SUBORDINATION, ASSIGNMENT AND SECURITY AGREEMENT

 

SUBORDINATION, ASSIGNMENT

AND SECURITY AGREEMENT

 

THIS SUBORDINATION, ASSIGNMENT AND SECURITY AGREEMENT (this “Agreement”) is made and entered into as of August 4, 2009 by and among (i) SNH FM Financing LLC, a Delaware limited liability company (together with its successors and assigns, the “Borrower”), (ii) Citibank, N.A., a national banking association (the “Lender”), (iii) FS Tenant Pool III Trust, a Maryland business trust (together with its successors and assigns, the “Operator”) and (iv) FVE FM Financing, Inc., a Maryland corporation (together with its successors and assigns, the “Master Tenant”).

 

Recitals

 

A.             Borrower is the owner of a Seniors Housing Facility commonly known as Memorial Woods and located at 777 North Post Oak Road, Houston, TX 77024 (the “Mortgaged Property”).  A legal description of the Mortgaged Property is attached hereto as Exhibit A.

 

B.             Master Tenant is the tenant of the Mortgaged Property pursuant to that certain Amended and Restated Master Lease Agreement dated August 4, 2009 among SNH FM Financing LLC, SNH FM Financing Trust, Ellicott City Land I, LLC and Master Tenant (the “Master Lease”).

 

C.             Operator is the operator of the Mortgaged Property pursuant to that certain Sublease Agreement between Operator and Master Tenant (the “Operating Lease”) and is the holder of all of the required Licenses required to operate the Mortgaged Property as a Seniors Housing Facility.

 

D.             Lender has made a loan to Borrower and related parties in the amount of $512,934,000 (the “Loan”) pursuant to that certain Master Credit Facility Agreement by and between Borrower and Lender dated as of the date hereof (the “Master Agreement”).  The Loan will be evidenced by the Note and will be secured by, among other things, a Multifamily Deed of Trust , Assignment of Rents, Security Agreement and Fixture Filing of even date herewith executed by the Borrower for the benefit of Lender, which will be recorded in the official records of Recorder’s Office of the County of Harris, Texas and assigned to Fannie Mae (the “Instrument”), which encumbers the Mortgaged Property.

 

E.              Lender requires and each of Master Tenant and Operator is willing to subordinate its right, title and interest to and under the Master Lease and Operating Lease to the Instrument and to assign all Leases, Rents, Equipment, Inventory, Contracts and Accounts to Lender subject to recognition by Lender of Master Tenant’s and Operator’s rights under the Master Lease and the Operating Lease so long as there shall exist no Event of Default thereunder or hereunder.

 

 

 

 

 

 

Subordination, Assignment and Security Agreement	Form 4079
(Seniors Housing) (Memorial Woods)	05-05	Ó 2000-2005 Fannie Mae

 

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F.              Each of Master Tenant and Operator is willing to attorn to Lender upon an event of default by Borrower under the Loan Documents, to perform its obligations under the Master Lease and Operating Lease and this Agreement for Lender, or its successors and assigns in interest, and upon an Event of Default to permit Lender to terminate the Master Lease and Operating Lease without liability.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, Borrower, Lender, Master Tenant and Operator agree as follows:

 

1.              DEFINITIONS.   Capitalized terms used in this Agreement and not otherwise defined shall have the meanings assigned to them in the Instrument.  All terms used herein which are defined in the Uniform Commercial Code, as in effect from time to time in the jurisdiction in which the Mortgaged Property is located, shall have the same meanings when used herein.  The following terms, when used in this Agreement, shall have the following meanings:

 

(a)            “Accounts” means all money, funds, investment property, accounts, general intangibles, deposit accounts, chattel paper, documents, instruments, judgments, claims, settlements of claims, causes of action, refunds, rebates, reimbursements, reserves, deposits, subsidies, proceeds, products, rents and profits, now or hereafter arising, received or receivable, from or on account of Operator’s management and operation of the Mortgaged Property as a Seniors Housing Facility.

 

(b)            “ CERCLA ” shall have the meaning as defined in Section 15(h) of this Agreement.

 

(c)            “ Certificate of Operator ” means that certain Master Certificate of Operator dated as of the date hereof among FS Tenant Pool I Trust, a Maryland business trust, FS Tenant Pool II Trust, a Maryland business trust, FS Tenant Pool III Trust, a Maryland business trust, Five Star Quality Care-CA, LLC, a Delaware limited liability company, Five Star Quality Care-Savannah, LLC, a Delaware limited liability company, Five Star Quality Care-MD, LLC, a Delaware limited liability company, The Heartlands Retirement Community — Ellicott City I, Inc., a Maryland corporation, Five Star Quality Care-NC, LLC, a Delaware limited liability company, Morningside of Charlottesville, LLC, a Delaware limited liability company, Five Star Quality Care-VA, LLC, a Delaware limited liability company, Morningside of Bellgrade, Richmond, LLC, a Delaware limited liability company, Morningside of Newport News, LLC, a Delaware limited liability company, Five Star Quality Care-WI, LLC, a Delaware limited liability company, and FVE FM Financing, Inc., a Maryland corporation.

 

(d)            “Contracts” means any contract or other agreement for the provision of goods or services at or otherwise in connection with the operation, use or management of the Mortgaged Property, including cash deposited to secure performance by parties of their obligations. “Contracts” shall also include any residency, occupancy, admission, and care agreements pertaining to residents of the Mortgaged Property.

 

 

 

 

 

Subordination, Assignment and Security Agreement	Form 4079
(Seniors Housing) (Memorial Woods)	05-05	Ó 2000-2005 Fannie Mae

 

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(e)            “Equipment” means all right, title and interest of Operator in and to all machinery, equipment, computer equipment (hardware and software), tools, furniture, furnishings, kitchen or restaurant supplies and facilities, office equipment, dining room supplies and facilities, medical supplies and facilities, appliances, supplies, books, records, fixtures, leasehold improvements, all tangible and intangible property, and goods now owned and hereafter acquired, in each case used in connection with the operation of the Mortgaged Property, together with all present and future parts, additions, accessories, replacements, attachments, accessions, replacement parts and substitutions therefor, and the proceeds thereof (cash and non-cash including insurance proceeds).

 

(f)             “Event of Default” means (A) the occurrence of a breach by Operator or Master Tenant of any representation, warranty or covenant under this Agreement or the Operator Certificate or (B) any Event of Default by Operator under the Operating Lease or by the Master Tenant under the Master Lease provided, however, Master Tenant and Operator shall have the same time period (if any) as is provided Borrower in the Designated Loan Documents up to a maximum of 30 days to cure any breach of any Operating Covenant and shall have 30 days to cure the covenants set forth in Sections 4(e), 4(f), 4(g), 5(e) (except for subclause (4) therein), the second sentence of 14(t) or 15(h) of this Agreement before such breach becomes an Event of Default under this Agreement (the “ Cure Period ”); provided, further, however there shall be no Cure Period if Operator or Master Tenant was previously provided with notice and opportunity to cure under the Master Lease or Operating Lease and the Cure Period shall run concurrently with any cure period provided in the Master Agreement, the Master Lease or Operating Lease.

 

(g)            “Event of Default has occurred and is continuing ” shall mean that an Event of Default has occurred which has not been cured to the satisfaction of Lender, provided however, that nothing shall be construed to require Lender to accept any cure, or grant any cure period not otherwise provided for in this Agreement under which such Event of Default may arise.

 

(h)            “Healthcare Licenses” means all licenses necessary to operate the Seniors Housing Facility as an assisted living facility, skilled nursing facility, Alzheimer’s/dementia care facility, or independent living facility in the State of Texas.

 

(i)             “Impositions” and “Imposition Deposits” shall have the meaning as defined in Section 7(a) of the Instrument.

 

(j)             “Improvements” means the buildings, structures, improvements and alterations now constructed or at any time in the future constructed or placed upon the Land, including any future replacements and additions, which may now or hereafter constitute the Mortgaged Property.

 

 

 

 

 

Subordination, Assignment and Security Agreement	Form 4079
(Seniors Housing) (Memorial Woods)	05-05	Ó 2000-2005 Fannie Mae

 

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(k)            “Indebtedness” means the principal of, interest on and all other amounts due at any time under, the Note, the Master Agreement, the Instrument or any other Loan Documents, including prepayment premiums, late charges, and default interest.

 

(l)             “ Instrument ” shall have the meaning as defined in Recital D above.

 

(m)           “Inventory” means all right, title and interest of Operator in and to inventory of every type and description, now owned and hereafter acquired, including, without limitation, raw materials, work in process, finished goods, goods returned or repossessed or stopped in transit, goods used for demonstration, promotion, marketing or similar purposes, property in, on or with which any of the foregoing may be stored or maintained, all materials and supplies usable or used or consumed, in each case, at the Mortgaged Property, and all documents and documents of title relating to any of the foregoing, together with all present and future parts, additions, accessories, attachments, accessions, replacements, replacement parts and substitutions therefor or thereto in any form whatsoever.

 

(n)            “Land” means the land described in Exhibit A.

 

(o)            “Leases” means all present and future leases, subleases, licenses, concessions or grants or other possessory interests now or hereafter in force, whether oral or written, covering or affecting the Mortgaged Property or any portion of the Mortgaged Property (including proprietary leases or occupancy agreements if Master Tenant or Operator is a cooperative housing corporation), and all modifications, extensions or renewals thereof.  The term “Leases” shall also include any residency, occupancy, admission, and care agreements pertaining to residents of the Mortgaged Property and shall also specifically include, without limitation, the Master Lease and Operating Lease.

 

(p)            “Loan” shall have the meaning as defined in Recital D above.

 

(q)            “Loan Documents” shall have the meaning set forth in the Master Agreement.

 

(r)             “ Master Agreement ” shall have the meaning as defined in Recital D above.

 

(s)            “Mortgaged Property” shall have the meaning as defined in Recital A above.

 

(t)             “ Note ” means those certain Notes in the aggregate principal amount of $512,934,000 executed by Borrower in favor of Lender and other notes issued by Borrower pursuant to the Master Agreement and all schedules, riders, allonges and addenda, as such Note may be amended, supplemented or modified from time to time.

 

 

 

 

 

Subordination, Assignment and Security Agreement	Form 4079
(Seniors Housing) (Memorial Woods)	05-05	Ó 2000-2005 Fannie Mae

 

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(u)            “ Operating Covenants ” shall have the meaning as defined in Section 14(a) of this Agreement.

 

(v)            “ Operating Lease ” shall have the meaning as defined in Recital C above and shall include any master lease, operating agreement, operating lease or similar document, between the Operator and Master Tenant, approved by Lender, under which control of the occupancy, use, operation, maintenance and administration of the Mortgaged Property as a Seniors Housing Facility has been granted to the Operator.

 

(w)           “ Operating Lease Rent ” shall have the meaning as defined in Section 14(l) of this Agreement.

 

(x)             “ Rents ” means all rents (whether from residential or non-residential space), revenues and other income of the Land or the Improvements, including subsidy payments received from any sources (including but not limited to payments under any Housing Assistance Payments Contract), parking fees, laundry and vending machine income and fees and charges for food, healthcare and other services provided at the Mortgaged Property, whether now due, past due, or to become due, resident and tenant security deposits, entrance fees, application fees, processing fees, community fees and any other amounts or fees deposited by any resident or tenant (whether forfeited or not) together with and including all proceeds from any private insurance for residents to cover rental charges and charges for services at or in connection with the Mortgaged Property, and the right to third party payments due for the rents or services of residents at the Mortgaged Property.  Each of the foregoing shall be considered “Rents” for the purposes of the actions and rights set forth in Section 3 of this Agreement.

 

(y)            “ Special Use Permit ” shall have the meaning as defined in Section 15(k) of this Agreement.

 

(z)             “Taxes” shall have the meaning as defined in the Instrument.

 

(aa)          “ UCC Collateral ” shall have the meaning as defined in Section 2(a) of this Agreement.

 

2.              UNIFORM COMMERCIAL CODE SECURITY AGREEMENT.

 

(a)            This Agreement is also a security agreement under the Uniform Commercial Code for any of the Contracts, Accounts, Equipment, Inventory, Leases and Rents of Operator which, under applicable law, may be subject to a security interest under the Uniform Commercial Code, whether acquired now or in the future and all products and cash and non-cash proceeds thereof (collectively, “UCC Collateral” ).  Operator hereby assigns and grants to Lender a security interest in the UCC Collateral to secure all Obligations of the Operator under this Agreement and under the Operating Lease.  Operator hereby authorizes Lender to file financing statements, continuation statements and financing statement amendments in such form as Lender may require to perfect or continue the perfection of this security interest and Operator

 

 

 

 

 

Subordination, Assignment and Security Agreement	Form 4079
(Seniors Housing) (Memorial Woods)	05-05	Ó 2000-2005 Fannie Mae

 

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agrees, if Lender so requests, to execute and deliver to Lender such financing statements, continuation statements and amendments.  Borrower shall pay all filing costs and all costs and expenses of any record searches for financing statements that Lender may require.  Without the prior written consent of Lender, Operator shall not create or permit to exist any other lien or security interest in any of the UCC Collateral.  Operator represents and warrants that Operator has delivered or has caused to be delivered to Lender copies, with filing information, of all of the UCC financing statements, including any amendments, naming Operator, as debtor, that pledge any of the Collateral under the Loan Documents or any UCC Collateral under this  Agreement to any Person other than Lender, including but not limited to, all of the UCC financing statements naming Operator, as debtor, and Wachovia Bank, National Association, as secured party, in connection with that certain Credit and Security Agreement dated as of May 9, 2005, as the same has been amended (the “Operator UCC Amendments” ).  Operator hereby authorizes Lender to file the Operator UCC Amendments with the appropriate Governmental Authority. Operator represents and warrants that Operator has entered into the Seventh Amendment to Credit and Security Agreement (the “Wachovia Agreement”) dated the date hereof with Wachovia Bank, National Association (“Wachovia”) wherein Wachovia released all of its Liens on certain property of Operator with respect to the Mortgaged Properties.  Operator further represents and warrants that the property released by Wachovia pursuant to the Wachovia Agreement represents all of the property of Operator with respect to the Mortgaged Properties that had been pledged to Wachovia.

 

(b)            If an Event of Default has occurred and is continuing, Lender shall have the remedies of a secured party under the Uniform Commercial Code, in addition to all remedies provided by this Agreement or existing under applicable law.  In exercising any remedies, Lender may exercise its remedies against the UCC Collateral separately or together, and in any order, without in any way affecting the availability of Lender’s other remedies.

 

(c)            Upon an Event of Default, Lender or its designee may (in Lender’s sole discretion) terminate Operator’s authority to collect Accounts and notify the residents and account debtors that the Accounts have been assigned to Lender or of Lender’s security interest therein and, either in its own name or that of Operator or both, demand, collect (including, without limitation, through any lockbox arrangement prescribed by Lender), receive, receipt for, sue for or give acquittance for any or all amounts due or to become due in respect of the Accounts, and may also, in its discretion, file any claim, institute any proceeding or take any other action that Lender may deem necessary or appropriate to protect and realize upon the security interest of Lender in the Accounts.  All of Lender’s collection expenses shall be charged to the Borrower’s account and added to the Indebtedness.  If Lender is collecting the Accounts as above provided, Lender shall have the right to receive, endorse, assign and deliver in Lender’s name or Operator’s name any and all checks, drafts and other instruments for the payment of money relating to the Accounts, and Operator hereby waives notice of presentment, protest and non-payment of any instrument so endorsed.  If Lender is collecting the Accounts directly as above provided, Operator hereby constitutes Lender or Lender’s designee as Operator’s attorney-in-fact with power with respect to the Accounts to:  (1) endorse Operator’s name upon all notes, acceptances, checks, drafts, money orders or other evidences of payment that may come into

 

 

 

 

 

Subordination, Assignment and Security Agreement	Form 4079
(Seniors Housing) (Memorial Woods)	05-05	Ó 2000-2005 Fannie Mae

 

6

 

Lender’s possession; (2) notify the Post Office to change the address for delivery of mail addressed to Operator for the Mortgaged Property to such address as Lender may designate; and (3) receive, open, and dispose of all such mail addressed to Operator.  Any amounts so received by Lender and not utilized to pay for operating expenses of any Mortgaged Property shall be applied against Operator’s obligations to Master Tenant under the Operating Lease and to Master Tenant’s obligations under the Master Lease.

 

(d)            Upon an Event of Default, unless cured to Lender’s satisfaction, Lender may, without demand and without advertisement or notice, at any time or times, sell and deliver any or all Equipment or Inventory held by or for it at public or private sale, for cash, upon credit or otherwise, at such prices and upon such terms as Lender, in its sole discretion, deems advisable.  Subject to the provisions of applicable law, Lender may postpone or cause the postponement of the sale of all or any portion of the Equipment or Inventory by announcement at the time and place of such sale, and such sale may, without further notice, be made at the time and place to which the sale has been postponed or Lender may further postpone such sale by announcement made at such time and place.  Without in any way limiting the foregoing, Lender shall, following any Event of Default, unless cured to Lender’s satisfaction, have the right, in addition to all other rights provided herein or by law, to enter without legal process upon the Mortgaged Property (provided that such entry be done lawfully) for the purpose of taking possession of the Equipment or Inventory, and the right to maintain such possession on the Mortgaged Property or to remove the Equipment or Inventory or any part thereof to such other places as Lender may desire.  Whether or not Lender exercises its right to take possession of the Equipment or Inventory, Operator shall, upon Lender’s demand, promptly assemble the Equipment or Inventory and make it available to Lender at the Mortgaged Property.

 

3.              ASSIGNMENT OF RENTS; APPOINTMENT OF RECEIVER; LENDER IN POSSESSION.

 

(a)            To the extent permitted by applicable law, Operator absolutely and unconditionally assigns and transfers to Lender Operator’s right, title and interest in all Rents.  To the extent permitted by applicable law, it is the intention of Operator to establish a present, absolute and irrevocable transfer and assignment to Lender of Operator’s right, title and interest in all Rents and to authorize and empower Lender to collect and receive all Rents owed to Operator without the necessity of further action on the part of Operator.  Promptly upon request by Lender, Operator agrees to execute and deliver further confirmation of such assignments as Lender may from time to time require.  To the extent permitted by applicable law, Operator and Lender intend this assignment of Rents to be immediately effective and to constitute an absolute present assignment and not an assignment for additional security only.  However, if this present, absolute and unconditional assignment of Rents is not enforceable by its terms under the laws of the Property Jurisdiction (as that term is defined in the Instrument), then it is the intention of Operator that in this circumstance this Agreement create and perfect a lien on Operator’s right, title and interest in all Rents in favor of Lender, which lien shall be effective as of the date of this Agreement and shall secure all obligations of Operator under this Agreement and under the Operating Lease.

 

 

 

 

 

Subordination, Assignment and Security Agreement	Form 4079
(Seniors Housing) (Memorial Woods)	05-05	Ó 2000-2005 Fannie Mae

 

7

 

(b)           After the occurrence of an Event of Default, Operator authorizes Lender to collect, sue for and compromise Rents and directs each resident and tenant of the Mortgaged Property to pay all Rents to, or as directed by, Lender.  However, until the occurrence of an Event of Default, Lender hereby grants to Operator a revocable license to collect and receive all Rents, to hold all Rents in trust for the benefit of Lender and subject to the terms of the Operating Lease, to apply all Rents to pay the current costs and expenses of managing, operating and maintaining the Mortgaged Property, including utilities, Taxes and insurance premiums (to the extent not included in Imposition Deposits), resident and tenant improvements and other capital expenditures and otherwise to apply such Rents and retain them as its sole property, all to the extent such Rents are attributable to periods during which an Event of Default has not occurred (each a “Nondefault Period”).  Subject to the terms of the Operating Lease, Rents attributable to Nondefault Periods may be retained by Operator free and clear of, and released from, Lender’s rights with respect to Rents under this Agreement.  From and after the occurrence of an Event of Default, and without the necessity of Lender entering upon and taking and maintaining control of the Mortgaged Property directly, or by a receiver, Operator’s license to collect Rents shall automatically terminate and Lender shall without notice be entitled to all Rents as they become due and payable, including Rents then due and unpaid.  Operator shall pay to Lender upon demand all Rents to which Lender is entitled.  At any time on or after the date of Lender’s demand for Rents, Lender may give, and Operator hereby irrevocably authorizes Lender to give, notice to all residents and tenants of the Mortgaged Property instructing them to pay all Rents to Lender.  No resident or tenant shall be obligated to inquire further as to the occurrence or continuance of an Event of Default, and no resident or tenant shall be obligated to pay to Operator any amounts which are actually paid to Lender in response to such a notice.  Any such notice by Lender shall be delivered to each resident and tenant personally, by mail or by delivering such demand to each rental unit.  Operator shall not interfere with and shall cooperate with Lender’s collection of such Rents.  After an Event of Default, Lender is further authorized to give notice to all third party payment payors (other than governmental entities) at Lender’s option, instructing them to pay all third party payments which would be otherwise paid to Operator to Lender, to the extent permitted by law.

 

(c)           Operator represents and warrants to Lender that Operator has not executed any prior assignment of Rents or any such assignments have been terminated and Operator covenants and agrees that it will not perform any acts and has not executed, and shall not execute, any instrument which would prevent Lender from exercising its rights under this Section 3, and that at the time of execution of this Agreement there has been no anticipation or prepayment of any Rents for more than two months prior to the due dates of such Rents.  Operator shall not collect or accept payment of any Rents more than two months prior to the due dates of such Rents.

 

(d)           If an Event of Default has occurred and is continuing, Lender may, regardless of the adequacy of Lender’s security or the solvency of Operator and even in the absence of waste, to the extent permitted by applicable law, enter upon and take and maintain full control of the Mortgaged Property in order to perform all acts that Lender in its discretion

 

 

 

 

 

Subordination, Assignment and Security Agreement	Form 4079
(Seniors Housing) (Memorial Woods)	05-05	Ó 2000-2005 Fannie Mae

 

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determines to be necessary or desirable for the operation and maintenance of the Mortgaged Property, including the execution, cancellation or modification of Leases, the collection of all Rents, the making of repairs to the Mortgaged Property and the execution or termination of Contracts and Leases providing for the management, operation or maintenance of the Mortgaged Property, for the purposes of enforcing the assignment of Rents pursuant to Section 3(a), protecting the Mortgaged Property or the security of this Agreement, or for such other purposes as Lender in its discretion may deem necessary or desirable.  Alternatively, if an Event of Default has occurred and is continuing, regardless of the adequacy of Lender’s security, without regard to Operator’s solvency and without the necessity of giving prior notice (oral or written) to Operator, Lender may apply to any court having jurisdiction for the appointment of a receiver for the Mortgaged Property to take any or all of the actions set forth in the preceding sentence.  If Lender elects to seek the appointment of a receiver for the Mortgaged Property at any time after an Event of Default has occurred and is continuing, Operator, by its execution of this Agreement, expressly consents to the appointment of such receiver, including the appointment of a receiver ex parte if permitted by applicable law.  Lender or the receiver, as the case may be, shall be entitled to receive a reasonable fee for managing the Mortgaged Property.  Immediately upon appointment of a receiver or immediately upon Lender’s entering upon and taking possession and control of the Mortgaged Property, Operator shall, to the extent permitted by applicable law, surrender possession of the Mortgaged Property to Lender or the receiver, as the case may be, and shall deliver to Lender or the receiver, as the case may be, all documents, records (including records on electronic or magnetic media), accounts, surveys, plans, and specifications relating to the Mortgaged Property and all security deposits and prepaid Rents.  In the event Lender takes possession and control of the Mortgaged Property, Lender may exclude Operator and its representatives from the Mortgaged Property.  Operator acknowledges and agrees that the exercise by Lender of any of the rights conferred under this Section 3 shall not be construed to make Lender a mortgagee-in-possession of the Mortgaged Property so long as Lender has not itself entered into actual possession of the Land and Improvements.

 

(e)           To the extent permitted by applicable law, Master Tenant absolutely and unconditionally assigns and transfers to Lender Master Tenant’s right, title and interest in all Rents.  To the extent permitted by applicable law, it is the intention of Master Tenant to establish a present, absolute and irrevocable transfer and assignment to Lender of Master Tenant’s right, title and interest in all Rents and to authorize and empower Lender to collect and receive all Rents owed to Master Tenant without the necessity of further action on the part of Master Tenant.  Promptly upon request by Lender, Master Tenant agrees to execute and deliver further confirmation of such assignment as Lender may from time to time require.  To the extent permitted by applicable law, Master Tenant and Lender intend this assignment of Rents to be immediately effective and to constitute an absolute present assignment and not an assignment for additional security only.  However, if this present, absolute and unconditional assignment of Rents is not enforceable by its terms under the laws of the Property Jurisdiction (as that term is defined in the Instrument), then it is the intention of Master Tenant that in this circumstance this Agreement create and perfect a lien on Master Tenants’ right, title and interest in all Rents in favor of Lender, which lien shall be effective as of the date of this Agreement and shall secure all obligations of Master Tenant under this Agreement and under the Master Lease.

 

 

 

 

 

Subordination, Assignment and Security Agreement	Form 4079
(Seniors Housing) (Memorial Woods)	05-05	Ó 2000-2005 Fannie Mae

 

9

 

(f)            After the occurrence of an Event of Default, Master Tenant authorizes Lender to collect, sue for and compromise Rents and directs each resident and tenant of the Mortgaged Property to pay all Rents to, or as directed by, Lender.  However, until the occurrence of an Event of Default, Lender hereby grants to Master Tenant a revocable license to collect and receive all Rents, to hold all Rents in trust for the benefit of Lender and subject to the terms of the Master Lease, to apply all Rents to pay the current costs and expenses of managing, operating and maintaining the Mortgaged Property, including utilities, Taxes and insurance premiums (to the extent not included in Imposition Deposits), resident and tenant improvements and other capital expenditures and otherwise to apply such Rents and retain them as its sole property, all to the extent such Rents are attributable to Nondefault Periods.  Subject to the terms of the Master Lease, Rents attributable to Nondefault Periods may be retained by Master Tenant free and clear of, and released from, Lender’s rights with respect to Rents under this Agreement.  From and after the occurrence of an Event of Default, and without the necessity of Lender entering upon and taking and maintaining control of the Mortgaged Property directly, or by a receiver, Master Tenant’s license to collect Rents shall automatically terminate and Lender shall without notice be entitled to all Rents as they become due and payable, including Rents then due and unpaid.  Master Tenant shall pay to Lender upon demand all Rents to which Lender is entitled.  At any time on or after the date of Lender’s demand for Rents, Lender may give, and Master Tenant hereby irrevocably authorizes Lender to give, notice to all residents and tenants of the Mortgaged Property instructing them to pay all Rents to Lender.  No resident or tenant shall be obligated to inquire further as to the occurrence or continuance of an Event of Default, and no resident or tenant shall be obligated to pay to Master Tenant any amounts which are actually paid to Lender in response to such a notice.  Any such notice by Lender shall be delivered to each resident and tenant personally, by mail or by delivering such demand to each rental unit.  Master Tenant shall not interfere with and shall cooperate with Lender’s collection of such Rents.  After an Event of Default, Lender is further authorized to give notice to all third party payment payors (other than governmental entities) at Lender’s option, instructing them to pay all third party payments which would be otherwise paid to Master Tenant to Lender, to the extent permitted by law.

 

(g)           Master Tenant represents and warrants to Lender that Master Tenant has not executed any prior assignment of Rents or any such assignments have been terminated, and Master Tenant covenants and agrees that it will not perform any acts and has not executed, and shall not execute, any instrument which would prevent Lender from exercising its rights under this Section 3, and that at the time of execution of this Agreement there has been no anticipation or prepayment of any Rents for more than two months prior to the due dates of such Rents.  Master Tenant shall not collect or accept payment of any Rents more than two months prior to the due dates of such Rents.

 

(h)           If an Event of Default has occurred and is continuing, Lender may, regardless of the adequacy of Lender’s security or the solvency of Master Tenant and even in the absence of waste, to the extent permitted by applicable law, enter upon and take and maintain full control of the Mortgaged Property in order to perform all acts that Lender in its discretion determines to be necessary or desirable for the operation and maintenance of the Mortgaged Property, including the execution, cancellation or modification of Leases, the collection of all Rents, the making of repairs to the Mortgaged Property and the execution or termination of Contracts and Leases providing for the management, operation or maintenance of the Mortgaged

 

 

 

 

 

Subordination, Assignment and Security Agreement	Form 4079
(Seniors Housing) (Memorial Woods)	05-05	Ó 2000-2005 Fannie Mae

 

10

 

Property, for the purposes of enforcing the assignment of Rents pursuant to Section 3(a), protecting the Mortgaged Property or the security of this Agreement, or for such other purposes as Lender in its discretion may deem necessary or desirable.  Alternatively, if an Event of Default has occurred and is continuing, regardless of the adequacy of Lender’s security, without regard to Master Tenant’s solvency and without the necessity of giving prior notice (oral or written) to Master Tenant, Lender may apply to any court having jurisdiction for the appointment of a receiver for the Mortgaged Property to take any or all of the actions set forth in the preceding sentence.  If Lender elects to seek the appointment of a receiver for the Mortgaged Property at any time after an Event of Default has occurred and is continuing, Master Tenant, by its execution of this Agreement, expressly consents to the appointment of such receiver, including the appointment of a receiver ex parte if permitted by applicable law.  Lender or the receiver, as the case may be, shall be entitled to receive a reasonable fee for managing the Mortgaged Property.  Immediately upon appointment of a receiver or immediately upon Lender’s entering upon and taking possession and control of the Mortgaged Property, Master Tenant shall, to the extent permitted by applicable law, surrender possession of the Mortgaged Property to Lender or the receiver, as the case may be, and shall deliver to Lender or the receiver, as the case may be, all documents, records (including records on electronic or magnetic media), accounts, surveys, plans, and specifications relating to the Mortgaged Property and all security deposits and prepaid Rents.  In the event Lender takes possession and control of the Mortgaged Property, Lender may exclude Master Tenant and its representatives from the Mortgaged Property.  Master Tenant acknowledges and agrees that the exercise by Lender of any of the rights conferred under this Section 3 shall not be construed to make Lender a mortgagee-in-possession of the Mortgaged Property so long as Lender has not itself entered into actual possession of the Land and Improvements.

 

(i)            If Lender enters the Mortgaged Property, Lender shall be liable to account only to Borrower, Operator and Master Tenant and only for those Rents actually received.  Lender shall not be liable to Operator, Master Tenant, Borrower, anyone claiming under or through Master Tenant, Master Tenant or Borrower, or anyone having an interest in the Mortgaged Property, by reason of any act or omission of Lender under this Section 3, and Operator, Master Tenant and Borrower hereby release and discharge Lender from any such liability to the fullest extent permitted by law.

 

(j)            If the Rents are not sufficient to meet the costs of taking control of and managing the Mortgaged Property and collecting the Rents following an Event of Default, any funds expended by Lender for such purposes shall become an additional part of the Indebtedness, as provided in Section 12 of the Instrument.

 

(k)           Any entering upon and taking of control of the Mortgaged Property by Lender or the receiver, as the case may be, and any application of Rents as provided in this

 

 

 

 

 

Subordination, Assignment and Security Agreement	Form 4079
(Seniors Housing) (Memorial Woods)	05-05	Ó 2000-2005 Fannie Mae

 

11

 

Agreement shall not cure or waive any Event of Default or invalidate any other right or remedy of Lender under applicable law or provided for in this Agreement or in the Instrument.

 

(l)            Any Rents received by Lender hereunder and not utilized to pay operating expenses of any Mortgaged Property shall be applied to Operator’s obligations to Master Tenant under the Operating Lease and to Master Tenant’s obligations to Borrower under the Master Lease.

 

4.             ASSIGNMENT OF LEASES; LEASES AFFECTING THE MORTGAGED PROPERTY.

 

(a)           To the extent permitted by applicable law, Operator absolutely and unconditionally assigns and transfers to Lender all of Operator’s right, title and interest in, to and under the Leases, including Operator’s right, power and authority to modify the terms of any such Lease, or extend or terminate any such Lease.  To the extent permitted by applicable law, it is the intention of Operator to establish a present, absolute and irrevocable transfer and assignment to Lender of all of Operator’s right, title and interest in, to and under the Leases.  To the extent permitted by applicable law, Operator and Lender intend this assignment of the Leases to be immediately effective and to constitute an absolute present assignment and not an assignment for additional security only.  However, if this present, absolute and unconditional assignment of the Leases is not enforceable by its terms under the laws of the Property Jurisdiction, then it is the intention of Operator that in this circumstance this Agreement create and perfect a lien on the Leases in favor of Lender, which lien shall be effective as of the date of this Agreement and shall secure all obligations of Operator under this Agreement and under the Operating Lease.  Notwithstanding the foregoing or (b) below, Operator and Master Tenant may, except after the occurrence of any Event of Default, amend or modify the Operating Lease in a manner consistent with Section 8.21 of the Master Agreement, and Operator may terminate the Operating Lease in connection with a release of the Mortgaged Property pursuant to the terms and conditions of the Master Agreement.

 

(b)           Until Lender gives notice to Operator of Lender’s exercise of its rights under this Section 4, Operator shall have all rights, power and authority granted to Operator under any Lease (except as otherwise limited by this Section or any other provision of this Agreement), including the right, power and authority to modify the terms of any Lease or extend or terminate any Lease, with the exception of the Operating Lease.  If an Event of Default has occurred and is continuing and at the option of Lender, the permission given to Operator pursuant to the preceding sentence to exercise all rights, power and authority under Leases shall terminate.  Operator shall comply with and observe Operator’s material obligations under all Leases, including Operator’s obligations pertaining to the maintenance and disposition of resident or tenant security deposits.

 

(c)           Operator acknowledges and agrees that the exercise by Lender, either directly or by a receiver, of any of the rights conferred under this Section 4 shall not be construed to make Lender a mortgagee-in-possession of the Mortgaged Property so long as Lender has not itself entered into actual possession of the Land and the Improvements.  The acceptance by

 

 

 

 

 

Subordination, Assignment and Security Agreement	Form 4079
(Seniors Housing) (Memorial Woods)	05-05	Ó 2000-2005 Fannie Mae

 

12

 

Lender of the assignment of the Leases pursuant to Section 4(a) shall not at any time or in any event obligate Lender to take any action under this Agreement or to expend any money or to incur any expenses.  Lender shall not be liable in any way for any injury or damage to person or property sustained by any person or persons, firm or corporation in or about the Mortgaged Property.  Prior to Lender’s actual entry into and taking possession of the Mortgaged Property, Lender shall not (i) be obligated to perform any of the terms, covenants and conditions contained in any Lease (or otherwise have any obligation with respect to any Lease); (ii) be obligated to appear in or defend any action or proceeding relating to the Lease or the Mortgaged Property; or (iii) be responsible for the operation, control, care, management or repair of the Mortgaged Property or any portion of the Mortgaged Property.  The execution of this Agreement by Operator shall constitute conclusive evidence that all responsibility for the operation, control, care, management and repair of the Mortgaged Property is and shall be that of Operator, prior to such actual entry and taking of possession.

 

(d)           Upon delivery of notice by Lender to Operator of Lender’s exercise of Lender’s rights under this Section 4 at any time after the occurrence of an Event of Default, and without the necessity of Lender entering upon and taking and maintaining cont