Common use of Future Operations Clause in Contracts

Future Operations. (a) Following the Closing through December 31, 2020 (the “Earnout Period”), the Company and its Subsidiaries shall, and the Purchaser and its Affiliates shall cause the Company and its Subsidiaries to, operate, in good faith in accordance with the business plan and practices of the Company and its Subsidiaries in effect prior to the Closing with the existing executives of the Company and its Subsidiaries, and to continue to engage in financing activities so as to obtain and maintain resources for working capital, capital requirements and other business needs at a level consistent with past practices, and shall not make, accelerate or defer any payments or expenditures or accelerate or defer receipt of any revenues, or otherwise take, agree to take, not take or agree not to take any action, different from the ordinary course past practices of the Company and its Subsidiaries prior to the Closing and in each case in a manner that would be reasonably expected to adversely affect the Company’s Gross Revenue or Adjusted EBITDA for the year ended December 31, 2019, the Company’s Adjusted EBITDA for the year ended December 31, 2020 or the amount of any Earnout Payment payable or potentially payable to Seller. In addition, during the Earnout Period, the Company and its Subsidiaries shall not, and the Purchaser and its Affiliates shall cause the Company and its Subsidiaries not to: (i) (A) effect any dividend or distribution of any portion of the cash of the Company and its Subsidiaries, (B) enter into any intercompany loans or similar arrangements with Purchaser or any Affiliates of the Purchaser or (C) enter into any intercompany arrangements or transactions with Purchaser or any other Affiliates of the Purchaser on pricing on terms other than arm’s-length terms, in each case that would reasonably be expected to adversely affect the Company’s Gross Revenue or Adjusted EBITDA for the year ended December 31, 2019, the Company’s Adjusted EBITDA for the year ended December 31, 2020 or the amount of any Earnout Payment payable or potentially payable to Purchaser; (ii) (A) incur any Indebtedness or other Liabilities except for such Indebtedness or Liabilities as relate to the operation of the Company and its Subsidiaries, or (B) incur any Indebtedness or other Liabilities on behalf of the Purchaser or any of its Affiliates with respect to any business other than that of the Company and its Subsidiaries; (iii) transfer, convey, license or otherwise dispose of any rights, assets or properties (A) to any Affiliate that is not a wholly-owned Subsidiary of the Company or to the Purchaser or any Affiliate of Purchaser, except to the extent that any such rights, assets and operations, or portions thereof, so transferred, conveyed, licensed or otherwise disposed of continue to be included in the calculation of the Company’s Gross Revenue and Adjusted EBITDA for the year ended December 31, 2019 or the Company’s Adjusted EBITDA for the year ended December 31, 2020; or (iv) make any material change to its accounting practices, procedures or policies that would reasonably be expected to adversely affect the Company’s Gross Revenue or Adjusted EBITDA for the year ended December 31, 2019, the Company’s Adjusted EBITDA for the year ended December 31, 2020 or the amount of any Earnout Payment payable or potentially payable to Seller, except in each case as required by U.S. GAAP. (b) In the event of any reorganization, restructuring, merger, purchase, acquisition, disposition, divestiture or other transfer of equity, assets, properties or business, business combination, exclusive lease or license, or other similar transaction directly or indirectly involving the Company or any of its Subsidiaries during the Earnout Period, the parties shall determine by mutual good faith such action (if any) as is necessary to modify the calculation of the Company’s Gross Revenue and Adjusted EBITDA for the year ended December 31, 2019 or the Company’s Adjusted EBITDA for the year ended December 31, 2020 so as to ensure Seller maintains substantially equivalent economic rights under Section 3.4 after such transaction so as to effect the original intention of the parties as closely as possible. To the extent the parties are not able to reach a good faith mutual agreement pursuant to this Section 3.7(b), such matter will be subject to the dispute resolution procedures of ARTICLE XI. (c) The Company and its Subsidiaries shall keep, and Purchaser shall cause the Company and its Subsidiaries to keep, adequate records with respect to the Company and its Subsidiaries as is reasonably necessary to enable Seller to review the Earnout Statement and the calculation of Gross Revenue and Adjusted EBITDA contained therein. (d) Within ten (10) days following the Closing, Purchaser and Seller shall each appoint an individual (who may be replaced by the appointing Party at any time in its sole discretion) to together comprise a committee for the purpose of facilitating communications and monitoring the matters contemplated by this Section 3.7 (the “Committee”). The Committee shall meet on a quarterly basis during the Earnout Period to discuss the status of the business of the Company and its Subsidiaries, and shall be permitted to make reasonable inquiries to senior officers of the Company and its Subsidiaries.

Future Operations. During the pendency of this Agreement: (a) Following Seller shall carry on its business and activities relating to the Property in an manner that is consistent with all HUD and VHDA maintenance and management policies including but not limited to current tenant selection practices, including (a) the leasing of the Property, substantially in the same manner as it did for the one year period preceding the date of this Agreement and maintain staffing at the same levels; (b) all maintenance, repair and replacement work in accordance with Seller’s policies and practices prior to the date of this Agreement including: (i) replacement of carpet and appliances (including individual air-conditioning units) in the ordinary course of business, (ii) interior painting in the ordinary course of business, and (iii) day to day maintenance and repair of roofs and other building systems, decks, patios, stairways, parking lots and structures, landscaping, gates and fences and other items requiring periodic maintenance and repair. Notwithstanding the foregoing, nothing contained in this Section shall affect or otherwise diminish the rights and obligations of Purchaser and Seller under Section 8 with respect to a casualty. On or prior to the Closing through December 31Date, 2020 Seller shall have performed all work necessary to make all apartments within the Property that have been vacant for more than seven (7) days prior to the Closing Date ready for occupancy by incoming tenants, consistent with Seller’s past practices (the “Earnout PeriodReady Work”), and, to the Company extent that Ready Work for any vacant apartments has not been completed, Purchaser shall receive a credit at Closing in an amount equal to Seven Hundred Fifty Dollars ($750.00) for each apartment for which Ready Work has not been completed. (b) From the Effective Date until Closing, Seller shall not enter into any agreement or instrument or take any action which would constitute a lien or other encumbrances of the Property, or which would be outside the normal scope of maintaining and operating the Property in a safe and lawful manner, without the prior written consent of Purchaser. (c) Seller shall renew, extend or modify or otherwise comply with the terms of any Section 8 contracts or other contracts related to the Property or its Subsidiaries shall, and the Purchaser and its Affiliates shall cause the Company and its Subsidiaries to, operate, in good faith tenants in accordance with the business plan terms thereof subject to the review and practices approval of Purchaser. The form of renewal and application shall be forwarded to the Company and Sellers upon its Subsidiaries in effect completion by Purchaser. (d) Without Purchaser’s prior written approval, Seller will not execute any contract for, or on behalf of, or affecting any Property which cannot be terminated prior to the Closing Date, without cause and without charge, costs, penalty or premium. (e) Seller will comply in all material respects with all contractual obligations, laws, ordinances, rules, regulations and governmental requirements applicable to the Property or any written notice from any governmental authority, holder of any mortgage or board of fire underwriters (or any body performing similar functions) requiring any work, repairs, construction, alterations or installations on or in connection with any Property in order to comply with or asserting any violation of any applicable law, regulation or other governmental requirement. (f) Seller will not remove any items of Tangible Personal Property from any of the apartment units within the Property, with the existing executives exception of obsolete or worn items, which are replaced with items of similar function and quality as that identified on Exhibit B. (g) On or before the Company Closing Date Seller will pay all amounts due and its Subsidiaries, owing to third parties in respect of services and to continue to engage in financing activities so as to obtain and maintain resources for working capital, capital requirements and other business needs at a level consistent with past practices, and shall not make, accelerate or defer any payments or expenditures or accelerate or defer receipt of any revenues, or otherwise take, agree to take, not take or agree not to take any action, different from the ordinary course past practices of the Company and its Subsidiaries prior materials provided to the Property up to and including the Closing and in each case in a manner that would be reasonably expected to adversely affect the Company’s Gross Revenue or Adjusted EBITDA for the year ended December 31, 2019, the Company’s Adjusted EBITDA for the year ended December 31, 2020 or the amount of any Earnout Payment payable or potentially payable to Seller. In addition, during the Earnout Period, the Company and its Subsidiaries shall not, and the Purchaser and its Affiliates shall cause the Company and its Subsidiaries not to: (i) (A) effect any dividend or distribution of any portion of the cash of the Company and its Subsidiaries, (B) enter into any intercompany loans or similar arrangements with Purchaser or any Affiliates of the Purchaser or (C) enter into any intercompany arrangements or transactions with Purchaser or any other Affiliates of the Purchaser on pricing on terms other than arm’s-length terms, in each case that would reasonably be expected to adversely affect the Company’s Gross Revenue or Adjusted EBITDA for the year ended December 31, 2019, the Company’s Adjusted EBITDA for the year ended December 31, 2020 or the amount of any Earnout Payment payable or potentially payable to Purchaser; (ii) (A) incur any Indebtedness or other Liabilities except for such Indebtedness or Liabilities as relate to the operation of the Company and its Subsidiaries, or (B) incur any Indebtedness or other Liabilities on behalf of the Purchaser or any of its Affiliates with respect to any business other than that of the Company and its Subsidiaries; (iii) transfer, convey, license or otherwise dispose of any rights, assets or properties (A) to any Affiliate that is not a wholly-owned Subsidiary of the Company or to the Purchaser or any Affiliate of PurchaserDate, except to the extent that any such rights, assets and operations, or portions thereof, so transferred, conveyed, licensed or otherwise disposed of continue to be included in the calculation of the Company’s Gross Revenue and Adjusted EBITDA for the year ended December 31, 2019 or the Company’s Adjusted EBITDA for the year ended December 31, 2020; or (iv) make any material change to its accounting practices, procedures or policies that would reasonably be expected to adversely affect the Company’s Gross Revenue or Adjusted EBITDA for the year ended December 31, 2019, the Company’s Adjusted EBITDA for the year ended December 31, 2020 or the amount of any Earnout Payment payable or potentially payable to Seller, except in each case as required by U.S. GAAPpro rated under Section 7.3. (h) Seller shall make all payments due under the Loan Documents, comply with all of Seller’s other obligations under the Loan Documents, and give Purchaser notice of any material default or event of default by Seller under the Loan Documents of which Seller becomes aware. (i) Seller shall not without Purchaser’s prior written consent (a) enter into any new lease for an apartment unit with a first-time tenant unless the lease is on the Seller’s standard form, is for a period of no more than one (1) year and the rent shall be not less than the annual rent shown on the Rent Roll applicable to such unit, (b) In renew or extend any Lease for an apartment unit with an existing tenant unless the event lease is on the Seller’s standard form, is for a period of not more than one (1) year and not less than seven (7) months, and the rent for the amended, renewal or extension term shall not be less than the annual rent shown on the Rent Roll applicable to such unit, (c) terminate any Lease except by reason of a default by the tenant thereunder. Seller, without the need for prior approval from Purchaser, must provide notice of any reorganizationconcessions granted at the Property to Purchaser; provided, restructuringhowever, mergerif Seller grants any concessions at the Property in which (i) the upfront concession exceeds one-half (1/2) of the current monthly market rent or (ii) any prorated concessions which reduce the monthly rent below the rent required by clause (a) above, purchase, acquisition, disposition, divestiture or other transfer Seller must obtain the prior written approval of equity, assets, properties or business, business combination, exclusive lease or licensePurchaser. The failure of Purchaser to consent, or other similar transaction directly to withhold its consent, in writing within five (5) business days after written request therefor, to any new lease, renewal or indirectly involving the Company extension of any Lease or any termination of its Subsidiaries during the Earnout Period, the parties shall determine by mutual good faith such action (if any) as any Lease for which Purchaser’s consent is necessary to modify the calculation of the Company’s Gross Revenue and Adjusted EBITDA for the year ended December 31, 2019 or the Company’s Adjusted EBITDA for the year ended December 31, 2020 so as to ensure Seller maintains substantially equivalent economic rights under Section 3.4 after such transaction so as to effect the original intention of the parties as closely as possible. To the extent the parties are not able to reach a good faith mutual agreement required pursuant to this Section 3.7(b), such matter will be subject to the dispute resolution procedures of ARTICLE XI. (c10.1(i) The Company and its Subsidiaries shall keep, and Purchaser shall cause the Company and its Subsidiaries to keep, adequate records with respect to the Company and its Subsidiaries as is reasonably necessary to enable Seller to review the Earnout Statement and the calculation of Gross Revenue and Adjusted EBITDA contained therein. (d) Within ten (10) days following the Closing, Purchaser and Seller shall each appoint an individual (who may be replaced by the appointing Party at any time in its sole discretion) to together comprise a committee for the purpose of facilitating communications and monitoring the matters contemplated by this Section 3.7 (the “Committee”). The Committee shall meet on a quarterly basis during the Earnout Period to discuss the status of the business of the Company and its Subsidiaries, and shall be permitted deemed to make reasonable inquiries to senior officers of the Company and its Subsidiariesconstitute consent.