Designated Entity for Transfers or any Guarantor, and (iii) operating statements and rent rolls with respect to the Mortgaged Property. Borrower Information does not include any information provided directly to Lender or Loan Servicer by a third party such as an appraiser or an environmental consultant.

 

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  (B)

The term “Lender” includes its officers and directors.

 

  (C)

An “Issuer Person” includes all of the following:

 

  (1)

Any Person that has filed the registration statement, if any, relating to the Securitization, and any Affiliate of such Person.

 

  (2)

Any Person acting as issuer, depositor, sponsor and/or in a similar capacity with respect to the Securitization, and any Affiliate of such Person.

 

  (D)

The “Issuer Group” includes all of the following:

 

  (1)

Each director and officer of any Issuer Person.

 

  (2)

Each entity that Controls any Issuer Person within the meaning of Section 15 of the Securities Act or Section 20 of the Securities Exchange Act.

 

  (E)

The “Underwriter Group” includes all of the following:

 

  (1)

Each entity which is acting as an underwriter, manager, placement agent, initial purchaser or in a similar capacity with respect to the Securitization.

 

  (2)

Each entity that Controls any such entity described in Section 10.02(d)(iii)(E)(1) within the meaning of Section 15 of the Securities Act or Section 20 of the Securities Exchange Act and is acting as an underwriter, manager, placement agent, initial purchaser or in a similar capacity with respect to the Securitization.

 

  (3)

The directors and officers of the entities described in Section 10.02(d)(iii)(E)(1) and Section 10.02(d)(iii)(E)(2).

 

  (F)

Indemnified Party” or “Indemnified Parties” means one or more of Lender, Issuer Person, Issuer Group, and Underwriter Group.

 

  (e)

Selection and Direction of Counsel. Counsel selected by Borrower to defend Indemnitees will be subject to the approval of those Indemnitees. In any circumstances in which the indemnity under this Article X applies, Lender may employ its own legal counsel and consultants to prosecute, defend or negotiate any claim or legal or administrative proceeding and Lender, with the prior written consent of Borrower (which will not be unreasonably withheld, delayed or

 

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  conditioned) may settle or compromise any action or legal or administrative proceeding. However, unless an Event of Default has occurred and is continuing, or the interests of Borrower and Lender are in conflict, as determined by Lender in Lender’s Discretion, Lender will permit Borrower to undertake the actions referenced in this Article X so long as Lender approves such action, which approval will not be unreasonably withheld or delayed. Borrower will reimburse Lender upon demand for all costs and expenses incurred by Lender, including all costs of settlements entered into in good faith, consultants’ fees and Attorneys’ Fees and Costs.

 

  (f)

Settlement or Compromise of Claims. Borrower will not, without the prior written consent of those Indemnitees who are named as parties to a claim or legal or administrative proceeding (“Claim”), settle or compromise the Claim if the settlement (i) results in the entry of any judgment that does not include as an unconditional term the delivery by the claimant or plaintiff to Lender of a written release of those Indemnitees, satisfactory in form and substance to Lender, or (ii) may materially and adversely affect Lender, as determined by Lender in Lender’s Discretion.

 

  (g)

Effect of Changes to Loan on Indemnification Obligations. Borrower’s obligation to indemnify the Indemnitees will not be limited or impaired by any of the following, or by any failure of Borrower or any Guarantor to receive notice of or consideration for any of the following:

 

  (i)

Any amendment or modification of any Loan Document.

 

  (ii)

Any extensions of time for performance required by any Loan Document.

 

  (iii)

Any provision in any of the Loan Documents limiting Lender’s recourse to property securing the Indebtedness, or limiting the personal liability of Borrower or any other party for payment of all or any part of the Indebtedness.

 

  (iv)

The accuracy or inaccuracy of any representations and warranties made by Borrower under this Loan Agreement or any other Loan Document.

 

  (v)

The release of Borrower or any other Person, by Lender or by operation of law, from performance of any obligation under any Loan Document.

 

  (vi)

The release or substitution in whole or in part of any security for the Indebtedness.

 

  (vii)

Lender’s failure to properly perfect any Lien or security interest given as security for the Indebtedness.

 

  (h)

Payments by Borrower. Borrower will, at its own cost and expense, do all of the following:

 

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  (i)

Pay or satisfy any judgment or decree that may be entered against any Indemnitee or Indemnitees in any legal or administrative proceeding incident to any matters against which Indemnitees are entitled to be indemnified under this Article X.

 

  (ii)

Reimburse Indemnitees for any expenses paid or incurred in connection with any matters against which Indemnitees are entitled to be indemnified under this Article X.

 

  (iii)

Reimburse Indemnitees for any and all expenses, including Attorneys’ Fees and Costs, paid or incurred in connection with the enforcement by Indemnitees of their rights under this Article X, or in monitoring and participating in any legal or administrative proceeding.

 

  (iv)

Other Obligations. The provisions of this Article X will be in addition to any and all other obligations and liabilities that Borrower may have under applicable law or under other Loan Documents, and each Indemnitee will be entitled to indemnification under this Article X without regard to whether Lender or that Indemnitee has exercised any rights against the Mortgaged Property or any other security, pursued any rights against any Guarantor, or pursued any other rights available under the Loan Documents or applicable law. If Borrower consists of more than one Person, the obligation of those Persons to indemnify the Indemnitees under this Article X will be joint and several. The obligation of Borrower to indemnify the Indemnitees under this Article X will survive any repayment or discharge of the Indebtedness, any foreclosure proceeding, any foreclosure sale, any delivery of any deed in lieu of foreclosure, and any release of record of the Lien of any Security Instrument. Notwithstanding the foregoing, if Lender has never been a mortgagee-in-possession of, or held title to, an Individual Property, Borrower will have no obligation to indemnify the Indemnitees with respect to such Individual Property under this Article X after the earlier of (i) the date of the release of record of the Lien of the applicable Security Instrument by voluntary prepayment in full by Borrower of the applicable Allocated Loan Amount and all other amounts then due and payable pursuant to this Loan Agreement and the other Loan Documents, as applicable, or (ii) payment in full of the Indebtedness on the Maturity Date.

 

  (i)

Reserved.

 

10.03

Reserved.

ARTICLE XI MISCELLANEOUS PROVISIONS.

 

11.01

Waiver of Statute of Limitations, Offsets and Counterclaims. Borrower waives the right to assert any statute of limitations as a bar to the enforcement of this Loan Agreement or the Lien of any Security Instrument or to any action brought to enforce any Loan Document. Borrower waives the right to assert a counterclaim, other than a compulsory

 

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  counterclaim, in any action or proceeding brought against it by Lender or otherwise to offset any obligations to make the payments required by the Loan Documents. No failure by Lender to perform any of its obligations under the Loan Documents will be a valid defense to, or result in any offset against, any payments that Borrower is obligated to make under any of the Loan Documents.

 

11.02

Governing Law; Consent to Jurisdiction and Venue.

 

  (a)

This Loan Agreement, and any Loan Document which does not itself expressly identify the law which is to apply to it, will in all respects including, without limitation, as to matters of construction, validity and performance be governed by the laws of the Commonwealth of Virginia (without regard to choice of law principles), except that at all times the provisions of this Loan Agreement relating solely to the creation, perfection, priority and enforcement of any security interest created pursuant to this Loan Agreement (collectively, “Security Interest Provisions”), that relate to an individual Property Jurisdiction shall be governed by and construed according to the law of the applicable Property Jurisdiction. Notwithstanding the foregoing, for purposes of the application of the Uniform Commercial Code to any collateral held in an account and not subject to another Loan Document specifying applicable law, including, without limitation, any Reserve Funds, the parties agree that such accounts shall be deemed located in the Commonwealth of Virginia.

 

  (b)

Borrower agrees that any controversy arising under or in relation to the Note, the Security Instrument, this Loan Agreement (except for a controversy relating to Security Interest Provisions, which will be governed by and construed according to the law of the applicable Property Jurisdiction and litigated in the applicable Property Jurisdiction) or any other Loan Document (other than any action in respect of the creation, perfection or enforcement of a lien or security interest created pursuant to any Loan Document not governed by the laws of the Commonwealth of Virginia) may be litigated in any Federal or State court in the Commonwealth of Virginia (the “Virginia Courts”). The state and federal courts and authorities with jurisdiction in any applicable Property Jurisdiction will have jurisdiction over all controversies that may arise in respect of the Security Interest Provisions and the creation, perfection or enforcement of a lien or security interest created pursuant to any Loan Document not governed by the laws of the Commonwealth of Virginia. Borrower irrevocably consents to service, jurisdiction and venue of such courts for any such litigation and waives any other venue to which it might be entitled by virtue of domicile, habitual residence or otherwise. Borrower also expressly and irrevocably waives any other objection that Borrower may now or hereafter have to the venue of any suit, action or proceeding brought in connection with any such controversy in any of the Virginia Courts and any claim that any such suit, action, or proceeding brought in any of the Virginia Courts has been brought in an inconvenient forum. However, nothing in this Section 11.02 is intended to limit Lender’s right to bring any suit, action or proceeding relating to matters under this Loan Agreement in any court of any other jurisdiction including, without limitation, any suit, action or proceeding which may be brought in any Property Jurisdiction

 

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  in accordance with the terms of this Loan Agreement or the other Loan Documents. Final judgment in any of the Virginia Courts shall be conclusive and binding on Borrower and may be enforced in any court in which Borrower is subject to jurisdiction by any method permitted by the law of such jurisdiction including, without limitation, a suit upon such judgment provided that service of process is effected as provided herein or as otherwise permitted by applicable laws.

 

11.03

Notice.

 

  (a)

All Notices under or concerning this Loan Agreement will be in writing. Each Notice will be deemed given on the earliest to occur of: (i) the date when the Notice is received by the addressee, (ii) the first Business Day after the Notice is delivered to a recognized overnight courier service, with arrangements made for payment of charges for next Business Day delivery, or (iii) the third Business Day after the Notice is deposited in the United States mail with postage prepaid, certified mail, return receipt requested. Any Notice properly given to an Individual Borrower will be deemed given to all Individual Borrowers. Addresses for Notice are as follows:

 

If to Lender:               

KeyBank National Association

c/o KeyBank Real Estate Capital – Servicing Dept.

11501 Outlook Street, Suite #300

Overland Park, Kansas 66211

Mailcode: KS-01-11-0501

Attention: Servicing Manger

If to Borrower:   

c/o Fortress Investment Group LLC

1345 Avenue of the Americas, 45th Floor

New York, New York 10105

Attention: General Counsel

Lender will endeavor to provide a courtesy copy of any Notice given to Borrower by Lender to the Person at the following address. However, the failure to provide such courtesy copy will not affect the validity or sufficiency of any Notice to Borrower, will not affect Lender’s rights and remedies under this Loan Agreement or any other Loan Document, and will not subject Lender to any claims by or liability to Borrower or any other Person. No Person listed below will be a third-party beneficiary of any of the Loan Documents.

 

Courtesy Copy to:   

Skadden, Arps, Slate, Meagher & Flom LLP

4 Times Square

New York, New York 10036

Attention: Vered Rabia

 

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  (b)

Any party to this Loan Agreement may change the address to which Notices intended for it are to be directed by means of Notice given to the other party in accordance with this Section 11.03. Each party agrees that it will not refuse or reject delivery of any Notice given in accordance with this Section 11.03, that it will acknowledge, in writing, the receipt of any Notice upon request by the other party and that any Notice rejected or refused by it will be deemed for purposes of this Section 11.03 to have been received by the rejecting party on the date so refused or rejected, as conclusively established by the records of the U.S. Postal Service or the courier service.

 

  (c)

Any Notice under the Note and any other Loan Document that does not specify how Notices are to be given will be given in accordance with this Section 11.03.

 

  (d)

Reserved.

 

11.04

Successors and Assigns Bound. This Loan Agreement will bind the respective successors and assigns of Borrower and Lender, and the rights granted by this Loan Agreement will inure to Lender’s successors and assigns.

 

11.05

Joint and Several (and Solidary) Liability. If more than one Person signs this Loan Agreement as Borrower, the obligations of such Persons will be joint and several. Without limiting the foregoing, each Individual Borrower will be jointly and severally liable for the entire amount of the Loan, without regard to any Allocated Loan Amount. For any Individual Property located in Louisiana, if more than one Person signs this Loan Agreement as Borrower, the obligations of such Persons will be joint and several and solidary, and wherever the phrase “joint and several” appears in this Loan Agreement, the phrase is amended to read “joint, several, and solidary.”

 

11.06

Relationship of Parties; No Third Party Beneficiary.

 

  (a)

The relationship between Lender and Borrower will be solely that of creditor and debtor, respectively, and nothing contained in this Loan Agreement will create any other relationship between Lender and Borrower. Nothing contained in this Loan Agreement will constitute Lender as a joint venturer, partner or agent of Borrower, or render Lender liable for any debts, obligations, acts, omissions, representations or contracts of Borrower.

 

  (b)

No creditor of any party to this Loan Agreement and no other Person will be a third party beneficiary of this Loan Agreement or any other Loan Document. Without limiting the generality of the preceding sentence: (i) any arrangement (“Servicing Arrangement”) between Lender and any Loan Servicer for loss sharing or interim advancement of funds will constitute a contractual obligation of such Loan Servicer that is independent of the obligation of Borrower for the payment of the Indebtedness, (ii) Borrower will not be a third party beneficiary of any Servicing Arrangement, and (iii) no payment by the Loan Servicer under any Servicing Arrangement will reduce the amount of the Indebtedness.

 

11.07

Severability; Amendments.

 

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  (a)

The invalidity or unenforceability of any provision of this Loan Agreement will not affect the validity or enforceability of any other provision, and all other provisions will remain in full force and effect. This Loan Agreement contains the entire agreement among the parties as to the rights granted and the obligations assumed in this Loan Agreement.

 

  (b)

This Loan Agreement may not be amended or modified except by a writing signed by the party against whom enforcement is sought.

 

11.08

Disclosure of Information.

 

  (a)

Borrower acknowledges that Lender may provide to third parties with an existing or prospective interest in the servicing, enforcement, evaluation, performance, ownership, purchase, participation or Securitization of the Loan, including any of the Rating Agencies, any entity maintaining databases on the underwriting and performance of commercial mortgage loans, as well as governmental regulatory agencies having regulatory authority over Lender, any and all information which Lender now has or may hereafter acquire relating to the Loan, the Mortgaged Property, Borrower, any SPE Equity Owner or any Guarantor, as Lender determines necessary or desirable and that such information may be included in disclosure documents in connection with a Securitization or syndication of participation interests, including a prospectus, prospectus supplement, offering memorandum, private placement memorandum or similar document (each, a “Disclosure Document”) and also may be included in any filing with the Securities and Exchange Commission pursuant to the Securities Act or the Securities Exchange Act. To the fullest extent permitted under applicable law, Borrower irrevocably waives all rights, if any, to prohibit such disclosure, including any right of privacy.

 

  (b)

Borrower agrees that Lender may publicly use, at Lender’s discretion, the name of the Mortgaged Property, photographs of the Mortgaged Property, and basic transaction information (for example, the number of units in the Mortgaged Property and the Loan Amount) relating to the Loan.

 

11.09

Determinations by Lender. Unless otherwise provided in this Loan Agreement, in any instance where the consent or approval of Lender may be given or is required, or where any determination, judgment or decision is to be rendered by Lender under this Loan Agreement, the granting, withholding or denial of such consent or approval and the rendering of such determination, judgment or decision will be made or exercised by Lender (or its designated representative) at its sole and exclusive option and in its sole and absolute discretion.

 

11.10

Sale of Note; Change in Servicer; Loan Servicing. The Note or a partial interest in the Note (together with this Loan Agreement and the other Loan Documents) may be sold one or more times without prior Notice to Borrower. A sale may result in a change of the Loan Servicer. There also may be one or more changes of the Loan Servicer unrelated to a sale of the Note. If there is a change of the Loan Servicer, Borrower will be given Notice of the

 

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  change. All actions regarding the servicing of the Loan evidenced by the Note, including the collection of payments, the giving and receipt of Notice, inspections of the Mortgaged Property, inspections of books and records, and the granting of consents and approvals, may be taken by the Loan Servicer unless Borrower receives Notice to the contrary. If Borrower receives conflicting Notices regarding the identity of the Loan Servicer or any other subject, any such Notice from Lender will govern.