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Section 1: 8-K (FORM 8-K)

Form 8-K
false 0001610114 0001610114 2020-02-10 2020-02-10

 

 

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): February 10, 2020

 

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)

55 West 46th Street, Suite 2204

New York, New York 10036

(Address of principal executive office)

646-822-3700

(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 (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:

 

Trading

Symbol:

 

Name of each exchange

on which registered:

Common stock, $0.01 par value per share

 

SNR

 

New York Stock Exchange (NYSE)

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 under the Securities Act of 1933 (17 CFR 230.405) or Rule 12b-2 under the Securities Exchange Act of 1934 (17 CFR 240.12b-2).

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.

Amendment to Credit Facility

In connection with the AL/MC Portfolio Disposition (as defined below), on February 10, 2020, New Senior Investment Group Inc. (the “Company”), amended its revolving credit facility with KeyBank National Association (the “Agent”), in its capacity as agent (the “Revolver”). The Revolver is in the amount of $125,000,000 and may be increased up to a maximum aggregate amount of $500,000,000, of which (i) a portion in an amount of 10% of the Revolver may be used for the issuance of letters of credit to the Company, and (ii) a portion in an amount of 10% of the Revolver may be drawn by the Company in the form of swing loans. The Revolver is evidenced by certain agreements (the “Revolver Documents”), including, that certain Credit Agreement dated as of December 13, 2018, as amended by that certain First Amendment to Credit Agreement dated May 10, 2019 and that certain Second Amendment to Credit Agreement, dated February 10, 2020, by and among the Company, as borrower, Agent, the lenders that are parties therein, and KeyBanc Capital Markets Inc., as lead arranger (as so amended, the “Credit Agreement”). The Revolver is secured by nine independent living facilities owned by the Company (the “Borrowing Base Properties”) and the pledge of the equity interests of certain wholly owned subsidiaries of the Company that directly or indirectly own such Borrowing Base Properties (the “Subsidiary Guarantors”).

The Revolver bears interest at a rate per annum equal to, at the Company’s option, (i) the sum of LIBOR plus 2.00% or, in the case of a swing line loan, (ii) the greater of (a) the fluctuating annual rate of interest announced from time to time by the Agent as its “prime rate,” plus 1.00% (b) 1.50% above the effective federal funds rate and (c) the sum of LIBOR for a one-month interest period plus 2.00%. The Revolver is subject to a 0.25% origination fee and unused fees payable to Agent for unused amounts of the Revolver. The Revolver may be prepaid in whole or in part without any termination fees payable to the Agent.

The Revolver Documents contain affirmative and negative covenants that are customary for credit facilities of this type, including, but not limited to, restrictions and limitations on the incurrence of debt and liens, disposition of assets, capital expenditures, distributions and other payments in respect of equity interests, the making of loans and equity investments, mergers, consolidations, liquidations and dissolutions and transactions with affiliates (in each case, subject to various exceptions).

In addition, the Revolver Documents contain customary financial covenants and restrictions for credit facilities of this type, including, among others, requirements to maintain (i) a minimum consolidated tangible net worth, which is subject to change and is initially set at approximately $480 million, (ii) a minimum four quarters’ consolidated interest coverage ratio of not less than 1.50 to 1 prior to the initial maturity date of the Revolver and (iii) a minimum four quarters’ consolidated fixed charge coverage ratio of not less than 1.25 to 1 prior to the initial maturity date of the Revolver.

The Revolver Documents also contain events of default that are customary for credit facilities of this type, including, among others, nonpayment of principal, interest, fees and other amounts when due, failure to perform any term, agreement or covenant under the Revolver Documents (subject to certain exceptions), failure of any representation or warranty to be true in any material respect when made or deemed made, cross default with other material indebtedness, certain bankruptcy events, material judgments, the actual or asserted disavowal, cancellation, termination, revocation or rescission of the Revolver Documents and the occurrence of a change of control.

Pursuant to the Revolver Documents, the Subsidiary Guarantors guaranteed certain of the Company’s obligations, including full repayment of the Revolver.

The foregoing description of the Revolver and the transactions contemplated thereby does not purport to be complete and is qualified in its entirety by reference to the Credit Agreement, a copy of which is filed as Exhibit 10.1 hereto and is incorporated herein by reference.

New Freddie Financing

In connection with the completion of the AL/MC Portfolio Disposition, on February 10, 2020, the Company, through certain of its subsidiaries, obtained mortgage financing comprised of 14 loans in the aggregate amount of $270,015,000 from KeyBank National Association and assigned to Federal Home Loan Mortgage Corporation (the “New Freddie Financing”). The New Freddie Financing is secured by 14 independent living facilities owned by the Company, matures on February 10, 2030, and bears interest at an adjustable rate, adjusted monthly, equal to the sum of the one month ICE LIBOR index rate plus 2.12%. The New Freddie Financing includes an initial interest only period for 48 months after closing. The documents evidencing the New Freddie Financing contain various customary representations and warranties, financial and other covenants and event of default provisions.


The foregoing description of the New Freddie Financing does not purport to be complete and is qualified in its entirety by reference to the full text of the Multifamily Loan and Security Agreement and related Multifamily Note – Floating Rate, copies of which are filed herewith as Exhibit 10.2 and Exhibit 10.3, respectively, and incorporated herein by reference.

Item 1.02. Termination of a Material Definitive Agreement.

The information set forth in Item 2.01 below is incorporated by reference into this Item 1.02.

In connection with the AL/MC Portfolio Disposition, on February 10, 2020, the Company prepaid in full, resulting in the termination of, mortgage financing comprised of 41 loans, including that certain Multifamily Loan and Security Agreement – Seniors Housing, dated as of March 27, 2015 (collectively, referred to as, the “2015 Financing”), by and between NIC 11 Ashford Court Owner LLC, a Delaware limited liability company, as Borrower, and Walker & Dunlop, LLC, as Lender. The Company incurred prepayment fees of approximately $5.6 million related to the 2015 Financing.

Item 2.01. Completion of Acquisition or Disposition of Assets.

On February 10, 2020, various subsidiaries of the Company, as sellers (collectively, the “Seller”), completed the previously announced disposition of a portfolio of 28 senior living facilities, which substantially comprise the Company’s Managed Assisted Living/Memory Care Properties segment, for a gross sale price of $385 million (collectively, the “AL/MC Portfolio Disposition”), pursuant to that certain Purchase and Sale Agreement entered into on October 31, 2019 (the “Sale Agreement”), by and among the Seller and various purchaser parties named therein (collectively, the “Purchasers”). The Purchasers are affiliates of ReNew REIT.

The foregoing description of the AL/MC Portfolio Disposition and the transactions contemplated thereby does not purport to be complete and is qualified in its entirety by reference to the Sale Agreement, a copy of which is filed as Exhibit 10.4 hereto and 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 in Item 1.01 above is incorporated by reference into this Item 2.03.

Item  8.01. Other Events.

On February 10, 2020, the Company issued a press release announcing the completion of the AL/MC Portfolio Disposition, the Revolver amendment and the New Freddie Financing. A copy of the press release is filed as Exhibit 99.1 hereto and is incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits

(b)    Pro forma financial information.    

The following pro forma financial information reflecting the transaction described under Item 2.01 above, as previously filed by the Company in a Current Report on Form 8-K on November 5, 2019, is filed as Exhibit 99.2 to this Form 8-K and is incorporated herein by reference:

  the Company’s unaudited pro forma consolidated balance sheet dated as of September 30, 2019;

  the Company’s unaudited pro forma consolidated statement of operations for the nine months ended September 30, 2019; and

  the Company’s unaudited pro forma consolidated statement of operations for the years ended December 31, 2018, December 31, 2017 and December 31, 2016.

(d)    Exhibits

Exhibit
No.

   

Description

         
 

10.1

   

Second Amendment to Credit Agreement and Other Loan Documents, dated as of February 10, 2020, by and among the Company, as borrower, Agent, the lenders that are parties therein, and KeyBanc Capital Markets Inc., as lead arranger

         
 

10.2*

   

Multifamily Loan and Security Agreement, dated as of February 10, 2020, by and between SNR 24 Bluebird Estates Owner LLC, as Borrower, and KeyBank National Association, as Lender

         
 

10.3*

   

Multifamily Note – Floating Rate, dated as of February 10, 2020, executed by SNR 24 Bluebird Estates Owner LLC in favor of KeyBank National Association

         
 

10.4†

   

Purchase and Sale Agreement, dated October 31, 2019, by and among the Seller and various purchaser parties named therein

         
 

99.1

   

Press release dated February 10, 2020

         
 

99.2

   

Unaudited Pro Forma Financial Information (incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K filed on November 5, 2019)

         
 

104

   

Cover Page Interactive Data File (embedded within the Inline XBRL document)


* In accordance with Instruction 2 to Item 601 of Regulation S-K, the Company has filed only one Multifamily Loan and Security Agreement and the related Multifamily Note, as the other Multifamily Loan and Security Agreements and the related Multifamily Notes are substantially identical in all material respects except as to the borrower thereto, the principal amount and certain property-specific provisions.

† Portions of this exhibit have been omitted pursuant to Rule 601(b)(10)(iv) of Regulation S-K. The omitted information is not material and would likely cause competitive harm to the registrant if publicly disclosed.


SIGNATURES

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: February 11, 2020

 

 

By:

 

/s/ Lori B. Marino

 

 

 

Lori B. Marino

 

 

 

Executive Vice President, General Counsel & Secretary

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Section 2: EX-10.1 (EX-10.1)

EX-10.1

Exhibit 10.1

SECOND AMENDMENT TO CREDIT AGREEMENT AND OTHER LOAN DOCUMENTS

THIS SECOND AMENDMENT TO CREDIT AGREEMENT AND OTHER LOAN DOCUMENTS (this “Amendment”), dated as of February 10, 2020, by and among NEW SENIOR INVESTMENT GROUP INC., a Delaware corporation (“Borrower”), the undersigned parties to this Amendment executing as “Guarantors” (hereinafter referred to individually as “Guarantor” and collectively as “Guarantors”), KEYBANK NATIONAL ASSOCIATION (“KeyBank”), BMO HARRIS BANK N.A. (“BMO”), CAPITAL ONE, NATIONAL ASSOCIATION (“Capital One”), CADENCE BANK, N.A. (“Cadence”), DEUTSCHE BANK AG, NEW YORK BRANCH (“DB”), ROYAL BANK OF CANADA (“RBC”; KeyBank, BMO, Capital One, Cadence, DB and RBC collectively, the “Lenders”), and KeyBank as Agent for itself and the other Lenders from time to time a party to the Credit Agreement (as hereinafter defined) (KeyBank, in its capacity as Agent, is hereinafter referred to as “Agent”).

W I T N E S S E T H:

WHEREAS, the Borrower, Agent, KeyBank and the other Lenders are parties to that certain Credit Agreement dated as of December 13, 2018, as amended by that certain First Amendment to Credit Agreement dated as of May 10, 2019 (as the same may be varied, extended, supplemented, consolidated, replaced, increased, renewed, modified or amended from time to time, the “Credit Agreement”);

WHEREAS, certain of the Guarantors executed and delivered to Agent and the Lenders that certain Unconditional Guaranty of Payment and Performance dated as of December 13, 2018, and certain of the Guarantors have become a party to such Unconditional Guaranty of Payment and Performance pursuant to a Joinder Agreement dated of even date herewith (as the same may be varied, extended, supplemented, consolidated, replaced, increased, renewed, modified or amended from time to time, the “Guaranty”);

WHEREAS, the Borrower and the Guarantors have requested that the Agent and the Lenders make certain modifications to the Credit Agreement and Agent and the undersigned Lenders have consented to such modifications, subject to the execution and delivery of this Amendment.

NOW, THEREFORE, for and in consideration of the sum of TEN and NO/100 DOLLARS ($10.00), and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto do hereby covenant and agree as follows:

1. Definitions. Capitalized terms used in this Amendment, but which are not otherwise expressly defined in this Amendment, shall have the respective meanings given thereto in the Credit Agreement.

2. Modifications of the Credit Agreement. The Borrower, Agent and the Lenders do hereby modify and amend the Credit Agreement as follows:

(a) By deleting in their entirety the definitions of “Adjusted Consolidated EBITDA”, “Adjusted Funds from Operations”, “Applicable Margin”, “Borrowing Base Availability,” “Borrowing Base Property or Borrowing Base Properties”, “Cash Collateral


Agreement”, “Collection Account”, “Consolidated EBITDA”, “Consolidated Interest Expense”, “Fixed Charges” “Management Agreements”, “Manager”, “Maturity Date”, “Potential Collateral” and “Security Documents” appearing in §1.1 of the Credit Agreement, and inserting in lieu thereof the following:

Adjusted Consolidated EBITDA. On any date of determination, the sum of Consolidated EBITDA for (except as provided in §9.2) the four (4) fiscal quarters most recently ended plus (b) non-recurring charges of the Borrower and its Subsidiaries not otherwise added back in the calculation of Consolidated EBITDA less (c) the Capital Reserve for all Real Estate of the Borrower and its Subsidiaries. The calculation of Adjusted Consolidated EBITDA shall be adjusted by Borrower on a pro forma basis reasonably satisfactory to Agent to remove the impact of the ALF Sale, the Borrower Refinancings and the Preferred Securities Repayment.

Adjusted Funds from Operations. With respect to Borrower and its Subsidiaries for a given period, Net Income (or Loss) of such Person computed in accordance with GAAP, excluding (i) gains (losses) from sales of depreciable real estate assets and impairment charges of depreciable real estate, (ii) gains (losses) on extinguishment of debt, (iii) acquisition, transaction and integration expenses, (iv) gains (losses) on lease terminations, (v) non-cash income or expenses and (vi) extraordinary and/or nonrecurring income or expenses, plus real estate related depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures, as set forth in more detail under the definitions and interpretations thereof relative to funds from operations promulgated by the National Association of Real Estate investment Trusts or its successor. The calculation of Adjusted Funds from Operations shall be adjusted by Borrower on a pro forma basis reasonably satisfactory to Agent to remove the impact of the ALF Sale, the Borrower Refinancings and the Preferred Securities Repayment.

Applicable Margin. On any date, the Applicable Margin for LIBOR Rate Loans and Base Rate Loans shall be a percentage per annum as set forth below:

 

Applicable Margin for
LIBOR Rate Loans
    Applicable Margin for
Base Rate Loans
 
  2.00     1.00

Borrowing Base Availability. The Borrowing Base Availability shall be as of any date of determination the lesser of:

(a) the aggregate Borrowing Base Value of all Borrowing Base Properties multiplied by 0.65; and

 

2


(b) The maximum principal amount of Loans and Letter of Credit Liabilities that would not cause the Implied Debt Service Coverage Ratio to be less than:

 

For the period:

  

Implied Debt Service

Coverage Ratio:

From the Second Amendment Effective Date through and including June 30, 2021

   1.20 to 1

From July 1, 2021 through and including December 31, 2022

   1.25 to 1

From January 1, 2023 and thereafter

   1.30 to 1

Notwithstanding the foregoing, (a) if the Borrowing Base Value attributable to a Borrowing Base Property that is encumbered by a Mortgage increases after such property first becomes a Borrowing Base Property, such increased value shall not be included in the calculation of Borrowing Base Value until Borrower increases the coverage under the Title Policy for such Borrowing Base Property (and any tie-in endorsements included in the Title Policies for the other Borrowing Base Properties) to 100% of such increased Borrowing Base Value (or with respect to the Borrowing Base Property commonly known as The Manor at Woodside in Poughkeepsie, New York, to the Manor at Woodside Advance Value as redetermined based on such increased Borrowing Base Value), (b) the Borrowing Base Value attributable to a Borrowing Base Property (other than the Borrowing Base Property commonly known as The Manor at Woodside in Poughkeepsie, New York) shall not exceed the principal amount to which recovery under the applicable Mortgage is contractually limited pursuant to its terms provided that such Mortgage may be amended to increase such limit, and (c) for purposes of determining the Borrowing Base Value attributable to the Borrowing Base Property commonly known as The Manor at Woodside in Poughkeepsie, New York, the Manor at Woodside Advance Value shall not exceed the principal amount to which recovery under the applicable Mortgage for such Borrowing Base Property is contractually limited pursuant to its terms provided that such Mortgage may be amended to increase such limit.

Borrowing Base Property or Borrowing Base Properties. The Real Estate owned by a Subsidiary Guarantor and, if applicable, leased by a Subsidiary Guarantor pursuant to an Operating Lease or managed by a Subsidiary Guarantor pursuant to a Management Agreement, that is security for the Obligations pursuant to the Mortgages.

Cash Collateral Agreement. The First Amended and Restated Cash Collateral Account Agreement, by and among the Borrower, the Subsidiary Guarantors, each Additional Subsidiary Guarantor that may hereafter become a party thereto and Agent, providing for the deposit of revenues from the Borrowing Base Properties into the Collection Account, and the granting of a security interest in and control of such account and any other accounts subject thereto to Agent for the benefit of the Lenders, such agreement to be in form and substance reasonably satisfactory to Agent.

Collection Account. A deposit account maintained at Agent or another depository approved by Agent more particularly described in the Cash Collateral Agreement, or any successor deposit accounts approved by Agent.

 

3


Consolidated EBITDA. For any period, for the Borrower and its Subsidiaries on a consolidated basis (and without double-counting), (a) Net Income (or Loss) of Borrower and its Subsidiaries for such period determined on a consolidated basis (excluding any income or losses from minority interests in the case of the Borrower), in accordance with GAAP excluding acquisition related costs, and exclusive of the following (but only to the extent included in the determination of such Net Income (or Loss)): (i) depreciation and amortization expense; (ii) interest expense and amortization of deferred financing costs; (iii) income tax expense; (iv) acquisition, transaction and integration expenses; (v) non-cash impairment of long lived assets; (vi) non-cash income or expenses; (vii) extraordinary or non-recurring income or expenses; (viii) non-cash stock based compensation; and (ix) extraordinary or non-recurring gains and losses; plus (b) such Person’s pro rata share of Consolidated EBITDA determined pursuant to clause (a) above of its Unconsolidated Affiliates. Consolidated EBITDA shall be adjusted to remove any impact from straight line rent adjustments required under GAAP and amortization of deferred market rent into income pursuant to Statement of Financial Accounting Standards number 141.

Consolidated Interest Expense. As of any date of determination and for any applicable period, with respect to Borrower and its Subsidiaries, without duplication, total interest expense accruing or paid on Indebtedness of Borrower and its Subsidiaries, on a consolidated basis, during such period (including interest expense attributable to Capitalized Leases and amounts attributable to interest incurred under Derivatives Contracts, but excluding, to the extent non-cash, amortization of financing costs and charges), determined in accordance with GAAP, and including (without duplication) the Equity Percentage of the foregoing items for the Unconsolidated Affiliates and non-Wholly-Owned Subsidiaries of Borrower and its Subsidiaries. Consolidated Interest Expense shall not include capitalized interest funded under a construction loan by an interest reserve. For the purposes of §9.7, the calculation of Consolidated Interest Expense shall be adjusted by Borrower on a pro forma basis satisfactory to Agent to adjust for the ALF Sale, the Borrower Refinancings and the Preferred Securities Repayment.

Fixed Charges. As of any date of determination for any applicable period for Borrower and its Subsidiaries, determined on a consolidated basis, an amount equal to the sum (a) Consolidated Interest Expense for such period, plus (b) all regularly scheduled principal payments made with respect to Indebtedness of the Borrower, the Guarantors and their respective Subsidiaries during such period, other than any balloon, bullet or similar principal payment which repays such Indebtedness in full and any voluntary principal prepayments (provided that any such regularly scheduled principal payments that are not payable monthly shall, for purposes of this definition, be treated as if such payment were payable in equal monthly installments commencing on such payment date to and including the month immediately prior to the date of the next such scheduled payment or, if there is no such next scheduled payment, the maturity date therefore), plus (c) all Preferred Distributions paid during such period, plus (d) the Borrower or its Subsidiaries pro rata share (based upon their Equity Percentage in such Unconsolidated Affiliate) of all Fixed Charges from any non-Wholly-Owned Subsidiary and Unconsolidated Affiliate of Borrower and its Subsidiaries. The calculation of Fixed Charges shall be adjusted by Borrower on a pro forma basis satisfactory to Agent to adjust for the ALF Sale, the Borrower Refinancings and the Preferred Securities Repayment.

 

4


Management Agreements. An agreement entered into by any Subsidiary Guarantor pursuant to which it engages a Manager to manage or sub-manage and operate a Healthcare Facility.

Manager. The management company (including any SNR Manager or any sub-manager retained by an SNR Manager) that manages or sub-manages and operates a Healthcare Facility pursuant to a Management Agreement for such Healthcare Facility.

Maturity Date. February 9, 2024, as the same may be extended as provided in §2.12, or such earlier date on which the Loans shall become due and payable pursuant to the terms hereof.

Potential Collateral. Any Real Estate which is not at the time included in the Collateral and which Real Estate, consists of (i) Eligible Real Estate and the related rights under an Operating Lease or Management Agreement with an SNR Manager, if applicable, or (ii) Real Estate which is capable of becoming Eligible Real Estate through the approval of the Required Lenders and the related rights under the Operating Lease, if applicable, and the completion and delivery of Borrowing Base Qualification Documents as required by the Agent and the related rights under an Operating Lease.

Security Documents. Collectively, the Joinder Agreements, the Mortgages, the Assignments of Leases and Rents, the Security Agreements, the Cash Collateral Agreement, the Assignment of Interests, the Acknowledgments, the Indemnity Agreement, the Guaranty, the UCC-1 financing statements, any deposit account control agreements, any deposit account instructions and services agreements (if applicable), and any further collateral assignments or security agreements to the Agent for the benefit of the Lenders.”

(b) By deleting in their entirety the definitions of “Extension Period”, “Holiday Lease Termination” and “LIBOR Termination Date” appearing in §1.1 of the Credit Agreement.

(c) By inserting the following definitions in §1.1 of the Credit Agreement, in the appropriate alphabetical order:

ALF Sale. ALF Sale shall mean the closing of the transactions contemplated pursuant to that certain Purchase and Sale Agreement, dated as of October 31, 2019, as amended from time to time, by and between certain Affiliates of Borrower and the purchasers as set forth on the signature pages thereto.

Assigned Notes. Collectively, the “Note” as defined in each Assignment of Note and Mortgage.

Assignment of Note and Mortgage. Each Assignment of Note and Mortgage dated as of the Second Amendment Effective Date by Deutsche Bank Trust Company Americas, as Trustee for the Registered Holders of Wells Fargo Commercial Mortgage Securities, Inc., Multifamily Mortgage Pass-Through Certificates, Series 2015-KS04, and collectively, both of them.

 

5


BHC Act Affiliate. With respect to any Person, an “affiliate” (as such term is defined under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of such Person.

Borrower Refinancings. Borrower Refinancings shall mean the repayment in full of certain secured financing by Borrower and/or its Subsidiaries on or about February 10, 2020, and the borrowings pursuant to certain new financings entered into concurrently therewith.

Covered Entity. Any of the following: (i) a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. Section 252.82(b); (ii) a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. Section 47.3(b); or (iii) a “covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. Section 382.2(b).

Covered Party. See §35.

Default Right. Default Right shall have the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. Sections 252.81, 47.2 or 382.1, as applicable.

Manor at Woodside Advance Value. The product obtained by multiplying (i) the Borrowing Base Value attributable to the Borrowing Base Property commonly known as The Manor at Woodside in Poughkeepsie, New York, by (ii) 0.65.

Preferred Securities Repayment. Preferred Securities Repayment shall mean the redemption of the Preferred Securities issued in connection with the Internalization, if and when such redemption is made after the Second Amendment Effective Date.

QFC. QFC shall have the meaning assigned to the term “qualified financial contract” in, and shall be interpreted in accordance with, 12 U.S.C. 5390(c)(8)(D).

QFC Credit Support. See §35.

Second Amendment Effective Date. February 10, 2020.

Security Agreement. The security agreement or agreements from an SNR Manager or the indirect owners thereof as required by Agent to the Agent for the benefit of the Lenders covering assets of such SNR Manager, each such security agreement to be in form and substance satisfactory to the Agent.

SNR Manager. Each Wholly-Owned Subsidiary of Borrower that is a Manager of a Borrowing Base Property as to which there is no Operating Lease, and which is managed pursuant to a Management Agreement approved by the Agent. Each SNR Manager shall be a Subsidiary Guarantor.

 

6


Supported QFC. See §35.

U.S. Special Resolution Regimes. See §35.”

(d) By inserting the following as §1.2(p) of the Credit Agreement:

“(p) Agent does not warrant or accept any responsibility for, and shall not have any liability with respect to, the administration, submission or any other matter related to the London interbank offered rate or other rates in the definition of “LIBOR” or with respect to any alternative or successor rate thereto, or replacement rate therefor or thereof, including, without limitation, whether the composition or characteristics of any such alternative, successor or replacement reference rate, as it may or may not be adjusted pursuant to §4.15, will be similar to, or produce the same value or economic equivalence of, LIBOR or have the same volume or liquidity as did the London interbank offered rate prior to its discontinuance or unavailability.”

(e) By deleting the amount “$300,000,000.00” appearing in the fourth (4th) line of §2.11(a) of the Credit Agreement, and inserting in lieu thereof the amount “$500,000,000.00”.

(f) By deleting in its entirety §2.12 of the Credit Agreement, and inserting in lieu thereof the following:

“2.12 Extension of Maturity Date.

(a) The Borrower shall have the one-time right and option to extend the Maturity Date to August 9, 2024 upon satisfaction of the following conditions precedent, which must be satisfied prior to the effectiveness of any extension of the Maturity Date:

(i) Extension Request. The Borrower shall deliver revocable written notice of such request (an “Extension Request”) to the Agent not earlier than the date which is one hundred twenty (120) days and not later than the date which is sixty (60) days prior to the Maturity Date (as determined without regard to such extension); provided Borrower shall be responsible for any out-of-pocket costs and expenses of Agent incurred in connection with the Extension Request.

(ii) Payment of Extension Fee. The Borrower shall pay to the Agent for the pro rata accounts of the Lenders in accordance with their respective Commitments an extension fee in an amount equal to seven and one-half (7.50) basis points on the Total Commitment in effect on the Maturity Date (as determined without regard to such extension), which fee shall, when paid, be fully earned and non-refundable under any circumstances.

(iii) No Default. On the date the Extension Request is given and on the Maturity Date (as determined without regard to such extension) there shall exist no Default or Event of Default.

 

7


(iv) Representations and Warranties. The representations and warranties made by the Borrower and the Guarantors in the Loan Documents or otherwise made by or on behalf of the Borrower and the Guarantors in connection therewith or after the date thereof shall have been true and correct in all material respects when made and shall also be true and correct in all material respects on the date the Extension Request is given and on the Maturity Date (as determined without regard to such extension), except to the extent of changes resulting from transactions permitted by the Loan Documents (it being understood and agreed that any representation or warranty which by its terms is made as of a specified date shall be required to be true and correct only as of such specified date).

(v) Pro Forma Covenant Compliance. Borrower shall have delivered to Agent evidence reasonably satisfactory to Agent that Borrower will be in pro forma compliance with the Borrowing Base Availability and the covenants set forth in §9 immediately after giving effect to the extension.

(vi) Appraisals. Agent shall have obtained at Borrower’s expense new Appraisals or an update to the existing Appraisals of the Borrowing Base Properties and determined the current Appraised Value of the Borrowing Base Properties.

(vii) Beneficial Ownership Certification. If requested by the Agent or any Lender, Borrower shall have delivered, at least two (2) Business Days prior to the Maturity Date (as determined without regard to such extension), to the Agent (and any such Lender) a completed and executed Beneficial Ownership Certification.

(viii) Additional Documents and Expenses. The Borrower and the Guarantors shall execute and deliver to Agent and Lenders such additional consents and affirmations and other documents (including, without limitation, amendments to the Security Documents) as the Agent may reasonably require to evidence such extension and maintain the effectiveness of the Loan Documents and the priority and enforceability thereof, and the Borrower shall pay the cost of any legal fees, title endorsement or update thereto or any update of UCC searches, recordings costs and fees, and any and all intangible taxes or other documentary or mortgage taxes, assessments or charges or any similar fees, taxes or expenses which are required to be paid in connection with such extension.

(b) Provided that Borrower has validly extended the Maturity Date pursuant to §2.12(a), Borrower shall have the one-time right and option to extend the Maturity Date to February 10, 2025 upon satisfaction of the following conditions precedent, which must be satisfied prior to the effectiveness of any extension of the Maturity Date:

(i) Extension Request. The Borrower shall deliver an Extension Request to the Agent not earlier than the date which is one hundred twenty (120) days and not later than the date which is sixty (60) days prior to the Maturity Date (as determined without regard to such extension); provided Borrower shall be responsible for any out-of-pocket costs and expenses of Agent incurred in connection with the Extension Request.

 

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(ii) Payment of Extension Fee. The Borrower shall pay to the Agent for the pro rata accounts of the Lenders in accordance with their respective Commitments an extension fee in an amount equal to seven and one-half (7.5) basis points on the Total Commitment in effect on the Maturity Date (as determined without regard to such extension), which fee shall, when paid, be fully earned and non-refundable under any circumstances.

(iii) No Default. On the date the Extension Request is given and on the Maturity Date (as determined without regard to such extension) there shall exist no Default or Event of Default.

(iv) Representations and Warranties. The representations and warranties made by the Borrower and the Guarantors in the Loan Documents or otherwise made by or on behalf of the Borrower and the Guarantors in connection therewith or after the date thereof shall have been true and correct in all material respects when made and shall also be true and correct in all material respects on the date the Extension Request is given and on the Maturity Date (as determined without regard to such extension), except to the extent of changes resulting from transactions permitted by the Loan Documents (it being understood and agreed that any representation or warranty which by its terms is made as of a specified date shall be required to be true and correct only as of such specified date).

(v) Pro Forma Covenant Compliance. Borrower shall have delivered to Agent evidence reasonably satisfactory to Agent that Borrower will be in pro forma compliance with the Borrowing Base Availability and the covenants set forth in §9 immediately after giving effect to the extension.

(vi) Beneficial Ownership Certification. If requested by the Agent or any Lender, Borrower shall have delivered, at least two (2) Business Days prior to the Maturity Date (as determined without regard to such extension), to the Agent (and any such Lender) a completed and executed Beneficial Ownership Certification.

(vii) Additional Documents and Expenses. The Borrower and the Guarantors shall execute and deliver to Agent and Lenders such additional consents and affirmations and other documents (including, without limitation, amendments to the Security Documents) as the Agent may reasonably require to evidence such extension and maintain the effectiveness of the Loan Documents and the priority and enforceability thereof, and the Borrower shall pay the cost of any legal fees, title endorsement or update thereto or any update of UCC searches, recordings costs and fees, and any and all intangible taxes or other documentary or mortgage taxes, assessments or charges or any similar fees, taxes or expenses which are required to be paid in connection with such extension.”

(g) By deleting the word “In” appearing in the first (1st) sentence of §4.5 of the Credit Agreement, and inserting in lieu thereof the words “Subject to §4.15, in”.

 

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(h) By deleting in its entirety §4.15 of the Credit Agreement, and inserting in lieu thereof the following:

Ҥ4.15 Effect of Benchmark Transition Event.

(a) Benchmark Replacement. Notwithstanding anything to the contrary herein or in any other Loan Document, (i) upon the determination of the Agent (which shall be conclusive absent manifest error) that a Benchmark Transition Event has occurred or (ii) upon the occurrence of an Early Opt-in Election, as applicable, the Agent and the Borrower may amend this Agreement to replace LIBOR with a Benchmark Replacement, by a written document executed by the Borrower and the Agent, subject to the requirements of this §4.15. Notwithstanding the requirements of §27 or anything else to the contrary herein or in any other Loan Document, any such amendment with respect to a Benchmark Transition Event will become effective and binding upon the Agent, the Borrower and the Lenders at 5:00 p.m. on the fifth (5th) Business Day after the Agent has posted such proposed amendment to all Lenders and the Borrower so long as the Agent has not received, by such time, written notice of objection to such amendment from Lenders comprising the Required Lenders, and any such amendment with respect to an Early Opt-in Election will become effective and binding upon the Agent, the Borrower and the Lenders on the date that Lenders comprising the Required Lenders have delivered to the Agent written notice that such Required Lenders accept such amendment. No replacement of LIBOR with a Benchmark Replacement pursuant to this §4.15 will occur prior to the applicable Benchmark Transition Start Date.

(b) Benchmark Replacement Conforming Changes. In connection with the implementation of a Benchmark Replacement, the Agent will have the right to make Benchmark Replacement Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such Benchmark Replacement Conforming Changes will become effective without any further action or consent of any other party to this Agreement or the other Loan Documents.

(c) Notices; Standards for Decisions and Determinations. The Agent will promptly notify the Borrower and the Lenders in writing of (i) any occurrence of a Benchmark Transition Event or an Early Opt-in Election, as applicable, and its related Benchmark Replacement Date and Benchmark Transition Start Date, (ii) the implementation of any Benchmark Replacement, (iii) the effectiveness of any Benchmark Replacement Conforming Changes and (iv) the commencement or conclusion of any Benchmark Unavailability Period. Any determination, decision or election that may be made by the Agent or Lenders pursuant to this §4.15, including, without limitation, any determination with respect to a tenor, comparable replacement rate or adjustment, or implementation of any Benchmark Replacement Rate Conforming Changes, or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action, will be conclusive and binding on all parties hereto or to the other Loan Documents absent manifest error and may be made in its or their sole discretion and without consent from any other party hereto, except, in each case, as expressly required pursuant to this §4.15 and shall not be a basis of any claim of liability of any kind or nature by any party hereto or thereto, all such claims being hereby waived individually be each party hereto and thereto.

 

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(d) Benchmark Unavailability Period. Upon the Borrower’s receipt of notice of the commencement of a Benchmark Unavailability Period, the Borrower may revoke any request for a borrowing of Loans that is to be a LIBOR Rate Loan, conversion to or continuation of LIBOR Rate Loans to be made, converted or continued during any Benchmark Unavailability Period and, failing that, the Borrower will be deemed to have converted any such request into a request for a borrowing of or conversion to Base Rate Loans. During any Benchmark Unavailability Period, the components of Base Rate based upon LIBOR will not be used in any determination of Base Rate.

(e) Certain Defined Terms. As used in this §4.15:

“Benchmark Replacement” means the sum of: (a) the alternate benchmark rate (which may include Term SOFR) that has been selected by the Agent and the Borrower giving due consideration to (i) any selection or recommendation of a replacement rate or the mechanism for determining such a rate by the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention for determining a rate of interest as a replacement to LIBOR for U.S. dollar-denominated syndicated credit facilities at such time and (b) the Benchmark Replacement Adjustment; provided that, if the Benchmark Replacement as so determined would be less than zero, the Benchmark Replacement will be deemed to be zero for the purposes of this Agreement.

“Benchmark Replacement Adjustment” means, with respect to any replacement of LIBOR with an Unadjusted Benchmark Replacement for each applicable Interest Period, the spread adjustment, or method for calculating or determining such spread adjustment (which may be a positive or negative value or zero) that has been selected by the Agent and the Borrower giving due consideration to (i) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of LIBOR with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of LIBOR with the applicable Unadjusted Benchmark Replacement for U.S. dollar-denominated syndicated credit facilities at such time.

“Benchmark Replacement Conforming Changes” means, with respect to any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “Base Rate,” the definition of “Interest Period,” timing and frequency of determining rates and making payments of interest and other administrative matters) that the Agent decides may be appropriate to reflect the adoption and implementation of such Benchmark Replacement and to permit the administration thereof by the Agent in a manner substantially consistent with market practice (or, if the Agent decides that adoption of any portion of such market practice is not administratively feasible or if the Agent determines that no market practice for the administration of the Benchmark Replacement exists, in such other manner of administration as the Agent decides is reasonably necessary in connection with the administration of this Agreement).

 

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“Benchmark Replacement Date” means the earlier to occur of the following events with respect to LIBOR:

(1) in the case of clause (1) or (2) of the definition of “Benchmark Transition Event,” the later of (a) the date of the public statement or publication of information referenced therein and (b) the date on which the administrator of LIBOR permanently or indefinitely ceases to provide LIBOR; or

(2) in the case of clause (3) of the definition of “Benchmark Transition Event,” the date of the public statement or publication of information referenced therein.

“Benchmark Transition Event” means the occurrence of one or more of the following events with respect to LIBOR:

(1) a public statement or publication of information by or on behalf of the administrator of LIBOR announcing that such administrator has ceased or will cease to provide LIBOR, permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide LIBOR;

(2) a public statement or publication of information by the regulatory supervisor for the administrator of LIBOR, the U.S. Federal Reserve System, an insolvency official with jurisdiction over the administrator for LIBOR, a resolution authority with jurisdiction over the administrator for LIBOR or a court or an entity with similar insolvency or resolution authority over the administrator for LIBOR, which states that the administrator of LIBOR has ceased or will cease to provide LIBOR permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide LIBOR; or

(3) a public statement or publication of information by the regulatory supervisor for the administrator of LIBOR or a Relevant Governmental Body announcing that LIBOR is no longer representative.

“Benchmark Transition Start Date” means (a) in the case of a Benchmark Transition Event, the earlier of (i) the applicable Benchmark Replacement Date and (ii) if such Benchmark Transition Event is a public statement or publication of information of a prospective event, the 90th day prior to the expected date of such event as of such public statement or publication of information (or if the expected date of such prospective event is fewer than 90 days after such statement or publication, the date of such statement or publication) and (b) in the case of an Early Opt-in Election, the date specified by the Agent or the Required Lenders, as applicable, by notice to the Borrower, the Agent (in the case of such notice by the Required Lenders) and the Lenders.

 

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“Benchmark Unavailability Period” means, if a Benchmark Transition Event and its related Benchmark Replacement Date have occurred with respect to LIBOR and solely to the extent that LIBOR has not been replaced with a Benchmark Replacement, the period (x) beginning at the time that such Benchmark Replacement Date has occurred if, at such time, no Benchmark Replacement has replaced LIBOR for all purposes hereunder in accordance with this §4.15 and (y) ending at the time that a Benchmark Replacement has replaced LIBOR for all purposes hereunder pursuant to this §4.15.

“Early Opt-in Election” means the occurrence of:

(1) a determination by the Agent that U.S. dollar-denominated syndicated credit facilities being executed at such time, or that include language similar to that contained in this §4.15 are being executed or amended, as applicable, to incorporate or adopt a new benchmark interest rate to replace LIBOR, and

(2) the election by the Agent to declare that an Early Opt-in Election has occurred and the provision by the Agent of written notice of such election to the Borrower and the Lenders.

“Federal Reserve Bank of New York’s Website” means the website of the Federal Reserve Bank of New York at http://www.newyorkfed.org, or any successor source.

“Relevant Governmental Body” means the Federal Reserve Board and/or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Federal Reserve Board and/or the Federal Reserve Bank of New York or any successor thereto, including without limitation the Alternative Reference Rates Committee.

“SOFR” with respect to any day means the secured overnight financing rate published for such day by the Federal Reserve Bank of New York, as the administrator of the benchmark, (or a successor administrator) on the Federal Reserve Bank of New York’s Website.

“Term SOFR” means the forward-looking term rate based on SOFR that has been selected or recommended by the Relevant Governmental Body.

“Unadjusted Benchmark Replacement” means the Benchmark Replacement excluding the Benchmark Replacement Adjustment.”

(i) By deleting in their entirety §§5.3(b) and (d) of the Credit Agreement, and inserting in lieu thereof the following:

“(b) such Real Estate shall be owned in fee simple by a Wholly-Owned Subsidiary of the Borrower and, if leased, is leased by such Subsidiary pursuant to an Operating Lease to a TRS Lessee, or if not leased to a TRS Lessee, is managed by an SNR Manager, and said Wholly-Owned Subsidiary, TRS Lessee, SNR Manager, as applicable, and any other Persons required by §5.4 shall have executed a Joinder Agreement and satisfied the conditions of §5.4;

 

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(d) the Borrower, its Wholly-Owned Subsidiary, TRS Lessee, SNR Manager, as applicable, and any other Wholly-Owned Subsidiary of Borrower owning an interest (or Equity Interest) therein, as applicable, which is the owner and/or lessee (under an Operating Lease) and/or manager (under a Management Agreement) of the Real Estate and, as applicable, the owner directly or indirectly of an Equity Interest in such Persons, as applicable, shall have executed and delivered to the Agent all Borrowing Base Qualification Documents, all of which instruments, documents or agreements shall be in form and substance reasonably satisfactory to the Agent;”

(j) By deleting in its entirety the first (1st) sentence of §5.4(a) of the Credit Agreement, and inserting in lieu thereof the following:

“In the event that the Borrower shall request that certain Real Estate owned by a Wholly-Owned Subsidiary of the Borrower be included as a Borrowing Base Property as contemplated by §5.3 and such Real Estate is included as a Borrowing Base Property in accordance with the terms hereof, the Borrower shall, as a condition to such Real Estate being included as a Borrowing Base Property, cause (i) each such Wholly-Owned Subsidiary of Borrower that owns such Real Estate, any TRS Lessee that leases such Real Estate under an Operating Lease and any SNR Manager that manages such Real Estate under a Management Agreement and (ii) each other Wholly-Owned Subsidiary of Borrower, TRS Lessee or SNR Manager that owns a direct or indirect interest in any of such Subsidiaries, to execute and deliver to the Agent a Joinder Agreement, and such Subsidiary shall become a Guarantor hereunder and thereunder.”

(k) By deleting the words “owned or leased” appearing in the first (1st) line of §5.4(b) and the seventh (7th) line of §6.1(b) of the Credit Agreement, and inserting in lieu thereof the words “owned, leased or managed”.

(l) By deleting the words “owner or lessee” appearing in §5.4(c)(iii) of the Credit Agreement, and inserting in lieu thereof the words “owner, lessee or manager”.

(m) By deleting in its entirety the introductory paragraph of §5.5 of the Credit Agreement, and inserting in lieu thereof the following:

“Provided no Default or Event of Default shall have occurred hereunder and be continuing (or would exist immediately after giving effect to the transactions contemplated by this §5.5), the Agent shall release a Borrowing Base Property and the personal property solely used on or with respect to such Borrowing Base Property pledged under the Mortgage or Security Agreement applicable thereto from the Mortgage, Assignment of Leases and Rents and Security Agreement and the related Equity Interests in the owner, lessee or manager of such Borrowing Base Property pledged pursuant to the Assignment of Interests (provided that such Person does not directly or indirectly own, lease or manage another Borrowing Base Property) upon the request of the Borrower in connection with a sale or other permanent disposition or refinancing of such Borrowing Base Property or collateral substitution to cure a Default as provided in §12.2, subject to and upon the following terms and conditions:”

 

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(n) By inserting the following to the end of §7.13(b) of the Credit Agreement:

“Agent may condition the approval of any Management Agreement with an SNR Manager on the SNR Manager becoming a Guarantor and satisfying the requirements in §5.4 and by becoming a party to such Security Documents and such other documents, opinions and certificates as Agent may require.”

(o) By deleting in their entirety §§7.20(a)(i), (iii), (vi) and (x) of the Credit Agreement, and inserting in lieu thereof the following:

“(i) the Eligible Real Estate shall be owned one hundred percent (100%) in fee simple by a Subsidiary Guarantor and, if leased, is leased to a Subsidiary Guarantor that is a TRS Lessee pursuant to an Operating Lease (and if not leased to a Subsidiary Guarantor that is a TRS Lessee, then is managed by an SNR Manager that is a Subsidiary Guarantor pursuant to a Management Agreement), free and clear of all Liens other than the Liens permitted by §8.2(ix), and such Eligible Real Estate and all assets of the TRS Lessee shall not have applicable to it any negative pledge or restriction on the sale, pledge, transfer, mortgage or assignment of such property (including any restrictions contained in any applicable organizational documents);

(iii) the only assets of such Subsidiary Guarantor (including the TRS Lessee and SNR Manager, as applicable) shall be the Eligible Real Estate included in the calculation of the Borrowing Base Availability and as a Borrowing Base Property together with related fixtures and personal property;

(vi) such Eligible Real Estate is (1) managed (or if there is an SNR Manager, sub-managed) by a third party manager approved by the Agent; and (2) operated under a Management Agreement reasonably satisfactory to the Agent;

(x) no more than twenty percent (20%) of the total Borrowing Base Availability shall be attributable to Borrowing Base Properties which are not ILFs or ALFs owned by a Subsidiary Guarantor and leased pursuant to an Operating Lease to a Subsidiary Guarantor or managed by an SNR Manager that is a Subsidiary Guarantor under a Management Agreement (notwithstanding the foregoing, a failure to satisfy the requirements of this clause (x) shall not result in any such Real Estate not being included as a Borrowing Base Property, but any such Borrowing Base Availability in excess of such limitation shall be excluded for purposes of calculating Borrowing Base Availability and Borrowing Base Value and the associated Net Operating Income and Adjusted Net Operating Income corresponding thereto shall be similarly excluded);”

(p) By inserting the following as §7.26 of the Credit Agreement:

Ҥ7.26 Radon Testing. The phase I environmental site assessment for the Borrowing Base Property commonly known as Chateau Brickyard located at 3080 S Richmond Street, Salt Lake City, Utah has identified that laboratory results for radon gas concentration indicate that levels of radon gas in Unit 107 at such Borrowing Base Property are above the action level of 4.0 pCi/l, as established by

 

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the EPA. On or before the date that is 120 days following the Second Amendment Effective Date, Borrower shall (a) engage an environmental consultant reasonably acceptable to the Agent to perform additional long-term radon sampling (for at least 91 days) in Unit 107 and (b) deliver the report of such environmental consultant (including the test results) to Agent. Borrower shall undertake such additional action, including remedial action, as Agent may reasonably require if the radon level remains elevated above the action level described above.”

(q) By deleting in its entirety §8.7(a) of the Credit Agreement, and inserting in lieu thereof the following:

“(a) The Borrower shall not pay for the period of the four (4) consecutive fiscal quarters most recently ended any Distribution to its partners, shareholders, members or other owners, to the extent that the aggregate amount of such Distribution paid, when added to the aggregate amount of all other Distributions paid in such period, exceeds ninety-five percent (95%) of Adjusted Funds from Operations for such period; provided that the limitations contained in this §8.7(a) shall not preclude Distributions in an amount equal to the minimum distributions required under the Code to maintain the REIT Status of the Borrower, as evidenced by a certification of the principal financial or accounting officer of the Borrower containing calculations in detail reasonably satisfactory in form and substance to the Agent. For the purposes of calculating compliance with this §8.7(a), Distributions shall be calculated (i) for the fiscal quarter ending March 31, 2020, by multiplying the Distributions for the period from January 1, 2020 through and including March 31, 2020 by four (4), (ii) for the fiscal quarter ending June 30, 2020, by multiplying the Distributions for the period from January 1, 2020 through and including June 30, 2020, by two (2), (iii) for the fiscal quarter ending September 30, 2020, by multiplying the Distributions for the period from January 1, 2020 through and including September 30, 2020 by one and one-third (1.33), and (iv) for each fiscal quarter thereafter, Distributions shall be calculated for the prior four (4) consecutive fiscal quarters most recently ended.”

(r) By deleting in their entirety §§9.2 and 9.3 of the Credit Agreement, and inserting in lieu thereof the following:

“§9.2 Adjusted Consolidated EBITDA to Fixed Charges. The Borrower will not at any time permit the ratio of Adjusted Consolidated EBITDA to be less than 1.25 to 1. Compliance with this §9.2 shall be calculated: (i) for the fiscal quarter ending March 31, 2020, by using Adjusted Consolidated EBITDA and Fixed Charges for the period from January 1, 2020 through and including March 31, 2020, (ii) for the fiscal quarter ending June 30, 2020, by using Adjusted Consolidated EBITDA and Fixed Charges for the period from January 1, 2020 through and including June 30, 2020, (iii) for the fiscal quarter ending September 30, 2020, by using Adjusted Consolidated EBITDA and Fixed Charges for the period from January 1, 2020 through and including September 30, 2020, and (iv) for each fiscal quarter thereafter, by using Adjusted Consolidated EBITDA and Fixed Charges for the prior four (4) consecutive fiscal quarters most recently ended.

 

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§9.3 Minimum Consolidated Tangible Net Worth. The Borrower will not at any time permit Consolidated Tangible Net Worth to be less than the sum of (i) $480,328,188.00, plus (ii) eighty percent (80%) of the sum of any additional Net Offering Proceeds after the date of this Agreement.”

(s) By inserting the following as §9.7 of the Credit Agreement:

“§9.7 Adjusted Consolidated EBITDA to Consolidated Interest Expense. The Borrower will not at any time permit the ratio of Adjusted Consolidated EBITDA determined for the most recently ended four (4) fiscal quarters to Consolidated Interest Expense determined for the most recently ended four (4) fiscal quarters to be less than the following:

 

For the Period:

  

Ratio

From the Second Amendment Effective Date and continuing through and including February 9, 2024

   1.50 to 1

From February 10, 2024 and continuing thereafter”

   1.60 to 1

(t) By inserting the following as §35 of the Credit Agreement:

Ҥ35. ACKNOWLEDGEMENT REGARDING ANY SUPPORTED QFCs.

To the extent that the Loan Documents provide support, through a guarantee or otherwise, for a Derivatives Contract or any other agreement or instrument that is a QFC (such support, “QFC Credit Support” and each such QFC a “Supported QFC”), the parties acknowledge and agree as follows with respect to the resolution power of the Federal Deposit Insurance Corporation under the Federal Deposit Insurance Act and Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (together with the regulations promulgated thereunder, the “U.S. Special Resolution Regimes”) in respect of such Supported QFC and QFC Credit Support (with the provisions below applicable notwithstanding that the Loan Documents and any Supported QFC may in fact be stated to be governed by the laws of the State of New York and/or of the United States or any other state of the United States):

In the event a Covered Entity that is party to a Supported QFC (each, a “Covered Party”) becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer of such Supported QFC and the benefit of such QFC Credit Support (and any interest and obligation in or under such Supported QFC and such QFC Credit Support, and any rights in property securing such Supported QFC or such QFC Credit Support) from such Covered Party will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if the Supported QFC and such QFC Credit Support (and any such interest, obligation and rights in property) were governed by the laws of the United States or a state of the United States. In the event a Covered Party or a BHC Act Affiliate of a Covered Party becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under the Loan Documents that might

 

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otherwise apply to such Supported QFC or any QFC Credit Support that may be exercised against such Covered Party are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if the Supported QFC and the Loan Documents were governed by the laws of the United States or a state of the United States. Without limitation of the foregoing, it is understood and agreed that rights and remedies of the parties with respect to a Defaulting Lender shall in no event affect the rights of any Covered Party with respect to a Supported QFC or any QFC Credit Support.”

(u) By inserting the following as §36 of the Credit Agreement:

Ҥ36. CONSOLIDATION, AMENDMENT AND RESTATEMENT OF ASSIGNED NOTES.

By execution of this Agreement, the Assigned Notes are being consolidated, amended, restated and bifurcated into the Revolving Credit Notes delivered as of the date of this Amendment having an aggregate principal face amount of $125,000,000.00. Borrower hereby expressly assumes and agrees to perform all covenants, agreements, promises, duties, obligations and liabilities of the obligors under the Assigned Notes, and agrees to be bound by all of the terms and conditions of the Assigned Notes as if Borrower had been specifically named therein as the original borrower or maker thereunder. Such assumption is absolute and unconditional, is not subject to any defenses, waivers, claims or offsets nor may it be affected or impaired by any agreement, condition, statement or representation of Agent, Lender or any other Person or any failure to perform the same, and Borrower hereby relinquishes, waives and releases any and all such defenses, claims, offsets and causes of action.”

(v) By deleting in its entirety the form of Revolving Credit Note attached to the Credit Agreement as Exhibit B, and inserting in lieu thereof Exhibit B-1 attached hereto.

(w) By deleting in its entirety the form of Compliance Certificate calculation template included as part of Exhibit G attached to the Credit Agreement, and inserting in lieu thereof the template attached hereto as Exhibit G-1.

(x) By deleting in its entirety the Borrowing Base worksheet included as part of Exhibit H to the Credit Agreement, and inserting in lieu thereof the worksheet attached hereto as Exhibit H-1.

(y) By deleting in their entirety subparagraphs (b), (c) and (m) of Schedule 5.3 to the Credit Agreement, and inserting in lieu thereof the following:

“(b) Security Documents. A Mortgage, Assignment of Leases and Rents, Assignment of Interests, Security Agreement, Acknowledgment and such other Security Documents relating to such Real Estate and the Equity Interests in the Persons that directly or indirectly own, lease or manage such Real Estate, including any amendments to or additional Security Documents, in order to grant to the Agent, for the benefit of the Lenders, a first priority perfected lien and security interest (subject to any Liens expressly permitted with respect thereto by §8.2) in such Borrowing Base Property, all assets of the TRS Lessee and SNR

 

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Manager (and indirect owners thereof as required by the Agent) and such Equity Interests in such Persons, if any, duly executed and delivered by the respective parties thereto (which shall include the delivery to Agent of certificates evidencing such Equity Interests together with such transfer powers or assignments as the Agent may reasonably require), and the Agent shall have recorded such Security Documents, amendments, UCC financing statements or amendments thereto as the Agent may reasonably require.

(c) Authority Documents. If such Real Estate is owned, leased or managed by a Subsidiary Guarantor, such organizational and formation documents of such Subsidiary Guarantor as the Agent shall require.

(m) Payment Direction Letter. Borrower shall deliver a payment direction letter substantially in the form of the payment direction letter delivered to the TRS Lessee or other tenant on the Closing Date (or if delivered to SNR Manager, in such form with such changes as Agent may reasonably require), notifying and advising each TRS Lessee or other tenant or SNR Manager under a Lease of a Borrowing Base Property or SNR Manager to send directly to the Collection Account when due all payments of rent, fees or any other item payable to Borrower or any Subsidiary Guarantors under such Leases.”

3. Modification of the Guaranty. Guarantors, Agent and Lenders do hereby modify and amend the Guaranty as follows:

(a) By deleting the words “Revolving Credit Notes” appearing in the second (2nd) line of paragraph (a) of the Guaranty on page 1 thereof, and inserting in lieu thereof the words “‘Revolving Credit Notes’ (for the avoidance of doubt as defined in the Credit Agreement)”; and

(b) By deleting the amount “$300,000,000.00” appearing in the last sentence of Section 3 of the Guaranty and inserting in lieu thereof the amount “$500,000,000.00.”

4. References to Credit Agreement and Guaranty. All references in the Loan Documents to the Credit Agreement and the Guaranty shall be deemed a reference to the Credit Agreement and the Guaranty as modified and amended herein.

5. Consent of Guarantors. By execution of this Amendment, Guarantors hereby expressly consent to the modifications and amendments relating to the Credit Agreement and the Guaranty as set forth herein and the execution and delivery of any other agreements contemplated hereby, and Borrower and Guarantors hereby acknowledge, represent and agree that the Credit Agreement, the Guaranty, and the other Loan Documents as modified and amended herein, remain in full force and effect and constitute the valid and legally binding obligation of Borrower and Guarantors, respectively, enforceable against such Persons in accordance with their respective terms, except as enforceability is limited by bankruptcy, insolvency, reorganization, moratorium or other laws relating to or affecting generally the enforcement of creditors’ rights and the effect of general principles of equity, and that the Guaranty extends to and applies to the foregoing documents as modified and amended.

 

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6. Representations. Borrower and Guarantors represent and warrant to Agent and the Lenders as follows as of the date of this Amendment:

(a) Authorization. The execution, delivery and performance by the Borrower and the Guarantors of this Amendment and any other agreements contemplated hereby or delivered in connection herewith and the transactions contemplated hereby and thereby (i) are within the authority of Borrower and Guarantors, (ii) have been duly authorized by all necessary proceedings on the part of such Persons, (iii) do not and will not conflict with or result in any breach or contravention of any provision of law, statute, rule or regulation to which any of such Persons is subject or any judgment, order, writ, injunction, license or permit applicable to such Persons, (iv) do not and will not conflict with or constitute a default (whether with the passage of time or the giving of notice, or both) under any provision of the partnership agreement, operating agreement, articles of incorporation or other charter documents or bylaws of, or any agreement or other instrument binding upon, any of such Persons or any of its properties, (v) do not and will not result in or require the imposition of any lien or other encumbrance on any of the properties, assets or rights of such Persons other than the Liens and encumbrances in favor of the Agent contemplated by the Credit Agreement and the other Loan Documents, and (vi) do not require the approval or consent of any Person other than those already obtained and delivered to the Agent.

(b) Enforceability. Each of this Amendment and any other documents executed and delivered in connection herewith is the valid and legally binding obligations of Borrower and Guarantors enforceable in accordance with the respective terms and provisions hereof and thereof, except as enforceability is limited by bankruptcy, insolvency, reorganization, moratorium or other laws relating to or affecting generally the enforcement of creditors’ rights and general principles of equity.

(c) Approvals. The execution, delivery and performance by the Borrower and the Guarantors of this Amendment and any other agreements contemplated hereby or delivered in connection herewith and the transactions contemplated hereby and thereby do not require the approval or consent of, or filing or registration with, or the giving of any notice to, any court, department, board, governmental agency or authority other than those already obtained and other than any public filings as may be required with respect to this Amendment.

(d) Reaffirmation. Borrower and the Guarantors reaffirm and restate as of the date hereof each and every representation and warranty made by the Borrower, the Guarantors and their respective Subsidiaries in the Loan Documents except for representations or warranties that expressly relate to an earlier date. Each of the representations and warranties made by or on behalf of Borrower, Guarantors or any of their respective Subsidiaries contained in this Amendment, the Credit Agreement, the other Loan Documents or in any document or instrument delivered pursuant to or in connection with the Credit Agreement are true and correct in all material respects both as of the date as of which they were made and are true and correct in all material respects as of the date hereof, with the same effect as if made at and as of that time, except to the extent of changes resulting from transactions permitted by the Loan Documents (it being understood and agreed that any representation or warranty which by its terms is made as of a specified date shall be required to be true and correct only as of such specified date).

 

20


(e) No Default. By execution hereof, the Borrower and Guarantors certify that the Borrower and Guarantors are and will be in compliance with all covenants under the Loan Documents immediately after the execution and delivery of this Amendment and the other documents executed in connection herewith or delivered in connection herewith, and that no Default or Event of Default has occurred and is continuing.

(f) Borrowing Base Properties. The Borrowing Base Properties as of the date of this Amendment are set forth on Schedule A attached hereto and made a part hereof.

7. Waiver of Claims. Borrower and Guarantors acknowledge, represent and agree that Borrower and Guarantors as of the date hereof have no defenses, setoffs, claims, counterclaims or causes of action of any kind or nature whatsoever with respect to the Loan Documents, the administration or funding of the Loans or Letters of Credit or with respect to any acts or omissions of Agent or any Lender, or any past or present officers, agents or employees of Agent or any Lender, and each of Borrower and Guarantors does hereby expressly waive, release and relinquish any and all such defenses, setoffs, claims, counterclaims and causes of action, if any.

8. Ratification. Except as hereinabove set forth, all terms, covenants and provisions of the Credit Agreement, the Guaranty and the other Loan Documents remain unaltered and in full force and effect, and the parties hereto do hereby expressly ratify and confirm the Credit Agreement, the Guaranty and the other Loan Documents. Nothing in this Amendment or any other document executed in connection herewith shall be deemed or construed to constitute, and there has not otherwise occurred, a novation, cancellation, satisfaction, release, extinguishment or substitution of the indebtedness evidenced by the Notes or the other obligations of Borrower and Guarantors under the Loan Documents (including without limitation the Guaranty). This Amendment shall constitute a Loan Document.

9. Counterparts. This Amendment may be executed in any number of counterparts which shall together constitute but one and the same agreement.

10. Miscellaneous. THIS AMENDMENT SHALL, PURSUANT TO NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1401, BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. This Amendment shall be binding upon and shall inure to the benefit of the parties hereto and their respective permitted successors, successors-in-title and assigns as provided in the Credit Agreement.

11. Payment of Accrued Interest and Fees. All interest and fees accrued and unpaid under the Credit Agreement as in effect prior to the “Effective Date” (as defined below) of this Agreement shall be due and payable in the amount determined pursuant to the Credit Agreement as in effect prior to the Effective Date for periods prior to the Effective Date on the next payment date for such interest or fee set forth in the Credit Agreement as amended by this Amendment.

12. Effective Date. This Amendment shall be deemed effective and in full force and effect (the “Effective Date”) upon confirmation by the Agent of the satisfaction of the following conditions:

(a) the execution and delivery of this Amendment by Borrower, Guarantors, Agent, and all of the Lenders;

 

21


(b) the execution and delivery to Agent of (i) the Assignment of Note and Mortgage (as defined in this Amendment), (ii) a promissory note from Borrower to Agent in form and substance satisfactory to Agent that consolidates the Assigned Notes (as such term is defined in this Amendment), and (iii) replacement Revolving Credit Notes from Borrower to the Lenders that sever and consolidate the existing Revolving Credit Notes and the Assigned Notes;

(c) Borrower shall have paid the fees due to and the expenses of the Agent and Lead Arranger (including those to be paid to the Lenders) due and payable with respect to this Amendment, all of which shall be fully earned and non-refundable under any circumstances when paid;

(d) The Borrower shall have successfully completed the sale of its ALF assets (including all of the Borrowing Base Properties that are collateral prior to the effectiveness of this Amendment), and delivered simultaneously with the effectiveness of this Amendment substitute Borrowing Base Properties acceptable to the Agent and the Required Lenders;

(e) receipt by Agent of such other resolutions, certificates, documents, instruments and agreements as the Agent may reasonably request; and

(f) the Borrower shall have paid the reasonable fees and expenses of Agent’s counsel in connection with this Amendment and the transactions contemplated hereby.

[CONTINUED ON NEXT PAGE]

 

22


IN WITNESS WHEREOF, the parties hereto, acting by and through their respective duly authorized officers and/or other representatives, have duly executed this Amendment under seal as of the day and year first above written.

 

BORROWER:

NEW SENIOR INVESTMENT GROUP INC.,

a Delaware corporation

By:   /s/ Bhairav Patel
Name:   Bhairav Patel
Title:   EVP, Finance & Accounting
    (SEAL)

[Signature Page to Second Amendment to Credit Agreement – KeyBank/New Senior Investment Group Inc.]


   GUARANTORS:
   SNR OPERATIONS LLC,
   PROPCO 2 LLC,
   PROPCO 6 LLC,
   PROPCO 9 LLC,
   PROPCO 22 LLC,
   RLG OWNER LLC,
   NIC 6 OWNER LLC,
   NIC 9 VIRGINIA OWNER LLC,
   SNR 22 OWNER LLC,
   RLG UTAH OWNER LLC,
   NIC 6 NEW YORK OWNER LLC,
   CHATEAU BRICKYARD OWNER LLC,
   NIC 6 MANOR AT WOODSIDE OWNER LLC,
   NIC 9 HERITAGE OAKS OWNER LLC,
   SNR 22 OKC OWNER LLC,
   SNR 24 OWNER LLC,
   PROPCO 24 LLC,
   SNR 24 SHADS LANDING OWNER GP LLC,
   SNR 24 CYPRESS WOODS OWNER LLC,
   SNR 24 ROLLING HILLS RANCH OWNER LLC,
   SNR 24 VENETIAN GARDENS OWNER LLC,
   SNR 24 WINDWARD PALMS OWNER LLC,
   RLG LEASING LLC,
   NIC 6 MANAGEMENT LLC,
   RLG UTAH LEASING LLC,
   NIC 6 NEW YORK MANAGEMENT LLC,
   NIC 9 VIRGINIA MANAGEMENT LLC,
   SNR 22 MANAGEMENT LLC,
  

CHATEAU BRICKYARD OPERATIONS LLC,

   NIC 6 MANOR AT WOODSIDE MANAGEMENT LLC,
   NIC 9 HERITAGE OAKS MANAGEMENT LLC,
   SNR 22 OKC MANAGEMENT LLC,
   SNR 24 MANAGEMENT LLC,
   SNR 24 CYPRESS WOODS MANAGEMENT LLC,
   SNR 24 ROLLING HILLS RANCH MANAGEMENT LLC,
   SNR 24 SHADS LANDING MANAGEMENT LLC,
   SNR 24 VENETIAN GARDENS MANAGEMENT LLC,
   SNR 24 WINDWARD PALMS MANAGEMENT LLC,
each a Delaware limited liability company
By:   /s/ Lori B. Marino
Name:   Lori B. Marino
Title:   Vice President
    (SEAL)

[Signatures Continue On Next Page]

[Signature Page to Second Amendment to Credit Agreement – KeyBank/New Senior Investment Group Inc.]


SNR 24 SHADS LANDING INC.,

a Delaware corporation

By:   /s/ Lori B. Marino
Name:   Lori B. Marino
Title:   Vice President
    (SEAL)

 

SNR 24 SHADS LANDING OWNER LP,

a Delaware limited partnership

By:   SNR 24 Shads Landing Owner GP LLC, a Delaware limited liability company, its sole general partner
By:   /s/ Lori B. Marino
  Name: Lori B. Marino
  Title: Vice President
    (SEAL)

[Signature Page to Second Amendment to Credit Agreement – KeyBank/New Senior Investment Group Inc.]


LENDERS:
KEYBANK NATIONAL ASSOCIATION,
individually and as Agent
By:   /s/ Eric Hafertepen
Name:   Eric Hafertepen
Title:   Vice President Real Estate Capital

 

BMO HARRIS BANK N.A.
By:   /s/ Lloyd Baron
Name:   Lloyd Baron
Title:   Managing Director

 

CAPITAL ONE, NATIONAL ASSOCIATION
By:   /s/ Bruce Chen
Name:   Bruce Chen
Title:   Authorized Signatory

 

CADENCE BANK, N.A.
By:   /s/ Will Donnelly
Name:   Will Donnelly
Title:   Portfolio Manager

 

DEUTSCHE BANK AG, NEW YORK BRANCH
By:   /s/ James Rolison
Name:   James Rolison
Title:   Managing Director

 

By:   /s/ Joanna Soliman
Name:   Joanna Soliman
Title:   Director

[Signatures Continue On Next Page]

[Signature Page to First Amendment to Credit Agreement – KeyBank/New Senior Investment Group Inc.]


ROYAL BANK OF CANADA
By:   /s/ Brian Gross
Name:   Brian Gross
Title:   Authorized Signatory

[Signature Page to Second Amendment to Credit Agreement – KeyBank/New Senior Investment Group Inc.]


EXHIBIT B-1

FORM OF REVOLVING CREDIT NOTE

SEVERED, CONSOLIDATED, AMENDED AND RESTATED RENEWAL

REVOLVING CREDIT NOTE

 

$________________       _____________, 2020

FOR VALUE RECEIVED, the undersigned (“Maker”), hereby promises to pay to ___________________________, (“Payee”), or order, in accordance with the terms of that certain Credit Agreement, dated as of December 13, 2018, as amended by that certain First Amendment to Credit Agreement dated as of May 10, 2019, and as amended by that certain Second Amendment to Credit Agreement and Other Loan Documents dated as of February 10, 2020, as from time to time in effect, by and among Maker, KeyBank National Association, for itself and as Agent, and such other Lenders as may be from time to time named therein (the “Credit Agreement”), __________________ and No/100 Dollars ($____________), or such amount as may be advanced by the Payee under the Credit Agreement as a Revolving Credit Loan with daily interest from the date thereof, computed as provided in the Credit Agreement, on the principal amount hereof from time to time unpaid, at a rate per annum on each portion of the principal amount which shall at all times be equal to the rate of interest applicable to such portion in accordance with the Credit Agreement, and with interest on overdue principal and, to the extent permitted by Applicable Law, on overdue installments of interest and late charges at the rates provided in the Credit Agreement. Interest shall be payable on the dates specified in the Credit Agreement, except that all accrued interest shall be paid at the stated or accelerated maturity hereof or upon the prepayment in full hereof. Capitalized terms used herein and not otherwise defined herein shall have the meanings set forth in the Credit Agreement.

Payments hereunder shall be made to the Agent for the Payee at 127 Public Square, Cleveland, Ohio 44114-1306, or at such other address as Agent may designate from time to time.

This Note is one of one or more Revolving Credit Notes evidencing borrowings under and is entitled to the benefits and subject to the provisions of the Credit Agreement. The principal of this Note may be due and payable in whole or in part prior to the Maturity Date and is subject to mandatory prepayment in the amounts and under the circumstances set forth in the Credit Agreement, and may be prepaid in whole or from time to time in part, all as set forth in the Credit Agreement.

Notwithstanding anything in this Note to the contrary, all agreements between the undersigned Maker and the Lenders and the Agent, whether now existing or hereafter arising and whether written or oral, are hereby limited so that in no contingency, whether by reason of acceleration of the maturity of any of the Obligations or otherwise, shall the interest contracted for, charged or received by the Lenders exceed the maximum amount permissible under Applicable Law. If, from any circumstance whatsoever, interest would otherwise be payable to the Lenders in excess of the maximum lawful amount, the interest payable to the Lenders shall be reduced to the maximum amount permitted under Applicable Law; and if from any circumstance the Lenders shall ever receive anything of value deemed interest by Applicable Law in excess of the maximum lawful amount, an amount equal to any excessive interest shall be applied to the reduction of the principal balance of the Obligations of the undersigned Maker

 

EXHIBIT B-1 - Page 1


and to the payment of interest or, if such excessive interest exceeds the unpaid balance of principal of the Obligations of the undersigned Maker, such excess shall be refunded to the undersigned Maker. All interest paid or agreed to be paid to the Lenders shall, to the extent permitted by Applicable Law, be amortized, prorated, allocated and spread throughout the full period until payment in full of the principal of the Obligations of the undersigned Maker (including the period of any renewal or extension thereof) so that the interest thereon for such full period shall not exceed the maximum amount permitted by Applicable Law. This paragraph shall control all agreements between the undersigned Maker and the Lenders and the Agent.

In case an Event of Default shall occur, the entire principal amount of this Note may become or be declared due and payable in the manner and with the effect provided in said Credit Agreement.

This Note shall, pursuant to New York General Obligations Law Section 5-1401, be governed by the laws of the State of New York. This Note is a renewal note intended to comply with Florida Statute 201.09.

The undersigned Maker and all guarantors and endorsers hereby waive presentment, demand, notice, protest, notice of intention to accelerate the indebtedness evidenced hereby, notice of acceleration of the indebtedness evidenced hereby and all other demands and notices in connection with the delivery, acceptance, performance and enforcement of this Note, except as specifically otherwise provided in the Credit Agreement, and assent to extensions of time of payment or forbearance or other indulgence without notice.

This Note constitutes a severed portion of that certain Consolidated, Amended and Restated Renewal Revolving Credit Note from Maker to and in favor of KeyBank National Association, as Agent in the stated amount of $33,370,000 (the “Severed Note”), which Severed Note has been severed and separated into this Severed, Consolidated Amended and Restated Renewal Revolving Credit Note and into the following separate severed promissory notes: (i) Severed, Consolidated, Amended and Restated Renewal Revolving Credit Note made by Maker to and in favor of BMO Harris Bank, N.A. in the stated amount of $30,000,000.00, (ii) Severed, Consolidated, Amended and Restated Renewal Revolving Credit Note made by Maker to and in favor of Capital One, National Association in the stated amount of $25,000,000.00; (iii) Severed, Consolidated, Amended and Restated Renewal Revolving Credit Note made by Maker to and in favor of Cadence Bank in the stated amount of $15,000,000.00; (iv) Severed, Consolidated, Amended and Restated Renewal Revolving Credit Note made by Maker to an in favor of Deutsche Bank AG, New York Branch in the stated amount of $10,000,000.00; and (v) that certain Severed, Consolidated, Amended and Restated Renewal Revolving Credit Note made by Maker to and in favor of Royal Bank of Canada in the stated amount of $10,000,000.00. Proper Florida Intangibles and Documentary Stamp Tax has been paid on the promissory notes severed, consolidated, amended, restated and renewed by the Severed Note as set forth below.

The Severed Note consolidated, amended, restated, and renewed the following notes:

(1) That certain Amended and Restated Multifamily Note dated as of March 27, 2015, by SNR 24 Windward Palms Owner LLC to WALKER & DUNLOP, LLC, in the original principal amount of Sixteen Million Eight Hundred Five Thousand and 00/100 Dollars ($16,805,000.00) (“Note 1”), as assigned to FEDERAL HOME LOAN MORTGAGE CORPORATION by that certain Allonge dated as of March 27, 2015, as assigned to DEUTSCHE BANK TRUST COMPANY AMERICAS, AS TRUSTEE FOR THE

 

EXHIBIT B-1 - Page 2


REGISTERED HOLDERS OF WELLS FARGO COMMERCIAL MORTGAGE SECURITIES, INC., MULTIFAMILY MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2015-KS04 by that certain Allonge to Note dated as of December 29, 2015, which note as assigned, amended and restated (A) that certain Amended and Restated Renewal Promissory Note dated as of December 20, 2012, by BOYNTON BEACH RETIREMENT RESIDENCE LLC to THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, in the original principal amount of Eleven Million Seven Hundred Seventy-Five Thousand and 00/100 Dollars ($11,775,000.00), as assigned to WALKER & DUNLOP, LLC by that certain Allonge to Amended and Restated Renewal Promissory Note, dated as of March 24, 2015, which note described in this clause (1)(A) as assigned, amended, restated and renewed (B) that certain Amended and Restated Secured Promissory Note dated as of June 6, 2011, by BOYNTON BEACH RETIREMENT RESIDENCE LLC to LEASED FACILITIES POOL LLC, in the original principal amount of Eleven Million Four Hundred Seventy-Seven Thousand Three Hundred Seventy-Six and 34/100 Dollars ($11,477,376.34), as assigned to THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, by that certain Absolute Assignment of Note, Mortgage and Other Loan Documents, dated as of December 20, 2012, which note described in this clause (1)(B) as assigned, amended and restated (C) that certain Secured Promissory Note dated as of September 16, 2005, by BOYNTON BEACH RETIREMENT RESIDENCE LLC to AMSOUTH BANK, in the original principal amount of Fourteen Million One Hundred Fifty Thousand and 00/100 Dollars ($14,150,000.00), as assigned from REGIONS BANK, an Alabama banking corporation and the successor by merger to AMSOUTH BANK, to LEASED FACILITIES POOL LLC, by that certain Allonge dated as of June 6, 2011. All required Florida documentary stamp and intangibles taxes due were paid upon the recording of that certain Amended and Restated Multifamily Mortgage, Assignment of Rents and Security Agreement, dated as of March 27, 2015 (as the same may be further amended), and recorded on April 23, 2015 at Official Records Book 27485, Page 257 in the Real Estate Records of Palm Beach County Florida; and

(2) That certain Amended and Restated Multifamily Note dated as of March 27, 2015, by SNR 24 Venetian Gardens Owner LLC to WALKER & DUNLOP, LLC, in the original principal amount of Sixteen Million Five Hundred Sixty-Five Thousand and 00/100 Dollars ($16,565,000.00) (“Note 2”), as assigned to FEDERAL HOME LOAN MORTGAGE CORPORATION by that certain Allonge dated as of March 27, 2015, as further assigned to DEUTSCHE BANK TRUST COMPANY AMERICAS, AS TRUSTEE FOR THE REGISTERED HOLDERS OF WELLS FARGO COMMERCIAL MORTGAGE SECURITIES, INC., MULTIFAMILY MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2015-KS04 by that certain Allonge to Note dated as of December 29, 2015, which note as assigned, amended and restated (A) that certain Amended and Restated Renewal Promissory Note dated December 20, 2012, by VENICE RETIREMENT RESIDENCE LLC to THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, in the original principal amount of Ten Million Six Hundred Thousand and 00/100 Dollars ($10,600,000.00), as assigned to WALKER & DUNLOP, LLC by that certain Allonge to Amended and Restated Renewal Promissory Note, dated as of March 24, 2015, which note described in this clause (2)(A) as assigned, amended, restated and renewed (B) that certain Amended and Restated Secured Promissory Note dated as of June 6, 2011, by VENICE RETIREMENT RESIDENCE LLC to LEASED FACILITIES POOL LLC, in the original principal amount of Ten Million Three Hundred Fifty Seven Thousand Six Hundred Twenty Three and 66/100 Dollars ($10,357,623.66), as assigned to THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, by that certain Absolute Assignment of Note, Mortgage and Other Loan Documents, dated as of December 20, 2012, which note described in this clause (2)(B) as assigned, amended and restated (C) that certain Secured Promissory Note

 

EXHIBIT B-1 - Page 3


dated as of September 20, 2005, by VENICE RETIREMENT RESIDENCE LLC to AMSOUTH BANK, in the original principal amount of Eleven Million Nine Hundred Eighty Thousand and 00/100 Dollars ($11,980,000.00), as assigned from REGIONS BANK, an Alabama banking corporation and the successor by merger to AMSOUTH BANK, to LEASED FACILITIES POOL LLC, by that certain Allonge dated as of June 6, 2011. All required Florida documentary stamp and intangibles taxes due were paid upon the recording of that certain Amended and Restated Multifamily Mortgage, Assignment of Rents and Security Agreement, dated as of March 27, 2015 (as the same may be further amended), and recorded on April 20, 2015, as Instrument Number 2015046402, in the Real Estate Records of Sarasota County, Florida.

Note 1 and Note 2 have been assigned by DEUTSCHE BANK TRUST COMPANY AMERICAS, AS TRUSTEE FOR THE REGISTERED HOLDERS OF WELLS FARGO COMMERCIAL MORTGAGE SECURITIES, INC., MULTIFAMILY MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2015-KS04 to KEYBANK NATIONAL ASSOCIATION, a national banking association, as Agent, pursuant to those certain Assignments of Note and Mortgage dated of even date herewith.

Note 1 and Note 2 did not constitute tax free renewals under Florida Statute 201.09 because the obligors changed. Additionally, there is an advance of new monies made under the Severed Note from Lender to Maker in the principal amount of $54,400,000.00 (the “Future Advance”). Florida documentary stamp tax due on the principal amount of Note 1 ($20,000,000) and Note 2 ($33,600,000) in the amount of $190,400 will be paid upon the recording of the instrument securing such advance. Payment of any intangibles tax will be paid upon the recording of the instrument securing such advance.

[This Note is further issued in replacement and as a consolidation of that certain Revolving Credit Note in the principal face amount of $__________________, made by the undersigned maker to the order of Payee (the “Prior Note”) and shall supersede and replace the Prior Note in all respects. This Note is not intended to, nor shall it be construed to, constitute a novation, discharge, termination, extinguishment or satisfaction of the indebtedness due under the Severed Note, the Prior Note or the Credit Agreement or the obligations evidenced thereby.]

[CONTINUED ON NEXT PAGE]

 

EXHIBIT B-1 - Page 4


IN WITNESS WHEREOF, the undersigned has by its duly authorized officer executed this Note on the day and year first above written.

 

NEW SENIOR INVESTMENT GROUP INC., a Delaware corporation

By:

   

Name:   Bhairav Patel

Title:     EVP, Finance & Accounting

(SEAL)

 

EXHIBIT B-1 - Page 5


EXHIBIT G-1

COMPLIANCE CERTIFICATE TEMPLATE

LOGO


EXHIBIT H-1

BORROWING BASE WORKSHEET

LOGO


SCHEDULE A

BORROWING BASE PROPERTIES

 

Property Name

  

Owner

  

Address

Cypress Woods

   SNR 24 Cypress Woods Owner LLC    2755 Chestnut Ridge
Kingwood, TX 77339

Manor at Woodside

   NIC 6 Manor at Woodside Owner LLC    168 Academy St.
Poughkeepsie, NY 12601

Heritage Oaks

   NIC 9 Heritage Oaks Owner LLC    1100 German School Road
Richmond, VA 23225

Rolling Hills Ranch

   SNR 24 Rolling Hills Owner LLC    4324 N. 132nd St.
Omaha, NE 68164

Lionwood

   SNR 22 OKC Owner LLC    12525 N. Pennsylvania Ave.
Oklahoma City, OK 73120

Venetian Gardens

   SNR 24 Venetians Garden Owner LLC    1450 Venice East Boulevard
Venice, FL 34292

Windward Palms

   Windward Palms Owner LLC    8440 S. Military Trail
Boynton Beach, FL 33436

Shads Landing

   SNR 24 Shads Landing Owner LP    9131 Benfield Rd.
Charlotte, NC 28269

Chateau Brickyard

   Chateau Brickyard Owner LLC    3080 S Richmond St.
Salt Lake City, UT 84106
(Back To Top)

Section 3: EX-10.2 (EX-10.2)

EX-10.2

Exhibit 10.2

Freddie Mac Loan Number: 503106291

Property Name: Bluebird Estates

MULTIFAMILY LOAN AND SECURITY AGREEMENT – SENIORS HOUSING

(Revised 9-30-2019)

SUMMARY OF LOAN TERMS

The following information in this Summary of Loan Terms (“Summary”) is incorporated into and deemed part of this Multifamily Loan and Security Agreement (“Loan Agreement”).

 

Parties, Effective Date, Loan Amount

Borrower(s):    SNR 24 BLUEBIRD ESTATES OWNER LLC, a Delaware limited liability company
Lender:    KEYBANK NATIONAL ASSOCIATION, a national banking association
Effective Date:    02/10/2020
Loan Amount:    $24,357,000.00

 

Property Manager [See Section 6.09(d)]
   SNR 24 BLUEBIRD ESTATES MANAGEMENT LLC, a Delaware limited liability company (Property Manager), HOLIDAY AL MANAGEMENT SUB LLC, a Delaware limited liability company (Property Sub-Manager) or, in each case, another residential rental property manager that is approved by Lender in writing.
   Mortgaged Property is self-managed by Borrower [See Self Management Rider]
SPE Equity Owner [See Section 6.13]
  

Not applicable. Borrower will not be required to maintain an SPE Equity Owner in its organizational structure during the term of the Loan and all references to SPE Equity Owner in this Loan Agreement and in the Note are not applicable.

 

  

__________________, a single member Delaware limited liability company

 

   __________________, a __________ corporation
An SPE Equity Owner is required if: (1) The Loan Amount is $25,000,000 or greater or the Loan is part of a crossed pool that is $25,000,000 or greater, and (2) Borrower is a limited partnership or limited liability company with more than one equity member.

 

Required Equity Owner [See Section 7.03(c)(ii)]


  

Name of Required Equity Owner: _______________________

Required Equity Ownership Interest: ________%

 

Conditionally Permitted Transfers [See Section 7.03]
  

N/A

 

  

Transfer to Previously Underwritten Person [See Section 7.03(a)(iii)]

 

Prior Borrower Principal: _______________________

Previously Underwritten Person: _______________________

 

  

Co-Owner Transfer [See Section 7.03(a)(iv)]

 

Required Co-Owner: _______________________

Required Co-Owner Interest in the Mortgaged Property: ________________

 

  

TIC Roll-up Transfer [See Section 7.03(a)(v)]

 

Consolidation Borrower Manager: _______________________

 

  

Preferred Equity Control Take-Over-Transfer [See Section 7.03(b)(ii)]

 

Preferred Equity Investor: _______________________

 

  

Buy-Sell Transfer [See Section 7.03(b)(iii)]

 

Buy-Sell Equity Investor: _______________________

 

  

Other(s):

 

[Describe & specify whether the Transfer is described in a rider or in Exhibit D]

 

Imposition Reserves [See Section 4.02 of this Loan Agreement and Section 9 of the Note]
Collect    Deferred   
     

Property Insurance premiums

or premiums for other Insurance required by Lender

 

     

Taxes and payments in lieu of taxes (PILOT)

 

     

Water and sewer charges

that could become a Lien on the Mortgaged Property

 

     

Assessments or other charges

that could become a Lien on the Mortgaged Property,

including home owner association dues

 

     

Ground Rents                 or                 ☒ N/A


Replacement Reserve Initial Deposit [See Section 4.04]
N/A
Replacement Reserve Monthly Deposit [See Section 4.04]
$3,550.00
  

Deferred

  

Funded

  

Capped at $_______________ (if applicable) (the “Replacement Reserve Cap”)

  

Additional Deposit of $_________________ (if applicable)

Additional Deposit Date: / /20__

Additional Replacements Completion Date: / /20__

 

  

Minimum Replacement Disbursement Request Amount: $7,500.00

 

  

Replacement Reserve Disbursement Period: quarterly

 

Required Repairs [See Section 4.03 and Section 6.14]
  

Repair(s) required – see the Repair Schedule of Work in Exhibit C

 

  

No Repairs required

 

  

Minimum Repair Disbursement Request Amount: $5,000.00

  

Repair Reserve Disbursement Period: 30 days

Priority Repair Reserve Deposit [See Section 4.03]

N/A

 

After all Repairs are completed, any remaining Repair Reserve funds will be either[choose one]:

  

Returned to Borrower

 

  

Deposited into the Replacement Reserve Fund

 

Radon [See Applicable Rider]
  

N/A

 

  

Radon Screening required – (with possible Radon Testing, and possible Radon Remediation)

 

  

Units:

  

Radon Testing required – (with possible Radon Remediation)

 

  

Units:

  

Radon Remediation requirement identified as of the Effective Date

$_____________ (“Radon Repair Reserve Deposit”)

  

Units:


Other Required Reserve Fund Deposits [See Article IV and Applicable Rider(s)]
  

Green Repair Reserve Deposit

 

$_________________

Green Improvements Completion Date: / /20__

After all Green Improvements are completed, any remaining Green Repair Reserve funds will be [choose one]:

 

☐ Returned to Borrower

☐ Deposited into the Replacement Reserve Fund

  

Rate Cap Reserve Deposit

$________________

  

Rental Achievement Reserve Deposit

$_________________

  

Lease-Up Credit Enhancement Amount

$_________________

  

Other(s): [List and repeat as necessary]

$_________________

 

Insurance – Borrower Proof of Loss [See Section 6.10(k)]
$122,000   

Borrower Proof of Loss Threshold

Insert the amount that is the greater of (i) $50,000 or (ii) 0.5% of the Loan Amount, rounded to the nearest $1,000, not to exceed $200,000

 

$488,000   

Borrower Proof of Loss Maximum

Insert the amount that is equal to 4 times the (final, rounded) Borrower Proof of Loss Threshold, not to exceed $800,000

 

Purpose of Loan [See Section 5.24]
   Refinance Loan
  

Acquisition Loan – Mortgaged Property

Property Seller: ____________________________

  

Acquisition Loan – Membership Interests

Membership Interest Seller: ____________________

   Supplemental Loan
   Cross-Collateralized/Cross-Defaulted Loan Pool


Moisture Management Plan and O&M Program(s) [See Sections 6.06 and 6.12]
   Moisture Management Plan (MMP) required
  

O&M Program(s) required:

[List all that apply]

 

Minimum Occupancy and Maximum Combined LTV [See Sections 6.09 and 11.11 (b)(v)]
85%   

Minimum Occupancy (applicable for Property Improvement Alterations)

 

75%    Maximum Combined LTV (applicable for a Supplemental Loan request)

 

Senior Instrument [See Sections 3.02 and 9.01(n)]
   N/A—the Loan relates to a first Lien on the Mortgaged Property.
   This is a Supplemental Loan, and each Senior Instrument is described below.
   [Name of Senior Instrument]
   To or for the benefit of: _________________
   Effective Date: / /20__    Recording Date: / /20__
   Book/Page or Instrument Number: _________________
  

Assigned to Freddie Mac

  

Instrument: _______________

  

Effective Date: / /20__

   Recording Date: / /20__
  

Book/Page or Instrument Number: _________________

  

Assigned to ________________________

  

Instrument: ____________

  

Effective Date: / /20__

   Recording Date: / /20__
  

Book/Page or Instrument Number: _________________

Operating Lease:
Operator:   

_______________________, a _________________________

Not applicable

Operating Lease:           

   The [Operating Lease], dated as of ________________, entered into by and between Borrower, as landlord, and Operator, as tenant, leasing the Land and Improvements, together with certain personal property used in connection with the Land and Improvements, as described in the Lease, and all modifications, extensions, renewals and replacements.

 

Not applicable


Notice Requirements [See Section 11.03]

If to Lender:   

KEYBANK NATIONAL ASSOCIATION

c/o KeyBank Real Estate Capital – Servicing Dept.

11501 Outlook Street, Suite 300, Overland Park, Kansas 66221

Attention: Servicing Department

If to Borrower:   

SNR 24 Bluebird Estates Owner LLC

c/o New Senior Investment Group Inc.

55 West 46th Street, Suite 2204

New York, New York 10036

Attention: Susan Givens

Courtesy Copy to:   

Fried, Frank, Harris, Shriver & Jacobson LLP

One New York Plaza

New York, NY 10004

Attention: Nathaniel Lifschitz

 

Intended Use [See Section 5.25]

Independent Living Units:   

100%

132 units

Assisted Living Residences:   

0%

0 units

0 beds

Assisted Living Residences devoted to Alzheimer’s care, dementia care and/or memory care   

0%

0 units

0 beds

Skilled Nursing Beds   

0%

0 units

0 beds

Continuing Care Retirement Community   

☐ Yes

☒ No


Exhibits
   Exhibit A    Description of the Land (required)
   Exhibit B    Modifications to Multifamily Loan and Security Agreement
   Exhibit C    Repair Schedule of Work
   Exhibit D    Repair Disbursement Request (required)
   Exhibit E    Work Commenced at Mortgaged Property
   Exhibit F    Capital Replacements (required)
   Exhibit G    Description of Ground Lease
   Exhibit H    Organizational Chart of Borrower as of the Date of this Loan Agreement (required)
   Exhibit I    Designated Entities for Transfers and Guarantor(s) (required)
   Exhibit J    Description of Release Parcel
   Exhibit K    Licenses (required)
   Exhibit L    Furniture, Fixtures, Equipment, and Motor Vehicles (required)
   Exhibit M    Contracts (required)
   Exhibit N    Material Contracts (required)
   Exhibit O    Borrower’s Certificate of Property Improvement Alterations Completion (required)

 

Attached Rider(s)

  

Date Revised

Rider to Multifamily Loan and Security Agreement – Cooperation with Rating Agencies and Investors

   1-27-2015

Rider to Multifamily Loan and Security Agreement – Additional Provisions – Sale or Securitization of Loan

   9-30-2019

Rider to Multifamily Loan and Security Agreement – Recycled Borrower

   4-19-2018

Rider to Multifamily Loan and Security Agreement – Cross-Collateralized Transaction

   2-25-2019

Rider to Multifamily Loan and Security Agreement –Insurance Claims History – Seniors Housing

   3-1-2014

Rider to Multifamily Loan and Security Agreement –Rate Cap Agreement and Rate Cap Agreement Reserve Fund

   6-25-2019


TABLE OF CONTENTS

 

ARTICLE I DEFINED TERMS; CONSTRUCTION

     1  

1.01

   Defined Terms      1  

1.02

   Construction      1  

ARTICLE II LOAN

     2  

2.01

   Loan Terms      2  

2.02

   Prepayment Premium      2  

2.03

   Exculpation      2  

2.04

   Application of Payments      2  

2.05

   Usury Savings      2  

2.06

   Floating Rate Mortgage – Third-Party Cap Agreement      3  

ARTICLE III LOAN SECURITY AND GUARANTY

     3  
3.01    Security Instrument      3  
3.02    Reserve Funds      3  
3.03    Uniform Commercial Code Security Agreement      4  
3.04    Cap Agreement and Cap Collateral Assignment      4  
3.05    Guaranty      4  
3.06    Assignment of Licenses, Certificates and Permits      4  
3.07    Reserved      5  
3.08    Reserved      5  
3.09    Reserved      5  
3.10    Reserved      5  

ARTICLE IV RESERVE FUNDS AND REQUIREMENTS

     5  

4.01

   Reserves Generally      5  

4.02

   Reserves for Taxes, Insurance and Other Charges      6  

4.03

   Repairs; Repair Reserve Fund      7  

4.04

   Replacement Reserve Fund      13  

4.05

   Rental Achievement Provisions      17  

4.06

   Debt Service Reserve      17  

4.07

   Rate Cap Agreement Reserve Fund      17  

4.08

   through 4.20 are Reserved      17  

ARTICLE V REPRESENTATIONS AND WARRANTIES

     17  

5.01

   Review of Documents      17  

5.02

   Condition of Mortgaged Property      17  

5.03

   No Condemnation      17  

5.04

   Actions; Suits; Proceedings      17  

5.05

   Environmental      18  

5.06

   Commencement of Work; No Labor or Materialmen’s Claims      19  

5.07

   Compliance with Applicable Laws and Regulations      20  

5.08

   Access; Utilities; Tax Parcels      21  

5.09

   Licenses and Permits      21  

 

Multifamily Loan and Security Agreement – Seniors Housing    Page ix


5.10

   No Other Interests      22  

5.11

   Term of Leases      22  

5.12

   No Prior Assignment; Prepayment of Rents      22  

5.13

   Illegal Activity      23  

5.14

   Taxes Paid      23  

5.15

   Title Exceptions      23  

5.16

   No Change in Facts or Circumstances      23  

5.17

   Financial Statements      23  

5.18

   ERISA – Borrower Status      23  

5.19

   No Fraudulent Transfer or Preference      24  

5.20

   No Insolvency or Judgment      24  

5.21

   Working Capital      24  

5.22

   Cap Collateral      25  

5.23

   Ground Lease      25  

5.24

   Purpose of Loan      25  

5.25

   Intended Use      26  

5.26

   Furniture, Fixtures, Equipment, and Motor Vehicles      26  

5.27

   Participant in Federal Programs      27  

5.28

   Certificate of Need      27  

5.29

   Contracts      27  

5.30

   Material Contracts      27  

5.31

   No Financing Statements      28  

5.32

   Governmental Payor Programs      28  

5.33

   Third-Party Payor Programs and Private Commercial Insurance Managed Care and Employee Assistance Programs      29  

5.34

   No Transfer or Pledge of Licenses      30  

5.35

   No Pledge of Receivables      30  

5.36

   Patient and Resident Care Agreements      30  

5.37

   Patient and Resident Records      30  

5.38

   No Facility Deficiencies, Enforcement Actions or Violations      30  

5.39

   Seniors Housing Operator      30  

5.40

   Recycled SPE Borrower      30  

5.41

   Recycled SPE Equity Owner      30  

5.42

   through 5.50 are Reserved      30  

5.51

   Survival      30  

5.52

   through 5.57 are Reserved      30  

5.58

   Prohibited Parties Lists      31  

5.59

   AML Laws      31  

5.60

   Internal Controls      31  

5.61

   Crowdfunding      32  

5.62

   through 5.70 are Reserved      32  
ARTICLE VI BORROWER COVENANTS      32  

6.01

   Compliance with Laws      32  

6.02

   Compliance with Organizational Documents      32  

6.03

   Use of Mortgaged Property      33  

 

Multifamily Loan and Security Agreement – Seniors Housing    Page x


6.04    Non-Residential Leases      34  
6.05    Prepayment of Rents      34  
6.06    Inspection      35  
6.07    Books and Records; Financial Reporting      36  
6.08    Taxes; Operating Expenses; Ground Rents      40  
6.09    Preservation, Management and Maintenance of Mortgaged Property      41  
6.10    Insurance      46  
6.11    Condemnation      51  
6.12    Environmental Hazards      54  
6.13    Single Purpose Entity Requirements      57  
6.14    Repairs and Capital Replacements      62  
6.15    Residential Leases Affecting the Mortgaged Property      63  
6.16    Litigation; Government Proceedings      64  
6.17    Further Assurances and Estoppel Certificates; Lender’s Expenses      64  
6.18    Cap Collateral      65  
6.19    Ground Lease      65  
6.20    ERISA Requirements      65  
6.21    Operation of the Facility      66  
6.22    Facility Reporting      67  
6.23    Covenants Regarding Material Contracts      68  
6.24    Pledge of Receivables      68  
6.25    Property Manager and Operator of the Facility      68  
6.26    Residential Leases and Agreements      69  
6.27    Performance Under Leases      69  
6.28    Governmental Payor Programs      69  
6.29    Additional Covenants Regarding Operator      72  
6.30    Lender’s Right To Use Trade Name OR Trade Name      72  
6.31    through 6.52 are Reserved      72  
6.53    Economic Sanctions Laws; AML Laws      72  
6.54    Crowdfunding      72  
6.55    through 6.58 are Reserved      72  
6.59    Third-Party Payor Programs and Private Commercial Insurance Managed Care and Employee Assistance Programs      72  
6.60    through 6.62 are Reserved      73  
ARTICLE VII TRANSFERS OF THE MORTGAGED PROPERTY OR INTERESTS IN BORROWER      73  
7.01    Prohibited Transfers      73  
7.02    Permitted Transfers      74  
7.03    Conditionally Permitted Transfers      75  
7.04    Conditions for Conditionally Permitted Transfers      85  
7.05    Lender’s Consent to Prohibited Transfers      87  
7.06    SPE Equity Owner Requirement Following Transfer      91  
7.07    Additional Transfer Requirements—External Cap Agreement      91  
7.08    Reserved      91  
7.09    Reserved      91  
7.10    Easement, Restrictive Covenant or Other Encumbrance      92  

 

Multifamily Loan and Security Agreement – Seniors Housing    Page xi


ARTICLE VIII ACTIONS OR EVENTS RELATING TO GUARANTOR

     92  
8.01    Guarantor Bankruptcy      92  
8.02    Guarantor Status Event      93  
8.03    Death of a Guarantor Not in Control of Borrower      93  

ARTICLE IX EVENTS OF DEFAULT AND REMEDIES

     94  
9.01    Events of Default      94  
9.02    Protection of Lender’s Security; Security Instrument Secures Future Advances      97  
9.03    Remedies      98  
9.04    Forbearance      98  
9.05    Waiver of Marshalling      99  

ARTICLE X RELEASE; INDEMNITY

     100  
10.01    Release      100  
10.02    Indemnity      100  
10.03    Reserved      105  

ARTICLE XI MISCELLANEOUS PROVISIONS

     105  
11.01    Waiver of Statute of Limitations, Offsets and Counterclaims      105  
11.02    Governing Law; Consent to Jurisdiction and Venue      106  
11.03    Notice      106  
11.04    Successors and Assigns Bound      107  
11.05    Joint and Several (and Solidary) Liability      107  
11.06    Relationship of Parties; No Third-Party Beneficiary      107  
11.07    Severability; Amendments      107  
11.08    Disclosure of Information      108  
11.09    Determinations by Lender      108  
11.10    Sale of Note; Change in Servicer; Loan Servicing      108  
11.11    Supplemental Financing      109  
11.12    Defeasance      113  
11.13    Lender’s Rights to Sell or Securitize      117  
11.14    Cooperation with Rating Agencies and Investors      118  
11.15    Letter of Credit Requirements      118  
11.16    through 11.19 are Reserved      119  
11.20    Time is of the Essence      119  
11.21    Electronic Signatures      119  
11.22    Reserved      120  
11.23    Subrogation      120  
11.24    Reserved      120  

ARTICLE XII DEFINITIONS

     120  

ARTICLE XIII INCORPORATION OF ATTACHED RIDERS

     148  

ARTICLE XIV INCORPORATION OF ATTACHED EXHIBITS

     148  

ARTICLE XV RESERVED

     148  

 

Multifamily Loan and Security Agreement – Seniors Housing    Page xii


MULTIFAMILY LOAN AND SECURITY AGREEMENT – SENIORS HOUSING

This Loan Agreement is dated as of the 10th day of February, 2020 and is made by and between SNR 24 BLUEBIRD ESTATES OWNER LLC, a Delaware limited liability company (“Borrower”), and KEYBANK NATIONAL ASSOCIATION, a national banking association (together with its successors and assigns, “Lender”).

RECITAL

Lender has agreed to make and Borrower has agreed to accept a loan in the original principal amount of $24,357,000.00 (“Loan”). Lender is willing to make the Loan to Borrower upon the terms and subject to the conditions set forth in this Loan Agreement.

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.

 

  (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 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.”

 

Multifamily Loan and Security Agreement – Seniors Housing    Page 1


  (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)

Any reference in this Loan Agreement to “Lender’s consent,” will be construed to mean Lender’s written consent.

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.

 

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

 

Multifamily Loan and Security Agreement – Seniors Housing    Page 2


  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 – Third-Party 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), and (b) a third-party Cap Agreement is not required, 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.

 

  (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. Borrower will execute the Security Instrument dated of even date with this Loan Agreement. The 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 of the Property Jurisdiction or any other applicable law in and to all money in the Reserve Funds, as the same may increase or decrease from time to time, all interest and dividends thereon and all proceeds thereof.

 

Multifamily Loan and Security Agreement – Seniors Housing    Page 3


  (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.

 

3.04

Cap Agreement and Cap Collateral Assignment. Reserved.

 

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.

 

Multifamily Loan and Security Agreement – Seniors Housing    Page 4


  (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 Borrower has. Lender does not assume any obligations or duties of Borrower concerning the Licenses.

 

  (c)

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

 

3.07

Reserved.

 

3.08

Reserved.

 

3.09

Reserved.

 

3.10

Reserved.

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.

 

Multifamily Loan and Security Agreement – Seniors Housing    Page 5


  (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” in the Summary. Except as provided in the Summary, Lender will not require Borrower to make Imposition Reserve Deposits with respect to the items marked “Deferred” in the Summary.

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.

 

Multifamily Loan and Security Agreement – Seniors Housing    Page 6


  (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.

 

  (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 the Summary 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 the Summary, 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 (j) are Reserved.

 

4.03

Repairs; Repair Reserve Fund.

 

  (a)

Repairs.

 

  (i)

Borrower must commence and complete the Repairs as required pursuant to this Section 4.03 and Section 6.14.

 

  (ii)

Prior to the applicable Completion Date for any Repairs, Borrower will deliver to Lender all the following:

 

  (A)

Contractor’s Certificate. If required by Lender, a certificate signed by each major contractor and supplier of materials, as reasonably determined by Lender, engaged to provide labor or materials for the

 

Multifamily Loan and Security Agreement – Seniors Housing    Page 7


  Repairs to the effect that such contractor or supplier has been paid in full for all work completed and that the portion of the Repairs provided by such contractor or supplier has been fully completed in accordance with the plans and specifications (if any) provided to it by Borrower and that such portion of the Repairs is in compliance with all applicable building codes and other rules and regulations promulgated by any applicable regulatory authority or Governmental Authority.

 

  (B)

Borrower’s Certificate. A certificate signed by Borrower to the effect that the Repairs have been fully paid for and that all money disbursed from the Repair Reserve Fund has been used for the Repairs and no claim exists against Borrower or against the Mortgaged Property out of which a lien based on furnishing labor or material exists or might ripen. Borrower may except from the certificate described in the preceding sentence any claim(s) that Borrower intends to contest, provided that any such claim is described in Borrower’s certificate and Borrower certifies to Lender that the money in the Repair Reserve Fund from the applicable Repair Reserve Deposit is sufficient to make payment of the full amount which might in any event be payable in order to satisfy such claim(s). If required by Lender, Borrower also must certify to Lender that the Repairs are in compliance with all applicable building codes and zoning ordinances.

 

  (C)

Engineer’s Certificate. If required by Lender, a certificate signed by the professional engineer employed by Lender to the effect that the Repairs have been completed in a good and workmanlike manner in compliance with the Repair Schedule of Work and all applicable building codes, zoning ordinances and other rules and regulations promulgated by applicable regulatory or Governmental Authorities.

 

  (D)

Other Certificates. Any other certificates of approval, acceptance or compliance required by Lender from any Governmental Authority having jurisdiction over the Mortgaged Property and the Repairs.

 

  (iii)

If Lender, in Lender’s Discretion, retains a professional inspection engineer or other qualified third party to inspect any Repairs pursuant to the terms of Section 6.06, Lender may charge Borrower an amount sufficient to pay all reasonable costs and expenses charged by such third-party inspector. If there is not a Repair Reserve Fund, Borrower will pay the amount of such item(s) to Lender immediately after Notice from Lender to Borrower of such charge(s).

 

Multifamily Loan and Security Agreement – Seniors Housing    Page 8


  (b)

Repair Reserve Fund.

 

  (i)

This Section 4.03(b) will be applicable only if any of the following is true:

 

  (A)

Any of Priority Repair Reserve Deposit, Radon Repair Reserve Deposit, Green Repair Reserve Deposit, or Stab-Lok Repair Reserve Deposit are checked in the Summary.

 

  (B)

Lender has delivered a Radon Remediation Notice to Borrower and required a Radon Repair Reserve Deposit.

 

  (C)

Lender has delivered a Stab-Lok Remediation Notice to Borrower and required a Stab-Lok Repair Reserve Deposit.

 

  (D)

Reserved

The provisions of this Section 4.03(b) are in addition to the provisions set forth in 4.03(a).

 

  (ii)

If any box is checked in the Summary, then Lender and Borrower acknowledge that Borrower has established the applicable Repair Reserve Fund by depositing the applicable Repair Reserve Deposit with Lender on the date of this Loan Agreement.

 

  (iii)

Lender will be entitled, but not obligated, to deduct from the Repair Reserve Fund the costs and expenses set forth in Section 4.03(a)(iii). If there are insufficient funds to pay for the costs and expenses set forth in Section 4.03(a)(iii) or Lender, in Lender’s Discretion, determines, that it will not deduct such charges from the Repair Reserve Fund, then Borrower must pay the amount of such item(s) to Lender immediately after Notice from Lender to Borrower of such charge(s).

 

  (iv)

If Lender determines, in Lender’s Discretion that the money in the Repair Reserve Fund is insufficient to pay for the Repairs, Lender will provide Borrower with Notice of such insufficiency. As soon as possible (but in no event later than 20 days after such Notice) Borrower will pay to Lender an amount, in cash, equal to such deficiency, which Lender will deposit in the Repair Reserve Fund.

 

  (v)

The following will apply to disbursements from the Repair Reserve Fund:

 

  (A)

From time to time, as construction and completion of the Repairs progresses, upon Borrower’s submission of a Repair Disbursement Request in the form attached to this Loan Agreement as Exhibit D, and provided that no Event of Default has occurred and no condition

 

Multifamily Loan and Security Agreement – Seniors Housing    Page 9


  exists which but for the passage of time or giving of Notice, or both, would constitute an Event of Default, Lender will make disbursements from the Repair Reserve Fund for payment or reimbursement of the actual costs of the Repairs. In connection with each disbursement, Borrower must take each of the following actions:

 

  (I)

Sign Borrower’s Repair Disbursement Request.

 

  (II)

Include with each Repair Disbursement Request a report setting out the progress of the Repairs and any other reports or information relating to the construction of the Repairs that may be reasonably requested by Lender.

 
  (III)

Include with each Repair Disbursement Request copies of any applicable invoices and/or bills and appropriate lien waivers for the prior period for which disbursement was made, executed by all contractors and suppliers supplying labor or materials for the Repairs.

 
  (IV)

Include with each Repair Disbursement Request, a report prepared by the professional engineer employed by Lender as to the status of the Repairs, unless Lender has waived this requirement in writing.

 
  (V)

Include with each Repair Disbursement Request, Borrower’s written representation and warranty that the Repairs as completed to the applicable stage do not violate any laws, ordinances, rules or regulations, or building setback lines or restrictions, applicable to the Mortgaged Property.

 
  (VI)

Reserved.

 

  (B)

Except for the final Repair Disbursement Request, no Repair Disbursement Request may be for an amount less than the Minimum Repair Disbursement Request Amount set forth in the Summary.

 

  (C)

Lender will not be obligated to make any disbursement from the Repair Reserve Fund to or for the benefit of Borrower unless at the time of such Repair Disbursement Request all the following conditions exist:

 

  (I)

There exists no condition, event or act that would constitute a default (with or without Notice and/or lapse of time) under this Loan Agreement or any other Loan Document.

 

Multifamily Loan and Security Agreement – Seniors Housing    Page 10


  (II)

Borrower is in full compliance with the provisions of this Loan Agreement, the other Loan Documents and any request or demand by Lender permitted by this Loan Agreement.

 

  (III)

No lien or claim based on furnishing labor or materials has been recorded, filed or asserted against the Mortgaged Property, unless Borrower has properly provided bond or other security against loss in accordance with applicable law.

 

  (IV)

All licenses, permits, and approvals of any Governmental Authority required for the Repairs as completed to the applicable stage have been obtained and submitted to Lender upon Lender’s request.

 

  (D)

Prior to and as a condition of the final disbursement of funds from the Repair Reserve Fund, Lender will have the right to inspect or cause the Repairs and Improvements to be inspected in accordance with the terms of Section 6.06(a), to determine whether all interior and exterior Repairs have been completed in a manner acceptable to Lender.

 

  (E)

Lender, in its sole and absolute discretion, is authorized to hold, use and disburse funds from the Repair Reserve Fund to pay any and all costs, charges and expenses whatsoever and howsoever incurred or required in connection with the construction and completion of the Repairs, or, if an Event of Default has occurred and is continuing, in the payment or performance of any obligation of Borrower to Lender. If Lender, for purposes specified in this Section 4.03(b), elects to pay any portion of the money in the Repair Reserve Fund to parties other than Borrower, then Lender may do so, at any time and from time to time, and the amount of advances to which Borrower will be entitled under this Loan Agreement will be correspondingly reduced.

 

  (F)

All disbursements from the Repair Reserve Fund will be limited to the costs of those items set forth on the Repair Schedule of Work. Without the prior written consent of Lender, Borrower will not request any payments from the Repair Reserve Fund other than for the costs of those items set forth on the Repair Schedule of Work and Borrower will not alter the Repair Schedule of Work.

 

  (vi)

The provisions of this Section 4.03(b) will cease to be effective upon the completion of all Repairs in accordance with this Loan Agreement to Lender’s satisfaction, and the full disbursement by Lender of the Repair Reserve Funds. If there are funds remaining in the Repair Reserve Fund after the Repairs have been completed in accordance with this Loan

 

Multifamily Loan and Security Agreement – Seniors Housing    Page 11


  Agreement, and provided no Event of Default has occurred and is continuing under this Loan Agreement or under any of the other Loan Documents, and no condition exists which but for the passage of time or giving of Notice, or both, would constitute an Event of Default, such funds remaining in the Repair Reserve Fund will be refunded by Lender to Borrower or deposited by Lender into the Replacement Reserve Fund established by Lender pursuant to Section 4.04 in accordance with the Summary or in accordance with the applicable Rider to this Loan Agreement, as applicable.

 

  (c)

Lender’s Right to Complete Repairs. If Borrower abandons or fails to proceed diligently with the Repairs or otherwise, or there exists an Event of Default under this Loan Agreement, Lender will have the right (but not the obligation) to enter upon the Mortgaged Property and take over and cause the completion of the Repairs. Any contracts entered into or indebtedness incurred upon the exercise of such right may be in the name of Borrower, and Lender is irrevocably appointed the attorney in fact of Borrower, such appointment being coupled with an interest, to enter into such contracts, incur such obligations, enforce any contracts or agreements made by or on behalf of Borrower (including the prosecution and defense of all actions and proceedings in connection with the Repairs and the payment, settlement, or compromise of all claims for materials and work performed in connection with the Repairs) and do any and all things necessary or proper to complete the Repairs including signing Borrower’s name to any contracts and documents as may be deemed necessary by Lender. In no event will Lender be required to expend its own funds to complete the Repairs, but Lender may, in Lender’s sole and absolute discretion, advance such funds. Any funds advanced will be added to the Indebtedness, secured by the Security Instrument and payable to Lender by Borrower in accordance with the provisions of the Loan Documents pertaining to the protection of Lender’s security and advances made by Lender. Borrower waives any and all claims it may have against Lender for materials used, work performed or resultant damage to the Mortgaged Property.

 

  (d)

Completion of Repairs. Lender’s disbursement of monies in the Repair Reserve Fund or other acknowledgment of completion of any Repair in a manner satisfactory to Lender will not be deemed a certification by Lender that the Repair has been completed in accordance with applicable building, zoning or other codes, ordinances, statutes, laws, regulations or requirements of any Governmental Authority. Borrower will have the sole responsibility for insuring that all Repairs are completed in accordance with all such governmental requirements.

 

  (e)

Reserved Radon

 

  (f)

Reserved Existing Code Violations

 

  (g)

Reserved Stab-Lok

 

Multifamily Loan and Security Agreement – Seniors Housing    Page 12


  (h)

Reserved

 

  (i)

Reserved. Green

 

  (j)

Reserved.

 

4.04

Replacement Reserve Fund.

 

  (a)

Deposits to Replacement Reserve Fund. On the Closing Date, the parties will establish the Replacement Reserve Fund and Borrower will pay the Initial Deposit to Lender for deposit into the Replacement Reserve Fund. Commencing on the date the first installment of principal and/or interest is due under the Note and continuing on the same day of each successive month until the Loan is paid in full, Borrower will pay the Monthly Deposit to Lender for deposit into the Replacement Reserve Fund, together with its regular monthly payments of principal and/or interest as required by the Note. A transfer of funds into the Replacement Reserve Fund from the Repair Reserve Fund, pursuant to the terms of Section 4.03(e), if applicable, will not alter or reduce the amount of any deposits to the Replacement Reserve Fund.

 

  (b)

Costs Charged by Lender.

 

  (i)

If Lender, in Lender’s Discretion, retains a professional inspection engineer or other qualified third party to inspect any Capital Replacements pursuant to the terms of Section 6.06, Lender may charge Borrower an amount sufficient to pay all reasonable costs and expenses charged by such third-party inspector.

 

  (ii)

If there are sufficient funds in the Replacement Reserve Fund, Lender will be entitled, but not obligated, to deduct from the Replacement Reserve Fund the costs and expenses set forth in Section 4.04(b)(i). Lender will be entitled to charge Borrower for such costs and expenses and Borrower will pay the amount of such item(s) to Lender immediately after Notice from Lender to Borrower of such charge(s).

 

  (iii)

If there are insufficient funds in the Replacement Reserve Fund, then Lender will be entitled to charge Borrower for the costs and expenses specified in Section 4.04(b)(i), and Borrower will pay the amount of such item(s) to Lender immediately after Notice from Lender to Borrower of such charge(s).

 

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  (c)

Adjustments to Replacement Reserve Fund. If the initial term of the Loan is greater than 120 months, then the following provisions will apply:

 

  (i)

Lender reserves the right to adjust the amount of the Monthly Deposit based on Lender’s assessment of the physical condition of the Mortgaged Property, however, Lender will not make such an adjustment prior to the date that is 120 months after the first installment due date, nor more frequently than every 10 years thereafter during the term of the Loan.

 

  (ii)

Borrower will pay the cost of any assessment required by Lender pursuant to Section 4.04(c)(i) to Lender immediately after Notice from Lender to Borrower of such charge.

 

  (iii)

Upon Notice from Lender or Loan Servicer, Borrower will begin paying the Revised Monthly Deposit on the first monthly payment date that is at least 30 days after the date of Lender’s or Loan Servicer’s Notice. If Lender or Loan Servicer does not provide Borrower with Notice of a Revised Monthly Deposit, Borrower will continue to pay the Monthly Deposit or the Revised Monthly Deposit then in effect.

 

  (d)

Insufficient Amount in Replacement Reserve Fund. If Borrower requests disbursement from the Replacement Reserve Fund for a Capital Replacement in accordance with this Loan Agreement in an amount which exceeds the amount on deposit in the Replacement Reserve Fund, Lender will disburse to Borrower only the amount on deposit in the Replacement Reserve Fund. Borrower will pay all additional amounts required in connection with any such Capital Replacement from Borrower’s own funds.

 

  (e)

Reserved.

 

  (f)

Reserved.

 

  (g)

Disbursements from Replacement Reserve Fund.

 

  (i)

Requests for Disbursement. Lender will disburse funds from the Replacement Reserve Fund as follows:

 

  (A)

Borrower’s Request. If Borrower determines, at any time or from time to time, that a Capital Replacement is necessary or desirable, Borrower will perform such Capital Replacement and request from Lender, in writing, reimbursement for such Capital Replacement. Borrower’s request for reimbursement will include (1) a detailed description of the Capital Replacement performed, together with evidence, satisfactory to Lender, that the cost of such Capital Replacement has been paid, and (2) if required by Lender, lien waivers from each contractor and material supplier supplying labor or materials for such Capital Replacement.

 

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  (B)

Lender’s Request. If Lender reasonably determines at any time or from time to time, that a Capital Replacement is necessary for the proper maintenance of the Mortgaged Property, it will provide Borrower with a Notice requesting that Borrower obtain and submit to Lender bids for all labor and materials required in connection with such Capital Replacement. Borrower will submit such bids and a time schedule for completing each Capital Replacement to Lender within 30 days after Borrower’s receipt of Lender’s Notice. Borrower will perform such Capital Replacement and request from Lender, in writing, reimbursement for such Capital Replacement. Borrower’s request for reimbursement will include (1) a detailed description of the Capital Replacement performed, together with evidence, satisfactory to Lender, that the cost of such Capital Replacement has been paid, and (2) if required by Lender, lien waivers from each contractor and material supplier supplying labor or materials for such Capital Replacement.

 

  (ii)

Conditions Precedent. Disbursement from the Replacement Reserve Fund will be made no more frequently than once every Replacement Reserve Disbursement Period and, except for the final disbursement, no disbursement will be made in an amount less than the Minimum Replacement Disbursement Request Amount. Disbursements will be made only if the following conditions precedent have been satisfied, as determined by Lender in Lender’s Discretion:

 

  (A)

Each Capital Replacement has been performed and/or installed on the Mortgaged Property in a good and workmanlike manner with suitable materials (or in the case of a partial disbursement, performed and/or installed on the Mortgaged Property to an acceptable stage), in accordance with good building practices and all applicable laws, ordinances, rules and regulations, building setback lines and restrictions applicable to the Mortgaged Property, and has been paid for by Borrower as evidenced by copies of all applicable paid invoices or bills submitted to Lender by Borrower at the time Borrower requests disbursement from the Replacement Reserve Fund.

 

  (B)

There is no condition, event or act that would constitute a default (with or without Notice and/or lapse of time).

 

  (C)

No Lien or claim based on furnishing labor or materials has been recorded, filed or asserted against the Mortgaged Property, unless Borrower has properly provided a bond or other security against loss in accordance with applicable law.

 

  (D)

All licenses, permits and approvals of any Governmental Authority required for the Capital Replacement as completed to the applicable stage have been obtained and submitted to Lender upon Lender’s request.

 

Multifamily Loan and Security Agreement – Seniors Housing    Page 15


  (h)

Right to Complete Capital Replacements.

 

  (i)

If Borrower abandons or fails to proceed diligently with any Capital Replacement in a timely fashion or an Event of Default occurs and continues under this Loan Agreement for 30 days after Notice of such failure by Lender to Borrower, Lender will have the right (but not the obligation) to enter upon the Mortgaged Property and take over and cause the completion of such Capital Replacement. However, no such Notice or cure period will apply in the case of such failure which could, in Lender’s sole and absolute discretion, absent immediate exercise by Lender of a right or remedy under this Loan Agreement, result in harm to Lender, tenants or third parties or impairment of the security given under this Loan Agreement, the Security Instrument or any other Loan Document.

 

  (ii)

Any contracts entered into or indebtedness incurred upon the exercise of such right may be in the name of Borrower. Lender is irrevocably appointed the attorney in fact for Borrower, such appointment being coupled with an interest, to do all of the following:

 

  (A)

Enter into such contracts.

 

  (B)

Incur such obligations.

 

  (C)

Enforce any contracts or agreements made by or on behalf of Borrower (including the prosecution and defense of all actions and proceedings in connection with the Capital Replacement and the payment, settlement or compromise of all bills and claims for materials and work performed in connection with the Capital Replacement).

 

  (D)

Do any and all things necessary or proper to complete any Capital Replacement, including signing Borrower’s name to any contracts and documents as may be deemed necessary by Lender.

 

  (iii)

In no event will Lender be required to expend its own funds to complete any Capital Replacement, but Lender may, in Lender’s Discretion, advance such funds. Any funds advanced will be added to the Indebtedness, secured by the Security Instrument and payable to Lender by Borrower in accordance with the provisions of the Note, this Loan Agreement, the Security Instrument and any other Loan Document pertaining to the protection of Lender’s security and advances made by Lender.

 

Multifamily Loan and Security Agreement – Seniors Housing    Page 16


  (i)

Completion of Capital Replacements. Lender’s disbursement of monies from the Replacement Reserve Fund or other acknowledgment of completion of any Capital Replacement in a manner satisfactory to Lender in Lender’s Discretion will not be deemed a certification by Lender that the Capital Replacement has been completed in accordance with applicable building, zoning or other codes, ordinances, statutes, laws, regulations or requirements of any Governmental Authority. Borrower will at all times have the sole responsibility for ensuring that all Capital Replacements are completed in accordance with all such requirements of any Governmental Authority.

 

  (j)

Reserved.

 

  (k)

Reserved.

 

4.05

Rental Achievement Provisions. Reserved.

 

4.06

Debt Service Reserve. Reserved.

 

4.07

Rate Cap Agreement Reserve Fund. Reserved.

 

4.08

through 4.20 are Reserved.

ARTICLE V REPRESENTATIONS AND WARRANTIES.

Borrower represents and warrants to Lender 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.

 

Multifamily Loan and Security Agreement – Seniors Housing    Page 17


  (b)

Without limiting the generality of subsection (a) above, none of 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), any Facility Operator, or the Facility are subject to any proceeding, suit or investigation by any Governmental Authority. Neither 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 Borrower’s or any Facility Operator’s ability to accept and retain residents.

 

  (vi)

Impairment of 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.

 

  (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.

 

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  (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 Materialmen’s Claims. Except as set forth on Exhibit E, prior to the recordation of the 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 Security Instrument, Borrower has satisfied each of the following conditions:

 

  (a)

Borrower has fully disclosed in writing to both Lender and the title company issuing the 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 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.

 

Multifamily Loan and Security Agreement – Seniors Housing    Page 19


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 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, Borrower, any Facility Operator, and the Facility (and its operation) and all residential care agreements and residential Leases are in compliance with the applicable provisions of all laws, regulations, ordinances, orders or standards of any Governmental Authority having jurisdiction over the operation of the Facility (including any Governmental Payor Program requirements and disclosure of ownership and related information requirements), including:

 

  (i)

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

 

  (ii)

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

 

  (iii)

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

 

  (iv)

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

 

  (v)

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

 

Multifamily Loan and Security Agreement – Seniors Housing    Page 20


  (c)

Borrower has received no notice of, and is not aware of, any violation of applicable antitrust laws or securities laws relating to the Facility, 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)

Borrower, any Facility Operator, and any Property Manager, if applicable, and to the best of Borrower’s knowledge any commercial tenant of the Mortgaged Property is in possession of all material licenses, permits and authorizations required for use of the Mortgaged 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, Borrower has obtained or has caused any Facility Operator to obtain all Licenses necessary to use, occupy or operate the Facility for its Intended Use (such Licenses being in its own name or in the name of 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 the Facility is in conformity with all certificates of occupancy and Licenses and any other restrictions or covenants affecting the Facility. The Facility has all equipment, staff and supplies necessary to use and operate the Facility for its Intended Use.

 

  (c)

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 Borrower has not 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.

 

  (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.

 

Multifamily Loan and Security Agreement – Seniors Housing    Page 21


  (g)

There has been no previous assignment or encumbrance of the 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, the Security Instrument nor any other Loan Document, Borrower’s performance under the Loan Documents, nor the recordation of the Security Instrument, nor the exercise of any remedies by Lender pursuant to the Loan Documents, at law or in equity, will adversely affect the Licenses.

 

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 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, 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.

 

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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 the 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.

 

Multifamily Loan and Security Agreement – Seniors Housing    Page 23


  (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 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 Borrower or Borrower Principal is (i) the subject of or a party to (other than as a creditor) any completed or pending Bankruptcy, 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. Reserved.

 

5.23

Ground Lease. Reserved.

 

5.24

Purpose of Loan. The purpose of the Loan is as indicated by the checked boxes in the Summary.

 

  (a)

Refinance Loan: If “Refinance Loan” is checked in the Summary, then Borrower has fully disclosed to Lender the intended use of any cash received by Borrower from Lender in connection with the refinancing, if applicable.

 

  (b)

Acquisition Loan – Mortgaged Property: If “Acquisition Loan – Mortgaged Property” is checked in the Summary, then Borrower has fully disclosed to Lender all the consideration given or received or to be given or received in connection with the acquisition of the Mortgaged Property. The Mortgaged Property was or will be purchased from the Property Seller set forth in the Summary. No Borrower or Borrower Principal has or had, directly or indirectly (through a family member or otherwise), any interest in the Property Seller and the acquisition of the Mortgaged Property is an arm’s-length transaction. To the best of Borrower’s knowledge after due inquiry and investigation, the purchase price of the Mortgaged Property represents the fair market value of the Mortgaged Property and Property Seller is not or will not be insolvent subsequent to the sale of the Mortgaged Property.

 

  (c)

Acquisition Loan – Membership Interests: If “Acquisition Loan – Membership Interests” is checked in the Summary, then Borrower has fully disclosed to Lender all the consideration given or received or to be given or received in connection with the acquisition of 100% of the Membership Interests. The Membership Interests were or will be purchased from Membership Interests Seller set forth in the Summary. No Borrower Principal has or had, directly or indirectly (through a family member or otherwise), any interest in the 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 Membership Interests Seller is not or will not be insolvent subsequent to the sale of the Membership Interests.

 

  (d)

Supplemental Loan: If “Supplemental Loan” is checked in the Summary, then 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. Borrower has fully disclosed to Lender the intended use of any cash received by Borrower from Lender in connection with the Supplemental Loan, if applicable.

 

  (e)

Cross-Collateralized/Cross-Defaulted Loan Pool: If “Cross-Collateralized/Cross-Defaulted Loan Pool” is checked in the Summary, then the Loan is part of a cross-collateralized/cross-defaulted pool of loans and Borrower has fully disclosed to Lender the intended use of any cash received by Borrower from Lender in connection with the Loan and the other loans comprising the cross-collateralized/cross-defaulted loan pool, if applicable.

 

Multifamily Loan and Security Agreement – Seniors Housing    Page 25


5.25

Intended Use.

 

  (a)

The residential units in the Facility are allocated as set forth in the Intended Use in the Summary.

 

  (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 (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 (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 the Facility if the accumulated change after giving effect to the conversion, as a percentage of the total number of units in the 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 Facility, provided that no more than 40% of the beds at the 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.

 

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 Borrower, is listed on Exhibit L, and such list is true and complete.

 

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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 the 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 Borrower, or if Borrower is not a party thereto, by a Facility Operator, without the consent of the other party thereto (or 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 assignment of 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.

 

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  (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 Borrower, any Facility Operator, or the 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 the Facility, all of the following are true:

 

  (a)

The 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 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 Facility’s participation in the Governmental Payor Program nor is there any decision not to renew any provider agreement related to the Facility, nor is there any action pending or threatened to impose material intermediate or alternative sanctions with respect to the Facility.

 

  (d)

All Governmental Payor Program 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.

 

Multifamily Loan and Security Agreement – Seniors Housing    Page 28


  (e)

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

 

  (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 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 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 Facility Operator, of any private commercial insurance managed care or employee assistance program to which Borrower or 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.

 

Multifamily Loan and Security Agreement – Seniors Housing    Page 29


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 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 Facility for its Intended Use, and are not provisional, probationary, or restricted in any way.

 

5.35

No Pledge of Receivables. Neither Borrower nor the 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 the 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)

The Facility has not 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 the Facility, any Property Manager or Facility Operator or the 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 the Facility, any Property Manager or Facility Operator or the 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.

 

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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.

 

5.59

AML Laws.

 

  (a)

Borrower has not been convicted of a violation of the AML Laws or been the subject of a final enforcement action relating to the AML Laws.

 

  (b)

To the best of Borrower’s knowledge after due inquiry and investigation, no Borrower Principal nor Non-U.S. Equity Holder has been convicted of a violation of the AML Laws or been the subject of a final enforcement action relating to the AML Laws.

 

  (c)

Borrower has not received any notice that it is the subject of any pending proceedings for any violation of the AML Laws and to the best of Borrower’s knowledge it is not the subject of any pending proceedings for any violation of the AML Laws.

 

  (d)

To the best of Borrower’s knowledge after due inquiry and investigation no Borrower Principal nor Non-U.S. Equity Holder 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 are designed to prevent the admission of:

 

  (a)

Any Non-U.S. Equity Holder, or any investor with a 25% or more ownership interest in the aggregate in Borrower (whether directly or indirectly) 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. Notwithstanding the foregoing, Lender acknowledges and agrees that if Borrower or any Borrower Principal is a Public Company, unless such Borrower or Borrower Principal exercises control over the purchase and sale of its publicly traded equity securities to a particular investor (other than as a placement agent), Borrower or such Borrower Principal will not be deemed to make this representation with respect to direct or indirect ownership in such Public Company.

 

  (b)

Any Person that will have a 25% or more ownership interest in the aggregate in Borrower (whether directly or indirectly) that is on the Prohibited Parties Lists.

 

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  (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, there has been no direct or indirect interest in Borrower marketed or sold to investors through any form of Crowdfunding which constitutes either of the following:

 

  (a)

A Controlling Interest.

 

  (b)

An interest which may assume Control of Borrower under any terms of either Borrower’s organizational documents, or the organizational documents of any entity in Borrower’s ownership structure, regardless of whether the change in Control is the subject of a Permitted Transfer or a Conditionally Permitted Transfer.

 

5.62

through 5.70 are Reserved.

ARTICLE VI BORROWER COVENANTS.

 

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.

 

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.

 

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6.03

Use of Mortgaged Property.

 

  (a)

Unless required by applicable law, without the prior 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.

 

  (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 Borrower or the Facility Operator to provide at the Facility under (A) applicable Healthcare Laws, and (B) applicable Licenses.

 

  (c)

Notwithstanding anything contained in this Section 6.03 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.

 

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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 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 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.

 

  (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.

 

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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:

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.

 

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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:

 

  (i)

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

 

  (A)

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

 

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  (B)

A statement of income and expenses for Borrower 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, all of the following:

 

  (A)

An annual statement of income and expenses for Borrower for that fiscal year.

 

  (B)

A balance sheet showing all assets and liabilities of Borrower as of the end of that fiscal year.

 

  (C)

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

 

  (iii)

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

 

  (c)

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

 

  (i)

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

 

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  (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, an organizational chart that identifies all of the following:

 

  (A)

Persons that directly or indirectly Control Borrower and any Designated Entity for Transfers and the interest held by each.

 

  (B)

Persons with a collective equity interest (whether direct or indirect) of 25% or more in Borrower if not already identified pursuant to Section 6.07(c)(ii)(A).

 

  (C)

All Non-U.S. Equity Holders.

If any Designated Entity for Transfers is a Public Company, the organizational chart will not be required to show the ownership of such Public Company.

 

  (iii)

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

 

  (iv)

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

 

  (d)

Form of Statements; Audited Financials. A natural person having authority to bind Borrower (or the SPE Equity Owner or Guarantor, as applicable), 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 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.

 

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  (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 for each late statement, schedule or report, plus an additional $500 per month that any such statement, schedule or report continues to be late, and (ii) Lender will have the right to have Borrower’s books and records audited, at Borrower’s expense, by independent certified public accountants selected by Lender 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.

 

  (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.

 

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  (i)

through (m) are 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, unless applicable law specifies some lesser period.

 

  (c)

Payment of Impositions and Reserve Funds. If Lender is collecting Imposition Reserve Deposits pursuant to Article IV, then so long as no Event of Default exists, 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 6.08(c).

 

  (d)

Right to Contest. Borrower, at its own expense, may contest by appropriate legal proceedings, conducted diligently and in good faith, the amount or validity of any Imposition other than Insurance premiums and Ground Rent (if applicable), if: (i) Borrower notifies Lender of the commencement or expected commencement of such proceedings, (ii) the Mortgaged Property is not in danger of being sold or forfeited, (iii) if Borrower has not already paid the Imposition, Borrower deposits with Lender reserves sufficient to pay the contested Imposition, if requested by Lender, and (iv) Borrower furnishes whatever additional security is required in the proceedings or is reasonably requested by Lender, which may include the delivery to Lender of reserves established by Borrower to pay the contested Imposition.

 

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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 Sections 6.10(j), 6.10(k), 6.10(l), 6.11(b), or 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 (i) the assignment by the Property Manager of its interest under such property management agreement or (ii) the transfer of a controlling interest in the Property Manager if the Property Manager is an Affiliate of Borrower, 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.

 

  (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.

 

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  (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 consent of 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 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 Mortgaged Property has decreased to less than the 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 Mortgaged Property satisfies the Minimum Occupancy requirement.

 

  (2)

Suspend any additional Property Improvement Alterations which would cause residential units to be unavailable for leasing until the Mortgaged Property satisfies the 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)

If on the date of this Loan Agreement the Loan amount is $25,000,000 or more, or if the Mortgage is part of a crossed pool of Loans with an aggregate balance of $25,000,000 or more, then 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 that are then due and payable exceed 10% of the original principal loan amount.

 

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  (vi)

Reserved.

 

  (vii)

Reserved.

 

  (viii)

Reserved.

 

  (f)

Establishment of MMP. If indicated in the Summary, 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 Mortgaged Property or at the Property Manager’s or the Facility Operator’s office and available for review by Lender or the Loan Servicer during any annual assessment or other inspection of the Mortgaged 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 Borrower, including all operating and other expenses for the Mortgaged Property and all payments due pursuant to the terms of the Note and any Loan Documents.

 

  (h)

through (l) are reserved.

 

  (m)

Mechanic’s, Materialmen’s and Judgment Liens. If a mechanic’s, materialmen’s or judgment Lien is filed against the Mortgaged Property, Borrower must cause the Lien to be released of record, bonded off, or otherwise remedied to Lender’s satisfaction within 60 days after the date of creation of the Lien. 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 (not exceeding 120 days from the date of creation of the Lien 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.

 

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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, 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 “Causes of Loss – Special Form” 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.

 

  (iv)

Windstorm. If windstorm and/or windstorm related perils and/or “named storm” (collectively, “Windstorm Coverage”), are excluded from the “Causes of Loss – Special Form” 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.

 

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  (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:

 

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.

 

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  (ii)

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

 

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

 

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  (ii)

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

 

  (iii)

If a casualty results in damage to the Mortgaged Property for which the cost of Repairs will be more than the Borrower Proof of Loss 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 Mortgaged 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 Mortgaged Property after completion of the Restoration will not be sufficient to meet all operating costs and other expenses, deposits to Reserve Funds and Loan repayment obligations relating to the Mortgaged Property.

 

  (iv)

The Restoration will 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.

 

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  (vi)

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

 

  (vii)

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

 

  (viii)

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

 

  (m)

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

 

  (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

 

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  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 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 the Mortgaged Property, as long as no Event of Default, or any event which, with the giving of Notice or the passage of time, or both, would constitute an Event of Default, has occurred and is continuing, in the event of a partial Condemnation resulting in proceeds or awards in the amount of less than $100,000, Borrower will have the sole right to make proof of loss, adjust and compromise the claim and collect and receive any proceeds directly without the approval or prior consent of Lender so long as the proceeds or awards are used solely for the Restoration of the Mortgaged Property.

 

  (d)

Right to Apply Condemnation Proceeds to Indebtedness. In the event of a partial Condemnation of the Mortgaged Property resulting in proceeds or awards in the amount of $100,000 or more and subject to Section 6.11(e), Lender will have the right to 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.

 

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  (iii)

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

 

  (iv)

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

 

  (v)

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

 

  (vi)

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

 

  (vii)

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

 

  (viii)

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

 

  (e)

Right to Apply Condemnation Proceeds in Connection with a Partial Release. Notwithstanding anything to the contrary set forth in this Loan Agreement, including this Section 6.11, for so long as the Loan or any portion of the Loan is included in a Securitization 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 the Mortgaged Property (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 completed), then Lender will

 

Multifamily Loan and Security Agreement – Seniors Housing    Page 53


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

 

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

 

Multifamily Loan and Security Agreement – Seniors Housing    Page 55


  of technical consultants whether incurred in connection with any judicial or administrative process or otherwise) that Borrower fails to pay promptly will become an additional part of the Indebtedness as provided in Section 9.02. As long as: (i) no Event of Default has occurred and is continuing, (ii) Borrower has actually paid for or reimbursed Lender for all costs of any such Environmental Inspections performed or required by Lender, and (iii) Lender is not prohibited by law, contract or otherwise from doing so, Lender will make available to Borrower, without representation of any kind, copies of Environmental Inspections prepared by third parties and delivered to Lender. Lender reserves the right, and Borrower expressly authorizes Lender, to make available to any party, including any prospective bidder at a foreclosure sale of the Mortgaged Property, the results of any Environmental Inspections made by or for Lender with respect to the Mortgaged Property. Borrower consents to Lender notifying any party (either as part of a notice of sale or otherwise) of the results of 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.

 

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  (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 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 Borrower and any SPE Equity Owner will remain a “Single Purpose Entity,” which means at all times since its formation and thereafter it will satisfy each of the following conditions:

 

  (i)

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

 

  (ii)

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

 

  (iii)

It will preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the laws of the jurisdiction of its 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, divide or create divisions, wind-up, terminate or liquidate in whole or in part; to sell, transfer or otherwise dispose of all or substantially all of its assets; to change its legal structure; transfer or permit the direct or indirect transfer of any partnership, membership or other equity interests, as applicable, other than Transfers permitted under this Loan Agreement; issue additional partnership, membership or other equity interests, as applicable, or seek to accomplish any of the foregoing.

 

  (vi)

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

 

  (A)

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

 

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  (B)

Institute proceedings under any applicable insolvency law.

 

  (C)

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

 

  (D)

Consent to the filing or institution of a Bankruptcy 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.

 

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  (B)

Customary unsecured trade payables incurred in the ordinary course of owning and operating the Mortgaged Property provided the same are not evidenced by a promissory note, do not exceed, in the aggregate, at any time a maximum amount of 2% of the original principal amount of the Indebtedness and are paid within 60 days of the date incurred.

 

  (C)

through (H) are reserved.

 

  (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, 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 Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate or any other Person, and (B) such assets will also be listed on Borrower’s own separate balance sheet.

 

  (xii)

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

 

  (xiii)

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

 

  (xiv)

It will not assume or guaranty (excluding any guaranty that has been executed and delivered in connection with the Note) the debts or obligations of any other Person, hold itself out to be responsible for the debts of another Person, 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).

 

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  (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.

 

  (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)

It will pay (or cause the Property Manager or any Facility Operator to pay on behalf of Borrower from Borrower’s funds) its own liabilities (including salaries of its own employees) from its own funds; provided, however, 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.

 

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  (xxiv)

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

 

  (A)

Be formed and organized under Delaware law.

 

  (B)

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

 

  (C)

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

 

  (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. The SPE Equity Owner, if applicable, will at all times since its formation and thereafter comply in its own right (subject to the modifications set forth below), and will cause Borrower to comply, with each of the requirements of a Single Purpose Entity. Upon the withdrawal or the disassociation of an SPE Equity Owner from Borrower, Borrower will immediately appoint a new SPE Equity Owner, whose organizational documents are

 

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  substantially similar to those of the withdrawn or disassociated SPE Equity Owner, and if a nonconsolidation opinion was delivered on the Closing Date, 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 Borrower and SPE Equity Owner with those of its Affiliates.

 

  (i)

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

 

  (ii)

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

 

  (iii)

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

 

  (iv)

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

 

  (v)

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

 

  (c)

Effect of Transfer on 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 or after Notice from Lender, as applicable, 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

 

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  good and workmanlike manner, with suitable materials, and in accordance with good building practices and all applicable laws, ordinances, rules, regulations, building setback lines and restrictions applicable to the Mortgaged Property. Borrower agrees to cause the replacement of any material or work that is defective, unworkmanlike or that does not comply with the requirements of this Loan Agreement, as determined by Lender.

 

  (b)

Purchases. Without the prior 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 senior 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.

 

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  (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 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, any Borrower Principal, the 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 or governmental proceedings affecting Borrower, any Borrower Principal, the Facility Operator or Property Manager which might have a Material Adverse Effect.

 

6.17

Further Assurances and Estoppel Certificates; Lender’s 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, (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.

 

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  (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.

 

6.18

Cap Collateral. Reserved.

 

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.

 

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  (iv)

One or more of the following circumstances is true:

 

  (A)

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

 

  (B)

Less than 25% of each outstanding class of equity interests in Borrower are held by “benefit plan investors” within the meaning of Section 3(42) of ERISA, as amended from time to time or any successor provision.

 

  (C)

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

 

  (v)

Reserved

 

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.

 

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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 the 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.

 

  (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 the 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.

 

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  (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.

 

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

 

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  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.

 

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 the 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 the 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 the Facility.

 

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  (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 the Facility is being downgraded to a substandard category, revoked, or suspended, or that action is pending or being considered to downgrade any such certification.

 

  (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 the Facility with the Governmental Payor Program agency or the date of actual filing of such cost report of the 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 the 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.

 

Multifamily Loan and Security Agreement – Seniors Housing    Page 70


  (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.

 

  (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, 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 the 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 the Facility’s participation in any such program, as applicable.

 

Multifamily Loan and Security Agreement – Seniors Housing    Page 71


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 are designed to prevent the admission of:

 

  (i)

Any Non-U.S. Equity Holder, or any investor that would have a 25% or more ownership interest in Borrower (whether directly or indirectly), 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 Person with a 25% or more ownership interest in Borrower (whether directly or indirectly) that is on the Prohibited Parties Lists.

 

  (iii)

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

 

6.54

Crowdfunding. Borrower will not permit any direct or indirect ownership interests in Borrower to be marketed or sold to investors through any form of Crowdfunding which constitutes either of the following:

 

  (a)

A Controlling Interest.

 

  (b)

An interest which may assume Control of Borrower under any terms of either Borrower’s organizational documents, or the organizational documents of any entity in Borrower’s ownership structure, regardless of whether the change in Control is the subject of a Permitted Transfer or a Conditionally Permitted Transfer.

 

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.

 

Multifamily Loan and Security Agreement – Seniors Housing    Page 72


6.60

through 6.62 are Reserved.

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

 

7.01

Prohibited Transfers. Subject to Section 7.02 and 7.03, as applicable, the occurrence of any of the following Transfers will constitute a Prohibited Transfer:

 

  (a)

A Transfer of all or any part of the Mortgaged Property or any interest in the Mortgaged Property, whether voluntary, involuntary or by operation of law, including (i) the grant, creation or existence of any Lien on the Mortgaged Property (other than the Lien of the Security Instrument), even if such Lien does not have priority over the Lien of the Security Instrument, and (ii) the partial release of income producing or non-income producing property.

 

  (b)

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

 

  (c)

The Transfer of any Controlling Interest in Borrower or any Designated Entity for Transfers.

 

  (d)

A Transfer or series of Transfers of any legal or equitable interest that result(s) in a Required Equity Owner no longer owning the Required Equity Ownership Interest.

 

  (e)

The grant, creation or existence of any Lien on Ownership Interest, whether voluntary, involuntary or by operation of law, and whether or not such Lien on Ownership Interest has priority over the Lien of the Security Instrument, if the foreclosure of such Lien or the exercise of other remedies would result in a Prohibited Transfer.

 

  (f)

The termination or revocation of a Trust if the Trust is Borrower, Guarantor or a Designated Entity for Transfers.

 

  (g)

through (k) are Reserved.

 

  (l)

A Transfer that requires Lender’s prior consent under this Loan Agreement or a Conditionally Permitted Transfer that requires that certain conditions be satisfied, if such prior consent was not obtained or such conditions were not satisfied, as applicable.

 

  (m)

through (q) are Reserved.

 

Multifamily Loan and Security Agreement – Seniors Housing    Page 73


7.02

Permitted Transfers. Notwithstanding any provision of Section 7.01 to the contrary, the following Transfers are Permitted Transfers:

 

  (a)

Permitted Transfers of the Mortgaged Property.

 

  (i)

A Prohibited Transfer of the Mortgaged Property for which Borrower has obtained Lender’s written consent.

 

  (ii)

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.

 

  (iii)

The creation of any New Non-Residential Lease, or the modification or termination of any Non-Residential Lease, in each case, for which Borrower satisfies the requirements of Section 6.04.

 

  (iv)

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

 

  (v)

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

 

  (vi)

The creation of a mechanic’s, materialmen’s, or judgment Lien with respect to which Borrower satisfies the requirements of Section 6.09(m).

 

  (vii)

An easement, restrictive covenant or other encumbrance with respect to which Borrower satisfies the requirements of Section 7.10.

 

  (viii)

A Lien of a Supplemental Instrument with respect to which Borrower satisfies the requirements of Section 11.11.

 

  (ix)

A Defeasance with respect to which Borrower satisfies the requirements of Section 11.12.

 

  (b)

Permitted Transfers of Ownership Interests

 

  (i)

A Transfer of any legal or equitable interests in an entity that is not Borrower or a Designated Entity for Transfers so long as such Transfer does not result in a Prohibited Transfer under Section 7.01(b) or 7.01(d).

 

  (ii)

A Transfer of any legal or equitable Non-Controlling Interest in Borrower or any Designated Entity for Transfers so long as such Transfer does not result in a Prohibited Transfer under Section 7.01(b) or 7.01(d).

 

Multifamily Loan and Security Agreement – Seniors Housing    Page 74


  (iii)

A Prohibited Transfer of any legal or equitable interests in Borrower or a Designated Entity for Transfers for which Borrower has obtained Lender’s written consent.

 

  (iv)

A Conditionally Permitted Transfer pursuant to Section 7.03, upon the satisfaction of all applicable conditions.

 

  (v)

The Transfer by a Person of all or part of the Controlling Interest in Borrower or a Designated Entity for Transfers if such interests are first converted to a Non-Controlling Interest and the transferor retains Control of Borrower or Designated Entity for Transfers, as applicable, so long as such Transfer does not result in a Prohibited Transfer under Section 7.01(b) or 7.01(d).

 

  (vi)

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

 

  (c)

through (r) are Reserved.

 

7.03

Conditionally Permitted Transfers. Notwithstanding any provision of Section 7.01 to the contrary, the occurrence of any of the following Transfers will not constitute a Prohibited Transfer if Borrower has complied with all applicable conditions specified in this Section 7.03 and in Section 7.04 (each a “Conditionally Permitted Transfer”).

 

  (a)

Conditionally Permitted Transfers - Category I (Transfer Processing Fee transactions)

 

  (i)

Affiliate Transfer. An “Affiliate Transfer” is a Transfer of any Controlling Interest in Borrower or a Designated Entity for Transfers to an Affiliate of the transferor.

 

  (ii)

Reserved.

 

  (iii)

Transfer to Previously Underwritten Person.

 

  (A)

A “Transfer to Previously Underwritten Person” is a Transfer of a Controlling Interest in Borrower or a Designated Entity for Transfers to Previously Underwritten Person due to the retirement, death, or legal incapacity of a Prior Borrower Principal. If the name of Previously Underwritten Person is not completed in the Summary then this Section 7.03(a)(iii) is not applicable.

 

  (B)

In place of the Notice required in Section 7.04(a), Borrower provides Lender with Notice of such Transfer together with copies of all documents effecting such Transfer not more than 60 days after the retirement, death, or legal incapacity of Prior Borrower Principal.

 

Multifamily Loan and Security Agreement – Seniors Housing    Page 75


  (C)

If Prior Borrower Principal or its Affiliate was a Guarantor, one of the following must occur:

 

  (1)

Lender determines that at the time of the Transfer any or all the remaining Guarantors will meet the requirements for a Replacement Guarantor, including the Replacement Guarantor Net Worth and Liquidity Requirements, or

 

  (2)

Previously Underwritten Person or an Affiliate becomes a Replacement Guarantor and executes and delivers a Replacement Guaranty within 60 days after the retirement, death, or legal incapacity of Prior Borrower Principal.

 

  (D)

Previously Underwritten Person certifies in writing to Lender that, since the date of this Loan Agreement, except as disclosed to and approved by Lender in writing, Previously Underwritten Person has not been:

 

  (1)

Subject to a claim in any litigation or other proceeding (even if settled) relating to fraud, breach of fiduciary duty, breach of trust or other similar claim, or money laundering, terrorist financing, terrorism or similar claim.

 

  (2)

To the best of Previously Underwritten Person’s knowledge, investigated by any Governmental Authority in connection with any matter set forth in Section 7.03(a)(iii)(D)(1).

 

  (3)

The subject of a complaint or indictment charging a felony.

 

  (4)

Involved in any pending or current criminal litigation.

 

  (5)

The subject of a Bankruptcy.

 

  (6)

Suspended, barred or otherwise restricted by any department or agency of the federal government.

 

  (E)

Previously Underwritten Person certifies in writing to Lender that its net worth and liquidity are substantially the same as or better than the net worth and liquidity of Previously Underwritten Person as of the date of this Loan Agreement.

 

  (F)

Section 7.04(i) will not be applicable (solely with respect to the Prior Borrower Principal).

 

Multifamily Loan and Security Agreement – Seniors Housing    Page 76


  (iv)

Co-Owner Transfer.

 

  (A)

A “Co-Owner Transfer” is a Transfer of interests in the Mortgaged Property by any co-owner of the Mortgaged Property to any other co-owner of the Mortgaged Property.

 

  (B)

Lender receives and approves the documents transferring interest in the Mortgaged Property to the transferee(s).

 

  (C)

If Borrower is a tenancy-in-common, each of the co-owners remaining after the Co-Owner Transfer executes an amendment to the Tenancy in Common Agreement reasonably acceptable to Lender.

 

  (D)

Each co-owner remaining after the Co-Owner Transfer reaffirms in writing, in a form reasonably acceptable to Lender, its obligations under the Note, Loan Agreement, Security Instrument, and any other Loan Document and acknowledges and confirms that the Note, Loan Agreement, Security Instrument, and all other Loan Documents are in full force and effect.

 

  (E)

Each Guarantor reaffirms in writing, in a form reasonably acceptable to Lender, its obligations under any Guaranty and acknowledges and confirms that the Guaranty remains in full force and effect.

 

  (F)

Borrower delivers to Lender either (1) an endorsement to the Title Policy along with a title update, or (2) a new title insurance policy, in either case with an effective date no earlier than the date of recordation of the deed transferring the interest in the Mortgaged Property to the transferee. An endorsement to the Title Policy that evidences the recordation of the deed transferring the interest in the Mortgaged Property to the transferee but which does not change the effective date of the Title Policy will not be sufficient.

 

  (G)

Following the Co-Owner Transfer, Required Co-Owner must continue to maintain the Required Co-Owner Interest as described in the Summary.

 

  (v)

TIC Roll-up Transfer.

 

  (A)

A “TIC Roll-up Transfer” is the termination of the existing Tenancy in Common Agreement and the Transfer of all the interests of each Co-Owner Borrower in the Mortgaged Property to a single entity (“Consolidation Borrower”).

 

Multifamily Loan and Security Agreement – Seniors Housing    Page 77


  (B)

Immediately after the TIC Roll-up Transfer, the proportional beneficial ownership interest in the Consolidation Borrower must be the same as the ultimate beneficial ownership of each Co-Owner Borrower in the Mortgaged Property immediately prior to the TIC Roll-up Transfer. By way of example, an owner of a 10% membership interest in a Co-Owner Borrower that owns 50% of the Mortgaged Property must become a 5% member of the Consolidation Borrower.

 

  (C)

If the Consolidation Borrower was formed more than 90 days prior to the date of the TIC Roll-up Transfer, the Consolidation Borrower must comply with all of Lender’s then-current requirements relating to recycled entities.

 

  (D)

Following the TIC Roll-up Transfer, the Consolidation Borrower must be directly or indirectly Controlled by the Consolidation Borrower Manager identified in the Summary.

 

  (E)

All consents, agreements and other documents relating to the termination of the Tenancy in Common Agreement, the transfer of interests in the Mortgaged Property to Consolidation Borrower, and/or otherwise related to the TIC Roll-up Transfer are reasonably satisfactory to Lender.

 

  (F)

The Consolidation Borrower executes an Assumption Agreement that, among other things, requires the Consolidation Borrower to assume and perform all obligations of each Co-Owner Borrower set forth in the Loan Documents. Each Co-Owner Borrower will remain liable and Consolidation Borrower will become liable under the Loan Documents for events or circumstances occurring or existing on or before the date of the TIC Roll-up Transfer.

 

  (G)

The Assumption Agreement is recorded in the land records and Consolidation Borrower delivers either (1) an endorsement to the Title Policy along with a title update, or (2) a new title insurance policy in a form acceptable to Lender, in either case with an effective date no earlier than the date of recordation of the Assumption Agreement. An endorsement to the existing Title Policy that evidences the recordation of the deed transferring the interest in the Mortgaged Property to the Consolidation Borrower but which does not change the effective date of the Title Policy will not be sufficient.

 

  (H)

Each Guarantor reaffirms in writing, in a form reasonably acceptable to Lender, its obligations under any existing Guaranty and acknowledges and confirms that the Guaranty remains in full force and effect.

 

Multifamily Loan and Security Agreement – Seniors Housing    Page 78


  (I)

The Consolidation Borrower files such financing statements as reasonably required by Lender.

 

  (J)

The TIC Roll-up Transfer is completed in accordance with the terms of this Section 7.03(a)(v) at least one year prior to the Maturity Date.

 

  (vi)

through (xv) are Reserved.

 

  (b)

Conditionally Permitted Transfers - Category II (Special Transfer Processing Fee transactions)

 

  (i)

Transfer of a Controlling Interest Due to Death.

 

  (A)

Transfer of a Controlling Interest Due to Death” is (1) a Transfer to a Beneficiary of a Controlling Interest in Borrower or a Designated Entity for Transfers by devise, descent, or operation of law, due to the death of a natural person, and if applicable, (2) the subsequent Transfer by such Beneficiary to another Beneficiary of the deceased natural person (“Second Beneficiary”).

 

  (B)

In place of the Notice required in Section 7.04(a), Borrower provides Lender with Notice of the death not more than 60 days after the death (“Notice of Death”).

 

  (C)

Within 30 days after the Notice of Death, Borrower notifies Lender (1) of the proposed Transfer date, (2) of the identity of the Beneficiary, and (3) whether the Beneficiary will subsequently Transfer the Controlling Interest to a Second Beneficiary and the identity of the Second Beneficiary, if applicable (“Settlement Notice”).

 

  (D)

In place of the Transfer Processing Fee due under Section 7.04(b), Borrower pays Lender the Special Transfer Processing Fee when Borrower delivers the Settlement Notice.

 

  (E)

Contemporaneously with providing the Settlement Notice to Lender, Borrower provides evidence reasonably satisfactory to Lender that the eligibility, organization, credit and experience in the management of similar properties of Beneficiary or Second Beneficiary, as applicable, are appropriate to the overall structure and documentation of the Loan.

 

  (F)

If the Transfer of a Controlling Interest Due to Death results from the death of any Guarantor, each surviving Guarantor executes such documents and agreements as Lender reasonably requires to ratify its Guaranty within 30 days after the Notice of Death.

 

Multifamily Loan and Security Agreement – Seniors Housing    Page 79


  (G)

If the Transfer of a Controlling Interest Due to Death results from the death of any Guarantor, unless Lender determines that any or all the surviving Guarantors meet the requirements for a Replacement Guarantor, including the Replacement Guarantor Net Worth and Liquidity Requirements, one of the following occurs:

 

  (1)

Within 30 days after the Settlement Notice, Borrower causes a Replacement Guarantor to execute and deliver to Lender a Replacement Guaranty.

 

  (2)

The estate of the deceased Guarantor ratifies the Guaranty in writing within 30 days after the Settlement Notice, and within 6 months after the death of the deceased Guarantor, Borrower causes a Replacement Guarantor to execute and deliver to Lender a Replacement Guaranty.

 

  (H)

Section 7.04(i) and (j) will not be applicable (solely with respect to any deceased Guarantor).

 

  (ii)

Preferred Equity Control Take-Over Transfer.

 

  (A)

A “Preferred Equity Control Take-Over Transfer” is a Transfer of Manager’s right to Control Borrower to Preferred Equity Investor or an Affiliate of Preferred Equity Investor pursuant to the operating agreement, joint venture agreement, or similar agreement governing a preferred equity contribution. If the name of Preferred Equity Investor is not specified in the Summary then this Transfer provision is not applicable. The Preferred Equity Control Take-Over Transfer cannot include a contemporaneous Transfer of Manager’s ownership interests to Preferred Equity Investor. Such Manager’s ownership interests may only be transferred (i) subsequent to a Preferred Equity Control Take-Over, (ii) for fair value, and (iii) otherwise in accordance with this Loan Agreement.

 

  (B)

In place of the Transfer Processing Fee required by Section 7.04(b), Borrower pays Lender the Special Transfer Processing Fee when Borrower delivers the Notice of the Transfer.

 

  (C)

Notwithstanding Section 7.04(c), if there is an Event of Default and the Preferred Equity Control Take-Over Transfer would cure the Event of Default, then the Preferred Equity Control Take-Over Transfer will be permitted if it occurs within 60 days after all applicable conditions have been met to Lender’s satisfaction.

 

  (D)

Preferred Equity Investor or an Affiliate of Preferred Equity Investor becomes a Replacement Guarantor and executes and delivers a Replacement Guaranty.

 

Multifamily Loan and Security Agreement – Seniors Housing    Page 80


  (E)

Preferred Equity Investor certifies in writing to Lender that since the date of this Loan Agreement, except as disclosed to and approved by Lender, Preferred Equity Investor (or the Affiliate of Preferred Equity Investor, if applicable) has not been:

 

  (1)

Subject to a claim in any litigation or other proceeding (even if settled) relating to fraud, breach of fiduciary duty, breach of trust or other similar claim, or money laundering, terrorist financing, terrorism or similar claim.

 

  (2)

To the best of Preferred Equity Investor’s knowledge, investigated by any Governmental Authority in connection with any matter set forth in Section 7.03(b)(ii)(E)(1).

 

  (3)

The subject of a complaint or indictment charging a felony.

 

  (4)

Involved in any pending or current criminal litigation.

 

  (5)

The subject of a Bankruptcy.

 

  (6)

Suspended, barred or otherwise restricted by any department or agency of the federal government.

 

  (F)

Preferred Equity Investor certifies in writing to Lender that its net worth and liquidity (or the net worth and liquidity of the Affiliate of Preferred Equity Investor) are substantially the same as or better than the net worth and liquidity of Preferred Equity Investor as of the date of this Loan Agreement.

 

  (G)

Section 7.04(i) will not be applicable.

 

  (iii)

Buy-Sell Transfer.

 

  (A)

A “Buy-Sell Transfer” is a Transfer of Manager’s right to directly or indirectly Control Borrower and/or Manager’s direct or indirect ownership interest in Borrower with the right to Control Borrower to the Buy-Sell Equity Investor or an Affiliate of Buy-Sell Equity Investor pursuant to a buy-sell agreement, operating agreement, partnership agreement, joint venture agreement, or similar agreement. If the name of the Buy-Sell Equity Investor is not specified in the Summary then this provision is not applicable.

 

  (B)

In place of the Transfer Processing Fee required by Section 7.04(b), Borrower pays Lender the Special Transfer Processing Fee when Borrower delivers the Notice.

 

Multifamily Loan and Security Agreement – Seniors Housing    Page 81


  (C)

Notwithstanding Section 7.04(c), if there is an Event of Default and the Buy-Sell Transfer would cure the Event of Default, then the Buy-Sell Transfer will be permitted if it occurs within 60 days after all applicable conditions have been met to Lender’s satisfaction.

 

  (D)

Buy-Sell Equity Investor or its Affiliate becomes a Replacement Guarantor and executes and delivers a Replacement Guaranty.

 

  (E)

Buy-Sell Equity Investor certifies in writing to Lender that since the date of this Loan Agreement, except as disclosed to and approved by Lender, Buy-Sell Equity Investor (or the Affiliate of Buy-Sell Equity Investor, if applicable) has not been:

 

  (1)

Subject to a claim in any litigation or other proceeding (even if settled) relating to fraud, breach of fiduciary duty, breach of trust or other similar claim, or money laundering, terrorist financing, terrorism or similar claim.

 

  (2)

To the best of Buy-Sell Equity Investor’s knowledge, investigated by any Governmental Authority in connection with any matter set forth in Section 7.03(b)(iii)(E)(1).

 

  (3)

The subject of a complaint or indictment charging a felony.

 

  (4)

Involved in any pending or current criminal litigation.

 

  (5)

The subject of a Bankruptcy.

 

  (6)

Suspended, barred or otherwise restricted by any department or agency of the federal government.

 

  (F)

Buy-Sell Equity Investor certifies in writing to Lender that its net worth and liquidity (or the net worth and liquidity of the Affiliate of Buy-Sell Equity Investor, if applicable) are substantially the same as or better than the net worth and liquidity of Buy-Sell Equity Investor as of the date of this Loan Agreement.

 

  (G)

Section 7.04(i) will not be applicable.

 

  (iv)

through (viii) are Reserved.

 

  (c)

Conditionally Permitted Transfers—Category III (Transfer Processing Fee plus Conditional Transfer Fee transactions)

 

Multifamily Loan and Security Agreement – Seniors Housing    Page 82


If the Loan is in a Securitization, for purposes of this Section 7.03(c) only, the term “Lender in Lender’s Discretion” may include the determination of the approved directing certificateholder, if any, in such Securitization.

 

  (i)

Manager Transfer.

 

  (A)

A “Manager Transfer” is a voluntary or involuntary Transfer by a Manager (“Departing Manager”) to one or more Existing Owners.

 

  (B)

Lender in Lender’s Discretion has determined that the eligibility, organization, credit, and experience in the management of similar properties of the Existing Owner are appropriate to the overall structure and documentation of the Loan.

 

  (C)

If the Departing Manager or its Affiliate is a Guarantor, Existing Owner or an Affiliate of Existing Owner becomes a Replacement Guarantor and executes and delivers a Replacement Guaranty.

 

  (D)

Section 7.04(i) will not be applicable.

 

  (E)

Notwithstanding Section 7.04(q), Borrower pays to Lender the Conditional Transfer Fee at the time of the Manager Transfer.

 

  (ii)

Required Equity Owner Transfer.

 

  (A)

A “Required Equity Owner Transfer” is a Transfer by a Required Equity Owner (“Departing Equity Owner”) of part or all of the Required Equity Ownership Interest.

 

  (B)

Lender in Lender’s Discretion has determined that it is not necessary for the Departing Equity Owner to maintain the Required Equity Ownership Interest.

 

  (C)

If the Required Equity Owner Transfer takes place in connection with another Transfer, then notwithstanding Section 7.04(b), Lender will not collect a Transfer Processing Fee if a Transfer Processing Fee or Special Transfer Processing Fee was collected by Lender in connection with the other Transfer.

 

  (D)

Section 7.04(r) will not be applicable.

 

  (E)

Notwithstanding Section 7.04(q), Borrower pays to Lender the Conditional Transfer Fee at the time of the Required Equity Owner Transfer.

 

Multifamily Loan and Security Agreement – Seniors Housing    Page 83


  (iii)

Release of Guarantor Transfer.

 

  (A)

A “Release of Guarantor Transfer” is a Transfer that occurs when Lender in Lender’s Discretion agrees in writing to release a Guarantor (“Released Guarantor”) of a portion of Released Guarantor’s liability under the Guaranty.

 

  (B)

After the Release of Guarantor Transfer, there must be one or more remaining Guarantor(s), which individually or together meet the Replacement Guarantor Net Worth and Liquidity Requirements and are otherwise acceptable to Lender.

 

  (C)

If Lender consents to a Release of Guarantor Transfer, then one of the following will apply:

 

  (i)

If Borrower delivers to Lender a Clean Site Assessment, then Lender will release Released Guarantor from all of Released Guarantor’s obligations except Released 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 7.03(B)(iii), then Lender will release Released Guarantor from all of Released Guarantor’s obligations except for Released Guarantor’s obligation to guaranty Borrower’s liability under Section 6.12 or Section 10.02(b).

 

  (D)

If the Release of Guarantor Transfer takes place in connection with another Transfer, notwithstanding Section 7.04(b), Lender will not collect a Transfer Processing Fee if a Transfer Processing Fee or Special Transfer Processing Fee was collected by Lender in connection with the other Transfer.

 

  (E)

Notwithstanding Section 7.04(q), Borrower pays to Lender the Conditional Transfer Fee at the time of the Release of Guarantor Transfer unless the Release of Guarantor Transfer takes place in connection with another Conditionally Permitted Transfer or a Transfer to which Lender has consented pursuant to Section 7.05.

 

  (iv)

through (viii) are Reserved.

 

  (d)

Reserved.

 

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7.04

Conditions for Conditionally Permitted Transfers. The following conditions will apply to all Conditionally Permitted Transfers unless otherwise noted in Section 7.03.

 

  (a)

Borrower provides Lender with Notice at least 30 days prior to the proposed Conditionally Permitted Transfer.

 

  (b)

Borrower pays a Transfer Processing Fee to Lender at the time Borrower provides Lender with the Notice of such Transfer.

 

  (c)

At the time of the Conditionally Permitted 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.

 

  (d)

Borrower delivers to Lender organizational charts, in form and detail acceptable to Lender, reflecting the structure of Borrower prior to and after the Conditionally Permitted Transfer. If required by Lender, the Loan Agreement is amended to revise Exhibit H to reflect the post-Conditionally Permitted Transfer organizational chart.

 

  (e)

Borrower delivers to Lender either (i) copies of the then-current organizational documents of Borrower and any other entity in which interests will be transferred, including any proposed amendments to be made in connection with the Conditionally Permitted Transfer or (ii) a certification that the organizational documents have not been modified since the date of this Loan Agreement.

 

  (f)

Borrower certifies in writing to Lender that as of the date of the Conditionally Permitted Transfer no Borrower Principal:

 

  (i)

Is on any Prohibited Parties Lists.

 

  (ii)

Has been convicted of a violation of the AML Laws.

 

  (iii)

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

 

  (g)

Borrower certifies in writing to Lender that as of the date of the Conditionally Permitted Transfer either there will not be any Non-U.S. Equity Holders, or no Non-U.S. Equity Holder:

 

  (i)

Is on the OFAC Lists.

 

  (ii)

Has been convicted of a violation of the AML Laws.

 

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  (iii)

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

 

  (h)

Following the Conditionally Permitted Transfer, one of the following is true:

 

  (i)

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

 

  (ii)

The requirements of Section 6.09(d) regarding the appointment of a new Property Manager have been or will be satisfied.

 

  (i)

Following the Conditionally Permitted Transfer, Control and management of the operations of Borrower and Facility Operator, if applicable, continue to be held by the Person exercising such Control and management immediately prior to the Conditionally Permitted Transfer.

 

  (j)

Unless a Replacement Guarantor is applicable, Guarantor continues to own a direct or indirect interest in Borrower if Guarantor owned a direct or indirect interest in Borrower prior to the Conditionally Permitted Transfer.

 

  (k)

Reserved.

 

  (l)

If any transferee or any Replacement Guarantor is an entity, Borrower provides to Lender satisfactory evidence that the term of existence of such entity (exclusive of any unexercised extension options or rights) does not expire prior to the Maturity Date.

 

  (m)

If there is a Replacement Guaranty or a modification of any Loan Document, Borrower delivers to Lender customary legal opinions, as Lender reasonably deems necessary, in form and substance satisfactory to Lender.

 

  (n)

Borrower and Guarantor execute such documents and agreements as Lender reasonably requires to evidence the Transfer and to ratify their obligations under the Loan Documents.

 

  (o)

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

 

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  (p)

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

 

  (q)

Lender will not be entitled to collect a Transfer Fee or Conditional Transfer Fee.

 

  (r)

Upon completion of any Conditionally Permitted Transfer, Required Equity Owner must own the Required Equity Ownership Interest.

 

  (s)

Upon completion of any Conditionally Permitted Transfer, Borrower must be in compliance with Section 7.06 and 7.07 of this Loan Agreement, if applicable.

 

  (t)

through (v) are Reserved.

 

7.05

Lender’s Consent to Prohibited Transfers.

 

  (a)

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

 

  (i)

Borrower has provided Lender with Notice at least 45 days prior to the proposed Transfer and has paid the Transfer Processing Fee at the time of such Notice.

 

  (ii)

At least 30 days prior to the proposed Transfer, Borrower has submitted to Lender all information required by Lender to make the determinations required by this Section 7.05.

 

  (iii)

As of the date of the 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 unless such Transfer would cure the Event of Default.

 

  (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 meet Lender’s standards and are appropriate to the overall structure and documentation of the Loan.

 

  (v)

Lender in Lender’s Discretion has determined that the proposed Guarantor’s credit meets Lender’s standards.

 

  (vi)

Lender in Lender’s Discretion has determined that the Mortgaged Property at the time of the proposed Transfer will be managed by a Property Manager meeting the requirements of Section 6.09(d), and, if applicable, a Facility Operator whose organization, credit and experience in the operation of

 

Multifamily Loan and Security Agreement – Seniors Housing    Page 87


  similar senior housing facilities is adequate and appropriate to the overall structure and documentation of the Loan. Any new or replacement Facility Operator approved by Lender must either (A) assume the Loan Documents executed by the prior Facility 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 Facility Operator’s role in the operation of the Facility and appropriately secure the Loan.

 

  (vii)

Lender in Lender’s Discretion has determined that the Mortgaged Property, at the time of the proposed Transfer, will meet all of Lender’s standards as to its physical condition, occupancy, net operating income, and the accumulation of reserves (or appropriate reserves acceptable to Lender are established).

 

  (viii)

Reserved.

 

  (ix)

Lender has determined that none of the transferee, any proposed Borrower Principal of the transferee or any Non-U.S. Equity Holder of the transferee is presently listed on the OFAC Lists and neither the transferee or any proposed Borrower Principal of the transferee is listed on the FHFA SCP List.

 

  (x)

Lender has determined that neither the transferee nor any proposed Borrower Principal has been convicted of a violation of the AML Laws or has been the subject of a final enforcement action relating to the AML Laws.

 

  (xi)

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