Occupancy Covenant Clause Samples
An Occupancy Covenant is a contractual provision that requires a tenant or property owner to occupy and use the premises for a specified purpose or duration. Typically, this clause obligates the tenant to maintain active use of the property, such as operating a business or residing in the space, and may set minimum standards for occupancy or prohibit leaving the premises vacant. The core function of this clause is to ensure that the property remains in use, thereby protecting the landlord’s interests, maintaining property value, and supporting the surrounding community or commercial environment.
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Occupancy Covenant. Maintain or cause to be maintained an average occupancy for the Facility of not less than 75% (the “Occupancy Covenant”) commencing with the quarter ending December 31, 2015 (tested based on a trailing 1-calendar month basis), March 31, 2016 (tested based on a trailing 3-calendar month basis), June 30, 2016 (tested based on a trailing 6-calendar month basis), September 30, 2016 (tested based on a trailing 9-calendar month basis), and December 31, 2016 and each quarter thereafter during the Loan term (tested based on a trailing 12-calendar month basis). If the Occupancy Covenant is not achieved for any quarter during the term of the Loan for which it is tested, Borrower shall submit to Lender within thirty (30) days following such failure, a written plan of correction reasonably satisfactory to the Lender, detailing the Borrower’s plan to bring the Facility into compliance with the Occupancy Covenant. If the Facility fails to achieve the Occupancy Covenant for a second consecutive quarter, upon request by Lender, Borrower shall (1) promptly retain a marketing consultant satisfactory to the Lender to advise the Borrower regarding the Facility, (2) obtain and submit the recommendations or reports of such marketing consultant to Lender within thirty (30) days following the engagement of the marketing consultant, and (3) promptly implement the recommendations of the foregoing marketing consultant. Notwithstanding any provision herein to the contrary, Lender agrees that failure of the Facility to achieve the Occupancy Covenant shall not, in and of itself, constitute an Event of Default so long as Borrower provides Lender with evidence satisfactory to Lender that a marketing plan submitted to and approved by Lender is being timely implemented to correct the non-compliance.
Occupancy Covenant. Commencing with the quarter ending March 31, 2010, Borrower shall maintain at all times, tested as of the end of each fiscal quarter during the term of the Loan, a minimum average daily occupancy of eighty percent (80%), measured on a unit basis. For purposes of clarity, the occupancy covenant provided in this Section 7.30 will not be tested with respect to the fiscal quarter ending December 31, 2009.”
9. Section 8.15 (Distributions) is hereby amended and restated in its entirety as follows: “Pay distributions to members of Borrower; provided, however, commencing with the quarter ending March 31, 2010, Borrower shall be permitted to make distributions to its Sole Member only to the extent the Borrower is (i) in compliance with Section 7.29 and (ii) able to maintain a Debt Service Ratio for the Facility of not less than 1.0 to 1.0 after payment of the Management Fees and such distributions to its Sole Member.”
10. The parties hereto acknowledge and agree that this Agreement represents a settlement agreement between the parties only as to the maturity of Loan A and the waiver of the Event of Default caused by the Borrower’s failure to comply with the Occupancy Covenant for the fiscal quarter ending September 30, 2009 and this Agreement does not represent a settlement agreement between the parties as to any other obligations of Borrower or Guarantor under Loan A or pursuant to the Financing Documents or as to Loan A or Loan B as a whole.
11. Borrower hereby issues, ratifies and confirms the representations, warranties and covenants contained in the Loan Agreement, as amended or waived hereby. Borrower agrees that this Agreement is not intended to and shall not cause a novation with respect to any or all of the obligations of Borrower under the Loan Agreement. Except as expressly modified herein, the terms, provisions and covenants of the Loan Agreement are in all other respects hereby ratified and confirmed and remain in full force and effect.
12. The Borrower shall pay at the time this Agreement is executed and delivered all fees, commissions, costs, charges, taxes and other expenses incurred by the Agent and its counsel in connection with this Agreement, including, but not limited to, a commitment fee in the aggregate amount of Seventy-Five Thousand and No/100 Dollars ($75,000.00) (the “Commitment Fee”) for Loan A and Loan B, $18,750 of which Commitment Fee is due and payable to MB Financial Bank, N.A and $56,250 of which Commitment Fee is due and payable t...
Occupancy Covenant. Borrower shall maintain at all times, tested as of the end of each fiscal quarter during the term of the Loan, a minimum average daily occupancy of eighty-five percent (85%), measured on a unit basis.
Occupancy Covenant. (a) Tenant shall occupy the Leased Premises reasonably promptly after the completion of construction of the Tenant Work and the issuance to Tenant of either a temporary or permanent certificate of occupancy (or its equivalent) with respect thereto (the “Initial Occupancy Covenant”). After the Initial Occupancy Covenant has been satisfied, Tenant shall ensure that the Leased Premises is not left vacant for a period of twenty-four (24) consecutive months (the “Continued Occupancy Covenant”). If Tenant violates either the Initial Occupancy Covenant or the Continued Occupancy Covenant, then Landlord’s sole remedy hereunder for such breach shall be to terminate this Lease in accordance with Section 20.2(j) hereof.
(b) In calculating time periods with respect to the Initial Occupancy Covenant and the Continued Occupancy Covenant, failure to occupy or vacancies attributed to any of the following shall be excluded: (i) damage by fire or other casualty, (ii) takings, including those of a temporary nature, by the government, or any governmental or quasi-governmental authority, or restricted access related thereto, or to allow construction required in connection with any such taking, (iii) construction, refurbishing, remodeling, alterations or decorating, (iv) remediation of Hazardous Substances or Hazardous Wastes (as such terms are defined in the Acquisition Agreement) or environmental matters of any nature, (v) closures reasonably necessary for the safety of occupants or the preservation of property, or (vi) any strike, lockout, inability to procure materials, failure of power, restrictive laws, riots, obstructions, insurrection, acts of terrorism, war or other reasons of a like nature not the fault of, or under the control of, Tenant.
Occupancy Covenant