city of miami, florida health facilities authority · 2017. 1. 18. · with a large portion of its...
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Rating: Fitch (BBB)BOOK ENTRY ONLY (See "RATING" herein)
In the opinion of Squire Patton Boggs (US) LLP, Bond Counsel, under existing law (i) assuming continuing compliance with certain covenants and the accuracy of certain representations, interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, and (ii) the Bonds and the income thereon are exempt from taxation under the laws of the State of Florida, except estate taxes imposed by Chapter 198, Florida Statutes, as amended, and net income and franchise taxes imposed by Chapter 220, Florida Statutes, as amended. Interest on the Bonds may be subject to certain federal taxes imposed only on certain corporations, including the corporate alternative minimum tax on a portion of that interest. For a more complete discussion of the tax aspects, see "TAX MATTERS" herein.
$44,035,000CITY OF MIAMI, FLORIDA HEALTH FACILITIES AUTHORITY
Health Facilities Revenue and Revenue Refunding Bonds(Miami Jewish Health Systems, Inc. Project), Series 2017
Dates, Interest Rates, Yields, Prices and Maturities Are Shown on the Inside of the Front Cover
The above-captioned Bonds (the "Bonds") are initially issuable in fully registered form, without coupons, and, when issued, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ("DTC"). DTC will act as securities depository for the Bonds. Purchases of beneficial interests in the Bonds will be made in book entry only form, as more fully described in APPENDIX E herein.
The City of Miami, Florida Health Facilities Authority (the "Issuer") will use the proceeds of the sale of the Bonds to provide funds to (a) refinance certain obligations of Miami Jewish Health Systems, Inc. ("MJHS" or "Obligated Group Representative") by currently refunding (i) all of the Issuer's outstanding Health Facilities Revenue Refunding Bonds (Miami Jewish Home and Hospital for the Aged, Inc. Project), Series 2005 (the "Refunded Bonds"), and (ii) certain other outstanding debt of MJHS, (b) make a swap termination payment related to an interest rate hedge agreement with respect to the Refunded Bonds, (c) finance (including reimbursement of) all or a portion of the costs of acquisition, construction and equipping of certain capital improvements to the health care facilities of MJHS as more particularly described herein, (d) fund a debt service reserve fund for the Bonds, and (e) pay the cost of issuing the Bonds.
MJHS is a Florida not-for-profit corporation that owns and operates senior living and healthcare facilities known as "Miami Jewish Health Systems" with a large portion of its services located in Miami, Florida (the "Main Campus"). The Main Campus contains 95 independent living units, 81 residential style assisted living units, 19 memory support assisted living units, 438 skilled nursing beds, a 32-bed Medicare certified non-surgical hospital unit, an ambulatory health center and an outpatient pain center, together with a variety of related services and amenities, as more fully described in APPENDIX A hereto.
The Bonds are being issued pursuant to Part III, Chapter 154, Florida Statutes, as amended, Part II, Chapter 159, Florida Statutes, as amended, Resolution No. 79-93 of the City of Miami, Florida, as amended, and other applicable provisions of law (collectively, the "Act"), in conformity with the provisions, restrictions and limitations thereof. Additionally, the Bonds are being issued pursuant to an Indenture of Trust, dated as of January 1, 2017 (the "Bond Indenture"), between the Issuer and The Bank of New York Mellon Trust Company, N.A., as bond trustee (the "Bond Trustee").
Except as described in this Official Statement, the Bonds and the interest payable thereon are limited obligations of the Issuer and are payable solely from and secured exclusively by the funds pledged thereto under the Bond Indenture and payments to be made by MJHS pursuant to the Loan Agreement and the Series 2017 Note (as such terms are defined herein). The Series 2017 Note is being issued by MJHS, on behalf of itself and as the Obligated Group Representative on behalf of Miami Jewish Health Systems Foundation, Inc. and Florida PACE Centers, Inc. (collectively with MJHS, the "Initial Obligated Group") under a Master Trust Indenture dated as of January 1, 2017 by and among the Initial Obligated Group and The Bank of New York Mellon Trust Company, N.A., as master trustee (the "Master Trustee"), as supplemented by Supplemental Indenture Number 1, dated as of January 1, 2017 (collectively, the "Master Indenture"), between MJHS, as Obligated Group Representative, and the Master Trustee. The sources of payment of, and security for, the Bonds are more fully described in this Official Statement.
The Bonds are subject to acceleration of maturity, optional, mandatory and extraordinary optional redemption, in whole or in part, prior to maturity at the prices and under the circumstances described herein.
The Bonds when issued will be registered only in the name of Cede & Co., as registered owner and nominee of The Depository Trust Company, New York, New York ("DTC"). DTC will act as securities depository for the Bonds. Purchasers of the Bonds will not receive certificates representing their interest in the Bonds purchased. Ownership by the beneficial owners of the Bonds will be evidenced by book-entry only. Principal of and interest on the Bonds will be paid by the Bond Trustee to DTC, which in turn will remit such principal and interest to its participants for subsequent disbursement to the beneficial owners of the Bonds. As long as Cede & Co. is the registered owner as nominee of DTC, payments on the Bonds will be made to such registered owner, and disbursement of such payments will be the responsibility of DTC and its participants. See APPENDIX E - BOOK-ENTRY ONLY SYSTEM.
An investment in the Bonds involves a certain degree of risk related to, among other things, the nature of the Obligated Group's business, the regulatory environment, and the provisions of the principal documents. A prospective Bondholder is advised to read "SECURITY FOR THE BONDS" and "RISK FACTORS" herein for a discussion of certain risk factors that should be considered in connection with an investment in the Bonds.
NEITHER THE STATE OF FLORIDA, NOR THE CITY OF MIAMI, FLORIDA, SHALL IN ANY EVENT BE LIABLE FOR THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON ANY OF THE BONDS ISSUED HEREUNDER. THE BONDS ARE LIMITED OBLIGATIONS OF THE ISSUER PAYABLE SOLELY FROM THE REVENUES, RECEIPTS AND RESOURCES OF THE ISSUER PLEDGED TO THEIR PAYMENT AS DESCRIBED HEREIN AND NOT FROM ANY OTHER REVENUES, FUNDS OR ASSETS OF THE ISSUER. NONE OF THE BONDS SHALL BE CONSTRUED OR CONSTITUTE AN INDEBTEDNESS OF THE ISSUER OR AN INDEBTEDNESS OR OBLIGATION (SPECIAL, MORAL OR GENERAL) OF THE STATE OF FLORIDA OR THE CITY OF MIAMI, FLORIDA WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY PROVISION WHATSOEVER. THE ISSUER HAS NO TAXING POWER.
The Bonds are being offered, subject to prior sale and withdrawal of such offer without notice, when, as and if issued by the Issuer and accepted by the Underwriters subject to the opinions on certain legal matters relating to their issuance of Squire Patton Boggs (US) LLP, Miami, Florida, Bond Counsel. Certain legal matters will be passed upon for the Issuer by the Office of the City Attorney, for the Obligated Group by its counsel, Greenberg Traurig, P.A., Miami, Florida, and for the Underwriters by their counsel, Nabors, Giblin & Nickerson, P.A., Tampa, Florida. Public Financial Management, Inc., Miami, Florida, is serving as Financial Advisor to MJHS. It is expected that the Bonds will be available for delivery through the facilities of DTC, against payment therefor, on or about January 25, 2017.
SunTrust Robinson Humphrey
Official Statement dated January 11, 2017
CITY OF MIAMI, FLORIDA HEALTH FACILITIES AUTHORITYHealth Facilities Revenue and Revenue Refunding Bonds(Miami Jewish Health Systems, Inc. Project), Series 2017
Dated: Date of Delivery Due: As shown below
The Bonds will be issuable in fully registered form without coupons in minimum denominations of $5,000 and any integral multiples of $5,000 in excess thereof. Interest on the Bonds will be payable on each July 1 and January 1 commencing on July 1, 2017. The Bonds will be subject to optional, mandatory and extraordinary optional redemption prior to maturity, as more fully described herein.
MATURITY SCHEDULE
$18,845,000 Serial Bonds
Maturity Date (July 1)
Principal Amount
Interest Rate Yield Price CUSIP No.†
2017 $ 385,000 1.500% 1.450% 100.020 593416BZ22018 895,000 2.250 2.220 100.041 593416CA62019 920,000 2.500 2.500 100.000 593416CB42020 940,000 5.000 2.790 107.185 593416CC22021 990,000 5.000 3.000 108.242 593416CD02022 1,035,000 5.000 3.300 108.390 593416CE82023 1,090,000 5.000 3.500 108.571 593416CF52024 1,145,000 5.000 3.660 108.649 593416CG32025 1,200,000 5.000 3.790 108.662 593416CH12026 1,260,000 5.000 3.900 108.609 593416CJ72027 1,000,000 5.000 3.980 108.637 593416CK42027 325,000 4.000 3.980 100.167 593416CT52028* 1,385,000 5.000 4.060 107.927 593416CN82029* 1,455,000 5.000 4.130 107.311 593416CP32030* 1,530,000 5.000 4.200 106.699 593416CQ12031* 1,605,000 5.000 4.270 106.091 593416CR92032* 1,685,000 5.000 4.340 105.487 593416CL2
$25,190,000 Term Bonds
$8,695,000 5.125% Term Bonds due July 1, 2038*; Priced at 104.646 to Yield 4.560%; CUSIP No. 593416CS7†
$16,495,000 5.125% Term Bonds due July 1, 2046*; Priced at 103.972 to Yield 4.640%; CUSIP No. 593416CM0†
______________________* Yield and price calculated to first optional call of July 1, 2027.† CUSIP is a registered trademark of the American Bankers Association. CUSIP data contained herein is provided by Standard & Poor's, CUSIP
Service Bureau, a division of The McGraw-Hill Companies, Inc. This data is not intended to create a database and does not serve in any way as a substitute for the CUSIP Services. CUSIP data is provided for convenience of reference only. The Issuer, MJHS and the Underwriters take no responsibility for the accuracy of such numbers.
Locations of the Obligated Group’s Facilities
Main Campus Map
Main Campus Entrance & Hazel Cypen Tower – Assisted Living and Memory Care
Schaefer Building – Main Campus PACE Center
Irving Cypen Tower – Independent Living
Ablin Building – Rosomoff Rehabilitation & Douglas Gardens Homecare
Stein Commons – Ambulatory Health Clinic
Swimming Pool at Hazel Cypen Tower
No dealer, salesman or other person has been authorized to give any information or to make any representations other than those contained in this Official Statement, and if given or made, such information or representations must not be relied upon as having been authorized by the Obligated Group, the Issuer or the Underwriters. The information set forth herein concerning the Obligated Group has been furnished by the Obligated Group and is believed to be reliable, but is not guaranteed as to accuracy or completeness by, and is not to be construed as a representation by, the Issuer or the Underwriters. This Official Statement does not constitute an offer to sell or a solicitation of an offer to buy any of the securities offered hereby in any state to any person to whom it is unlawful to make such offer in such state. Except where otherwise indicated, this Official Statement speaks as of the date hereof. The information and expressions of opinion herein are subject to change without notice and neither the delivery of this Official Statement nor any sale hereunder will under any circumstances create any implication that there has been no change in the affairs of the Obligated Group since the date hereof.
The Underwriters have provided the following sentence for inclusion in this Official Statement: The Underwriters have reviewed the information in this Official Statement in accordance with, and as part of, their responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriters do not guarantee the accuracy or completeness of such information. The information contained in this Official Statement has been furnished by the Obligated Group, the Issuer, DTC and other sources that are believed to be reliable, but such information is not guaranteed as to accuracy or completeness by, and is not to be construed as a representation of, the Underwriters. The information and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the parties referred to above since the date hereof.
THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THE BOND INDENTURE AND THE MASTER INDENTURE HAVE NOT BEEN QUALIFIED UNDER THE TRUST INDENTURE ACT OF 1939, AS AMENDED, IN RELIANCE UPON EXEMPTIONS CONTAINED IN SUCH ACTS. THE REGISTRATION OR QUALIFICATION OF THE BONDS IN ACCORDANCE WITH APPLICABLE PROVISIONS OF LAWS OF THE STATES IN WHICH BONDS HAVE BEEN REGISTERED OR QUALIFIED AND THE EXEMPTION FROM REGISTRATION OR QUALIFICATION IN OTHER STATES CANNOT BE REGARDED AS A RECOMMENDATION THEREOF. NEITHER THESE STATES NOR ANY OF THEIR AGENCIES HAVE PASSED UPON THE MERITS OF THE BONDS OR THE ACCURACY OR COMPLETENESS OF THIS OFFICIAL STATEMENT. ANY REPRESENTATION TO THE CONTRARY MAY BE A CRIMINAL OFFENSE.
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IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER ALLOT OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME WITHOUT NOTICE.
____________________
Certain statements included or incorporated by reference in this Official Statement constitute "forward looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended. Such statements are generally identifiable by the terminology used such as "plan," "expect," "estimate," "budget" or other similar words. Such forward looking statements include, but are not limited to, certain statements contained in the information in APPENDIX A to this Official Statement.
THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN SUCH FORWARD LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS THAT MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS DESCRIBED TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD LOOKING STATEMENTS. THE OBLIGATED GROUP DOES NOT PLAN TO ISSUE ANY UPDATES OR REVISIONS TO THOSE FORWARD LOOKING STATEMENTS IF OR WHEN ITS EXPECTATIONS, OR EVENTS, CONDITIONS OR CIRCUMSTANCES ON WHICH SUCH STATEMENTS ARE BASED OCCUR.
THIS OFFICIAL STATEMENT IS BEING PROVIDED TO PROSPECTIVE PURCHASERS IN EITHER BOUND OR PRINTED FORMAT ("ORIGINAL BOUND FORMAT"), OR IN ELECTRONIC FORMAT ON THE FOLLOWING WEBSITES: WWW.MUNIOS.COM AND WWW.EMMA.MSRB.ORG. THIS OFFICIAL STATEMENT MAY BE RELIED ON ONLY IF IT IS IN ITS ORIGINAL BOUND FORMAT, OR IF IT IS PRINTED OR SAVED IN FULL DIRECTLY FROM THE AFOREMENTIONED WEBSITES.
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TABLE OF CONTENTS Page
INTRODUCTION ............................................................................................................... 1�Security for the Bonds ..................................................................................................... 2�
THE ISSUER ....................................................................................................................... 3�THE OBLIGATED GROUP AND ITS FACILITIES ........................................................ 4�PLAN OF FINANCE .......................................................................................................... 5�ESTIMATED SOURCES AND USES OF FUNDS ........................................................... 6�ESTIMATED ANNUAL DEBT SERVICE REQUIREMENTS ....................................... 7�THE BONDS ....................................................................................................................... 8�MANDATORY AND OPTIONAL REDEMPTION PROVISIONS FOR
THE BONDS ................................................................................................................. 10�SECURITY FOR THE BONDS ....................................................................................... 12�
General .......................................................................................................................... 12�Limited Obligations ...................................................................................................... 12�Debt Service Reserve Fund for the Bonds .................................................................... 13�The Loan Agreement .................................................................................................... 14�The Master Indenture .................................................................................................... 14�Certain Covenants of the Obligated Group ................................................................... 16�Revenue Fund ............................................................................................................... 20�
RISK FACTORS ............................................................................................................... 21�General Risk Factors ..................................................................................................... 21�Impact of Market Turmoil ............................................................................................. 22�Limited Obligations ...................................................................................................... 22�Uncertainty of Revenues ............................................................................................... 23�Failure to Maintain Occupancy ..................................................................................... 23�Competition ................................................................................................................... 24�Liquidation of Security May Not be Sufficient in the Event of a Default .................... 24�The Nature of the Income of the Elderly ...................................................................... 24�Sale of Homes ............................................................................................................... 25�Factors Affecting Real Estate Taxes ............................................................................. 25�Malpractice Claims and Losses ..................................................................................... 25�Regulation and Health Care Reform ............................................................................. 25�Nursing Staff Shortage .................................................................................................. 28�Third-Party Payments and Managed Care .................................................................... 28�Fraud and Abuse Enforcement ...................................................................................... 28�Other Sources of Liability for Health Care Providers .................................................. 34�Medicare and Medicaid Programs ................................................................................ 35�Medicare Reimbursement ............................................................................................. 36�Possible Changes in Tax Status .................................................................................... 38�Other Tax Status Issues ................................................................................................. 38�Lack of Marketability for the Bonds ............................................................................. 39�Bankruptcy .................................................................................................................... 39�Additional Indebtedness ................................................................................................ 40�
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Certain Matters Relating to Enforceability of the Master Indenture ............................ 40�Environmental Matters .................................................................................................. 42�Taxation of Interest on the Bonds ................................................................................. 43�Property and Casualty Insurance................................................................................... 43�Amendments to Documents .......................................................................................... 44�Other Possible Risk Factors .......................................................................................... 44�
FINANCIAL REPORTING AND CONTINUING DISCLOSURE ................................ 46�Financial Reporting ....................................................................................................... 46�Continuing Disclosure ................................................................................................... 47�
DISCLOSURE REQUIRED BY FLORIDA BLUE SKY REGULATIONS ................... 50�Issuer ............................................................................................................................. 50�Obligated Group ............................................................................................................ 51�
LITIGATION .................................................................................................................... 51�Issuer ............................................................................................................................. 51�Obligated Group ............................................................................................................ 51�
LEGAL MATTERS .......................................................................................................... 52�TAX MATTERS ............................................................................................................... 52�INDEPENDENT AUDITORS .......................................................................................... 56�RATING ............................................................................................................................ 56�UNDERWRITING ............................................................................................................ 57�FINANCIAL ADVISOR ................................................................................................... 57�ROLE OF BOND TRUSTEE AND MASTER TRUSTEE .............................................. 57�MISCELLANEOUS .......................................................................................................... 58�
APPENDIX A - INFORMATION CONCERNING THE OBLIGATED GROUPAPPENDIX B - COMBINED FINANCIAL STATEMENTS AND
SUPPLEMENTAL INFORMATION OF MJHS AND SUBSIDIARIES AND AFFILIATES FOR FISCAL YEARS ENDED JUNE 30, 2016 AND 2015
APPENDIX C - FORMS OF CERTAIN PRINCIPAL DOCUMENTS APPENDIX D - PROPOSED FORM OF BOND COUNSEL OPINION APPENDIX E - BOOK-ENTRY ONLY SYSTEM APPENDIX F - FORM OF CONTINUING DISCLOSURE CERTIFICATE
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OFFICIAL STATEMENT
relating to the
$44,035,000CITY OF MIAMI, FLORIDA HEALTH FACILITIES AUTHORITY
Health Facilities Revenue and Revenue Refunding Bonds (Miami Jewish Health Systems, Inc. Project), Series 2017
INTRODUCTION
Purpose of this Official Statement. This Official Statement, including the cover page, inside cover page and Appendices hereto, is provided to furnish information with respect to the issuance, sale and delivery by the City of Miami, Florida Health Facilities Authority (the "Issuer") of its Health Facilities Revenue and Revenue Refunding Bonds (Miami Jewish Health Systems, Inc. Project), Series 2017 (the "Bonds").
The Bonds are being issued pursuant to Part III, Chapter 154, Florida Statutes, as amended, Part II, Chapter 159, Florida Statutes, as amended, Ordinance No. 79-93 of the City of Miami, Florida, as amended, and other applicable provisions of law (collectively, the "Act"). Additionally, the Bonds are being issued pursuant to an Indenture of Trust, dated as of January 1, 2017 (the "Bond Indenture "), between the Issuer and The Bank of New York Mellon Trust Company, N.A., as bond trustee (the "Bond Trustee").
Certain capitalized terms used herein are defined in APPENDIX C hereto. The descriptions and summaries of various documents hereinafter set forth do not purport to be comprehensive or definitive, and reference is made to each document for the complete details of its terms and conditions. All statements herein are qualified in their entirety by reference to each document.
Purpose of the Bonds. The proceeds of the Bonds will be loaned to Miami Jewish Health Systems, Inc., a Florida not-for-profit corporation ("MJHS" or "Obligated Group Representative") pursuant to a Loan Agreement, dated as of January 1, 2017 (the "Loan Agreement"), between the Issuer and MJHS and will be used, together with other available moneys, to (a) refinance certain obligations of MJHS by currently refunding (i) all of the Issuer's outstanding Health Facilities Revenue Refunding Bonds (Miami Jewish Home and Hospital for the Aged, Inc. Project), Series 2005 (the "Refunded Bonds"), and (ii) certain other outstanding debt of MJHS (the "Prior Debt"), (b) make a swap termination payment related to an interest rate hedge agreement with respect to the Refunded Bonds (the "Swap Termination Payment"), (c) finance (including reimbursement of) all or a portion of the costs of acquisition, construction and equipping of certain capital improvements to the health care facilities of MJHS as more particularly described herein, (d) fund a debt service reserve fund for the Bonds, and (e) pay the cost
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of issuing the Bonds. See "PLAN OF FINANCE" and "ESTIMATED SOURCES AND USES OF FUNDS" herein.
Risk Factors. Certain risks are inherent in the successful operation of facilities, such as the Obligated Group's Facilities, on a basis such that sufficient cash will be available to pay interest on and to retire indebtedness. See "RISK FACTORS" below for a discussion of certain of these risks.
Security for the Bonds
General. The Bonds will be issued under and will be equally and ratably secured under the Bond Indenture, pursuant to which the Issuer will assign and pledge to the Bond Trustee, (1) the hereinafter described Series 2017 Note relating to the Bonds, (2) certain rights of the Issuer under the Loan Agreement, (3) the funds and accounts (excluding the Rebate Fund), including the money and investments in them, which the Bond Trustee holds under the terms of the Bond Indenture, and (4) such other property as may from time to time be pledged to the Bond Trustee as additional security for such Bonds or which may come into possession of the Bond Trustee pursuant to the terms of the Loan Agreement or the Series 2017 Note.
Loan Agreement. Pursuant to the Loan Agreement, MJHS has agreed to make loan payments sufficient, among other things, to pay in full when due all principal of, premium, if any, and interest on the Bonds and the reasonable and necessary administrative fees of the Bond Trustee, and, to make payments as required to restore any deficiencies in the debt service reserve fund. See "SECURITY FOR THE BONDS - The Loan Agreement." See also "LOAN AGREEMENT" in APPENDIX C hereto.
Master Indenture and Mortgage. The obligation of MJHS to repay the loan from the Issuer will be evidenced and secured by an Obligation (the "Series 2017 Note"), issued under and entitled to the benefit and security of a Master Trust Indenture, dated as of January 1, 2017, by and among MJHS, Miami Jewish Health Systems Foundation, Inc. (the "Foundation"), Florida PACE Centers, Inc. ("FPC," and collectively with MJHS and the Foundation, the "Initial Obligated Group") and The Bank of New York Mellon Trust Company, N.A., as master trustee (the "Master Trustee") as supplemented by Supplemental Indenture Number 1, dated as of January 1, 2017, between MJHS, as Obligated Group Representative, and the Master Trustee (collectively, the "Master Indenture"). See "SECURITY FOR THE BONDS - The Master Indenture." See also "MASTER TRUST INDENTURE" in APPENDIX C hereto. The Series 2017 Note will constitute an unconditional promise by each Obligated Group Member (as defined in the Master Indenture) to pay amounts sufficient to pay principal of (whether at maturity, by acceleration or earlier call for redemption) and premium, if any, and interest on the Bonds; and the Series 2017 Note will be secured on a parity basis with any other Obligations hereafter issued under the Master Indenture, by a lien on and security interest in the (i) Mortgaged Property granted to the Master Trustee pursuant to a Mortgage,
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Fixture Filing and Security Agreement, dated as of January 1, 2017, executed by MJHS and delivered to The Bank of New York Mellon Trust Company, N.A., in its capacity as Master Trustee under the Master Indenture (the "Mortgage") and (ii) Gross Revenues of the Obligated Group and the Funds established under the Master Indenture (described below). Currently, only the Initial Obligated Group and the Master Trustee are parties to the Master Indenture, and the Initial Obligated Group are the only Obligated Group Members. The Initial Obligated Group and each Obligated Group Member admitted to or removed from the Obligated Group in the future (collectively, the "Obligated Group") will be jointly and severally liable for the payment for all obligations entitled to the benefits of the Master Indenture and will be subject to the financial and operating covenants thereunder.
Pledge of Gross Revenues. In order to secure the payment of the principal of, premium, if any, and interest on the Series 2017 Note, the Obligated Group Members will pledge, assign, confirm and grant a security interest to the Master Trustee in the Gross Revenues of the Obligated Group Members as well as all moneys and securities from time to time held by the Master Trustee under the terms of the Master Indenture. See "SECURITY FOR THE BONDS - Revenue Fund" herein.
Debt Service Reserve Fund. As additional security for the Bonds, a debt service reserve fund (the "Reserve Fund") will be established pursuant to the Bond Indenture and will be funded from the proceeds of the Bonds. The Reserve Fund will be funded in an amount equal to the Reserve Fund Requirement. See "SECURITY FOR THE BONDS – Debt Service Reserve Fund for the Bonds." See also "INDENTURE OF TRUST" in APPENDIX C hereto.
THE ISSUER
The Issuer is a public body corporate and politic of the State of Florida created pursuant to and operating under the Act. The Issuer is authorized by the Act to issue its revenue bonds to finance and to refinance a variety of health facility and health care facility projects, which bonds are payable solely from the revenues derived from the sale, operation or leasing of such health facility project or projects. The facilities originally financed or refinanced with proceeds of the Refunded Bonds constituted, and the hereinafter described Project constitutes, a "project" and a "health care facility" and MJHS constitutes a "health facility" within the meaning of the Act. The Issuer adopted a resolution on December 2, 2016, authorizing the issuance of the Bonds.
The Issuer has not undertaken to review this Official Statement nor has it assumed any responsibility for the matters contained herein except solely as to matters relating to the Issuer. All findings and determinations by the Issuer have been made for its own internal uses and purposes in performing its duties under the Act. Notwithstanding its approval of the Bonds for purposes of Section 147(f) of the Internal Revenue Code of
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1986, as amended (the "Code"), the Issuer does not endorse or in any manner, directly or indirectly, guarantee or promise to pay the Bonds from any source of funds or guarantee, warrant or endorse the creditworthiness or credit standing of the Obligated Group or in any manner guarantee, warrant or endorse the investment quality or value of the Bonds. By its issuance of the Bonds, the Issuer does not in any manner, directly or indirectly, guarantee, warrant or endorse the creditworthiness of the Obligated Group or the investment quality or value of the Bonds. The Bonds are payable solely as described in this Official Statement and are not in any manner payable wholly or partially from any funds or properties otherwise belonging to the Issuer or the City of Miami, Florida.
The Issuer has not participated in the preparation of this Official Statement and makes no representation with respect to the accuracy or completeness of any of the material contained in this Official Statement other than in this section and the section entitled "DISCLOSURE REQUIRED BY FLORIDA BLUE SKY REGULATIONS – Issuer" and "LITIGATION – Issuer." The Issuer is not responsible for providing any purchaser of the Bonds with any information relating to the Bonds or any of the parties or transactions referred to in this Official Statement or for the accuracy or completeness of any such information obtained by any purchaser.
THE OBLIGATED GROUP AND ITS FACILITIES
MJHS. MJHS is a Florida not-for-profit corporation located in Miami, Florida. MJHS has obtained a letter from the Internal Revenue Service ("IRS") confirming its exemption from federal income taxation under Section 501(a) of the Internal Revenue Code of 1986, as amended (the "Code") by virtue as its status as an organization described in Section 501(c)(3) of the Code. MJHS is the sole corporate member of the Foundation and FPC and is the Obligated Group Representative.
MJHS owns and operates a system of specialized healthcare and senior living facilities consisting of a long term and short term care nursing home with 438 skilled nursing beds; a 32-bed acute non-surgical hospital; 95 independent living rental units; 81 assisted living rental units; 19 memory support assisted living rental units; an ambulatory health clinic; and a comprehensive rehabilitation center, together with a variety of related services and amenities, all located on an approximately 21-acre main campus in Miami, Florida (the "Main Campus").
FPC. In 2003, MJHS opened the first Program of All Inclusive Care for the Elderly ("PACE") in Florida under the name Florida PACE Centers, Inc., which is exempt from federal income taxation under Section 501(a) of the Code by meeting the requirements of Section 501(c)(3) of the Code. Today, FPC has four operating facilities (Miami-Main Campus, Hialeah, Westchester and Miramar) serving a total of nearly 550 participants annually (collectively, the "PACE Centers").
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The Foundation. The Foundation is a not-for-profit Florida corporation related to MJHS by common board membership and is organized to raise funds for and financially support the programs of MJHS and its residents. MJHS has the authority to direct the distribution of the Foundation's assets.
For more information regarding the Obligated Group and its facilities, services, businesses and financial affairs, see APPENDICES A and B hereto.
PLAN OF FINANCE
Refunding of the Refunded Bonds. Concurrently with the issuance of the Bonds, a portion of the proceeds thereof will be applied to fully redeem and pay the Refunded Bonds. The proceeds of the Refunded Bonds were used to finance or refinance costs related to the acquisition, construction, equipping and improvement of certain facilities of MJHS located on the Main Campus.
Refunding of the Prior Debt. Concurrently with the issuance of the Bonds, a portion of the proceeds thereof will be applied to fully satisfy the Prior Debt. The proceeds of the Prior Debt were used to finance or refinance costs related to the acquisition, construction, equipping and improvement of MJHS' facilities.
The Swap Termination Payment. Concurrently with the issuance of the Bonds, a portion of the proceeds thereof will be applied to make a Swap Termination Payment related to an interest rate hedge agreement with respect to the Refunded Bonds.
The Project. A portion of the proceeds of the Bonds will be deposited in the Construction Fund and disbursed by the Bond Trustee to MJHS to finance certain capital improvements, including land improvements, buildings, renovations, fixtures, furnishings and equipment, to the Main Campus (the "Project"). Construction of the Project is expected to commence in early 2017 and MJHS anticipates that the Project will be completed by early 2019. See APPENDIX A hereto for a further description of the Project.
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ESTIMATED SOURCES AND USES OF FUNDS
The estimated sources and uses of funds in connection with the issuance of the Bonds are as follows:
SOURCES OF FUNDS Bonds $44,035,000.00 Original Issue Premium 2,296,226.65
Total Bond Proceeds $46,331,226.65
Equity Contribution 108,769.23
Total Sources of Funds $46,439,995.88
USES OF FUNDS
Refunding of Refunded Bonds $17,136,000.00 Refunding of Prior Debt 6,623,708.44 Swap Termination Payment 1,194,350.00 Deposit to Construction Fund 17,305,556.19 Deposit to Reserve Fund(1) 3,062,987.50 Bond Issuance Costs(2) 1,117,393.75
Total Uses of Funds $46,439,995.88
(1) The Reserve Fund will be established at closing in an amount equal to Maximum Annual Debt Service on the Bonds.
(2) Management estimates, based on information provided by the Underwriters, that bond issuance costs would approximate this amount and would include legal fees, financial advisor fees, Issuer fees, Bond Trustee's fees, underwriters' discount and other costs associated with the issuance of the Bonds.
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ESTIMATED ANNUAL DEBT SERVICE REQUIREMENTS
The following table sets forth the estimated amounts required for the payment of principal of the Bonds at maturity or by mandatory sinking fund redemption and for the payment of interest on the Bonds for each Bond Year ending July 1.
Series 2017 Bonds
Bond Year Ending July 1 Principal Interest
Total Debt Service
2017 $ 385,000.00 $ 939,856.66 $1,324,856.662018 895,000.00 2,163,125.00 3,058,125.00 2019 920,000.00 2,142,987.50 3,062,987.50 2020 940,000.00 2,119,987.50 3,059,987.50 2021 990,000.00 2,072,987.50 3,062,987.50 2022 1,035,000.00 2,023,487.50 3,058,487.50 2023 1,090,000.00 1,971,737.50 3,061,737.50 2024 1,145,000.00 1,917,237.50 3,062,237.50 2025 1,200,000.00 1,859,987.50 3,059,987.50 2026 1,260,000.00 1,799,987.50 3,059,987.50 2027 1,325,000.00 1,736,987.50 3,061,987.50 2028 1,385,000.00 1,673,987.50 3,058,987.50 2029 1,455,000.00 1,604,737.50 3,059,737.50 2030 1,530,000.00 1,531,987.50 3,061,987.50 2031 1,605,000.00 1,455,487.50 3,060,487.50 2032 1,685,000.00 1,375,237.50 3,060,237.50 2033 1,275,000.00 1,290,987.50 2,565,987.50 2034 1,340,000.00 1,225,643.76 2,565,643.76 2035 1,410,000.00 1,156,968.76 2,566,968.76 2036 1,480,000.00 1,084,706.26 2,564,706.26 2037 1,555,000.00 1,008,856.26 2,563,856.26 2038 1,635,000.00 929,162.50 2,564,162.50 2039 1,720,000.00 845,368.76 2,565,368.76 2040 1,810,000.00 757,218.76 2,567,218.76 2041 1,900,000.00 664,456.26 2,564,456.26 2042 2,000,000.00 567,081.26 2,567,081.26 2043 2,100,000.00 464,581.26 2,564,581.26 2044 2,205,000.00 356,956.26 2,561,956.26 2045 2,320,000.00 243,950.00 2,563,950.00 2046 2,440,000.00 125,050.00 2,565,050.00
TOTAL $44,035,000.00 $39,110,794.26 $83,145,794.26
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THE BONDS
Specific information about the Bonds is contained below. Information about security for the Bonds is contained in "SECURITY FOR THE BONDS."
General; Book-Entry-Only System. The Bonds are immediately issuable in fully registered form, without coupons, and, when issued, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ("DTC"). So long as DTC acts as securities depository for the Bonds, as described in APPENDIX E hereto, all references herein to "Owner," "owner," "Holder" or "holder" of any Bonds or to "Bondowner," "Bondholder," "bondowner" or "bondholder" are deemed to refer to Cede & Co., as nominee for DTC, and not to Participants, Indirect Participants or Beneficial Owners (as defined herein) and principal of, premium, if any, and interest on the Bonds will be paid as described in APPENDIX E hereto. The following information is subject in its entirety to the provisions described in APPENDIX E hereto.
Denominations and Interest Payment Dates. The Bonds will be issued only in fully registered form without coupons in the denominations of $5,000 and any integral multiples thereof. The Bonds will be dated their date of issuance and will accrue interest from the date of delivery, except as otherwise provided in the Bond Indenture. The Bonds will bear interest (based on a 360-day year of twelve 30-day months) at the rates set forth on the inside cover hereof, payable semiannually on July 1 and January 1 each year, commencing July 1, 2017 (each, an "Interest Payment Date"), and mature on the dates set forth on the inside cover page hereof.
Payment of Principal and Interest. The principal of and premium, if any, on the Bonds shall be payable at the Payment Office of the Bond Trustee, or at the designated corporate trust office of its successor, upon presentation and surrender of the Bonds. Payment of interest on any Bond shall be made to the person who is the registered owner thereof at the close of business on the last day of the month preceding each regularly scheduled Interest Payment Date (each a "Regular Record Date") by check mailed by the Bond Trustee on such Interest Payment Date to such registered owner at his or her address as it appears on the registration records kept by the Bond Trustee or by wire transfer of same day funds upon receipt by the Bond Trustee prior to the Regular Record Date of a written request by a registered owner of $1,000,000 or more in aggregate principal amount of Bonds. The CUSIP number and appropriate dollar amounts for each CUSIP number shall accompany all payments of principal, premium, if any, and interest on the Bonds. Any such interest not so timely paid or duly provided for shall cease to be payable to the person who is the registered owner of such Bond at the close of business on the Regular Record Date and shall be payable to the person who is the registered owner thereof at the close of business on a Special Record Date (as defined in APPENDIX C hereto) for the payment of any such defaulted interest. Such Special
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Record Date shall be fixed by the Bond Trustee whenever moneys become available for payment of the defaulted interest, and notice of the Special Record Date shall be given to the registered owners of the Bonds not less than 10 days prior thereto by first class postage prepaid mail to each such registered owner as shown on the registration records, stating the date of the Special Record Date and the date fixed for the payment of such defaulted interest. Alternative means of payment of interest may be used if mutually agreed upon between the owners of any Bonds and the Bond Trustee. All such payments shall be made in lawful money of the United States of America.
Transfers and Exchanges; Persons Treated as Owners. The Bonds are exchangeable for an equal Aggregate Principal Amount of fully registered Bonds of the same maturity of other authorized denominations at the Payment Office of the Bond Trustee but only in the manner and subject to the limitations and on payment of the charges provided in the Bond Indenture.
The Bonds are fully transferable by the registered owner in person or by his or her duly authorized attorney on the registration books kept at the principal office of the Bond Trustee upon surrender of the Bond together with a duly executed written instrument of transfer satisfactory to the Bond Trustee. Upon such transfer a new fully registered Bond of authorized denomination or denominations for the same Aggregate Principal Amount and maturity will be issued to the transferee in exchange herefor, all upon payment of the charges and subject to the terms and conditions set forth in the Bond Indenture.
The Bond Trustee will not be required to transfer or exchange any Bond after the mailing of notice calling such Bond or any portion thereof for redemption has been given as provided in the Bond Indenture, nor during the period beginning at the opening of business 15 days before the day of mailing by the Bond Trustee of a notice of prior redemption and ending at the close of business on the day of such mailing except for Bondholders of $1,000,000 or more in aggregate principal amount of the Bonds.
The Issuer and the Bond Trustee may deem and treat the person in whose name the Bond is registered as the absolute owner thereof for the purpose of making payment (except to the extent otherwise provided hereinabove and in the Bond Indenture with respect to Regular and Special Record Dates for the payment of interest) and for all other purposes, and neither the Issuer nor the Bond Trustee will be affected by any notice to the contrary. The principal of, premium, if any, and interest on the Bonds will be paid free from and without regard to any equities between MJHS and the original or any intermediate owner thereof, or any setoffs or counterclaims.
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MANDATORY AND OPTIONAL REDEMPTION PROVISIONS FOR THE BONDS
Mandatory Sinking Fund Redemption. The Bonds maturing on July 1, 2038 are subject to mandatory sinking fund redemption at a redemption price equal to the principal amount thereof plus accrued interest to the redemption date. As and for a sinking fund for the redemption of the Bonds maturing on July 1, 2038, the Issuer shall cause to be deposited into the Principal Account of the Bond Fund a sum which is sufficient to redeem on July 1 of each of the following years (after credit as provided in the Bond Indenture) the following principal amounts of the Bonds maturing on July 1, 2038, plus accrued interest to the redemption date:
Year Amount Year Amount
2033 $1,275,000 2036 $1,480,000 2034 1,340,000 2037 1,555,000 2035 1,410,000 2038* 1,635,000
*Maturity.
The Bonds maturing on July 1, 2046 are subject to mandatory sinking fund redemption at a redemption price equal to the principal amount thereof plus accrued interest to the redemption date. As and for a sinking fund for the redemption of the Bonds maturing on July 1, 2046, the Issuer shall cause to be deposited into the Principal Account of the Bond Fund a sum which is sufficient to redeem on July 1 of each of the following years (after credit as provided in the Bond Indenture) the following principal amounts of the Bonds maturing on July 1, 2046, plus accrued interest to the redemption date:
Year Amount Year Amount
2039 $1,720,000 2043 $2,100,000 2040 1,810,000 2044 2,205,000 2041 1,900,000 2045 2,320,000 2042 2,000,000 2046* 2,440,000
*Maturity.
At the option of MJHS, to be exercised by delivery of a written certificate to the Bond Trustee on or before the 45th day next preceding any sinking fund redemption date, it may (i) deliver to the Bond Trustee for cancellation of the Bonds or portions thereof of the same maturity, in an Aggregate Principal Amount desired by the MJHS, or (ii) specify a principal amount of the Bonds or portions thereof of the same maturity,
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which prior to said date have been redeemed (otherwise than through the operation of the sinking fund) and canceled by the Bond Trustee at the request of the MJHS and not theretofore applied as a credit against any sinking fund redemption obligation.
Optional Redemption. The Bonds maturing on or after July 1, 2028 are subject to optional redemption prior to maturity by the Issuer, at the written direction of MJHS, on or after July 1, 2027, at any time as a whole or in part by lot, at the redemption price of 100% of the principal amount of the Series 2017 Bonds to be redeemed, without redemption premium, plus accrued interest to the redemption date.
Extraordinary Optional Redemption. The Bonds will be subject to optional redemption by the Issuer at the written direction of MJHS prior to their scheduled maturities, in whole or in part at a redemption price equal to the principal amount thereof plus accrued interest from the most recent interest payment date to the redemption date on any date following the occurrence of any of the following events:
(a) in case of damage or destruction to, or condemnation of, any property, plant, and equipment of any Obligated Group Member, to the extent that the net proceeds of insurance or condemnation award exceed the Threshold Amount (as defined in the Master Indenture), and MJHS has determined not to use such net proceeds or award to repair, rebuild or replace such property, plant, and equipment; or
(b) as a result of any changes in the Constitution or laws of the State of Florida or of the United States of America or of any legislative, executive, or administrative action (whether state or federal) or of any final decree, judgment, or order of any court or administrative body (whether state or federal), the obligations of MJHS under the Loan Agreement have become, as established by an Opinion of Counsel, void or unenforceable in each case in any material respect in accordance with the intent and purpose of the parties as expressed in the Loan Agreement.
Partial Redemption. In the event that less than all of the Bonds are to be optionally redeemed, MJHS may select the particular maturities to be redeemed. If less than all Bonds or portions thereof of a single maturity are to be redeemed, they will be selected by DTC or by lot in such manner as the Bond Trustee may determine.
If a Bond is of a denomination larger than the minimum Authorized Denomination, a portion of such Bond may be redeemed, but Bonds will be redeemed only in the principal amount of an Authorized Denomination and no Bond may be redeemed in part if the principal amount to be outstanding following such partial redemption is not an Authorized Denomination.
Notice of Redemption. In the case of every redemption, the Bond Trustee will cause notice of such redemption to be given electronically or by mailing by first-class mail, postage prepaid, a copy of the redemption notice to the owners of the Bonds
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designated for redemption in whole or in part, at their addresses as the same will last appear upon the registration books, in each case not more than 60 nor less than 30 days prior to the redemption date. In addition, notice of redemption will be sent by first class or registered mail, return receipt requested, or by overnight delivery service (1) contemporaneously with such mailing to any owner of $1,000,000 or more in principal amount of Bonds; and (2) to any securities depository registered as such pursuant to the Securities Exchange Act of 1934, as amended, that is an owner of Bonds to be redeemed so that such notice is received at least two days prior to such mailing date; provided, however, that any defect in such notice will not affect the validity of any proceedings for the redemption of such Bonds. All Bonds or portions thereof called for redemption will cease to bear interest after the specified redemption date, provided funds for their payment are on deposit at the place of payment at that time.
Notwithstanding the foregoing, notice of optional redemption may, upon direction of MJHS to the Issuer, be conditioned upon the occurrence or non-occurrence of such event or events as shall be specified in such notice of optional redemption and may also be subject to rescission by the Issuer upon direction of MJHS to the Bond Trustee if expressly set forth in such notice.
SECURITY FOR THE BONDS
General
The Bonds will be issued under and will be equally and ratably secured under the Bond Indenture, pursuant to which the Issuer will assign and pledge to the Bond Trustee (1) the Series 2017 Note, (2) certain rights of the Issuer under the Loan Agreement, (3) the funds and accounts (excluding the Rebate Fund), including the money and investments in such funds, which the Bond Trustee holds under the terms of the Bond Indenture and (4) such other property as may from time to time be pledged to the Bond Trustee as additional security for such Bonds or which may come into possession of the Bond Trustee pursuant to the terms of the Loan Agreement or the Series 2017 Note.
Limited Obligations
The Bonds and the interest thereon are limited obligations of the Issuer, payable solely from and secured exclusively by certain payments to be made by MJHS under the Loan Agreement, the Series 2017 Note and certain other funds held by the Bond Trustee under the Bond Indenture and not from any other fund or source of the Issuer.
NEITHER THE STATE OF FLORIDA, NOR THE CITY OF MIAMI, FLORIDA, SHALL IN ANY EVENT BE LIABLE FOR THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON ANY OF THE BONDS ISSUED HEREUNDER. THE BONDS ARE LIMITED OBLIGATIONS OF THE
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ISSUER PAYABLE SOLELY FROM THE REVENUES, RECEIPTS AND RESOURCES OF THE ISSUER PLEDGED TO THEIR PAYMENT AND NOT FROM ANY OTHER REVENUES, FUNDS OR ASSETS OF THE ISSUER. NONE OF THE BONDS SHALL BE CONSTRUED OR CONSTITUTE AN INDEBTEDNESS OF THE ISSUER OR AN INDEBTEDNESS OR OBLIGATION (SPECIAL, MORAL OR GENERAL) OF THE STATE OF FLORIDA OR THE CITY OF MIAMI, FLORIDA WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY PROVISION WHATSOEVER. THE ISSUER HAS NO TAXING POWER.
Debt Service Reserve Fund for the Bonds
The Bond Indenture creates and establishes with the Bond Trustee a Debt Service Reserve Fund (the "Reserve Fund") with respect to the Bonds. Moneys on deposit in the Reserve Fund will be used to provide a reserve for the payment of the principal of and interest on the Bonds and any Additional Bonds issued under the Bond Indenture. See "INDENTURE OF TRUST" in APPENDIX C hereto.
Payments into the Reserve Fund. Pursuant to the Bond Indenture, the Reserve Fund is required to be initially funded in an amount equal to $3,062,987.50 which is equal to the Reserve Fund Requirement. Reserve Fund Requirement means an amount equal to the lesser of (a) 125% of the average annual debt service requirement for the Bonds and any Additional Bonds issued pursuant to the Bond Indenture, (b) 10% of the aggregate stated original principal amount of the Bonds and any Additional Bonds issued pursuant to the Bond Indenture or (c) the Maximum Annual Debt Service on the Bonds and any Additional Bonds issued pursuant to the Bond Indenture.
In addition to the deposits required by the Bond Indenture, there will be deposited into the Reserve Fund any Reserve Fund Obligations delivered by MJHS to the Bond Trustee pursuant to the Loan Agreement. In addition, there will be deposited into the Reserve Fund all moneys required to be transferred thereto pursuant to the Bond Indenture, and all other moneys received by the Bond Trustee when accompanied by written directions that such moneys are to be paid into the Reserve Fund. There will also be retained in the Reserve Fund all interest and other income received on investments of Reserve Fund moneys in the Reserve Fund to the extent provided in the Bond Indenture.
Use of Moneys in the Reserve Fund. Except as provided in the Bond Indenture, moneys in the Reserve Fund will be used solely for the payment of the principal of and interest on the Bonds and any Additional Bonds issued pursuant to the Bond Indenture in the event moneys in the Bond Fund are insufficient to make such payments when due, whether on an interest payment date, redemption date, maturity date, acceleration date or otherwise.
Effect of Event of Default. Upon the occurrence of an Event of Default of which the Bond Trustee is deemed to have notice under the Bond Indenture and the election by
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the Bond Trustee of the remedy specified in the Bond Indenture, any Reserve Fund Obligations in the Reserve Fund will, subject to the provisions of the Bond Indenture, be transferred by the Bond Trustee to the Principal Account and applied in accordance with the provisions of the Bond Indenture. In the event of the redemption of a portion of the Bonds or any Additional Bonds issued pursuant to the Bond Indenture, any Reserve Fund Obligations on deposit in the Reserve Fund in excess of the Reserve Fund Requirement on the Bonds and any Additional Bonds issued pursuant to the Bond Indenture to be Outstanding immediately after such redemption may, subject to the provisions of the Bond Indenture, be transferred to the Principal Account and applied to the payment of the principal of the Bonds or any Additional Bonds issued pursuant to the Bond Indenture to be redeemed. On January 1 and July 1 in each year, any earnings on the Reserve Fund Obligations on deposit in the Reserve Fund that are in excess of the Reserve Fund Requirement will be transferred into the Interest Account of the Bond Fund created pursuant to the Bond Indenture.
Remaining Funds. On the final maturity date or redemption date of the Bonds, any Reserve Fund Obligations in the Reserve Fund in excess of the Reserve Fund Requirement after giving effect to such maturity or redemption may, upon the written direction of MJHS, be used to pay the principal of, premium, if any, and interest on the Bonds and any Additional Bonds issued pursuant to the Bond Indenture.
The Loan Agreement
Under the Loan Agreement, MJHS is required to duly and punctually to pay the principal of, premium, if any, and interest on the Bonds when due, and to make payments to the Bond Trustee to maintain the Reserve Fund at the required amount and to make certain other payments. See "LOAN AGREEMENT" in APPENDIX C hereto.
The Master Indenture
General. The Master Indenture provides for the issuance of Obligations entitled to its benefits and imposes certain financial and operating covenant restrictions on the Obligated Group. The Series 2017 Note will be the only Obligation entitled to the benefits of the Master Indenture upon issuance of the Bonds. The holders of all Obligations entitled to the benefit of the Master Indenture will be on a parity with respect to the benefits of the Master Indenture. Pursuant to the Master Indenture, the Obligated Group Members have pledged and granted to the Master Trustee (a) a security interest in certain property owned or hereafter acquired by the Obligated Group, (b) a security interest in all the Gross Revenues of the Obligated Group, with certain limited exceptions, (c) a security interest in accounts or deposits in any fund or account established under the Master Indenture and (d) a security interest in any other property from time to time subjected to the lien of the Master Indenture. See "MASTER TRUST INDENTURE" in APPENDIX C.
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The Series 2017 Note. The Series 2017 Note will constitute a joint and several obligation of each Obligated Group Member and the Series 2017 Note will be secured on a parity basis with any other Obligations hereafter issued under the Master Indenture by a lien on the trust estate pledged thereunder, which includes the Project and the Gross Revenues of the Obligated Group.
The Mortgage. Pursuant to the Mortgage, MJHS has pledged and granted to the Master Trustee a lien on the Mortgaged Property in order to secure the Obligated Group's obligations under the Master Trust Indenture. See "MORTGAGE" in APPENDIX C.
Additional Indebtedness; Other Existing Indebtedness. The Master Indenture permits MJHS to incur Additional Indebtedness which may be equally and ratably secured without preference, priority or distinction with the Series 2017 Note. Any such additional parity indebtedness would be entitled to share ratably with the holder(s) of the Series 2017 Note in any moneys realized from the exercise of remedies in the event of a default under the Master Indenture. The issuance of Additional Indebtedness could increase Debt Service Requirements and reduce the Historical Debt Service Coverage Ratio (as such terms are defined in the Master Indenture) in future years and could impair the ability of the Obligated Group to maintain its compliance with certain covenants described in "MASTER TRUST INDENTURE" in APPENDIX C hereto. There is no assurance that, despite compliance with the conditions upon which Additional Indebtedness may be incurred at the time such debt is created, the ability of MJHS to make the necessary payments to repay the Series 2017 Note may not be materially adversely affected upon the incurrence of such Additional Indebtedness. See "MASTER TRUST INDENTURE – Permitted Additional Indebtedness" in APPENDIX C hereto for a description of the requirements for the issuance of Additional Indebtedness by the Obligated Group pursuant to the Master Indenture.
MJHS has a working capital line of credit with SunTrust Bank (the "SunTrust Line of Credit") in the maximum amount of $5,000,000. The SunTrust Line of Credit is not secured by an Obligation issued under the Master Indenture but is secured by a lien on and pledge of the accounts receivables and related documents of MJHS. Such lien constitutes a Permitted Encumbrance under the Master Indenture as a Lien existing on the date of execution of the Master Indenture and is listed on Exhibit B to the Master Indenture.
Admission and Withdrawal of Obligated Group Members. Currently, the Initial Obligated Group and the Master Trustee are parties to the Master Indenture. The Initial Obligated Group and each Obligated Group Member that may be admitted in the future will be jointly and severally liable for the payment for all obligations entitled to the benefits of the Master Indenture and will be subject to the financial and operating covenants thereunder. A Member that withdraws from the Obligated Group will be released from such Obligation. See "MASTER TRUST INDENTURE – Admission of Obligated Group Members" and " - Withdrawal of Obligated Group Members" in
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APPENDIX C for a description of the limitations on admission and release of Obligated Group Members. Notwithstanding the foregoing, MJHS has covenanted in the Master Indenture that neither it, nor its successors nor assigns shall withdraw as a Member of the Obligated Group while the Series 2017 Note is outstanding.
Certain Covenants of the Obligated Group
In addition to the covenants described below, the Master Indenture contains additional covenants relating to, among others, the maintenance of each Obligated Group Member's property and corporate existence, the maintenance of certain levels of insurance coverage, the incurrence of additional debt, the sale or lease of certain property and permitted liens. For a full description of these and other covenants, see "MASTER TRUST INDENTURE" in APPENDIX C hereto.
Rate Covenant. Pursuant to the Master Indenture, each Member of the Obligated Group has covenanted to operate all of its Facilities (as defined in the Master Indenture) on a revenue-producing basis (if applicable to the nature of the Obligated Group Member's facilities), and to charge such fees and rates for its Facilities and services and to exercise such skill and diligence, including obtaining payment for services provided, as to provide income from its Property (as defined in the Master Indenture) together with other available funds sufficient to pay promptly all payments of principal and interest on its Indebtedness, all expenses of operation, maintenance and repair of its Property and all other payments required to be made by it under the Master Indenture to the extent permitted by law. Each Obligated Group Member has agreed that it will from time to time as often as necessary and to the extent permitted by law, revise its rates, fees and charges in such manner as may be necessary or proper to comply with the provisions of the Master Indenture. The Obligated Group Members have also agreed that MJHS will calculate the Historical Debt Service Coverage Ratio of the Obligated Group for each Fiscal Year commencing with the Fiscal Year ending June 30, 2017 (the "Initial Testing Period"), and deliver a copy of such calculation to the Required Information Recipients.
If the Historical Debt Service Coverage Ratio of the Obligated Group for the Fiscal Year commencing with the Initial Testing Period, and for any Fiscal Year thereafter is less than 1.20:1, the Obligated Group Representative, at the Obligated Group's expense, shall select a Consultant and notify the Master Trustee in writing of the selection within 30 days following the calculation described in the Master Indenture, and shall engage a Consultant in accordance with the Master Indenture to make recommendations with respect to the rates, fees and charges of the Members and the Obligated Group's methods of operation and other factors affecting its financial condition in order to increase such Historical Debt Service Coverage Ratio to at least 1.20:1 for the following Fiscal Year.
Within 60 days of the actual engagement of any such Consultant, the Obligated Group Representative is required to cause a copy of the Consultant's report and
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recommendations, if any, to be filed with each Member and each Required Information Recipient (as defined in the Master Indenture). Each Member is required to follow each recommendation of the Consultant applicable to it to the extent feasible (as determined in the reasonable judgment of the Governing Body of the Obligated Group Representative) and permitted by law. This Section does not prohibit any Member from serving indigent residents to the extent required for such Member to continue its qualifications as a Tax-Exempt Organization or from serving any other class or classes of residents without charge or at reduced rates so long as such service does not prevent the Obligated Group from satisfying the other requirements of this Section.
The foregoing provisions notwithstanding, if the Historical Debt Service Coverage Ratio of the Obligated Group for any Fiscal Year does not meet the levels required above, the Master Trustee shall not be obligated to require the Obligated Group to select a Consultant to make such recommendations if: (i) there is filed with each Required Information Recipient a written report addressed to them of a Consultant which contains an opinion of such Consultant that applicable laws or regulations have prevented the Obligated Group from generating Income Available for Debt Service during such Fiscal Year sufficient to meet the requirements set forth above, and such report is accompanied by a concurring opinion of Independent Counsel as to any conclusions of law supporting the opinion of such Consultant; (ii) the report of such Consultant indicates that the rates charged by the Obligated Group are such that, in the opinion of the Consultant, the Obligated Group has generated the maximum amount of Revenues reasonably practicable given such laws or regulations; and (iii) the Historical Debt Service Coverage Ratio of the Obligated Group for such Fiscal Year was at least 1.00:1. The Obligated Group shall not be required to cause the Consultant's report referred to in the preceding sentence to be prepared more frequently than once every two Fiscal Years if at the end of the first of such two Fiscal Years the Obligated Group provides to the Master Trustee (who shall provide a copy to the Bond Trustee) an opinion of Independent Counsel to the effect that the applicable laws and regulations underlying the Consultant's report delivered in respect of the previous Fiscal Year have not changed in any material way.
Notwithstanding any other provisions of the Master Indenture, an Event of Default thereunder arising with respect to the failure to achieve the required Historical Debt Service Coverage Ratio shall only occur if one or more of the following conditions applies:
(i) the Obligated Group (A) fails to achieve a Historical Debt Service Coverage Ratio of at least 1.20:1 for any Fiscal Year, and (B) fails to take all necessary action to comply with the procedures described under this Section for preparing a report, adopting a plan, and following all recommendations contained in such report or plan to the extent feasible (as determined in the reasonable judgment of the Governing Body of the Obligated Group Representative) and permitted by law; or
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(ii) the Obligated Group fails to achieve a Historical Debt Service Coverage Ratio of at least 1.00:1 for any Fiscal Year and the Days' Cash on Hand of the Obligated Group as of the last day of such Fiscal Year is less than 300; or
(iii) the Obligated Group fails to achieve a Historical Debt Service Coverage Ratio of at least 1.00:1 for two consecutive Fiscal Years.
In the event that any Member of the Obligated Group incurs any Additional Indebtedness for any Capital Addition, the Debt Service Requirements on such Additional Indebtedness and the Revenues and Expenses relating to the project or projects financed with the proceeds of such Additional Indebtedness shall be excluded from the calculation of the Historical Debt Service Coverage Ratio of the Obligated Group until the first full Fiscal Year following the later of (A) the estimated completion of the Capital Addition being paid for with the proceeds of such Additional Indebtedness provided that such completion occurs no later than six months following the completion date for such project set forth in the Consultant's report described in (i) below, or (B) the first full Fiscal Year in which Stable Occupancy is achieved in the case of construction, renovation or replacement of senior living facilities or nursing facilities financed with the proceeds of such Additional Indebtedness, which Stable Occupancy shall be projected in the report of the Consultant referred to in paragraph (i) below to occur no later than during the fifth full Fiscal Year following the incurrence of such Additional Indebtedness, or (C) the end of the fifth full Fiscal Year after the incurrence of such Additional Indebtedness, if the following conditions are met:
(i) there is delivered to the Master Trustee a report or opinion of a Consultant to the effect that the Projected Debt Service Coverage Ratio for the first full Fiscal Year following the later of (A) the estimated completion of the Capital Addition being paid for with the proceeds of such Additional Indebtedness, or (B) the first full Fiscal Year following the year in which Stable Occupancy is achieved in the case of construction, renovation or replacement of senior living facilities or nursing facilities being financed with the proceeds of such Additional Indebtedness, which Stable Occupancy shall be projected to occur no later than during the fifth full Fiscal Year following the incurrence of such Additional Indebtedness, will be not less than 1.25:1 after giving effect to the incurrence of such Additional Indebtedness and the application of the proceeds thereof; provided, however, that in the event that a Consultant shall deliver a report to the Master Trustee to the effect that state or federal laws or regulations or administrative interpretations of such laws or regulations then in existence do not permit or by their application make it impracticable for Members to produce the required ratio, then such ratio shall be reduced to the highest practicable ratio then permitted by such laws or regulations but in no event less than 1.00:1: provided, however, that in the event a Consultant's report is not required to incur such Additional Indebtedness, the Obligated Group may deliver an Officer's Certificate
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to the Master Trustee in lieu of the Consultant's report described in this subparagraph (i); and
(ii) there is delivered to the Master Trustee an Officer's Certificate on the date on which financial statements are required to be delivered to the Master Trustee pursuant to the Master Indenture until the first Fiscal Year in which the exclusion from the calculation of the Historical Debt Service Coverage Ratio no longer applies, calculating the Historical Debt Service Coverage Ratio of the Obligated Group at the end of each Fiscal Year, and demonstrating that such Historical Debt Service Coverage Ratio is not less than 1.00:1, such Historical Debt Service Coverage Ratio to be computed without taking into account (A) the Additional Indebtedness to be incurred if (1) the interest on such Additional Indebtedness during such period is funded from proceeds thereof or other funds of the Member then on hand and available therefor and (2) no principal of such Additional Indebtedness is payable during such period, and (B) the Revenues to be derived from the project to be financed from the proceeds of such Additional Indebtedness. See "MASTER TRUST INDENTURE – Rates and Charges" in APPENDIX C hereto.
For specific information regarding the process under the Master Indenture for selection of Consultants, see APPENDIX C – "MASTER TRUST INDENTURE – Approval of Consultants."
Liquidity Covenant. The Master Indenture requires that the Obligated Group maintain at least 90 Days Cash on Hand (the "Liquidity Requirement") as of December 31 and June 30 of each Fiscal Year (each a "Testing Date"), commencing June 30, 2017. The Obligated Group is required to deliver an Officer's Certificate setting forth such calculation for each Testing Date in the manner prescribed in the Master Indenture. The Days Cash on Hand may be less than such number at times other than the Testing Date.
If the Days Cash on Hand as of any Testing Date is less than the Liquidity Requirement, the Obligated Group Representative is required, within 30 days after delivery of the Officer's Certificate disclosing such deficiency, deliver an Officer's Certificate approved by a resolution of the Governing Body of the Obligated Group Representative to the Master Trustee setting forth in reasonable detail the reasons for such deficiency and adopting a specific plan setting forth steps to be taken designed to raise the level of Days Cash on Hand to the Liquidity Requirement for future Testing Dates.
If the Obligated Group has not raised the level of Days Cash on Hand to the Liquidity Requirement by the next Testing Date immediately subsequent to delivery of the Officer's Certificate required in the preceding paragraph, the Obligated Group Representative shall, within 30 days after receipt of the Officer's Certificate disclosing
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such deficiency, select a Consultant in accordance with the Master Indenture to make recommendations with respect to the rates, fees and charges of the Obligated Group and the Obligated Group's methods of operation and other factors affecting its financial condition in order to increase Days Cash on Hand to the Liquidity Requirement for future Testing Dates. A copy of the Consultant's report and recommendations, if any, shall be filed with each Member and each Required Information Recipient within 60 days after the date such Consultant is actually engaged. Each Member of the Obligated Group is required to follow each recommendation of the Consultant applicable to it to the extent feasible (as determined in the reasonable judgment of the Governing Body of such Member) and permitted by law.
Notwithstanding any other provision of the Master Indenture, failure of the Obligated Group to achieve the required Liquidity Requirement for any Testing Date shall not constitute an Event of Default under the Master Indenture if the Obligated Group takes all action necessary to comply with the procedures set forth above for preparing a report and adopting a plan and follows each recommendation contained in such report to the extent feasible (as determined in the reasonable judgment of the Governing Body of the Obligated Group Representative) and permitted by law. See "MASTER TRUST INDENTURE - Liquidity Covenant" in APPENDIX C hereto.
Revenue Fund
If an Event of Default under the Master Indenture occurs due to failure to pay any debt service on any Obligations when due and continues for a period of five days, the Master Trustee is required to establish a fund to be known as the "Revenue Fund" and each Obligated Group Member is required to deposit with the Master Trustee for deposit into the Revenue Fund all Gross Revenues of such Obligated Group Member (except to the extent otherwise provided by or inconsistent with any instrument creating any mortgage, lien, charge, encumbrance, pledge or other security interest granted, created, assumed, incurred or existing in accordance with the provisions of the Master Indenture) during each succeeding month, beginning on the first day thereof and on each day thereafter, until no payment default under the Master Indenture or in the payment of any other Obligations then exists.
On the fifth Business Day preceding the end of each month in which any Obligated Group Member has made payments to the Master Trustee for deposit into the Revenue Fund, the Master Trustee will withdraw and pay or deposit from the amounts on deposit in the Revenue Fund the following amounts in the order indicated:
FIRST, to the payment of all amounts due to the Master Trustee under the Master Indenture;
SECOND, to an operating account designated by the Obligated Group Representative (which shall be subject to the lien of the Master Indenture), the amount
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necessary to pay the Expenses due or expected to become due in the month in which such transfer is made, all as set forth in the then-current Annual Budget;
THIRD, to the payment of the amounts then due and unpaid upon the Obligations, other than Obligations constituting Subordinated Indebtedness, for principal (and premium, if any) and interest, in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Obligations for principal (and premium, if any) and interest, respectively, and payments of Regularly Scheduled Payments due under any Interest Rate Agreement;
FOURTH, to restore any deficiency in a Related Bonds Debt Service Reserve Fund;
FIFTH, to the payment of the amounts then due and unpaid upon the Obligations constituting Subordinated Indebtedness for principal (and premium, if any) and interest, in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Obligations for principal (and premium, if any) and interest, respectively;
SIXTH, to the payment of all other amounts due under any Interest Rate Agreement that are not Regularly Scheduled Payments; and
SEVENTH, to the Obligated Group Representative for the benefit of the Obligated Group.
RISK FACTORS
General Risk Factors
The Bonds are special and limited obligations of the Issuer, payable solely from and secured exclusively by the funds pledged thereto, including the payments to be made by the Obligated Group under the Master Indenture.
A BONDOWNER IS ADVISED TO READ THIS ENTIRE OFFICIAL STATEMENT, INCLUDING THE APPENDICES HERETO, AND SPECIAL REFERENCE IS MADE TO THE SECTION "SECURITY FOR THE BONDS" AND THIS SECTION FOR A DISCUSSION OF CERTAIN RISK FACTORS WHICH SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE BONDS.
As described herein under the caption "SECURITY FOR THE BONDS," except to the extent that the principal of, premium, if any, and interest on the Bonds may be payable from the proceeds thereof or investment income thereon or, under certain
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circumstances, proceeds of insurance, sale or condemnation awards or net amounts by recourse to the Mortgaged Property, such principal, premium and interest will be payable solely from amounts paid by MJHS under the Loan Agreement or by the Obligated Group under the Master Indenture and Series 2017 Note.
No representation or assurance is given or can be made that revenues will be realized by the Obligated Group (which in the context of this discussion of risk factors, should be understood to include the Initial Obligated Group and together with future Members of the Obligated Group, if any) sufficient to ensure the payment of the principal and interest on the Bonds in the amounts and at the times required to pay debt service on each series of the Bonds when due. Neither the Underwriters nor the Issuer has made any independent investigation of the extent to which any such factors may have an adverse effect on the revenues of the Obligated Group. The ability of the Obligated Group to generate sufficient revenues may be impacted by a number of factors. Some, but not necessarily all of these risk factors are discussed in this section below; these risk factors should be considered by investors considering any purchase of the Bonds.
Impact of Market Turmoil
The economic turmoil of the past eight years had severe negative repercussions upon the United States and global economies. This impact was particularly severe in the financial sector, prompting a number of banks and other financial institutions to seek additional capital, to merge, and, in some cases, to cease operating. While the financial markets have improved, the effects of this turmoil linger. This recent turmoil and any similar future market turmoil could adversely affect the secondary market and demand for the Bonds in addition to adversely affecting the value of any investments of the Members of the Obligated Group.
Limited Obligations
NEITHER THE STATE OF FLORIDA, NOR THE CITY OF MIAMI, FLORIDA, SHALL IN ANY EVENT BE LIABLE FOR THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON ANY OF THE BONDS ISSUED HEREUNDER. THE BONDS ARE LIMITED OBLIGATIONS OF THE ISSUER PAYABLE SOLELY FROM THE REVENUES, RECEIPTS AND RESOURCES OF THE ISSUER PLEDGED TO THEIR PAYMENT AND NOT FROM ANY OTHER REVENUES, FUNDS OR ASSETS OF THE ISSUER. NONE OF THE BONDS SHALL BE CONSTRUED OR CONSTITUTE AN INDEBTEDNESS OF THE ISSUER OR AN INDEBTEDNESS OR OBLIGATION (SPECIAL, MORAL OR GENERAL) OF THE STATE OF FLORIDA OR THE CITY OF MIAMI, FLORIDA WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY PROVISION WHATSOEVER. THE ISSUER HAS NO TAXING POWER.
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Uncertainty of Revenues
Obligated Group Members are not expected to have any revenues except those derived from operations of their Facilities. The ability of MJHS and other Members of the Obligated Group to make payments under the Loan Agreement and the Series 2017 Note is dependent upon the generation by the Obligated Group of revenues in the amounts necessary for MJHS to pay the principal, premium, if any, and interest on the Bonds, as well as other operating and capital expenses. The realization of future revenues and expenses are subject to, among other things, the capabilities of the management of MJHS and other Members of the Obligated Group, government regulation and future economic and other conditions that are unpredictable and that may affect revenues and payment of principal of and interest on the Bonds. No representation or assurance can be made that revenues will be realized by the Obligated Group in amounts sufficient to make the required payments with respect to debt service on the Bonds.
Failure to Maintain Occupancy
The continued economic feasibility of the Main Campus depends in large part upon the ability of MJHS to attract sufficient numbers of residents and patients to maintain substantial occupancy throughout the term of the Bonds. This depends to some extent on factors outside management's control, such as the rights of residents of the independent and assisted living units to terminate their lease agreements under certain circumstances. If MJHS fails to maintain substantial occupancy on the Main Campus, MJHS may not generate sufficient funds to satisfy its repayment obligations with respect to the loan of the proceeds of the Bonds. If market changes require a reduction in the amount of fees payable by residents and patients, there would be a consequent reduction in the revenues of MJHS. Such reduction would also result if MJHS is unable to fill vacancies becoming available when residents die, relocate, withdraw or are permanently transferred to any other facility. In addition, other factors may reduce the need for services and facilities such as those offered by the Members of the Obligated Group, including: (i) efforts by insurers and governmental agencies to reduce utilization of skilled nursing home and long term care facilities by such means as preventive medicine and home health care programs; (ii) advances in scientific and medical technology that eliminate the need for certain types of institutional or outpatient health care services; (iii) a decline in the population, a change in the age composition of the population or a decline in the economic conditions of the service area of the Obligated Group; and (iv) increased or more effective competition from other retirement and health care communities and long term care facilities now or hereafter located in the service area of the Obligated Group's Facilities.
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Competition
MJHS provides services in areas where other competitive facilities exist and may face additional competition in the future as a result of the construction or renovation of competitive facilities in the primary or secondary market area of the Obligated Group's Facilities. There may also arise in the future competition from other facilities providing similar services, some of which may offer similar facilities at lower prices.
Liquidation of Security May Not be Sufficient in the Event of a Default
The Bond Trustee and the Issuer must look solely to the Gross Revenues, the Mortgaged Property and any funds held under the Bond Indenture and the Master Indenture to pay and satisfy the Bonds in accordance with their terms. The Bondholders are dependent upon the continued financial health of the Obligated Group and the value of the assets of the Mortgaged Property for the payment of the principal of, redemption price, if any and interest on, the Bonds. MJHS has not made any representations to Bondholders regarding the current market value of the Mortgaged Property. In the Event of a Default, the value of the Mortgaged Property may be less than the amount of the Outstanding Bonds, since the Main Campus exists for the specific use as a senior living and healthcare facilities. In addition, even without consideration of the special purpose nature of the Main Campus, the sale of property at a foreclosure sale may not result in the full value of such property being obtained. The special design features of these types of facilities and the continuing rights of residents under any healthcare or lease agreements may make it difficult to convert the facilities to other uses, which may have the effect of reducing their attractiveness to potential purchasers. In the Event of a Default and subsequent foreclosure and sale of the Mortgaged Property, Bondholders have no assurance that the value of the Mortgaged Property would be sufficient to pay the outstanding principal and interest due under the terms of the Bonds. Accordingly, in the event of foreclosure and sale of the Mortgaged Property, Bondholders may not receive all principal and interest due under the terms of the Bonds.
The Nature of the Income of the Elderly
A percentage of the monthly income of certain residents on the Main Campus is fixed, as it derives from pensions and social security. In addition, some residents have to liquidate assets in order to afford the costs of residency and/or care on the Main Campus. If, due to inflation or otherwise, rates substantially increase due to MJHS' escalating costs or decreasing reimbursements, fixed-income residents may have difficulty paying or may be unable to pay such increased rates. Furthermore, residents’ investment income may be adversely affected by market and stock price fluctuations which may also result in payment difficulties.
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Sale of Homes
It is anticipated that many future residents on the Main Campus will relocate from a personal residence and many will sell their homes to effectuate such relocation. If local or national economic conditions affect the sale of residential real estate, such prospective residents may be delayed in relocating which could have an adverse impact on the revenues of the Obligated Group.
Factors Affecting Real Estate Taxes
In recent years, various state and local legislative, regulatory and judicial bodies have reviewed the exemption of various not-for-profit corporations from real estate taxes and in some instances have sought to overturn all or parts of such exemptions of property on the grounds that a portion of the property was not being used to further the organization’s charitable purposes. Determinations in several of these disputes have favored the taxing authorities or have resulted in settlements.
A portion of the Obligated Group's Facilities are currently exempt from payment of ad valorem property taxes under Florida law. In the event that a property appraiser determines that such facilities no longer qualify for a partial exemption from ad valorem taxes or if such exemption is overturned by the Florida legislature, the Obligated Group could become subject to real estate taxes. The imposition of such taxes may cause the Obligated Group to charge higher rates, which might affect the competitive position of such facilities in their respective service areas.
Malpractice Claims and Losses
The Obligated Group has covenanted in the Master Indenture to maintain professional liability insurance with commercial insurance carriers unless the Obligated Group provides a certificate of an insurance consultant complying with the terms of the Master Indenture. The operations of the Obligated Group may be affected by increases in the incidence of malpractice lawsuits against elder care facilities and care providers in general and by increases in the dollar amount of client damage recoveries. Malpractice lawsuits may also result in increased insurance premiums and an increased difficulty in obtaining malpractice insurance. It is not possible at this time to determine either the extent to which malpractice coverage will continue to be available to the Obligated Group or the premiums at which such coverage can be obtained, however, such lawsuits have not historically affected the Obligated Group's operations or financial position and MJHS does not expect this to occur in the future.
Regulation and Health Care Reform
The Obligated Group may be affected by changes in the regulation of, or reimbursement programs related to, senior living/care facilities, acute care hospitals,
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PACE programs or other healthcare facilities and related services. In addition, providers in the senior living and healthcare industries are subject to increasing scrutiny by federal, state and local governmental agencies in response to perceived and actual fraud, waste and abuse, in the form of increasing audit and enforcement activities, with accompanying civil and criminal penalties for violations of the law. See "RISK FACTORS - Fraud and Abuse Enforcement" below.
The "Patient Protection and Affordable Care Act" and "The Health Care and Education Affordability Reconciliation Act of 2010" (together referred to herein as the "Health Care Reform Act") were enacted in March 2010. Some of the provisions of the Health Care Reform Act took effect immediately while others will take effect over a ten-year period. Because of the complexity of the Health Care Reform Act generally, additional legislation modifying or repealing portions of the Health Care Reform Act is likely to be enacted over time. The Health Care Reform Act provides changes on how consumers pay for their own and their families' health care and how employers procure health insurance for their employees. In addition, the Health Care Reform Act requires insurers to change certain underwriting practices and benefit structures in order to cover individuals who previously would have been ineligible for health insurance coverage. As a result, since the enactment of the Health Care Reform Act, there has been a significant increase in the number of individuals eligible for health insurance coverage. Associated with increased utilization will be increased variable and fixed costs of providing health care services, which may or may not be offset by increased revenues.
Some of the specific provisions of the Health Care Reform Act that may impact the Obligated Group include the following (this listing is not, is not intended to be, nor should be considered to be comprehensive):
With varying effective dates, the annual Medicare market basket updates for many providers, including skilled nursing, would be reduced, and adjustments to payment for expected productivity gains would be implemented.
The Health Care Reform Act includes the Community Living Assistance Services and Supports (CLASS) Act, which creates a national, voluntary, long-term care insurance program to supplement Medicaid and provide long-term care insurance, effective August 1, 2014.
With varying effective dates, the Health Care Reform Act mandates a reduction of waste, fraud and abuse in public programs by allowing provider enrollment screening, enhanced oversight periods for new providers and suppliers, and enrollment moratoria in areas identified as being at elevated risk of fraud in all public programs, and by requiring Medicare and Medicaid program providers and suppliers to establish compliance programs. The legislation requires the development of a database to capture and share healthcare provider data across federal healthcare programs and also provides for
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increased penalties for fraud and abuse violations, and increased funding for anti-fraud activities.
The Health Care Reform Act provides for the implementation of various demonstration programs and pilot projects to test, evaluate, encourage and expand new payment structures and methodologies to reduce health care expenditures while maintaining or improving quality of care, including bundled payments under Medicare and Medicaid, and comparative effectiveness research programs that compare the clinical effectiveness of medical treatments and develop recommendations concerning practice guidelines and coverage determinations. Other provisions encourage the creation of new health care delivery programs, such as accountable care organizations, or combinations of provider organizations, that voluntarily meet quality thresholds to share in the cost savings they achieve for the Medicare program. The Health Care Reform Act also provides funding for establishment of a national electronic health records system. The outcomes of these projects and programs, including their effect on payments to providers and financial performance, cannot be predicted.
Health Care Reform Act provisions relating to skilled nursing facilities ("SNFs") include requirements that facilities (i) make certain disclosures regarding ownership; (ii) implement compliance and ethics programs; and (iii) make certain disclosures regarding expenditures for wages and benefits for direct care staff. In addition, Health Care Reform Act may affect SNF reimbursement through the creation of value-based purchasing payment and post-acute care payment bundling programs and may place limitations on SNF payments for health care acquired conditions. Investors are encouraged to review legislative, legal and regulatory developments as they occur and to assess the elements and potential effects of the health care reform initiative as it evolves.
Health care providers are likely to be subjected to decreased reimbursement as a result of implementation of recommendations of the Health Care Reform Act-created Independent Payment Advisory Board, whose directive is to reduce Medicare cost growth. The recommended reductions would be automatically implemented unless Congress adopts alternative legislation that meets equivalent savings targets.
It is difficult to predict the full long-term impact of the Health Care Reform Act due to the law's complexity, lack of implementing regulations or interpretive guidance and gradual implementation, as well as an inability to foresee how states, businesses and individuals will respond to the choices afforded them by the law. Additionally, President-elect Trump and the Republican-controlled Congress have promised to repeal all or a portion of the Health Care Reform Act in early 2017. The focus of the repeal effort, to date, has been the individual and employer mandates, the exchanges, insurance industry regulations, the Medicaid expansion, and the taxes levied to fund the expenditures related thereto. The timing of such repeal, and whether it would be in whole or in part, are unclear. It is also unclear when a replacement plan would be implemented.
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Nursing Staff Shortage
Recently both the state and national health care industries have experienced a shortage of nursing staff, which has resulted in increased costs for health care providers due to the need to hire agency nursing personnel at higher rates. Both the federal and state governments have implemented, or are considering implementing, legislative efforts to combat the health care industry's workforce shortages, including those in nursing. If the nursing shortage continues, it could adversely affect the Obligated Group's operations or financial condition.
Third-Party Payments and Managed Care
In the environment of increasing managed care, the Obligated Group can expect additional challenges in maintaining its resident and patient population and attendant revenues. Third-party payors, such as health maintenance organizations, direct their subscribers to providers who have agreed to accept discounted rates or reduced per diem charges. Should managed care cost reduction measures now pervasive in the health care industry continue to grow beyond what is currently expected by the Obligated Group, its revenues may be adversely affected in the future.
Fraud and Abuse Enforcement
Health care fraud and abuse laws were enacted at the federal and state levels to regulate both the provision of services to government program beneficiaries and the submission of claims for services rendered to such beneficiaries. Under these laws, individuals and organizations, such as the Obligated Group, can be punished for submitting claims for services that were not provided, not medically necessary, incorrectly coded, provided by an improper person, accompanied by an illegal inducement to utilize or refrain from utilizing a service or product, billed in a manner that does not comply with applicable government requirements, furnished in a substandard manner or other similar reasons.
Federal and state governments have a range of criminal, civil and administrative sanctions available to penalize and remediate health care fraud and abuse, including recoveries of amounts paid to the provider, imprisonment, exclusion of the provider from participation in the Medicare and Medicaid programs, civil monetary penalties and suspension of payments. Fraud and abuse cases may be prosecuted by one or more government entities and/or private individuals, and more than one of the available penalties may be imposed for each violation. The federal government has made the investigation and prosecution of health care fraud and abuse a priority and Congress has authorized significant funding of this effort. As a result, there have been a substantial number of investigations, prosecutions and civil enforcement proceedings of health care-related fraud and abuse in recent years.
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Laws governing fraud and abuse apply to virtually all individuals and entities with which a health care provider does business, including hospitals, home health agencies, long-term care entities, infusion providers, pharmaceutical providers, insurers, health maintenance organizations ("HMOs"), preferred provider organizations ("PPOs"), third party administrators, physicians, physician groups, physician practice management companies, ambulatory care entities, laboratories, diagnostic testing facilities, suppliers of medical items and services and other potential referral sources. Fraud and abuse prosecutions can have a catastrophic effect on such entities and a material adverse impact on the financial condition of other entities in the health care delivery system of which that entity is a part.
Federal Criminal Fraud and Abuse Liability of Health Care Providers. Both individuals and organizations may be subject to prosecution under several federal criminal fraud and abuse statutes. Criminal conviction for an offense related to a health care provider's participation in the Medicare program may result in substantial fines and/or the provider's suspension, exclusion or debarment from all government programs, including the Medicare program. Any such fines, exclusions or debarment could have a material adverse effect on the Obligated Group's financial condition. Even the assertion of a violation could have an effect. The following is a brief discussion of some (but not all) of these federal criminal statutes:
Criminal False Claims Act. The criminal False Claims Act ("Criminal FCA") prohibits anyone from knowingly and willfully making a false statement or misrepresentation of a material fact in submitting a claim to a government health care program (defined as "any plan or program that provides health benefits, whether directly, through insurance, or otherwise, which is funded directly, in whole or in part, by the United States Government" other than the Federal Employees Health Benefit Program). There are numerous specific rules that a health care provider must follow with respect to the submission of claims. Violation of the Criminal FCA can result in up to five years imprisonment and a fine of up to $250,000 for an individual and $500,000 for a corporation for a felony conviction, or $100,000 for an individual and $200,000 for a corporation for a misdemeanor conviction. Violation of the Criminal FCA also results in mandatory exclusion from participation in the government health care programs. Additionally, the State of Florida has enacted its own version of the Criminal FCA to which the Obligated Group is also subject.
Anti-Kickback Law. The federal anti-kickback law ("Anti-Kickback Law") is a criminal statute that prohibits the offering, payment, solicitation or receipt of remuneration (including any kickback, bribe or rebate), directly or indirectly, overtly or covertly, in cash or in kind, for (1) the referral of patients or arranging for the referral of patients to receive services for which payment may be made in whole or in part under a government health care program or any state health care program; or (2) the purchase, lease, order, or arranging for the purchase, lease or order of any good, facility, service or
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item for which payment may be made under a government health care program. Generally, courts have taken a broad interpretation of the scope of the Anti-Kickback Law. Courts have held that the Anti-Kickback Law may be violated if merely one purpose of a financial arrangement is to induce future referrals of federal or state health care program covered items or services.
The criminal sanctions for a conviction under the Anti-Kickback Law are imprisonment for not more than five years, a fine of not more than $25,000 or both, for each incident or offense, although this fine may be increased to $250,000 for individuals and $500,000 for organizations. If a party is convicted of a criminal offense related to participation in the Medicare program or any state health care program, or is convicted of a felony relating to health care fraud, the secretary of the United States Department of Health and Human Services ("DHHS") is required to bar the party from participation in federal health care programs and to notify the appropriate state agencies to bar the individual from participation in state health care programs.
Because of the government's vigorous enforcement efforts, many health care providers may be subject to some type of government investigation for alleged Anti-Kickback Law violations involving relationships such as those between health care providers and physicians, as well as the operations of any nursing homes, home health agencies, hospices and ancillary service providers owned or operated by a health care provider. The outcome of any government efforts to enforce the Anti-Kickback Law against health care providers is difficult to predict and defense efforts can be costly. Violations of Anti-Kickback Law may also implicate civil False Claims Acts (discussed below) if the violating claim results from an illegal referral. Additionally, the State of Florida has enacted its own version of the Anti-Kickback Law to which the Obligated Group is also subject.
However, imposition of such penalties or exclusions may result in a significant loss of reimbursement and may have a material adverse effect on the Obligated Group's financial condition. Even the assertion of a violation could have a material adverse effect on the financial condition and results of operations of the Obligated Group.
OIG Advisory Opinions. In the Health Insurance Portability and Accountability Act of 1996 ("HIPAA"), Congress provided for an advisory opinion process in conjunction with the Anti-Kickback Law. These advisory opinions are issued only to the requestors and cannot be relied on by any other individual or entity. The Obligated Group has not requested, and does not plan to request, an OIG Advisory Opinion with respect to issues or arrangements that the Obligated Group may have relating to Anti-Kickback Law, including compliance with the safe harbor provisions discussed below.
"Safe Harbor" Regulations. The Medicare and Medicaid Patient and Program Protection Act of 1987 required the DHHS to promulgate regulations to clarify that certain investment and payment practices in the health care industry would not violate the
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Anti-Fraud and Abuse Statute. In response, the DHHS has promulgated final "safe harbor" regulations that set forth requirements that, if met, will protect certain payment arrangements. The scope of these safe harbors is narrow, and the requirements are specific.
The scope of the Anti-Kickback Law is not expanded by way of the safe harbor regulations; these regulations give those who comply completely with a safe harbor the assurance that they will likely not be prosecuted under the statute. Parties to a particular venture or contemplating entering into a specific arrangement may seek an Advisory Opinion from the OIG to ascertain whether the arrangement will meet the requirements of a safe harbor or otherwise will violate the Anti-Kickback Law.
Federal Civil Fraud and Abuse Liability of Health Care Providers. Unlike criminal statutes, which require the government to prove that the health care provider intended to violate, or recklessly disregarded, the law, civil statutes may be violated simply by the provider's participation in a prohibited financial arrangement or actual or assumed knowledge that its claims procedures are not in full compliance with the law. The following is a brief discussion of some (but not all) of these federal civil fraud and abuse statutes:
Civil False Claims Act. The civil False Claims Act ("Civil FCA"), which has become one of the federal government's primary weapons against health care fraud, allows the government to recover significant damages from persons or entities that submit false or fraudulent claims for payment to a federal agency. With respect to certain types of required information, the Civil FCA and the Social Security Act may be violated by mere negligence or recklessness in the submission of information to the government even without any specific intent to defraud. New billing systems, new medical procedures and procedures for which there is not clear guidance may all result in liability. If a health care provider is found to have violated the Civil FCA, the potential liability is substantial and, for serious or repeated violations, may include significant fines and/or civil monetary penalties and exclusion from participation in the Medicare program.
The Civil FCA also provides for a private individual to initiate a civil action for a violation of the Act. These actions are referred to as Qui Tam actions. In this way, an individual, known as a whistleblower would be able to sue on behalf of the U.S. Government upon belief that a healthcare entity has violated the Civil FCA. If the government proceeds with an action brought by this individual, then the whistleblower could receive as much as 25 percent of any money recovered. The potential exists that a Qui Tam action could be brought against the Obligated Group in the future. Additionally, the State of Florida has also enacted its own version of the criminal FCA to which the Obligated Group is also subject.
Stark Law. Current federal law (known as the "Stark" law provisions) prohibits providers of "designated health services" from billing Medicare when the patient is
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referred by a physician or an immediate family member with a financial relationship with the provider, unless the financial relationship fits into a statutory or regulatory exception. The sanctions under the Stark law include denial and refund of payments, civil monetary penalties and exclusions from the Medicare program.
The Stark law includes specific reporting requirements providing that each entity furnishing covered items or services, upon request, must provide the Secretary of DHHS with certain information concerning its ownership, investment and compensation arrangements. Failure to adhere to these reporting requirements may subject the entity to significant civil money penalties.
In light of the scarcity of case law interpreting the Stark law, there can be no assurances that the Obligated Group will not be found to have violated the Stark law, and if so, whether any sanction imposed would have a material adverse effect on the operations or the financial condition of the Obligated Group. Additionally, the State of Florida has enacted its own version of the Stark Law to which the Obligated Group is also subject.
Civil Provisions of Anti-Kickback Law. The federal Anti-Kickback Law, discussed above, also includes civil standards and penalties for conduct that implicates this statute but falls short of the necessary level of intent and knowledge to be criminal. In the Balanced Budget Act of 1997, Congress expanded civil sanctions under the Anti-Kickback Law to include civil money penalties of $50,000 for each prohibited act and up to "three times the total amount of remuneration offered, paid, solicited, or received, without regard to whether a portion of such remuneration was offered, paid, solicited, or received for a lawful purpose."
Administrative Enforcement. As with civil laws, administrative enforcement provisions require a lower standard of proof of a violation than the criminal standard. Thus, health care providers have a risk of incurring monetary penalties as a result of an administrative enforcement action.
Civil Monetary Penalties Law. The Civil Monetary Penalties Law in part authorizes the government to impose money penalties against individuals and entities committing a variety of acts. For example, penalties may be imposed for the knowing presentation of claims that are (i) incorrectly coded for payment, (ii) for services that are known to be medically unnecessary, (iii) for services furnished by an excluded party, or (iv) otherwise false. An entity that offers remuneration to an individual that the entity knows is likely to induce the individual to receive care from a particular provider may also be fined. Moreover, a health care provider may not knowingly make a payment, directly or indirectly, to a physician as an inducement to reduce or limit services to Medicare or Medicaid patients under the physician's direct care. Pursuant to the health care reform statutes, Congress amended the Civil Monetary Penalties Law to authorize civil monetary penalties for a number of additional activities, including (i) knowingly
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making or using a false record or statement material to a false or fraudulent claim for payment; (ii) failing to grant the OIG timely access for audits, investigations, or evaluations; and (iii) failing to report and return a known overpayment within statutory time limits. Violations of the Civil Monetary Penalties Law can result in substantial civil monetary penalties plus three times the amount claimed. The Centers for Medicare and Medicaid Services ("CMS") rules adopted to implement applicable provisions of the health care reform statutes also provide that assessed civil monetary penalties may be collected and placed in whole or in part into an escrow pending final disposition of the applicable administrative and judicial appeals processes. To the extent a Member of the Obligated Group is assessed large civil monetary penalties that are collected and placed into an escrow account pending lengthy appeals, such actions could adversely affect its results of operations.
Exclusions from Medicare Participation. The term "exclusion" means that no Medicare or state health care program reimbursement (Medicaid) will be made for any services rendered by the excluded party or for any services rendered on the order or under the supervision of an excluded physician. The Secretary of DHHS is required to exclude from federal health care program participation for not less than five years any individual or entity convicted of a criminal offense relating to the delivery of any item or service reimbursed under Medicare or a state health care program; any criminal offense relating to patient neglect or abuse in connection with the delivery of health care; a felony relating to fraud, theft, embezzlement, breach of fiduciary responsibility or other misdemeanor in connection with the delivery of health care services or with respect to any act or omission in a health care program (other than Medicare or a state health care program) operated by or financed in whole or in part by a governmental agency; or a felony offense relating to the illegal manufacture, distribution, prescription or dispensing of a controlled substance. The Secretary also has permissive authority to exclude individuals or entities under certain other circumstances, such as a misdemeanor conviction for fraud in connection with delivery of health care services or conviction for obstruction of an investigation of a health care violation. The minimum period of exclusion for certain permissive exclusions is three years. While MJHS currently views such an occurrence as highly unlikely, any future exclusion of MJHS could have a material impact on the ability of the Obligated Group to make payments on the Series 2017 Note.
Enforcement Activity. Enforcement activity against health care providers is increasing, and enforcement authorities are adopting more aggressive approaches. In the current regulatory climate, it is anticipated that many hospitals, physician groups and other health care providers will be subject to investigation, audit or inquiry regarding billing practices or false claims. As with other health care providers, the Obligated Group may be the subject of Medicare, OIG, U.S. Attorney General, Department of Justice, state attorney general investigations, audits or inquiries in the future. Because of the complexity of these laws, the instances in which an alleged violation may arise to
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trigger such investigations, audits or inquiries is increasing and could result in enforcement action against the Obligated Group.
Regardless of the merits of a particular case or cases, the Obligated Group could incur significant legal and settlement costs. Prolonged and publicized investigations could be damaging to the reputation, business and credit of the Obligated Group and certain of its affiliates, regardless of the outcome, and could have material adverse consequences on the financial condition of the Obligated Group.
Internal Compliance Program. MJHS maintains a comprehensive internal compliance program (the "Compliance Program") to assist in developing and implementing internal controls and procedures that promote adherence to applicable statutes and regulations of federal and state health care programs and private insurance. The Compliance Program contains all of the following elements identified by the OIG as being fundamental to an effective compliance program: (i) implementation of written policies, procedures and standards of conduct; (ii) designation of a compliance officer and compliance committee; (iii) requirements for conducting effective training and education; (iv) development of effective lines of communication; (v) enforcement of standards through well publicized disciplinary guidelines; (vi) requirements for conducting internal monitoring and auditing; and (vii) requirements for responding promptly to detected offenses and developing corrective action. In addition to furthering the Obligated Group's mission to provide quality care to all of its residents and patients, the Compliance Program is an important means for preventing and reducing fraud and abuse, and would serve as a mitigating factor in any future enforcement actions brought against the Obligated Group related to alleged non-compliance with federal and state regulation.
Other Sources of Liability for Health Care Providers
Health care providers may be subject to criminal prosecution and civil penalties under a variety of federal laws in addition to those discussed in the previous paragraphs.
The confidentiality and security of patient medical records and other health information is subject to considerable regulation by state and federal governments. The administrative simplification provisions of HIPAA as amended by the Health Information Technology for Economic and Clinical Health Act, or the "HITECH Act," under the American Recovery and Reinvestment Act of 2009 ("ARRA") which was signed into law on February 17, 2009, established programs under Medicare and Medicaid for privacy and security of patient identifiable information, provided incentive payments for the "meaningful use" of certified electronic health records technology, and mandated that standards and requirements be adopted for the electronic transmission of certain health information. DHHS has issued a series of regulations to comport with these requirements.
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The ARRA contained significant changes to HIPAA including a new requirement that covered entities must make notification in the event of a material breach of privacy, security or integrity of protected health information to individuals, DHHS, and in certain instances, depending on the number of people whose information was subject to the breach, to the media. In addition, the ARRA increased the liability of business associates of covered entities and places additional administrative responsibilities on health care providers and other covered entities regarding the privacy and security of health information. Pursuant to the ARRA, DHHS will be required to conduct periodic HIPAA compliance audits to ensure that covered entities, including health care providers, are complying with HIPAA and the new requirements created by the ARRA.
Congress also established criminal penalties for knowingly violating patient privacy. Criminal penalties include up to $50,000 and one year in prison for obtaining or disclosing protected health information; up to $100,000 and up to five years in prison for obtaining protected health information under "false pretenses"; and up to $250,000 and up to ten years in prison for obtaining or disclosing protected health information with the intent to sell, transfer or use it for commercial advantage, personal gain or malicious harm. In addition, the ARRA authorizes state attorneys general to bring civil actions seeking either an injunction or damages in response to violations of HIPAA privacy and security regulations that threaten state residents.
The Obligated Group has and continues to incur significant costs in implementing the policies and systems required to comply with these new requirements. MJHS is considered a covered entity under HIPAA and intends to continue operating in compliance with HIPAA. Additionally, the State of Florida has enacted the Florida Information Protection Act of 2014 that protects an even broader range of patient information and to which the Obligated Group is also subject.
If the Obligated Group is found to have violated any state or federal statute or regulation with regard to the security, confidentiality, dissemination or use of patient medical information, it could be liable for damages, or civil or criminal penalties. These standards impose very complex procedures and operational requirements with which the Obligated Group is required to comply. There can be no assurance that differing interpretations of existing laws and regulations or the adoption of new laws and regulations would not have a material adverse effect on the ability of the Obligated Group to obtain or use health information which, in turn, could have a material adverse effect on the business of the Obligated Group. Similarly, because of the complexity of these regulations, there can be no assurances that the Obligated Group would not be reviewed, found to violate these standards and assessed penalties for such violations.
Medicare and Medicaid Programs
Currently, MJHS is licensed for both Medicare and Medicaid. For Fiscal Year 2016, approximately 22% of the total payor days for the skilled nursing beds at the Main
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Campus were utilized by Medicare patients, and approximately 58% of the total payor days for the skilled nursing beds were utilized by Medicaid patients. See APPENDIX A hereto, for additional information regarding Medicare and Medicaid payor mixes in addition to a description of FPC's PACE Centers.
The Obligated Group is subject to highly technical regulations by a number of federal, state and local government agencies and private agencies that administer the Medicare and Medicaid programs. Changes in the structure of the Medicare system, as well as potential limitations on payments from governmental and other third party payors, could potentially have an adverse effect on the results of operations of the Obligated Group. Actions by governmental agencies concerning the licensure and certification of the Facilities or the initiation of audits and investigations concerning billing practices could also potentially have an adverse effect on the results of operations of the Obligated Group.
There is an expanding and increasingly complex body of law, regulation and policy (both federal and state) relating to the Medicaid and Medicare programs, which is not directly related to payments under such programs. This includes reporting and other technical rules as well as broadly stated prohibitions regarding improper inducements for referrals, referrals by physicians for designated health services to entities with which the physicians have a prohibited financial relationship, and payment of kickbacks in connection with the purchase of goods and services (see "Fraud and Abuse Enforcement" and "Administrative Enforcement" above). Violations of prohibitions against false claims, improper inducements and payments, prohibited physician referrals, and illegal kickbacks may result in civil and/or criminal sanctions and penalties. Civil penalties range from monetary fines that may be levied on a per-violation basis to temporary or permanent exclusion from the Medicaid and Medicare programs. The determination that any of the facilities of the Obligated Group were in violation of these laws could have a material adverse effect on finances of the Obligated Group.
Medicare Reimbursement
Medicare reimbursement to skilled nursing facilities ("SNFs") depends on several factors, including the type of items and services provided. Skilled services furnished by SNFs are covered only if the patient spent at least three consecutive days as a hospital inpatient prior to admission to the SNF and if the patient was admitted to the SNF within thirty (30) days of discharge from a qualifying hospital stay. Medicare Part A covers nursing services furnished by or under the supervision of a registered professional nurse, as well as physical, occupational, and speech therapy provided by the SNF. "Ancillary" services not covered under Medicare Part A may still be furnished to patients under Medicare Part B. SNF services for Medicare Part A inpatient stays are reimbursed for up to one hundred (100) days for each spell of illness. Medicare payments are subject to coinsurance and deductibles from the patient.
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Payments of Medicare patients in SNFs are now based on a Prospective Payment System ("PPS"). Under the PPS, SNFs are paid a single per diem rate per resident according to the Resource Utilization Group ("RUG") to which the patient is assigned. RUG rates are based on the expected resource needs of patients and cover routine services, therapy services, and nursing costs. SNF PPS payment rates are adjusted annually based on the skilled nursing facility "market basket" index, or the cost of providing SNF services. There is no guarantee that the SNF rates, as they may change from time to time, will cover the actual costs of providing care to Medicare SNF patients.
The Health Care Reform Act also required the Secretary of DHHS to develop a "value based" purchasing program (based on performance and quality measures and other factors) for skilled nursing facilities. DHHS is required to publish the measures selected with respect to fiscal year 2014, including procedures for the public to review such data. This will eventually result in a mandatory requirement for nursing homes reporting on key performance and other quality performance measures and the development of a pay for performance program for SNFs which will impact reimbursement to skilled nursing facilities. Compliance with the performance and other quality performance measures will be essential for full reimbursement under the Medicare Program. In 2014, the Health Care Reform Act require that the annual update to the standard federal rate for discharges during the rate year will be reduced by two percentage points for each facility that does not report quality data. The Secretary is also required to study the impact of expanding Medicare's health care acquired conditions reduced payment policy to skilled nursing facilities. Because the Health Care Reform Act are relatively new, the full impact of these provisions is unknown and subsequent laws, regulation and guidance impacting Medicare policy and reimbursement may provide additional changes which may adversely impact skilled nursing homes.
Medicare has also increased its efforts to recover overpayments. CMS is expanding its use of Recovery Audit Contractors ("RACs") to further assure accurate payments to providers. RACs search for potentially improper Medicare payments from prior years that may have been detected through CMS existing program integrity efforts. RACs use their own software and review processes to determine areas for review. Once a RAC identifies a potentially improper claim as a result of an audit, it applies an assessment to the provider's Medicare reimbursement in an amount estimated to equal the overpayment from the provider pending resolution of the audit. Such audits may result in reduced reimbursement for past alleged overpayments and may slow future Medicare payments to providers pending resolution of appeals process with RACs, as well as increase purported Medicare overpayments and associated costs for the Obligated Group.
Other future legislation, regulation or actions by the federal government are expected to continue to trend toward more restrictive limitations on reimbursement for the long term care services. At present, no determination can be made concerning whether, or in what form, such legislation could be introduced and enacted into law.
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Similarly, the impact of future cost control programs and future regulations upon the financial performance of the Obligated Group cannot be determined at this time.
Possible Changes in Tax Status
The possible modification or repeal of certain existing federal income or state tax laws or other loss by a Member of the Obligated Group of the present advantages of certain provisions of the federal income or state tax laws could materially and adversely affect the status of such Member and thereby the revenues of the entire Obligated Group. Each Member of the Obligated Group has obtained a letter from the IRS determining that it is exempt from federal income taxation under Section 501(a) of the Code by virtue of being an organization described in Section 501(c)(3) of the Code. As exempt organizations, each Member of the Initial Obligated Group is subject to a number of requirements affecting its operation. The failure of a Member of the Obligated Group to remain qualified as an exempt organization would affect the funds available to the Obligated Group for payments to be made under the Loan Agreement and the Series 2017 Note. In addition, failure of the Members of the Obligated Group or the Issuer to comply with certain requirements of the Code, or adoption of amendments to the Code to restrict the use of tax-exempt bonds for facilities such as those being financed with Bond proceeds, could cause interest on the Bonds to be included in the gross income of Bondholders or former Bondholders for federal income tax purposes.
It is not possible to predict the scope or effect of future legislative or regulatory actions with respect to taxation of not-for-profit corporations. There can be, however, no assurance that future changes in the laws and regulations of the federal, state or local governments will not materially and adversely affect the operations and revenues of the Obligated Group.
Other Tax Status Issues
The IRS has issued Revenue Rulings dealing specifically with the manner in which a facility providing residential services to the elderly must operate in order to maintain its exemption under Section 501(c)(3). Revenue Rulings 61-72 and 72-124 hold that, if otherwise qualified, a facility providing residential services to the elderly is exempt under Section 501(c)(3) if the organization (1) is dedicated to providing, and in fact provides or otherwise makes available services for, care and housing to aged individuals who otherwise would be unable to provide for themselves without hardship, (2) to the extent of its financial ability, renders services to all or a reasonable proportion of its residents at substantially below actual cost, and (3) renders services that minister to the needs of the elderly and relieve hardship or distress. Revenue Ruling 79-18 holds that a facility providing residential services to the elderly may admit only those tenants who are able to pay full rental charges, provided that those charges are set at a level that is within the financial reach of a significant segment of the community's elderly persons, and that the organization is committed by established policy to maintaining persons as
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residents, even if they become unable to pay the monthly charges after being admitted to the facility.
Lack of Marketability for the Bonds
There is no assurance that the ratings assigned to the Bonds will not be lowered or withdrawn at any time. The effect of such revisions to the rating could adversely affect the secondary market price for and marketability of the Bonds. See "RATING" herein.
Although the Underwriters intend, but are not obligated, to make a market for the Bonds, there can be no assurance that there will be a secondary market for the Bonds, and the absence of such a market for the Bonds could result in investors not being able to resell the Bonds should they need to or wish to do so.
Bankruptcy
If a Member of the Obligated Group were to file a petition for relief under the Federal Bankruptcy Code, its revenues and certain of its accounts receivable and other property acquired after the filing (and under certain conditions some or all thereof acquired within 120 days prior to the filing) would not be subject to the security interests created under the Master Indenture. The filing would operate as an automatic stay of the commencement or continuation of any judicial or other proceeding against the Member and its property and as an automatic stay of any act or proceeding to enforce a lien upon its property. If the bankruptcy court so ordered, the Member's property, including their accounts receivable and proceeds thereof, could be used for the benefit of the Member despite the security interest of the Master Trustee therein, provided that "adequate protection" is given to the lienholder.
In a bankruptcy proceeding, the petitioner could file a plan for the adjustment of its debts which modifies the rights of creditors generally, or any class of creditors, secured or unsecured. The plan, when confirmed by the court, binds all creditors who had notice or knowledge of the plan and discharges all claims against the debtor provided for in the plan. No plan may be confirmed unless, among other conditions, the plan is in the best interests of creditors, is feasible and has been accepted by each class of claims impaired thereunder. Each class of claims has accepted the plan if at least two-thirds in dollar amount and more than one-half in number of the allowed claims of the class that are voted with respect to the plan are cast in its favor. Even if the plan is not so accepted, it may be confirmed if the court finds that the plan is fair and equitable with respect to each class of non-accepting creditors impaired thereunder and does not discriminate unfairly in favor of junior creditors. Certain judicial decisions have cast doubt upon the right of a trustee, in the event of a health care facility's bankruptcy, to collect and retain for the benefit of bondholders portions of revenues consisting of Medicare and other governmental receivables.
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On April 20, 2005, the Healthcare Bankruptcy Bill was enacted (the "Healthcare Bankruptcy Act"). The stated goal of the Healthcare Bankruptcy Act was to encourage healthcare companies to consider the patients' rights and interests when administering their bankruptcy cases related to (1) disposal of patient records, (2) transferring patients to new facilities, (3) appointment of a patient ombudsman, and (4) exclusions of a debtor from Medicare and other federal health care programs.
In the event of bankruptcy of one or more Members of this Obligated Group, there is no assurance that certain covenants, including tax covenants, contained in the Bond Indenture, the Loan Agreement, the Master Indenture and certain other documents would survive. Accordingly, such Member, as debtor in possession, or a bankruptcy trustee could take action that would adversely affect the exclusion of interest on the Bonds from gross income of the Owners for federal income tax purposes.
Additional Indebtedness
The Master Indenture permits the Obligated Group to incur Additional Indebtedness which may be equally and ratably secured with the Series 2017 Note. Any such additional parity indebtedness would be entitled to share ratably with the holder(s) of the Series 2017 Note in any moneys realized from the exercise of remedies in the Event of a Default under the Master Indenture. The issuance of additional parity indebtedness could increase Debt Service Requirements and reduce the Historical Debt Service Coverage Ratio in future years and could impair the ability of the Obligated Group to maintain its compliance with certain covenants described in "MASTER TRUST INDENTURE" in APPENDIX C hereto. There is no assurance that, despite compliance with the conditions upon which Additional Indebtedness may be incurred at the time such debt is created, the ability of the Obligated Group to make the necessary payments to repay the Series 2017 Note may not be materially adversely affected upon the incurrence of Additional Indebtedness.
Certain Matters Relating to Enforceability of the Master Indenture
The obligations of the Obligated Group under the Master Indenture and the Series 2017 Note will be limited to the same extent as the obligations of debtors typically are affected by bankruptcy, insolvency and the application of general principles of creditors' rights and as additionally described below.
The accounts of the Obligated Group will be combined for financial reporting purposes and will be used in determining whether various covenants and tests contained in the Master Indenture (including tests relating to the incurrence of Additional Indebtedness) are met, notwithstanding the uncertainties as to the enforceability of certain obligations of the Obligated Group contained in the Master Indenture which bear on the availability of the assets and revenues of the Obligated Group to pay debt service on Obligations, including the Series 2017 Note. The obligations described herein of the
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Obligated Group to make payments of debt service on Obligations issued under the Master Indenture (including transfers in connection with voluntary dissolution or liquidation) may not be enforceable to the extent (1) enforceability may be limited by applicable bankruptcy, moratorium, reorganization or similar laws affecting the enforcement of creditors' rights and by general equitable principles and (2) such payments (i) are requested with respect to payments on any Obligations issued by a member other than the member from which such payment is requested, issued for a purpose which is not consistent with the charitable purposes of the Member of the Obligated Group from which such payment is requested or issued for the benefit of a Member of the Obligated Group which is not a Tax-Exempt Organization; (ii) are requested to be made from any moneys or assets which are donor-restricted or which are subject to a direct or express trust which does not permit the use of such moneys or assets for such a payment; (iii) would result in the cessation or discontinuation of any material portion of the health care or related services previously provided by the Member of the Obligated Group from which such payment is requested; or (iv) are requested to be made pursuant to any loan violating applicable usury laws. The extent to which the assets of any future Member of the Obligated Group may fall within the categories (ii) and (iii) above with respect to the Obligations cannot now be determined. The amount of such assets which could fall within such categories could be substantial.
A Member of the Obligated Group may not be required to make any payment on any Obligation, or portion thereof, the proceeds of which were not loaned or otherwise disbursed to such Member of the Obligated Group to the extent that such payment would render such Member of the Obligated Group insolvent or which would conflict with or not be permitted by or which is subject to recovery for the benefit of other creditors of such Member of the Obligated Group under applicable laws. There is no clear precedent in the law as to whether such payments from a Member of the Obligated Group in order to pay debt service on the Series 2017 Note may be voided by a trustee in bankruptcy in the event of bankruptcy of a Member of the Obligated Group, or by third-party creditors in an action brought pursuant to Florida fraudulent conveyance statutes. Under the United States Bankruptcy Code, a trustee in bankruptcy and, under Florida fraudulent conveyance statutes and common law, a creditor of a related guarantor, may avoid any obligation incurred by a related guarantor if, among other bases therefor, (1) the guarantor has not received fair consideration or reasonably equivalent value in exchange for the guaranty and (2) the guaranty renders the guarantor insolvent, as defined in the United States Bankruptcy Code or Florida fraudulent conveyance statutes, or the guarantor is undercapitalized.
Application by courts of the tests of "insolvency," "reasonably equivalent value" and "fair consideration" has resulted in a conflicting body of case law. It is possible that, in an action to force a Member of the Obligated Group to pay debt service on an Obligation for which it was not the direct beneficiary, a court might not enforce such a payment in the event it is determined that such member is analogous to a guarantor of the
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debt of the Obligated Group who directly benefited from the borrowing and that sufficient consideration for such member's guaranty was not received and that the incurrence of such Obligation has rendered or will render the such member insolvent.
The effectiveness of the security interest in the Obligated Group's Gross Revenues granted in the Master Indenture may be limited by a number of factors, including: (i) present or future prohibitions against assignment contained in any applicable statutes or regulations; (ii) certain judicial decisions which cast doubt upon the right of the Master Trustee, in the event of the bankruptcy of any Member of the Obligated Group, to collect and retain accounts receivable from Medicare, Medicaid, general assistance and other governmental programs; (iii) commingling of the proceeds of Gross Revenues with other moneys of a Member of the Obligated Group not subject to the security interest in Gross Revenues; (iv) statutory liens; (v) rights arising in favor of the United States of America or any agency thereof; (vi) constructive trusts, equitable or other rights impressed or conferred by a federal or state court in the exercise of its equitable jurisdiction; (vii) federal bankruptcy laws which may affect the enforceability of the mortgage or the security interest in the Gross Revenues of the Obligated Group which are earned by the Obligated Group within 90 days preceding or, in certain circumstances with respect to related corporations, within one year preceding and after any effectual institution of bankruptcy proceedings by or against a Member of the Obligated Group; (viii) rights of third parties in Gross Revenues converted to cash and not in the possession of the Master Trustee; and (ix) claims that might arise if appropriate financing or continuation statements are not filed in accordance with the Florida Uniform Commercial Code as from time to time in effect.
Pursuant to the Master Indenture, each Member of the Obligated Group who pledges its Gross Revenues under the Master Indenture covenants and agrees that, if an Event of Default involving a failure to pay any installment of interest or principal on an Obligation should occur and be continuing, it will deposit daily the proceeds of its Gross Revenues. Such deposits will continue daily until such default is cured.
It is unclear whether the covenant to deposit the proceeds of Gross Revenues with the Master Trustee is enforceable. In light of the foregoing and of questions as to limitations on the effectiveness of the security interest granted in such Gross Revenues, as described above, no opinion will be expressed by counsel to the Obligated Group as to enforceability of such covenant with respect to the required deposits.
Environmental Matters
Health care providers are subject to a wide variety of federal, state and local environmental and occupational health and safety laws and regulations which address, among other things, health care operations, facilities and properties owned or operated by health care providers. Among the type of regulatory requirements faced by health care providers are (a) air and water quality control requirements, (b) waste management
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requirements, including medical waste disposal, (c) specific regulatory requirements applicable to asbestos, polychlorinated biphenyls and radioactive substances, (d) requirements for providing notice to employees and members of the public about hazardous materials handled by or located at the clinics, (e) requirements for training employees in the proper handling and management of hazardous materials and wastes and (f) other requirements.
In their role as the owner and operator of properties or facilities, the Member of the Obligated Group may be subject to liability for investigating and remedying any hazardous substances that may have migrated off of its property. Typical health care operations include, but are not limited to, in various combinations, the handling, use, storage, transportation, disposal and discharge of hazardous, infectious, toxic, radioactive, flammable and other hazardous materials, wastes, pollutants or contaminants. As such, health care operations are particularly susceptible to the practical, financial and legal risks associated with compliance with such laws and regulations. Such risks may (a) result in damage to individuals, property or the environment, (b) interrupt operations and increase their cost, (c) result in legal liability, damages, injunctions or fines and (d) result in investigations, administrative proceedings, penalties or other governmental agency actions. There is no assurance that MJHS or other Members of the Obligated Group will not encounter such risks in the future, and such risks may result in material adverse consequences to the operations or financial condition of the Obligated Group.
Except as described below, at the present time MJHS is not aware of any pending or threatened claim, investigation or enforcement action regarding such environmental issues which, if determined adversely, would have a material adverse effect on the Obligated Group's operations or financial condition.
Taxation of Interest on the Bonds
Because the existence and continuation of the excludability of the interest on the Bonds from federal gross income depends upon events occurring after the date of issuance of the Bonds, the opinion of Bond Counsel described under the caption "TAX MATTERS" herein assumes the compliance by MJHS and the other Members of the Obligated Group and the Issuer with the provisions of the Code and the regulations relating thereto. No opinion is expressed by Bond Counsel with respect to the excludability of the interest on the Bonds in the event of noncompliance with such provisions. The failure of the Members of the Obligated Group or the Issuer to comply with the provisions of the Code and the regulations thereunder may cause the interest on the Bonds to become includable in gross income as of the date of issuance.
Property and Casualty Insurance
Pursuant to the Master Indenture, the Obligated Group maintains insurance coverage (including one or more self-insurance or shared or pooled-insurance programs)
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to protect it and its Property and operations, including without limitation professional liability claims. Recent hurricane seasons and the performance of the stock markets have reduced the number and quality of providers in the insurance industry which has led to increased premiums and reduced coverage for purchasers of insurance. MJHS believes that the current coverage limits provide reasonable coverage under the circumstances to protect the Facilities, which coverage is consistent with the coverage generally available to similarly situated communities. Nevertheless, should losses exceed insurance coverage, it could have a material adverse effect on the financial condition of the Obligated Group. Moreover, MJHS is unable to predict the cost or availability of any such property and casualty insurance when its current coverage expires.
Amendments to Documents
Certain amendments to the Master Indenture, the Bond Indenture, the Loan Agreement and the Mortgage may be made without notice to or the consent of the holders of the Bonds. Such amendments could affect the security for the Bonds. Certain amendments, however, are not permitted without the consent of the holder of each outstanding Bond affected thereby, including (1) extensions in the stated maturity of the principal, or any installment of interest on, any Bond, or (2) any reduction in the principal amount of or interest on any Bond. See "MASTER TRUST INDENTURE – SUPPLEMENTS AND AMENDMENTS," "INDENTURE OF TRUST – SUPPLEMENTAL INDENTURES AND AMENDMENTS TO THE AGREEMENT," and "LOAN AGREEMENT – Amendments, Changes and Modifications" in APPENDIX C hereto.
Other Possible Risk Factors
The occurrence of any of the following events, or other unanticipated events, could adversely affect the operations of the Obligated Group:
(1) Inability to control increases in operating costs, including salaries, wages and fringe benefits, supplies and other expenses, given an inability to obtain corresponding increases in revenues from residents and patients whose incomes will largely be fixed;
(2) Unionization, employee strikes and other adverse labor actions which could result in a substantial increase in expenditures without a corresponding increase in revenues;
(3) Adoption of other federal, state or local legislation or regulations having an adverse effect on the future operating or financial performance of the Initial Obligated Group and any future member of the Obligated Group;
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(4) A decline in the population, a change in the age composition of the population or a decline in the economic conditions of the Facilities' market area;
(5) The cost and availability of energy;
(6) Increased unemployment or other adverse economic conditions in the service areas of the Members of the Obligated Group which would increase the proportion of patients who are unable to pay fully for the cost of their care;
(7) Any increase in the quantity of indigent care provided which is mandated by law or required due to increased needs of the community in order to maintain the charitable status of the Initial Obligated Group Members and any future Member of the Obligated Group;
(8) Inflation or other adverse economic conditions;
(9) Reinstatement or establishment of mandatory governmental wage, rent or price controls;
(10) Changes in tax, pension, labor, social security or other laws and regulations affecting the provisions of health care and other services to the elderly;
(11) Changes in the tax laws and regulations eliminating or adversely impairing the value of the tax exemption afforded the Bonds;
(12) Inability to control the diminution of patients' assets or insurance coverage with the result that the patients' charges are reimbursed from government reimbursement programs rather than private payments or funded from assets of the Obligated Group;
(13) Scientific and technological advances that could reduce demand for services offered by the Members of the Obligated Group;
(14) The occurrence of natural disasters, including hurricanes, volcanic eruptions and typhoons, floods or earthquakes, or failures of storm water detention devices during such naturally occurring events, which may damage the Facilities, interrupt utility service to the Facilities, or otherwise impair the operation and generation of revenues from the Facilities; or
(15) Cost and availability of any insurance, such as malpractice, fire, automobile and general comprehensive liability, that organizations such as the Initial Obligated Group Members and any future Members of the Obligated Group generally carry.
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FINANCIAL REPORTING AND CONTINUING DISCLOSURE
Financial Reporting
The Master Indenture requires that the Obligated Group Representative provide to each Required Information Recipient, the following:
(i) Commencing with the fiscal quarter ended December 31, 2016, quarterly unaudited financial statements of the Obligated Group as soon as practicable after they are available but in no event more than 75 days after the completion of the fiscal quarter ended December 31, 2016 and 45 days after the completion of the fiscal quarter ending March 31, 2017 and thereafter, including a combined or combining statement of revenues and expenses and statement of cash flows and accumulated depreciation of the Obligated Group during such period, a combined or combining balance sheet as of the end of each such fiscal quarter, and a calculation of Days Cash on Hand, Historical Debt Service Coverage Ratio and occupancy, for such fiscal quarter, all prepared in reasonable detail and certified, subject to year end adjustment, by an officer of the Obligated Group Representative. Such financial statements shall be accompanied by a comparison to the Annual Budget, a report of the (A) occupancy by each level of care (on a units available/units occupied/percentage occupied basis), and (B) payor mix, and an update on the construction status of the Project.
If the Historical Debt Service Coverage Ratio of the Obligated Group for any Fiscal Year is less than 1.00:1 and the Days Cash on Hand of the Obligated Group is less than 90 days for any Testing Date as provided in the Master Indenture, the Obligated Group will deliver the financial information and the calculations described in the paragraph above on a monthly basis within 45 days of the end of each month until the Historical Debt Service Coverage Ratio of the Obligated Group is at least 1.00:1 and the Days Cash on Hand of the Obligated Group is at least equal to 90 days.
(ii) Within 150 days of the end of each Fiscal Year, an annual audited financial report of the Obligated Group prepared by a firm of Accountants, including a combined and an unaudited combining balance sheet as of the end of such Fiscal Year; a combined and an unaudited combining statement of cash flows for such Fiscal Year; and a combined and an unaudited combining statement of revenues and expenses for such Fiscal Year, showing in each case in comparative form the financial figures for the preceding Fiscal Year, together with a separate written statement of the Accountants preparing such report (or another firm of Accountants) containing calculations of the Obligated Group's Historical Debt Service Coverage Ratio and Days Cash on Hand at the end of such Fiscal Year and a statement that such Accountants have no knowledge of any default under the Master Indenture insofar as it relates to accounting matters or to the Obligated Group's financial covenants, or if such Accountants have obtained knowledge of any such default or defaults, they are required to disclose in such statement the default or defaults and the nature thereof.
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(iii) On or before the date of delivery of the financial reports referred to in subsection (b)(ii) above, an Officer's Certificate of the Obligated Group Representative (A) stating that the Obligated Group is in compliance with all of the terms, provisions and conditions of the Master Indenture, any Related Loan Agreement, and any Related Bond Indenture or, if not, specifying all such defaults and the nature thereof, and (B) calculating and certifying Days Cash on Hand, the Historical Debt Service Coverage Ratio and occupancy, as of the end of such month or Fiscal Year, as appropriate.
(iv) On or before the date of delivery of the financial reports referred to in paragraphs (i) and (ii) above, a management's discussion and analysis of results for the applicable fiscal period.
(v) Copies of (A) any board approved revisions to the Annual Budget and (B) any correspondence to or from the IRS concerning the status of any Member of the Initial Obligated Group as an organization described in Section 501(c)(3) of the Code or with respect to the tax-exempt status of any Related Bonds, promptly upon receipt.
(vi) To the extent that any Obligated Group Member incurs permitted Additional Indebtedness of a form for which there is not a CUSIP number (the "non-Public Debt"), the Obligated Group Representative will provide a debt service schedule showing the principal and interest associated with each series of Related Bonds then outstanding as well as the non-Public Debt and the aggregate debt service of the Obligated Group; provided, however, to the extent that the non-Public Debt is used to construct additional units at the Facilities, the Obligated Group Representative will provide monthly reports (A) regarding whether the construction of additional units is within the construction budget and if not, a brief explanation and a copy of any revised budget, and on schedule with the construction timetable and if not, a brief explanation and a copy of any revised timetable, and (B) reconciling the amount of construction contingency remaining and the uses of the contingency funds to date.
(vii) Such additional information as the Master Trustee or the Bond Trustee may reasonably request concerning any Member in order to enable the Master Trustee or such Related Bond Trustee to determine whether the covenants, terms and provisions of the Master Indenture have been complied with by the Members and for that purpose all pertinent books, documents and vouchers relating to the business, affairs and Property (other than patient, donor and personnel records) of the Members shall, to the extent permitted by law, at all times during regular business hours be open to the inspection of such Accountant or other agent (who may make copies of all or any part thereof) as shall from time to time be designated by the Master Trustee or such Related Bond Trustee.
Continuing Disclosure
General. Inasmuch as the Bonds are limited obligations of the Issuer, the Issuer shall not provide any financial or operating data concerning it. MJHS has undertaken all
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responsibilities for any continuing disclosure to holders of the Bonds as described below, and the Issuer shall have no liability to the holders or any other person with respect to such disclosures. MJHS has covenanted for the benefit of the holders of the Bonds and the Beneficial Owners (as hereinafter defined under this caption), pursuant to a Continuing Disclosure Certificate (the "Disclosure Certificate") to be executed and delivered by MJHS, to provide or cause to be provided (i) each year, certain financial information and operating data relating to the Obligated Group (the "Annual Report") by not later than the date 150 days after the last day of the fiscal year of the Obligated Group, commencing with the Annual Report for the fiscal year ended June 30, 2017; provided, however, that if the audited financial statements of the Obligated Group are not available by such date, unaudited financial statements will be included in the Annual Report and audited financial statements will be provided when and if available; and (ii) timely notices of the occurrence of certain enumerated events, if material. Currently the fiscal year of the Obligated Group commences on July 1. "Beneficial Owners" means the beneficial owner of any Bond held in a book-entry only system. In addition, MJHS will provide the to the Repositories, as defined in the Disclosure Certificate, a copy of any information provided pursuant to the Master Indenture as described above under the subcaption "Financial Reporting" (the "Additional Information"). See "FORM OF CONTINUING DISCLOSURE CERTIFICATE" attached hereto as APPENDIX F.
The Annual Report and the Additional Information will be filed by or on behalf of MJHS and made available to holders of the Bonds through EMMA (http://emma.msrb.org), the information repository of the Municipal Securities Rulemaking Board, to comply with Rule 15c2-12 (as amended from time to time the "Rule") of the Securities and Exchange Commission (the "SEC"). These covenants have been made in order to assist the Underwriters and registered brokers, dealers and municipal securities dealers in complying with the requirements of the Rule.
Notice of Certain Events, If Material. MJHS covenants to provide, or cause to be provided, notice of the occurrence of any of the following events with respect to the Bonds, if material, in a timely manner and in accordance with the Rule:
(1) Principal and interest payment delinquencies;
(2) Non-payment related defaults;
(3) Unscheduled draws on debt service reserves reflecting financial difficulties;
(4) Unscheduled draws on credit enhancements reflecting financing difficulties;
(5) Substitution of credit or liquidity providers, or their failure to perform;
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(6) Adverse tax opinions or events adversely affecting the tax-exempt status of the Bonds;
(7) Modifications to rights of the owners of the Bonds;
(8) Bond calls;
(9) Defeasances;
(10) Release, substitution, or sale of property securing repayment of the Bonds;
(11) Rating changes;
(12) Bankruptcy, insolvency, receivership or similar event of the obligated person;
(13) The consummation of a merger, consolidation or acquisition involving the obligated person or sale of all or substantially all of the assets of the obligated person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such action, or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; and
(14) Appointment of a successor or additional trustee or the change of name of a trustee, if material.
Annual Report. The Annual Report will contain or incorporate by reference at least the following items:
(a) The audited financial statements of the Obligated Group for the fiscal year ending immediately preceding the due date of the Annual Report; provided, however, that if such audited financial statements are not available by the deadline for filing the Annual Report, they shall be provided when and if available, and unaudited financial statements shall be included in the Annual Report. The financial statements shall be audited and prepared pursuant to accounting and reporting policies conforming in all material respects to generally accepted accounting principles;
(b) An update regarding the current status of the Centers for Medicare & Medicaid Services Star Rating(s) of MJHS; and
(c) The Additional Information required by the Master Indenture.
MJHS may modify from time to time the specific types of information provided to the extent necessary to conform to changes in legal requirements, provided that any such modification will be done in a manner consistent with the Rule and will not materially impair the interests of the Bondowners.
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Any or all of the items listed above may be included by specific reference to other documents which previously have been provided to each of the repositories described above or filed with the SEC. If the document included by reference is a final official statement, it must be available from the Municipal Securities Rulemaking Board. MJHS shall clearly identify each such other document as included by reference.
Failure to Comply. In the event of a failure of MJHS to comply with any provision of the Disclosure Certificate, any owner of Bonds or Beneficial Owner may take such actions as may be necessary and appropriate, including seeking specific performance by court order, to cause MJHS to comply with the obligations under the Disclosure Certificate. A failure to comply with the Disclosure Certificate shall not be deemed an Event of Default under the Bond Indenture. The sole remedy under the Disclosure Certificate in the event of any failure of MJHS to comply with the Disclosure Certificate shall be an action to compel performance, and no person or entity shall be entitled to recover monetary damage thereunder under any circumstances.
Amendment of the Disclosure Certificate. The provisions of the Disclosure Certificate, including but not limited to the provisions relating to the accounting principles pursuant to which the financial statements are prepared, may be amended as deemed appropriate by an authorized officer of MJHS but any such amendment must be adopted procedurally and substantively in a manner consistent with the Rule, including any interpretation thereof made from time to time by the SEC. Such interpretations currently include the requirements that (a) the amendment may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature or status of the Obligated Group or the type of activities conducted thereby, (b) the undertaking, as amended, would have complied with the requirements of the Rule at the time of the primary offering of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances, and (c) the amendment does not materially impair the interests of Bondowners, as determined by parties unaffiliated with MJHS (such as independent legal counsel). The foregoing interpretations may be changed in the future.
Compliance with Prior Undertakings. Within the last five years MJHS has not failed in any material respects to comply with any previous continuing disclosure commitments or undertakings with respect to issued obligations.
DISCLOSURE REQUIRED BY FLORIDA BLUE SKY REGULATIONS
Issuer
Pursuant to Section 517.051, Florida Statutes, as amended, no person may directly or indirectly offer or sell securities of the Issuer except by an offering circular containing full and fair disclosure of all defaults as to principal or interest on its obligations since
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December 31, 1975, as provided by rule of the Florida Department of Financial Services (the "Department"). Pursuant to Rule 69W-400.003, Florida Administrative Code, the Department has required the disclosure of the amounts and types of defaults, any legal proceedings resulting from such defaults, whether a trustee or receiver has been appointed over the assets of the Issuer, and certain additional financial information, unless the Issuer believes in good faith that such information would not be considered material by a reasonable investor.
As described herein, the Issuer has the power to issue bonds for the purpose of financing other projects for other borrowers which are payable from the revenues of the particular project or borrower. Other than the Refunded Bonds issued on behalf of MJHS, the Issuer has no other outstanding bonds at this time. The Issuer is not and has not been in default on any bond issued since December 31, 1975 that would be considered material by a reasonable investor.
Obligated Group
With respect to the Obligated Group, MJHS has not defaulted in the payment of principal and interest on an obligation issued by the Issuer since December 31, 1975.
LITIGATION
Issuer
There is not now pending or, to the Issuer's knowledge, threatened any litigation restraining or enjoining the issuance or delivery of the Bonds or the execution and delivery by the Issuer of the Bond Indenture, or the Loan Agreement or questioning or affecting the validity of the Bonds or the security therefor or the proceedings for the Issuer under which they are or are to be issued, respectively.
Obligated Group
There is no litigation pending or, to the Obligated Group's knowledge, threatened against any Member of the Obligated Group, wherein an unfavorable decision would (i) adversely affect the ability of the Obligated Group to construct the Project, operate the Facilities or to carry out its obligations under the Master Indenture, the Loan Agreement, the Series 2016 Note or the Mortgage or (ii) would have a material adverse impact on the financial position or results of operations of the Obligated Group, taken as a whole.
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LEGAL MATTERS
Certain legal matters incident to the issuance of the Bonds are subject to the legal opinions of Bond Counsel. Squire Patton Boggs (US) LLP has acted in the capacity as Bond Counsel for the purpose of rendering such opinions.
The proposed opinion of Bond Counsel is attached hereto as APPENDIX D and will be delivered at the time of delivery of the Bonds. The actual legal opinion to be delivered may vary from that text if necessary to reflect facts and law on the date of delivery. The opinion will speak only as of its date, and subsequent distribution of it by recirculation of this Official Statement or otherwise shall create no implication that, subsequent to the date of the opinion, Bond Counsel has reviewed or expresses any opinion concerning any of the matters referenced in the opinion. Bond Counsel's opinions are based on existing law, which is subject to change. Such opinions are further based on factual representations made to Bond Counsel as of the date thereof. Bond Counsel assumes no duty to update or supplement its opinions to reflect any facts or circumstances, including changes in law, that may thereafter occur or become effective. Squire Patton Boggs (US) LLP has not been requested to examine, and has not investigated or verified, any statements, records, material or matters relating to the financial condition or capabilities of the Obligated Group or its affiliates, and has not assumed responsibility for the preparation of this Official Statement, and therefore expresses no opinion as to the accuracy, completeness, fairness or sufficiency of any of the information or statements contained in this Official Statement or any appendices hereto except as to the accuracy of the information contained under the captions "THE BONDS," "MANDATORY AND OPTIONAL REDEMPTION PROVISIONS FOR THE BONDS," "SECURITY FOR THE BONDS" and "TAX MATTERS."
Certain legal matters will be passed upon for the Issuer by the Office of the City Attorney; for the Obligated Group by its counsel, Greenberg Traurig, P.A., and for the Underwriters by their counsel, Nabors, Giblin & Nickerson, P.A.
The various legal opinions to be delivered concurrently with the delivery of the Bonds express the professional judgment of the attorneys rendering the opinions as to the legal issues explicitly addressed therein. In rendering a legal opinion, the attorney does not become an insurer or guarantor of the expression of professional judgment, of the transaction opined upon, or of the future performance of the parties to the transaction, nor does the rendering of an opinion guarantee the outcome of any legal dispute that may arise out of the transaction.
TAX MATTERS
In the opinion of Squire Patton Boggs (US) LLP, Bond Counsel, under existing law: (i) interest on the Bonds is excluded from gross income for federal income tax
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purposes under Section 103 of the Internal Revenue Code of 1986, as amended (the "Code"), and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; and (ii) the Bonds and the income thereon are exempt from taxation under the laws of the State of Florida, except estate taxes imposed by Chapter 198, Florida Statutes, as amended, and net income and franchise taxes imposed by Chapter 220, Florida Statutes, as amended. Bond Counsel expresses no opinion as to any other tax consequences regarding the Bonds.
The opinion on tax matters will be based on and will assume the accuracy of certain representations and certifications, and continuing compliance with certain covenants, of the Issuer and MJHS contained in the transcript of proceedings and that are intended to evidence and assure the foregoing, including that the Bonds are and will remain obligations the interest on which is excluded from gross income for federal income tax purposes. In addition, Bond Counsel has relied on, among other things, the opinion of Greenberg Traurig, P.A., counsel to MJHS, regarding, among other matters, the status of MJHS as an organization described in Section 501(c)(3) of the Code and the use of the facilities financed with the Bonds in activities that are not considered "unrelated trade or business" activities of MJHS, as defined in Section 513(a) of the Code, which opinion is subject to a number of qualifications and limitations. Failure of MJHS to maintain its status as an organization described in Section 501(c)(3) of the Code, or to operate the facilities financed by the Bonds in a manner that is substantially related to MJHS's exempt purpose under Section 513(a) of the Code, may cause interest on the Bonds to be included in gross income retroactively to the date of the issuance of the Bonds. Bond Counsel will not independently verify the accuracy of the Issuer's and MJHS's representations and certifications or the continuing compliance with the Issuer's and MJHS's covenants and will not independently verify the accuracy of the opinion of MJHS's counsel.
The opinion of Bond Counsel is based on current legal authority and covers certain matters not directly addressed by such authority. It represents Bond Counsel's legal judgment as to exclusion of interest on the Bonds from gross income for federal income tax purposes but is not a guaranty of that conclusion. The opinion is not binding on the Internal Revenue Service ("IRS") or any court. Bond Counsel expresses no opinion about (i) the effect of future changes in the Code and the applicable regulations under the Code or (ii) the interpretation and the enforcement of the Code or those regulations by the IRS.
The Code prescribes a number of qualifications and conditions for the interest on state and local government obligations to be and to remain excluded from gross income for federal income tax purposes, some of which require future or continued compliance after issuance of the obligations. Noncompliance with these requirements by the Issuer or MJHS may cause loss of such status and result in the interest on the Bonds being included in gross income for federal income tax purposes retroactively to the date of
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issuance of the Bonds. MJHS and, subject to certain limitations, the Issuer have each covenanted to take the actions required of it for the interest on the Bonds to be and to remain excluded from gross income for federal income tax purposes, and not to take any actions that would adversely affect that exclusion. After the date of issuance of the Bonds, Bond Counsel will not undertake to determine (or to so inform any person) whether any actions taken or not taken, or any events occurring or not occurring, or any other matters coming to Bond Counsel's attention, may adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds or the market value of the Bonds.
A portion of the interest on the Bonds earned by certain corporations may be subject to a federal corporate alternative minimum tax. In addition, interest on the Bonds may be subject to a federal branch profits tax imposed on certain foreign corporations doing business in the United States and to a federal tax imposed on excess net passive income of certain S corporations. Under the Code, the exclusion of interest from gross income for federal income tax purposes may have certain adverse federal income tax consequences on items of income, deduction or credit for certain taxpayers, including financial institutions, certain insurance companies, recipients of Social Security and Railroad Retirement benefits, those that are deemed to incur or continue indebtedness to acquire or carry tax-exempt obligations, and individuals otherwise eligible for the earned income tax credit. The applicability and extent of these and other tax consequences will depend upon the particular tax status or other tax items of the owner of the Bonds. Bond Counsel will express no opinion regarding those consequences.
Payments of interest on tax-exempt obligations, including the Bonds, are generally subject to IRS Form 1099-INT information reporting requirements. If a Bond owner is subject to backup withholding under those requirements, then payments of interest will also be subject to backup withholding. Those requirements do not affect the exclusion of such interest from gross income for federal income tax purposes.
Bond Counsel's engagement with respect to the Bonds ends with the issuance of the Bonds, and, unless separately engaged, Bond Counsel is not obligated to defend the Issuer, MJHS or the owners of the Bonds regarding the tax status of interest thereon in the event of an audit examination by the IRS. The IRS has a program to audit tax-exempt obligations to determine whether the interest thereon is includible in gross income for federal income tax purposes. If the IRS does audit the Bonds, under current IRS procedures, the IRS will treat the Issuer as the taxpayer and the beneficial owners of the Bonds will have only limited rights, if any, to obtain and participate in judicial review of such audit. Any action of the IRS, including but not limited to selection of the Bonds for audit, or the course or result of such audit, or an audit of other obligations presenting similar tax issues, may affect the market value of the Bonds.
Prospective purchasers of the Bonds upon their original issuance at prices other than the respective prices indicated on the inside cover of this Official Statement, and
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prospective purchasers of the Bonds at other than their original issuance, should consult their own tax advisers regarding other tax considerations such as the consequences of market discount, as to all of which Bond Counsel expresses no opinion.
Risk of Future Legislative Changes and/or Court Decisions
Legislation affecting tax-exempt obligations is regularly considered by the United States Congress and may also be considered by the State legislature. Court proceedings may also be filed, the outcome of which could modify the tax treatment of obligations such as the Bonds. There can be no assurance that legislation enacted or proposed, or actions by a court, after the date of issuance of the Bonds will not have an adverse effect on the tax status of interest on the Bonds or the market value or marketability of the Bonds. These adverse effects could result, for example, from changes to federal or state income tax rates, changes in the structure of federal or state income taxes (including replacement with another type of tax), or repeal (or reduction in the benefit) of the exclusion of interest on the Bonds from gross income for federal or state income tax purposes for all or certain taxpayers.
For example, recent presidential and legislative proposals would eliminate, reduce or otherwise alter the tax benefits currently provided to certain owners of state and local government bonds, including proposals that would result in additional federal income tax on taxpayers that own tax-exempt obligations if their incomes exceed certain thresholds. Investors in the Bonds should be aware that any such future legislative actions (including federal income tax reform) may retroactively change the treatment of all or a portion of the interest on the Bonds for federal income tax purposes for all or certain taxpayers. In such event, the market value of the Bonds may be adversely affected and the ability of holders to sell their Bonds in the secondary market may be reduced. The Bonds are not subject to special mandatory redemption, and the interest rates on the Bonds are not subject to adjustment in the event of any such change in the tax treatment of interest on the Bonds.
Investors should consult their own financial and tax advisers to analyze the importance of these risks.
Original Issue Premium
Certain of the Bonds ("Premium Bonds") as indicated on the inside cover of this Official Statement were offered and sold to the public at a price in excess of their stated redemption price at maturity (the principal amount). That excess constitutes bond premium. For federal income tax purposes, bond premium is amortized over the period to maturity of a Premium Bond, based on the yield to maturity of that Premium Bond (or, in the case of a Premium Bond callable prior to its stated maturity, the amortization period and yield may be required to be determined on the basis of an earlier call date that results in the lowest yield on that Premium Bond), compounded semiannually. No portion of that
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bond premium is deductible by the owner of a Premium Bond. For purposes of determining the owner's gain or loss on the sale, redemption (including redemption at maturity) or other disposition of a Premium Bond, the owner's tax basis in the Premium Bond is reduced by the amount of bond premium that is amortized during the period of ownership. As a result, an owner may realize taxable gain for federal income tax purposes from the sale or other disposition of a Premium Bond for an amount equal to or less than the amount paid by the owner for that Premium Bond. A purchaser of a Premium Bond in the initial public offering at the price for that Premium Bond stated on the inside cover of this Official Statement who holds that Premium Bond to maturity (or, in the case of a callable Premium Bond, to its earlier call date that results in the lowest yield on that Premium Bond) will realize no gain or loss upon the retirement of that Premium Bond.
Owners of Premium Bonds should consult their own tax advisers as to the determination for federal income tax purposes of the amount of bond premium properly accruable or amortizable in any period with respect to the Premium Bonds and as to other federal tax consequences and the treatment of bond premium for purposes of state and local taxes on, or based on, income.
INDEPENDENT AUDITORS
The audited combined financial statements of MJHS, its subsidiaries and affiliates as of and for the years ended June 30, 2016 and 2015, included in this Official Statement, have been audited by Moore Stephens Lovelace, P.A., independent auditors, as stated in their reports appearing in APPENDIX B to this Official Statement.
RATING
At the time the Bonds are issued, Fitch Ratings ("Fitch") has assigned the Bonds a rating of "BBB" (stable outlook) based on the creditworthiness of the Obligated Group.
The rating reflects only the view of the rating agency and is not a recommendation to buy, sell or hold the Bonds. Certain information and materials not included in this Official Statement were furnished to Fitch concerning the Bonds. Generally, rating agencies base their assumptions on such information and materials and on investigations, studies and assumptions by the rating agencies. There is no assurance that the rating mentioned above will remain for any given period of time or that such rating might not be lowered or withdrawn entirely by Fitch, if in its judgment circumstances so warrant. Except as set forth above under "FINANCIAL REPORTING AND CONTINUING DISCLOSURE," none of the Issuer, the Underwriters or the Obligated Group has any responsibility to bring to the attention of the holders of the Bonds any proposed revisions
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or withdrawal of the rating on the Bonds. Any such downward change in or withdrawal of such rating may have an adverse effect on the market price of the Bonds.
A further explanation of the significance of the rating may be obtained from the rating agency.
UNDERWRITING
The Bonds are being purchased by B.C. Ziegler and Company (the "Representative") on behalf of itself and SunTrust Robinson Humphrey, Inc., (collectively with the Representative, the "Underwriters"). The Underwriters have agreed to purchase the Bonds at a purchase price of $45,835,832.90 (representing the principal amount of the Bonds minus an underwriters' discount of $495,393.75 and plus original issue premium on the Bonds of $2,296,226.65), pursuant to a Bond Purchase Agreement, entered into by and between the Issuer and the Representative as approved by MJHS (the "Contract of Purchase"). Pursuant to the Contract of Purchase, the Obligated Group has agreed to indemnify the Underwriters and the Issuer against certain liabilities. The Underwriters reserve the right to join with dealers and other underwriters in offering the Bonds to the public. The obligations of the Underwriters to accept delivery of the Bonds are subject to various conditions contained in the Contract of Purchase. The Contract of Purchase provides that the Underwriters will purchase all of the Bonds if any Bonds are purchased.
FINANCIAL ADVISOR
MJHS has retained Public Financial Management, Inc., Miami, Florida, as Financial Advisor in connection with the issuance of the Bonds. The Financial Advisor is not obligated to undertake and has not undertaken to make an independent verification or to assume responsibility for the accuracy, completeness, or fairness of the information contained in the Official Statement. The Financial Advisor did not participate in the underwriting of the Bonds.
ROLE OF BOND TRUSTEE AND MASTER TRUSTEE
The Bank of New York Mellon Trust Company, N.A. has been appointed to serve as Bond Trustee and Master Trustee under the Bond Indenture and Master Indenture. The Bond Trustee and Master Trustee are to carry out those duties it has agreed to under the Bond Indenture and Master Indenture. The Bond Trustee and Master Trustee have not reviewed or participated in the preparation of this Official Statement and assume no responsibility for the contents, accuracy, fairness or completeness of the information given in this Official Statement or for the recitals contained in the Bond Indenture and Master Indenture or for the validity, sufficiency, or legal effect of any of such documents.
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Furthermore, the Bond Trustee and Master Trustee have no oversight responsibility, and are not accountable, for the use or application by Issuer of the proceeds from the sale of the Bonds. The Bond Trustee and Master Trustee have no duty to, have not undertaken to evaluate, and have not evaluated, the risks, benefits, or propriety of any investment in the Bonds and makes no representation, and has reached no conclusions, regarding the investment quality of the Bonds, about all of which the Bond Trustee and Master Trustee express no opinion and expressly disclaims the expertise to evaluate.
MISCELLANEOUS
The references herein to the Act, the Bond Indenture, the Loan Agreement, the Master Indenture, the Mortgage and other materials are only brief outlines of certain provisions thereof and do not purport to summarize or describe all the provisions thereof. Reference is hereby made to such instruments, documents and other materials, copies of which will be furnished by the Bond Trustees upon request for further information.
Any statements in this Official Statement involving matters of opinion, whether or not expressly so stated, are intended as such and not as representations of fact.
The attached APPENDICES A through F are integral parts of this Official Statement and should be read in their entirety together with all of the foregoing statements.
It is anticipated that CUSIP identification numbers will be printed on the Bonds, but neither the failure to print such numbers on any Bond nor any error in the printing of such numbers will constitute cause for a failure or refusal by the purchaser thereof to accept delivery of or pay for any Bonds.
The information assembled in this Official Statement has been supplied by MJHS and other sources believed to be reliable, and, except for the statements under the heading "THE ISSUER" herein and information relating to the Issuer under the headings "LITIGATION – Issuer" and "DISCLOSURE REQUIRED BY FLORIDA BLUE SKY REGULATIONS – Issuer," the Issuer makes no representations with respect to nor warrants the accuracy of such information. MJHS has agreed to indemnify the Issuer and the Underwriters against certain liabilities relating to the Official Statement.
MIAMI JEWISH HEALTH SYSTEMS, INC.
By: /s/ Jeffrey P. Freimark President & Chief Executive Officer
A-2 �
Table of Contents:
The Obligated Group .................................................................................................................... 3�
Background ................................................................................................................................... 6�
Mission & Vision ........................................................................................................................... 7�
History ............................................................................................................................................ 7�
Governance .................................................................................................................................... 9�
Leadership Team ......................................................................................................................... 13�
Employees .................................................................................................................................... 16�
Miami Jewish Health Systems, Inc. ........................................................................................... 16�
Florida PACE Centers, Inc. ....................................................................................................... 25�
Miami Jewish Health Systems Foundation, Inc. ...................................................................... 29�
Summary Financial Information ............................................................................................... 30�
Management Discussion and Analysis ...................................................................................... 38�
Investments .................................................................................................................................. 41�
Pensions ........................................................................................................................................ 42�
Insurance ..................................................................................................................................... 42�
Litigation ...................................................................................................................................... 42�
Future Plans ................................................................................................................................ 42�
A-3 �
The Obligated Group
The Obligated Group consists of the following:
�� Miami Jewish Health Systems, Inc. (“MJHS”) o� Owns and operates:
�� A long term and short term care nursing home with 438 skilled nursing beds.
�� A 32 bed acute care hospital. �� A residential housing unit with independent living rental units and
assisted living rental units. �� An ambulatory health clinic. �� An advanced pain management program - Rosomoff
Comprehensive Rehabilitation Center. �� Managed Care Services providing case management to members of
Molina Healthcare of Florida.
�� Florida Pace Centers, Inc. (“FPC”) o� Four (4) Program for All-Inclusive Care (“PACE”) Centers, a
Medicare/Medicaid capitated program for individuals otherwise requiring a nursing home level of care.
�� Miami Jewish Health Systems Foundation, Inc. o� Supporting organization for the purpose of providing financial assistance
to MJHS.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
A-4 �
MJHS also owns and/or operates or is supported by other entities that are not part of the
Obligated Group and are not jointly and severally obligated on the repayment obligations in respect to the Series 2017 Bonds (“Affiliated Entities”). The Affiliated Entities include the following:
Affiliated Entities
�� Wolf/Cypen Foundation
o� A philanthropic organization operated exclusively for the benefit of MJHS.
�� DGN I, Inc., DGN II, Inc. and DGN III, Inc. o� Own and operate, respectively, 75-unit, 52-unit and 95-unit HUD 202 apartment
buildings, which provide subsidized housing for the elderly.
�� Florida Pathways, Inc.
o� Acts as a holder of a long term land lease for approximately twenty-one acres in Pembroke Pines, Florida, where the facilities of DGN, DGN II and DGN III are located.
Number�of� Number�of� %�of
Units Participants Net�Revenue
Miami�Jewish�Health�Systems,�Inc.�("MJHS")Skilled�Nursing 438 NA 44.6%Acute�Care�Hospital 32 NA 2.1%Independent�Living 95 NA 2.1%Assisted�Living�&�Memory�Care 100 NA 5.8%Ambulatory�Health�Clinic NA 14,048 (1) 1.2%Rosomoff�Comprehensive�Rehabilitation�Center NA 676 (2) 2.8%Managed�Care�Case�Management�Service�Dvision� NA 2,407 (3) 4.7%
Florida�Pace�Centers,�Inc.�("FPC")Main�Campus NA 177 (3) 12.5%Hialeah NA 207 (3) 13.4%Westchester NA 162 (3) 9.6%Miramar NA 2 (3) 0.0%
Miami�Jewish�Health�Systems��Foundation,�Inc NA NA 1.0%
100.0%(1)�Annualized�procedures�as�of�September�30,�2016.
(2)�Annualized�patients�as�of�September�30,�2016.
(3)�Participants�as�of�September�30,�2016.
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�� Stein Gerontological Institute, Inc.
o� Conducts gerontological research and clinical trials to study the biological, psychological and social phenomena associated with cognitive disorders of aging, such as Alzheimer’s.
�� Douglas Gardens Home Care, Inc.
o� Administers a nurse registry program that provides private duty nurses, personal care assistants and companion services to the community and other nursing facilities in Miami-Dade and Broward Counties, Florida.
�� Douglas Gardens Senior Housing, Inc. o� Provides management services to other not-for-profit entities offering senior
housing.
�� Douglas Gardens Acquisitions, Inc. o� Acts as a holding company for a future senior housing project on the Pembroke
Pines property.
�� Douglas Gardens Holding Corp., Inc. o� Supports its parent MJHS by holding the title to property.
�� Douglas Gardens Hospice Inc. o� Former holder of license for hospice care; license sold in 2010. This entity is
expected to be dissolved in the current fiscal year (2017).
�� Douglas Gardens At Coral Way, Inc. o� Former independent diagnostic testing facility that ceased operations in 2009.
This entity is expected to be dissolved in current fiscal year.
THE AFFILIATED ENTITIES ARE NOT MEMBERS OF THE OBLIGATED GROUP AND ARE NOT GUARANTEEING ANY OF THE DEBT INCURRED BY THE OBLIGATED GROUP AS DESCRIBED IN THE FRONT PART OF THIS OFFICIAL STATEMENT. As illustrated in the following organizational chart, the members of the Obligated Group are those entities that appear within the perimeter delineated with a broken line, and the entities affiliated with MJHS that are not members of the Obligated Group are those entities that appear outside the perimeter delineated with a broken line:
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Background
Miami Jewish Health Systems, Inc. (“MJHS”), a Florida non-profit corporation for charitable purposes, was founded in 1940. In 1973, MJHS gained federal tax exempt status under Section 501(a) of the Internal Revenue Code of 1986 (“Code”) by meeting the requirements under the Code’s Section 501(c)(3).
MJHS and its Affiliates are organized and operate to provide residential, healthcare and supportive and community-based services and programs to the elderly and others in need, as well as create research and educational programs designed to foster independent, active and healthy lives for seniors in the community.
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Mission & Vision
Over its more than seventy-five year history, MJHS has grown to its current status as a multi-component health care organization providing an array of services including, but not limited to, independent living, assisted living, skilled nursing, affordable housing, the Medicare/Medicaid Program of All-Inclusive Care for the Elderly (“PACE”), inpatient and outpatient rehabilitation and hospital. MJHS is dedicated to providing care in an empathetic manner where all patients’ lives are respected, enhanced and enriched. MJHS expects to be at the forefront of elder health care as it expands methodologies, technologies and services to meet the health care needs of the elderly. Its mission and vision are:
Mission Statement -- To provide compassionate healthcare through a full range of quality services, guided by research and education, honoring traditional Jewish values of dignity and respect.
Vision -- To be the innovative leader in healthcare, promoting longer, healthier, more enriched lives.
History
The story of MJHS began in the 1930's when Adam Reiss, a German Lutheran, was rescued by a Jewish merchant during an anti-German riot during World War One. Grateful for the rescue, Reiss pledged to donate $10,000 to establish a home for Jewish elderly widows to live. Under Ida Cohen's leadership, the Jewish Home for the Aged (the “Home”) was incorporated on July 25, 1940 and opened on December 18, 1945 in a one-story house in Miami. The following illuminates significant events of MJHS's history:
�� In 1949, the Home purchased a beautiful seven-acre wooded estate in northeast Miami named Douglas Gardens for $210,000. In early 1951, the Home officially relocated from its one-story house to its current location, the Douglas Gardens campus (the “Main Campus”).
�� In 1953, the Home, along with the Greater Miami Jewish Federation, launched a $250,000 capital campaign to fund the construction of the Jack Ablin Memorial Unit, the first facility in the nation specifically designed and equipped to serve the chronically ill elderly.
�� In the years following, the Main Campus was enhanced with several health care Pavilions named in honor of the Home’s supporters: Gus Trau, Baron & Polly de Hirsch Meyer, Sol & Josepha Bloom, Henry & May Heyman and Norman & Rose Lifshitz, all of which facilities provided essential services to the Home’s growing population.
�� In the mid-1960’s, to meet growing resident demand, the Home purchased the abutting Roosevelt Elementary School from the Dade County Public Schools and nearly doubled the acreage of the Main Campus. New buildings were constructed and existing buildings underwent significant renovations expanding the number of residential beds from 105 to 225, making Douglas Gardens the largest not-for-profit institution for the elderly in Florida.
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�� Early in the 1970's, the Home was licensed as the sole nursing facility and hospital in Florida and one of only six in the nation to have this dual designation.
�� Incorporating these significant changes to its branding, in 1973 the Home changed its name to the Miami Jewish Home and Hospital for the Aged, Inc. (“MJHHA”).
�� In 1975, the 120 bed Baron and Poly de Hirsch Meyer Building was constructed, increasing MJHHA's nursing home capacity to 376 residents.
�� In 1981, MJHHA established the Channeling Program; one of the first home and community based healthcare models. Through the provision of services to seniors in their homes, the Channeling Program delayed or prevented thousands of seniors’ admissions to nursing homes. The State of Florida terminated this program in November 2013 and replaced it with the Statewide Medicaid Managed Care Long Term Care Program, in which MJHS continues to participate.
�� In 1993, MJHHA opened the Harold and Patricia Toppel Center for Life Enhancement, a skilled nursing building housing an additional 174 beds, including twenty private Krone Tower Suites and thereby increased its nursing home capacity to 462 residents.
�� In the mid-1990's, The Stein Gerontological Institute (“SGI”) was established as the innovative “think tank” of MJHHA, where new programs, services and products were developed and used to further assist the elderly in living independently.
�� In the early 2000’s, MJHHA further expanded its continuum of care options with the establishment of a hospice program (which was sold in 2010) and Douglas Gardens Home Care, Inc., a nurse registry service that furthered the provision of services to seniors in their own homes.
�� In 2003, MJHHA opened Florida’s first and only Program of All-Inclusive Care for the Elderly (“PACE”), legally named Florida PACE Centers, Inc. (“FPC”). This joint Medicare and Medicaid risk sharing program was and continues to be a model for a community based alternative to nursing home care. Since 2003, FPC has added three more PACE sites in Hialeah, Westchester and Miramar to expand the provision of services to seniors within Miami-Dade and Broward Counties.
�� In 2004, MJHHA opened the Rosomoff Comprehensive Rehabilitation Center, a cutting edge and internationally recognized advanced pain management program servicing people of all ages affected by chronic and debilitating pain.
�� In 2006, MJHHA expanded the scope of its residential living options on a twenty-six acre Douglas Gardens North campus in Pembroke Pines, Florida, with the construction of the Albert and Ann Jacobs Building, a 95-unit HUD Section 202 senior housing apartment complex. Two more HUD Section 202 senior housing buildings were later constructed, the fifty–two unit Colonel Mitchell and Frances Wolfson Building in 2008 and a seventy-five unit building in 2013. MJHS anticipates that it will construct more affordable senior housing in the next year or two on the Douglas Gardens North campus.
�� To reflect the expansion of its products and services, in October 2010, MJHHA changed its name to Miami Jewish Health Systems, Inc. (“MJHS”).
�� In 2010, MJHS partnered with Seasons Hospice and Palliative Care and formed Seasons Hospice and Palliative Care of Southern Florida, Inc. to serve Miami-Dade County, and, in 2015, MJHS partnered with Seasons Hospice and Palliative Care and Atlantic Coast
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Holdings, Inc. to form Seasons Hospice and Palliative Care of Broward County, LLC. to serve Broward County.
�� In 2012, MJHS and Mount Sinai Medical Center created the joint venture corporation Miami Jewish Home Health Agency, Inc. which in 2014 purchased and is currently operating a Medicare and Medicaid certified home health agency known as Home Care Plus, Inc.
�� In 2013, as an outgrowth of its earlier Channeling Program and due to shifts in Florida law, MJHS contracted with Molina Healthcare of Florida to manage patients participating in its Statewide Medicaid Managed Care Long Term Care Program, where MJHS currently manages approximately 2500 patients.
Governance
Miami Jewish Health Systems, Inc. MJHS is governed by a volunteer Board of Directors (“MJHS Board”), consisting of not
fewer than three (3) but no more than twenty (20) Directors at any given time. Directors of the MJHS Board are appointed to serve until the annual meeting of the MJHS Board following their appointment (a period not to exceed twelve (12) months), at which time a Director may be appointed to an initial three (3) year term. Upon expiration of the initial term, the Director may be reappointed for no more than two (2) consecutive three (3) year terms for a total maximum term limit of nine (9) consecutive years subsequent to initial appointment. Directors are divided into three (3) staggered classes so that approximately one-third (1/3) of the Directors are appointed and/or reappointed during the annual meeting of the MJHS Board.
The term limits for Chairman of the Board and President of MJHS are in accordance with specific officer term guidelines set forth in the Bylaws of MJHS and are separate from the term limits for Directors of the MJHS Board. Officers are appointed by the MJHS Board at its annual meeting and continue in office until the selection of successors. Officers may be, but need not be, Directors of the MJHS Board.
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The current MJHS Board of Directors is set forth below:
All current MJHS Board Directors are eligible for reappointment to the MJHS Board, but
there is no assurance such Directors will be reappointed. Leslie-Marie Torres serves as Secretary to the MJHS Board and John F. Kelleher serves
as Treasurer to the MJHS Board. Neither are Directors of the MJHS Board. The MJHS Board includes the following special committees: Finance Committee. The Finance Committee provides assistance with respect to the
policies, practices and strategies that relate to the financial management of MJHS. Duties include, but are not limited to, review and recommendations regarding the annual budget and capital budget, debt structure, financial aspects of proposed transactions and other key financial decisions.
Investment Committee. The Investment Committee ensures that investment practices are effective and aligned with proven practices, accreditation standards and other guidelines and requirements applicable to nonprofit organizations under Internal Revenue Code, Section 501(c)(3).
Name Occupation Current
Term Expires Jay Solowsky, Esq., Chairman Partner, Solowsky Allen 10/2017
Jeffrey Rittenberg, Vice Chairman CEO, SurfMed 10/2017
Stephen H. Cypen, Esq. Principal, Cypen & Cypen 10/2019
Wayne A. Cypen, Esq. Principal, Cypen & Cypen, Retired 10/2018
Ronald Fieldstone, Esq. Partner, Arnstein & Lehr, LLP 10/2019
Jeffrey P. Freimark President & CEO, MJHS 10/2018
Robert Goldszer, MD CMO, Mount Sinai Medical Center 10/2019
Samuel Harte Retired; Media Entrepreneur 10/2017
Jane Kahn Jacobs Philanthropist 10/2019
Alfred J. Katzin, CPA Principal, Levenson, Katzin, & Ballotta, P.A. 10/2018
Carol Lang Independent Financial Consultant 10/2019
John Richard President/CEO, Arsht Center for the Arts 10/2018
Ora Lea Strickland PhD Dean and Professor, FIU College of Nursing
and Health Sciences 10/2017
Arthur Unger, CPA Managing Director, EisnerAmper Accountants
and Advisors 10/2019
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The MJHS Board includes the following standing committees:
Quality Oversight and Risk Management Committee. For risk management purposes, the Quality Oversight and Risk Management Committee ensures that risk management policies, including the development of insurance and asset protection strategies, are effective and aligned with proven practices, accreditation standards and other applicable standards and requirements. For quality oversight purposes, the committee assists MJHS in its efforts to monitor and provide leadership with respect to the quality of care, patient safety and the appropriate environment of care.
Nominating, Compensation and Governance Committee. The purposes of the Nominating, Compensation and Governance Committee include to: (1)(a) oversee compensation policies, plans and programs and to review and approve the compensation to be paid to MJHS’ executive officers and Directors; (b) administer and implement incentive compensation plans; (2) identify and review individuals proposed to become Directors and recommend Director nominees for election and appointment; (3) consider and make recommendations concerning the size and composition of the MJHS Board and MJHS Board committee structure; and (4) develop and recommend corporate governance principles applicable to MJHS.
Audit and Compliance Committee. The Audit and Compliance Committee oversees MJHS’ internal controls over financial reporting matters, the integrity of MJHS’ financial statements and accounting and financial reporting processes, financial statement audits and relationship with outside auditors and such other matters delegated to the Committee by the MJHS Board.
All members of MJHS Board committees are Directors of the MJHS Board.
Florida Pace Centers, Inc. (“FPC”)
FPC, a subsidiary of MJHS, is governed by a volunteer Board of Directors (the “FPC
Board”), consisting of not fewer than three (3) Directors. The FPC Board is appointed annually by the MJHS Board. The FPC Board shall at all times contain among its number one or more participant representatives, as provided by applicable federal regulations. A Director of the FPC Board shall hold office until the next annual meeting of the MJHS Board or until the appointment and qualification of a successor Director. Officers are appointed by the FPC Board at its Annual Meeting and continue in office until the selection of successors. Officers may be, but need not be, Directors of the FPC Board.
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The current FPC Board is set forth below:
___________________ (1) Individual also serves on the MJHS Board.
Leslie-Marie Torres serves as Secretary to the FPC Board and John F. Kelleher serves as
Treasurer to the FPC Board. Neither are members of the FPC Board.
Miami Jewish Health Systems Foundation, Inc. The MJHS Foundation is governed by a volunteer Board of Directors (“MJHS
Foundation Board”), consisting of not fewer than three (3) Directors. Directors of the MJHS Foundation Board are appointed to serve until the next annual meeting of the MJHS Board (a period not to exceed one year or 12 months), at which time the Director may be appointed to an initial three (3) year term and, upon expiration of the initial term, may be reappointed for no more than two (2) consecutive three (3) year terms for a total maximum term limit of nine (9) consecutive years subsequent to initial appointment. Directors are divided into three (3) staggered classes so that approximately one-third (1/3) of the Directors are appointed and/or reappointed during each annual meeting of the MJHS Board.
The term limits for Chair and President of the MJHS Foundation Board are in accordance
with specific Officer term guidelines set forth in the MJHS Foundation Bylaws and are separate from the MJHS Foundation Board term limits. Officers of the MJHS Foundation Board are appointed by the MJHS Foundation Board at its annual meeting and continue in office until the selection of successors. Officers may be, but need not be, Directors of the MJHS Foundation Board.
Name Occupation
Current Term
Expires
Jeffrey P. Freimark, Chairman(1) President & CEO, MJHS 10/2017
Thelma Gibson Retired Nurse & Civic Maker 10/2017
Sidney Goldin Retired 10/2017
Linda Quick President, Quick Bernstein Connections
Group 10/2017
Jayson Rittenberg President, SurfMed 10/2017
Arthur Unger, CPA(1) Managing Director, EisnerAmper
Accountants and Advisors 10/2017
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The MJHS Foundation Board includes the following standing committees: Board Development Committee. The Board Development Committee takes
responsibility for the recruitment, retention, training and evaluation of Directors. Investment, Advisory & Allocations Committee. The Investment, Advisory and
Allocations Committee investigates and recommends appropriate investments for funds and other assets of the Foundation. It also investigates and recommends appropriate contributions, grants and other Foundation expenditures.
The current MJHS Foundation Board is set forth below:
_______________________ (1) Individual also serves on the MJHS Board.
Leslie-Marie Torres serves as Secretary to the Foundation Board and John F. Kelleher
serves as Treasurer. Neither are members of the Foundation Board.
Leadership Team
The leadership team of MJHS includes various individuals who are responsible for overseeing all or some portion of the operations of the Obligated Group and Affiliated Entities. These individuals include:
Name Occupation
Current Term
Expires Louis Wolfson, III, Chairman Partner, Pinnacle Housing Group 10/2018
Stephen H. Cypen(1) Attorney, Cypen & Cypen 10/2018
Jeffrey P. Freimark(1) President, & CEO, MJHS 10/2017
Samuel Harte(1) Retired; Media Entrepreneur 10/2018
Jane Kahn Jacobs Philanthropist 10/2019
Alfred J. Katzin, CPA(1) Principal, Levenson, Katzin, & Ballotta, P.A.
10/2016
Hiram Marrero Executive Vice President of Operations, Lockton Companies
10/2017
Jay H. Solowsky, Esq.(1) Partner, SolowskyAllen 10/2019
Arthur Unger, CPA(1) Managing Director, EisnerAmper Accountants and Advisors
10/2019
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Jeffrey P. Freimark, President and Chief Executive Officer, age 61. Mr. Freimark joined MJHS in 2008 as President and Chief Executive Officer and as a Director of the MJHS Board. Mr. Freimark has the responsibility for managing MJHS and each of its Affiliated Entities. Recently he was named one of the Top 10 CEOs in Miami-Dade County by the South Florida Business Journal. Prior to his career with MJHS, Mr. Freimark was Executive Vice President, Chief Financial and Chief Information Officer for Intelsat, the largest operator of commercial satellites worldwide. This followed a position as the Executive Vice President, Chief Financial and Chief Information Officer for Beverly Enterprises – one of the largest national operators of long term care facilities, rehabilitation, hospice and other healthcare segments. In addition, Mr. Freimark held the position of Senior Executive Vice President and Chief Financial Officer for OfficeMax. Mr. Freimark holds CPA licenses in Florida and New Jersey. He is also licensed to practice law in New Jersey. He is a graduate of New York Law School (JD), New York University Stern School of Business (MBA) and the University of South Florida (BA).
John F. (“Jack”) Kelleher, Vice President and Chief Financial Officer, age 59. Mr.
Kelleher joined MJHS in 2011 as Executive Director of Financial Operations and was promoted to Chief Financial Officer in January 2014. Mr. Kelleher is responsible for financial and regulatory reporting, analyzing financial activities, capital and operational budget management, capital financing, revenue management, insurance acquisition and procurement. Prior to joining MJHS, Mr. Kelleher served as Chief Financial Officer of Medical Business Service, Inc., a regional physician management company in the Southeast. Mr. Kelleher also served as CFO-Florida, Divisional CFO and Regional Director of Business Services for American Medical Response, the largest provider of ambulance services in the United States. Mr. Kelleher graduated with a BS in Accounting from the University of Scranton and holds a CPA license from the State of Florida. He is affiliated with the AICPA, FICPA and HFMA.
Brian J. Kiedrowski, M.D., Senior Vice President and Chief Medical Officer, age 51.
Dr. Kiedrowski leads the MJHS team of physicians, works closely with the nursing staff, risk management and compliance departments and builds relationships with healthcare professionals in the community. Dr. Kiedrowski is board certified in Geriatric Medicine, Internal Medicine and Hospice/Palliative Care. Prior to joining MJHS, he was Vice President and Medical Director at Catholic Hospice. He also worked at Moorings Park Continuing Care Retirement Community, the Wellness Clinic and Skilled Nursing Unit at Glenview Residences and had his own private practice in Naples, Florida. Dr. Kiedrowski is a graduate of the University of Wisconsin Medical School (MD).
Marc E. Agronin, M.D., Vice President – Behavioral Health and Clinical Research,
age 51. Dr. Agronin is a board-certified adult and geriatric psychiatrist. Dr. Agronin's clinical experience includes adults and elderly within the entire range of psychiatric illnesses. Dr. Agronin trained in psychiatry at Harvard Medical School and later completed a fellowship in geriatric psychiatry at the VA Medical Center in Minneapolis, MN. He has written numerous books and articles including “Alzheimer's Disease and Other Dementias, A Practical Guide, 3rd Edition” and the acclaimed ”How We Age: A Doctor's Journey into the Heart of Growing Old” featured on NBC's The Today Show and NPR's Talk of the Nation. Dr. Agronin currently writes a regular blog for the Wall Street Journal’s The Experts and lectures extensively around the country, including annual presentations at the U. S. Psychiatric Congress. Dr. Agronin is a
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graduate of Harvard University with a degree in psychology and philosophy and received his medical degree from the Yale School of Medicine.
Paul Mathew “Mat” Robie, Vice President – Business Strategy and Development,
age 43. Mr. Robie is responsible for all aspects of MJHS' business development initiatives including new market analysis, financial feasibility studies and the development of new business proposals. Prior to joining MJHS, Mr. Robie oversaw executive management and strategic alignment for United HomeCare Services, Inc. He also served as Vice President of Operations for Centene Corporation and Executive Director at Schaller Anderson, an Aetna Company, both of which are national multi-line healthcare enterprises that provide programs and related services to under-insured and uninsured individuals through the establishment of local health plans in the government healthcare sector. Mr. Robie is a graduate of the University of Phoenix (AS).
Churé Gladwell, Vice President and Chief Development Officer, age 60. Ms. Gladwell
is responsible for overseeing all gifts, campaigns and donations to the Miami Jewish Health Systems Foundation, Inc., in addition to maintaining a major gift prospect pool of several hundred donors. Ms. Gladwell brings more than twenty-five years of experience in fundraising and philanthropy to the Foundation, including managing one of the largest public-private capital campaigns in the history of Miami-Dade County. Prior to joining MJHS, Ms. Gladwell worked for the Adrienne Arsht Center for the Performing Arts as Senior Director of Advancement. She has also been a member of the Association of Fundraising Professionals (AFP) since 1994 and served on AFP Miami's Board of Directors since 2012.
Dana Kulvin, J.D., M.P.H., Vice President – Legal and Compliance, age 48. As
general counsel and compliance officer, Ms. Kulvin brings more than twenty years of academic and professional law experience to this position including regulatory healthcare, ADA (Americans with Disabilities Act) compliance, plus HIV and AIDS advocacy. Before joining MJHS initially as a Manager, for six years she was an Adjunct Professor at St. Thomas University's School of Law teaching Legal Research and Writing and Appellate Advocacy. In a prior role as a Legal Editor of various newsletters, over a six year period she published hundreds of articles on healthcare compliance in the areas of EMTALA, HIPAA, ambulatory surgery and Medicare regulation for different healthcare sectors. Ms. Kulvin received her Bachelor of Arts from Barnard College, Columbia University and her J.D. and M.P.H. from Boston University.
Elisa R. Hernandez, SPHR, Vice President – Human Resources, age 50.
Ms. Hernandez oversees all aspects of Human Resources, including recruitment of talent, staff development, training, compensation and benefits administration, as well as HR Information Systems. She brings over twenty years of experience in the field of human resources. Prior to joining MJHS, Ms. Hernandez was the Vice-President of H.R. and Payroll at Sunrise Sport & Entertainment. She received her BS in Professional Management from Nova Southeastern University and has been a Certified Senior Professional in Human Resources since 2002.
Cliff Bauer, Vice President of Government Relations and Administration and President
of FPC, age 63. Mr. Bauer is responsible for the expansion of the PACE Program and representation of MJHS in local, state and national trade associations. Prior to his current position at MJHS, Mr. Bauer served as MJHS’ Chief Operating Officer responsible for the nursing home, hospital, residential living and PACE programs. In total, Mr. Bauer has forty
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years of healthcare management experience, with twenty years within South Florida working in a variety of healthcare executive positions. Mr. Bauer also provided consultancy in healthcare association management, Medicare Advantage HMO programs and Public Health Department grant program implementation. Mr. Bauer has a BA from the University of Missouri and a Master's in Healthcare Administration from St. Louis University.
Jason Pincus, Executive Director of Operations, age 42. Mr. Pincus serves as the
Nursing Home Administrator and is responsible for all aspects of the daily nursing home operations. Mr. Pincus' original position at MJHS was as a Nursing Home Administrator intern and he has since held various management positions within the organization. Prior to his current role, since 2013 he served as the Executive of Senior Living responsible for the independent living, assisted living and three HUD Section 202 properties. During his time away from MJHS, Mr. Pincus served as Deputy Executive Director for Elderly Housing Development and Operations Corporations where he oversaw over 50 HUD Section 202 properties. Mr. Pincus has a degree in Business Management and Gerontology from the University of South Florida and an MBA in Health Care Administration from Nova Southeastern University.
Joyita Garg, Executive Director of Florida PACE Centers, age 40. Ms. Garg is
responsible for all aspects of the daily operations of the four Florida PACE Center, Inc. sites. She joined the organization in 2013 to serve as the PACE Hialeah Center Director where she led an inter-disciplinary team managing the medical, functional and social aspects of over 200 participants. Prior to joining MJHS, Ms. Garg was Project Director for the South Florida Hospital and Healthcare Association. Some of her projects were aimed at improving the health status of the community like assisting physicians with adoption and implementation of electronic health records for meaningful use. Ms. Garg is a graduate of the University of Miami Executive MBA in Healthcare Management and Policy program and has a post-graduate diploma in Marketing from Symbiosis Institute of Management Studies and Bachelors of Science in Chemistry from Delhi University in India.
Employees
As of September 30, 2016, the Obligated Group employed 900 full-time equivalents. No employees are represented by unions. Miami Jewish Health Systems, Inc.
The Main Campus of MJHS is located on the original Douglas Gardens campus, approximately twenty-one acres at 5200 NE 2nd Avenue in Miami, Florida, 33137. It is bordered to the south by the Miami Design District and the Buena Vista Neighborhood, both creative areas and shopping destinations dedicated to innovative fashion, design, art, architecture and dining. To the north of MJHS is Little Haiti, the cultural heart of Miami’s Haitian community, an area boasting art galleries, books and music stores and dance and theatrical performance venues.
The following MJHS health and residential service centers on the Main Campus are part
of the Obligated Group:
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1.� 438 bed skilled nursing bed facility (“Nursing Home”) in the Toppel, Meyer and Chernin Buildings
2.� 32 bed Medicare certified specialty hospital unit (“Douglas Gardens Hospital” or “DGH”)
3.� Independent and Assisted Living rental units
a.� 95 rental Independent Living Units (“Irving Cypen Tower”)
b.� 81 residential-style Assisted Living Units (“Hazel Cypen Tower”)
c.� 19 memory support Assisted Living Suites (“Memory Support Units”)
4.� Ambulatory Health Clinic
5.� Advanced pain management program (“Rosomoff Comprehensive Rehabilitation Center”)
6.� Managed Care Services providing case management for Molina Healthcare of Florida
Skilled and Long Term Care Nursing Home
The Nursing Home consists of 309 rooms containing 180 private nursing rooms and 129 semi-private nursing rooms for a total of 438 beds within the Toppel, Meyer and Chernin Buildings. Ten beds are leased to a joint venture partner, Seasons Hospice and Palliative Care of Southern Florida, Inc., and are utilized as part of an independent inpatient hospice unit. Sixteen beds are currently inactive due to renovation to adjoining areas. The remaining 412 beds are available to serve the Main Campus community and surrounding community. MJHS has a two star rating under the CMS Five-Star Quality Rating. Recently, MJHS received the bronze award for quality by the American Health Care Association’s National Quality Award Program.
Skilled�Nursing�Unit�Type Number�Square�Footage�
Private�–�Suite� 20 377�
Private�–�Room� 160 240�
Semi��Private�Room 129 480�
��Total/Weighted�Avg. 309 349�
MJHS has obtained Medicare certification for all its beds in the Nursing Home, as well as Medicaid certification for 388 of the beds. The Nursing Home is accredited by the Agency for Health Care Administration (“AHCA”).
Summarized in the tables below are the occupancy rates and payer mix of the Nursing
Home for the last three (3) Fiscal Years:
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_____________________________________
(1) Three�months�ended�September�30,�2016.
Douglas Gardens Hospital
Douglas Gardens Hospital (“DGH”) is a Medicare certified thirty-two bed acute care non-surgical hospital. With its small size, DGH is able to provide a high degree of physician and nurse attentiveness, with a low patient to nurse ratio. DGH is accredited by the Joint Commission. DGH is available to MJHS residents, patients, hospice patients, tenants and FPC participants. DGH staff provides an array of services including, but not limited to, blood transfusions, intravenous medication administration, cardiac monitoring, diabetes and pneumonia treatment and patient observation.
The following tables describe the DGH average daily census (“ADC”) and payer mix for
the last three (3) Fiscal Years:
�� For�Year�Ending�June�30,� ��� 2014 2015 2016� 2017(1)
Skilled�Nursing�Average�Occupancy� 94% 96% 98%� 98%
For�Year�Ending�June�30,�Percentage�of�Occupancy�by�Level�of�Care� 2014 2015 2016� 2017(1)�
Short�Stay�Skilled�Nursing�Care� 18.1% 19.0% 18.8%� 20.0%Custodial�Long�Term�Care� 81.9% 81.0% 81.2%� 80.0%
��� For�Year�Ending�June�30,�Payer�Mix� 2014 2015 2016� 2017(1)
Medicare� 20% 21% 22%� 21%Medicaid� 58% 58% 58%� 57%Other���Hospice/PACE� 9% 11% 10%� 12%Managed�Care� 6% 7% 7% 8%Private�Pay� 5% 3% 3% 2%Commercial�Insurance� 1% 1% 0% 0%
TOTAL� 100% 100% 100%� 100%
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�� For�Year�Ending�June�30,�2014 2015 2016 2017(1)�
DGH�Average�Daily�Census� 7.09 6.01 5.54 4.80�����
For�Year�Ending�June�30,� �Payer�Mix� 2014 2015 2016 ���������2017(1)�
Workers�Compensation� 46.0% 48.9% 50.7% 23.4%Medicare� 30.0% 30.6% 25.0% 48.7%PACE� 18.2% 12.7% 21.7% 24.9%Seasons� 0.3% 0.9% 0.0% 0.0%Other� 5.5% 6.9% 2.6% 3.0%
�TOTAL� 100.0% 100.0% 100.0% 100.0%_____________________________________
(1) Three�months�ended�September�30,�2016.�The�workers�compensation�census�was�lower�as�compared�to�the�other�payers�
because�summer�months�normally�tend�to�be�slow�for�the�advanced�pain�management�program.��Workers�compensation�census�was�higher�than�previous�year�same�period.
Independent Living Units
Irving Cypen Tower is an eight story, 96,815 sq. ft. structure with ninety-five rental Independent Living Units and additional common areas. The common areas include a central gathering place, multi-purpose room, main dining room, private dining room, computer room, library and multi-media room. Transportation is available for shopping, banking and medical appointments. One surface parking space is provided with each Independent Living Unit at the request of the resident.
Tenants pay monthly rental fees under a lease, which include the dwelling and two meals per day. Tenants must be capable of living independently without nursing care except that which may be provided by independently contracted home and community based providers. Each Independent Living Unit is furnished with floor coverings, window coverings, self-defrosting refrigerators and freezer, range/oven, microwave oven, garbage disposal, emergency call system, fire sprinkler system and a telephone/data communication port. All utilities, except telephone, and expanded or premium cable television services, are included in the monthly rental fee for the Independent Living Units.
Additional amenities are available on the Main Campus for tenants' enjoyment such as a
library, community center/synagogue/interfaith religious services, beauty and barber shop, dining room, arts and crafts room, fitness center, accessible swimming pool and on-site comprehensive
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medical services. MJHS’ ambulatory clinic maintains contracts and agreements with a number of specialty physicians to address the medical needs of the Main Campus population. MJHS employs physicians and advanced registered nurse practitioners available to take care of medical needs or to arrange to have tenants transferred to an appropriate medical facility, if necessary. Physician services may be paid by the tenant and/or responsible party, Medicaid, Medicare or other third parties. The typical lease is annual but has an automatic renewal clause. Irving Cypen Tower also sometimes offers short term leases.
Irving Cypen Tower has twelve hotel rooms for daily rental by families, patients
receiving treatment on the Main Campus or short term residents. The current daily rate is $140 per day which includes breakfast.
The following tables provide a summary describing the available Independent Living Units and the current monthly rental fees, as well as the average occupancy rates for the Independent Living Units during the last three (3) Fiscal Years:
Individual�Living�Unit�Type�Number�of�Units
Approximate�Square�Footage�
Monthly�Rental�Fee(1)
Studio� 42 450 $2,657���$2,114
One�Bedroom� 50 550 $2,760���$2,328
Two�Bedroom� 3 1,000�–�1,100� $5,165���$4,769
��Total/Weighted�Avg.� 95 521 $2,514�________________________________________
(1)� Second�person�pays�an�additional�monthly�fee�of�$750.�
�� For�Year�Ending�June�30,��2014 2015 2016� 2017(1)
�Independent�Living���Average�Occupancy� 76% 79% 80%� 67%
_____________________________________ (1)
Three�months�ended�September�30,�2016.��The�seasonal�impact�of�winter�residents�is�not�included�in�the�census.
Assisted Living Units and Memory Care Units
Hazel Cypen Tower is a six-story building with eighty-one rental Assisted Living Units and nineteen Memory Support Units. The Assisted Living Units are private apartments designed to foster continued independence of the tenant who requires varying amounts of assistance with activities of daily living. The Units have kitchenettes with microwave oven, full bath/shower, floor coverings, window coverings, emergency call system, fire sprinkler system and a telephone/data communication port. Hazel Cypen Tower’s common areas include a library,
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community center/synagogue/interfaith religious services, gathering area, beauty and barber shop, dining room, arts and crafts room, fitness center with ramp accessible swimming pool and on-site comprehensive medical services. The Memory Support Units are either private suites with full baths furnished with amenities similar to the Assisted Living Units but without kitchenettes or two bedrooms to accommodate two individuals with full baths furnished with amenities similar to the Assisted Living Units but without kitchenettes. The Memory Support Units have secured access and separate common areas which include similar amenities as the Assisted Living Unit common area.
Tenants pay monthly rental fees under a lease, which includes the apartments and three
meals per day. In addition, tenants can pay a monthly fee for assistance in connection with activities of daily living such as bathing, dressing, medication management or any other assistance required. All utilities, except telephone, and expanded or premium cable television services, are included in the monthly rental fee for the Assisted Living Units. Transportation is available for shopping, banking, and medical appointments. Tenants must be capable of living independently without nursing care except that which may be provided in connection with assistance with activities of daily living and which may be provided by independently contracted home and community based providers. Hazel Cypen Tower also sometimes offers short term leases.
Additional amenities are available to tenants within the Main Campus and tenants have
access to on-site comprehensive medical services. MJHS ambulatory health clinic maintains
contracts and agreements with a number of specialty physicians to address the medical needs of residents. MJHS employs physicians and advanced registered nurse practitioners available to take care of medical needs or to arrange to have tenants transferred to an appropriate medical facility, if necessary. Physician services may be paid by the tenant and/or responsible party, Medicaid, Medicare or other third party.
Hazel Cypen Tower has eight hotel rooms available for daily rental by family, patients receiving treatment on the Main Campus or short term residents. The current daily rate is $140 per day which includes breakfast.
The following tables provide a summary description of each of the available Assisted Living and Memory Care Units and Monthly Rental Fees, as well as the historical average occupancy rates for the Assisted Living and Memory Care Units over the last three (3) Fiscal Years:
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Memory�Care�&�Assisted�Living�Unit�TypeNumber�of�Units
Approximate�Square�Footage�
Monthly��Rental�Fee�
Memory�Care���One�Bedroom� 15 450 $5,397���$5,181
Memory�Care���Two�Bedroom� 4 900 $4,564*
Assisted�Living���One�Bedroom� 77 450 $5,234�$4,169
Assisted�Living���Two�Bedroom� 4 900�1000 $5,905�
Assisted�Living�Total/Weighted�Avg.� 100 500 $4,516���*�per�person��
�
�� For�Year�Ending�June�30,�Average�Occupancy� 2014 2015 2016 2017(1)
Assisted�Living�Units� 87% 91% 91% 91%�
Memory�Care�Units� 90% 91% 90% 90%��� � � � ��
_____________________________________ (1) Three�months�ended�September�30,�2016.
Ambulatory Health Clinic
The Ambulatory Health Clinic has ten exam rooms accommodating fifteen physicians who provide medical services to residents, patients and tenants on the Main Campus and others within the surrounding community. Services include physical exams and specialized physician visits and procedures in the following areas:
�� Cardiovascular care
�� Dental
�� Dermatology
�� Ear, nose and throat care
�� Eye care
�� Endocrinology and diabetes care
�� Gastro-intestinal care including swallowing evaluation services
�� Internal medicine
�� Nephrology
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�� Neurology
�� Orthopedic care
�� Ophthamology
�� Psychiatric and psychological care
�� Pulmonary
�� Radiology
�� Rheumatology
�� Urological care
The following tables contain the average daily census, total procedures and payer mix for
the Ambulatory Health Clinic for the last three (3) Fiscal Years:
�� For�Year�Ending�June�30,�2014 2015 2016� 2017(1)
Average�Daily�Census� 35.16 42.01 39.36� 33.82
Total�Procedures�� 12,832 15,333 14,365� 3,512_____________________________________
(1) Three�months�ended�September�30,�2016.�
Ambulatory�Health�Clinic� For�Year�Ending�June�30,����
Payer�Mix� 2014� 2015� 2016� 2017(1)�Medicare� 91% 84% 82%� 73%Other�� 3% 8% 9%� 10%Managed�Care� 2% 5% 5%� 11%Private�Pay� 2% 1% 2%� 2%Commercial�Insurance� 2% 2% 2%� 4%TOTAL� 100% 100% 100%� 100%_____________________________________ (1)�Three�months�ended�September�30,�2016.��The�1st�quarter�of�FY17�reflects�the�impact�of�40�residents�converting�to�Optum�from�Medicare.�
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Advanced Pain Management Program - Rosomoff Comprehensive Rehabilitation Center
The Rosomoff Comprehensive Rehabilitation Center (“Rosomoff”) treats patients who have complex and chronic pain, including amputees and patients with spinal cord injuries and all types of chronic pain within the neck, back and extremities. Rosomoff employs a comprehensive multidisciplinary team of specialists and, by using a non-surgical intensive, integrated approach, helps patients become pain and narcotic-free. Specialties include physical medicine and rehabilitation, psychiatry, pain management, physical therapy, neuromuscular massage, acupuncture and vocational counseling. Having treated more than 30,000 patients to date, Rosomoff is certified as one of the American Pain Society's first Centers of Excellence.
Based on the patient’s condition, treatments are performed inpatient or outpatient or a
combination of both. The typical treatment runs four to six weeks at a cost of $40,000 to $50,000. Primarily workers compensation insurance covers these treatments, along with certain commercial insurance and self-pay.
The following table contains the admission status for Rosomoff patients for the last three
(3) Fiscal Years:
ROSOMOFF�COMPREHENSIVE�REHABILITATION�CENTER� For�Year�Ending�June�30,��
��Patient�Census� 2014� 2015� 2016� 2017(1)�
Outpatient� �������������640�
�������������586�
��������������579��
�������������161�
Inpatient� �������������63�
�������������45�
��������������41��
�������������8�
TOTAL� �������������703�
�������������631�
��������������620��
�������������169�
_____________________________________ (1)�Three�months�ended�September�30,�2016.���
Managed Care Services for Molina Healthcare of Florida
MJHS’ Managed Care Services provides case management services to approximately 2,100 Medicaid waiver and diversion program recipients in the community and 400 nursing home residents, all of whom are managed care members of Molina Healthcare of Florida. The objective of the program is through case management oversight, to allow frail elderly to age in place at home by preventing their premature or unnecessary institutionalization. Each case manager is responsible for approximately sixty members and performs a complete assessment of the psychosocial, medical and environmental surroundings of the member. Based on the assessment and eligibility, the case manager obtains medical authorization to procure necessary
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services and supplies for the member and then follows-up at least monthly. The case manager and administrative team also assist the member administratively in determining eligibility for Medicaid certification or recertification.
Florida PACE Centers, Inc.
PACE is the Program of All Inclusive Care for the Elderly (“PACE”), a Medicare health care program that provides comprehensive medical and social services to certain frail, community-dwelling elderly individuals, most of whom are dually eligible for Medicare and Medicaid benefits. PACE is a program under Medicare and states can elect, as Florida has done, to provide PACE services to Medicaid beneficiaries as an optional Medicaid benefit. For most participants, the comprehensive service package enables them to remain in the community rather than receive care in a nursing home. Under the capitated managed care premium, PACE assumes all financial risk for the participant’s medical and other care without limits in amounts, duration or scope of services, allowing providers to deliver all services participants need rather than only those reimbursable under Medicare and Medicaid fee-for-service plans.
In 2003, MJHS opened the first PACE program in the State of Florida under the name
Florida PACE Centers, Inc. (“FPC”), which is exempt from federal income taxation under Section 501(a) of the Code by meeting the requirements of Section 501(c)(3) of the Code. Today, FPC has four operating facilities (Miami-Main Campus, Hialeah, Westchester and Miramar) serving a total of nearly 550 participants annually (Florida limits the number of participants in each program). An interdisciplinary team of health professionals provides PACE participants with coordinated care. To be eligible for PACE, one must be age 55 or older, live in the service area of a PACE organization, qualify for nursing home care and be able to live safely in the community.
The map below shows FPC’s current service areas:
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The following tables present the average census, capitation rates and payer mix for FPC during the last three (3) Fiscal Years:
_____________________________________ (1) Three�months�ended�September�30,�2016.�
(2) Miramar�PACE�Center�opened�September�2016.
Primary Service Area
The primary service area for the Main Campus is within a ten mile radius of the Main Campus with a secondary area within a twenty mile radius of it. A majority of the tenants relocating to the Independent or Assisted Living Units are between the ages of 75 to 85 and are from the primary and secondary service areas. Most patients admitted to the skilled nursing facility are above the age of 65 and after skilled care return to homes primarily in the primary or
3�Months�Thru�9/30
PACE�Average�Census 2014 2015 2016 FY�2017(1)
�����Main�Campus 204 161 167 177
�����Hialeah 177 189 195 207
�����Westchester 33 100 129 162
�����Miramar(2) NA NA NA 2
Total Average Census 414 450 491 548
3�Months�Thru�9/30
PACE�Average�Capitation�Rates 2014 2015 2016 FY�2017(1)
Medicaid�only $4,312.00 $4,372.63 $5,284.93 $5,284.93
Medicaid�dual $2,441.44 $2,484.70 $2,529.24 $2,529.24
Medicare�Part�C $2,893.56 $2,911.96 $3,331.41 $3,370.65
Medicare�Part�D $595.91 $637.44 $643.63 $613.24
3�Months�Thru�9/30
Percentage�by�Payer 2014 2015 2016 FY�2017(1)
State�Capitation 50% 49% 44% 47%
Medicare�Capitation 42% 44% 46% 46%
Medicare�Part�D 7% 7% 9% 7%
Private�Pay 0% 1% 0% 0%Total 100% 100% 100% 100%
For�Year�Ending�June�30,�
For�Year�Ending�June�30,�
For�Year�Ending�June�30,�
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secondary service area. A majority of the long term care admissions are above the age of 65 and relocate to the Main Campus from both the primary and secondary areas. Hospital admissions are mostly made up of residents and tenants living on the Main Campus, FPC participants on the Main Campus and patients participating in the Rosomoff advanced pain management program who do not live within the primary or secondary service areas. The ambulatory health clinic typically serves the residents, patients and tenants of the Main Campus. Managed Care Services serves Molina Healthcare of Florida members throughout all of Miami-Dade County.
FPC participants are aged 55 and older and reside within geographic catchment zip code
areas defined by CMS, a majority of which are within the primary and secondary areas.
Competition
Operations within the Obligated Group face competition from similar facilities operating in or near its market area and may face additional competition in the future as a result of the construction of new facilities and expansion of existing facilities. There are a substantial number of assisted living facilities ranging from small, four to six beds in private homes, to large facilities with over 100 beds within Miami-Dade County, including the Palace in Coral Gables, Pointe of North Gables, Am Grand Court Lakes, All American Adult Congregate Living Facility and Eden Gardens A.L.F. As MJHS’ independent and assisted living units are the only kosher facilities in the area, they are favored by many Jewish consumers. There are ten nursing homes (listed in table below) within a five mile radius of the Main Campus that compete for similar clientele. MJHS staffs liaisons within local hospitals including Mount Sinai Medical Center, University of Miami Medical Center, Jackson Memorial Hospital, North Shore Hospital and Aventura Hospital to facilitate the regular patient referrals made to MJHS. Management believes MJHS is well positioned in its market area due to its solid history of providing quality care, relationships with local hospital and healthcare networks and its expanding suite of services to respond to existing and any future competition. The Main Campus has experienced relatively stable occupancy levels over the past four Fiscal Years as reflected in the tables set forth above.
NURSING�HOME�FACILITIES�WITHIN��FIVE�MILES�OF�MJHS� Number�of�Beds�
MIAMI�SHORES�NURSING�AND�REHAB�CENTER 99�UNIVERSITY�PLAZA�REHABILITATION�AND�NURSING�CENTER 148�JACKSON�PLAZA�NURSING�&�REHABILITATION�CENTER 120�TREASURE�ISLE�CARE�CENTER� 176�UNITY�HEALTH�AND�REHABILITATION�CENTER 294�FRANCO�NURSING�&�REHABILITATION�CENTER 120�JACKSON�MEMORIAL�LONG�TERM�CARE�CENTER 180�SOUTH�POINTE�PLAZA�REHABILITATION�AND�NURSING�CENTER 230�VICTORIA�NURSING�&�REHABILITATION�CENTER,�INC 264�RIVERSIDE�CARE�CENTER�� 120�
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Miami Jewish Health Systems Foundation, Inc.
The Miami Jewish Health Systems Foundation, Inc. (“MJHS Foundation”), a Florida nonprofit corporation was formed in 2003. The MJHS Foundation is exempt from federal income taxation under Section 501(a) of the Code as an organization described in Section 501(c)(3) of the Code and it is not a private foundation but a “supporting organization” within the meaning of Section 509(a)(3) of the Code. In addition, the MJHS Foundation is a controlled entity of MJHS under IRS Prop. Reg. § 1.414(c)-5(b), because “at least 80 percent of the directors or trustees of one organization are either representatives of, or directly or indirectly controlled by, the other organization.” Contributions to the MJHS Foundation are deductible from federal income taxation under Section 170 of the Code.
The following table presents the assets for the MJHS Foundation during the last three (3)
Fiscal Years:
� For�Year�Ending�June�30,����
�� 2014� 2015� 2016� 2017(1)�Cash�and�cash�equivalents� $2,332,045� $1,430,122� $2,086,189�� �$1,875,338�Investments� $9,840,944� $9,995,360� $9,906,450�� �$10,763,461�TOTAL� $12,172,989� $11,425,482� $11,992,639�� $12,638,799��� � � �� �_____________________________________ (1) Three�months�ended�September�30,�2016.
Uses of Funds The new money portions of the proceeds of the Series 2017 Bonds are intended to be used for the following projects:
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Description of Major Projects With proceeds from the Series 2017 Bonds, MJHS plans to build a three story garage containing 300 parking spaces on the Main Campus. The five storied Chernin Building, comprised of 200 skilled nursing beds, will undergo a major renovation upgrade with new furniture, nurses’ stations, hallway floors, lights, ceiling tiles and handrails. The Assisted Living and the Memory Units in Hazel Cypen Tower will undergo renovation improvements to all of the hallways and main common areas with new carpet, ceiling tiles, lights and furniture. The remaining improvements include structural and mechanical replacements and upgrades to Main Campus buildings such as roofs, elevators, and air handlers.
Summary Financial Information
Combined Balance Sheets
The following table summarizes the Obligated Group’s combined assets, liabilities and net assets for the dates indicated. This summary should be read together with the information under “Management Discussion and Analysis” below, the audited combined financial statements of MJHS for the fiscal years ended June 30, 2016 and 2015 and the notes to those combined financial statements included in Appendix B to this Official Statement. The selected statements of financial position for June 30, 2014 are derived from audited combined financial statements of MJHS not included in this Official Statement. The financial position information for September 30, 2016 and 2015, is derived from unaudited combined financial statements of MJHS, and includes all adjustments that Management considers necessary for a fair presentation on a consistent basis with the audited combined financial statements. Financial information for September 30, 2016 is not necessarily indicative of the financial position that may be expected on June 30, 2017. See “Management Discussion and Analysis” herein.
DESCRIPTION�ESTIMATED�
COSTPARKING�GARAGE 9,496,308$�������HAZEL�CYPEN�TOWER�RENOVATION�PROJECT 2,500,000$�������CHERNIN�REFURBISHMENT 1,527,759$�������CHILLER�REPLACEMENT�PLANT#2 685,000$����������CHILLER�REPLACEMENT�PLANT#1 685,000$����������(10)�AIR�HANDLER�UNITS 600,000$����������CHERNIN�ROOF�REPLACEMENT�(ROOF�33�YRS�OLD) 350,000$����������IRVING�CYPEN�TOWER�ROOF�REPLACEMENT�(ROOF�36�YRS�OLD) 350,000$����������CHERNIN�NURSE�CALL�SYSTEM�REPLACEMENT 282,000$����������ABLIN��ELEVATOR�MECHANICAL�REFURBISHMENT 275,000$����������MEYER�ROOF�REPLACEMENT 235,000$����������MEYER�ELEVATOR�REFURBISHED 189,000$����������MEYER�FIRE�ALARM 130,000$����������
ESTIMATED�TOTAL 17,305,067$�����
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2014 2015 2016 2015 2016
CURRENT ASSETS
Cash and cash equivalents 19,396,272$ 16,142,942$ 16,253,726$ 15,409,981$ 26,448,798$
Investments 403,091 814,687 314,822 679,172 320,444
Accounts receivable, net 8,527,453 11,278,517 18,413,049 13,122,967 11,653,299
Pledges receivable, net 244,750 199,440 176,929 199,440 176,929
HUD capital advance receivable - - - - -
Assets whose use is limited 6,947,788 7,059,595 6,943,812 6,425,855 4,586,329
Due from affiliates 3,949,666 4,003,102 4,509,039 4,144,885 4,609,202
Prepaid expenses and other current assets 1,350,499 1,603,376 1,502,943 1,387,642 1,673,410
TOTAL CURRENT ASSETS 40,819,519 41,101,659 48,114,320 41,369,942 49,468,411
INVESTMENTS, less current portion 9,462,853 9,233,173 9,694,710 8,086,861 10,409,003
INVESTMENTS IN UNCONSOLIDATED AFFILIATES 9,646,337 10,195,337 10,437,862 10,195,337 11,113,112
ASSETS WHOSE USE IS LIMITED, less current portion 4,022,959 3,647,383 2,992,521 3,037,105 2,572,718
PLEDGES RECEIVABLE, net, less current portion 647,445 575,446 491,511 537,946 491,511
PROPERTY AND EQUIPMENT, net 55,492,278 54,648,600 51,551,969 53,792,019 50,707,525
OTHER ASSETS 923,047 898,484 764,603 892,364 781,764
TOTAL ASSETS 121,014,438$ 120,300,082$ 124,047,496$ 117,911,574$ 125,544,044$
CURRENT LIABILITIES
Accounts payable 866,375$ 1,549,892$ 1,295,394$ 644,738$ 1,128,486$
Accrued expenses and other current liabilities 13,182,938 12,089,606 14,414,444 11,718,231 15,539,483
Revolving credit facility 3,573,000 4,346,000 4,718,000 4,721,000 4,683,000
Estimated third party payor settlements, net 874,793 348,641 68,586 383,687 72,660
Deferred revenue 751,090 879,741 370,208 806,363 2,424,238
Bonds payable 710,000 710,000 1,700,000 1,700,000 1,700,000
Term loan 333,333 666,667 666,667 666,667 666,667
Annuity payment liability 287,661 250,294 197,197 250,294 197,197
Due to affiliates 188,240 485,401 370,039
TOTAL CURRENT LIABILITIES 20,579,190 20,840,841 23,618,736 21,376,381 26,781,770
BONDS PAYABLE, less current portion 19,410,000 18,700,000 17,000,000 17,000,000 15,300,000
TERM LOAN, less current portion 7,666,667 7,000,000 6,333,333 6,833,333 6,166,666
INTEREST RATE SWAP 1,642,695 1,631,705 1,696,239 1,749,666 1,541,950
ANNUITY PAYMENT LIABILITY, less current portion 1,466,421 1,315,315 851,423 1,277,148 821,044
UNFUNDED PENSION BENEFIT OBLIGATION 4,015,980 7,372,925 12,849,096 6,790,795 12,286,750
OTHER LIABILITIES 5,854,147 6,691,419 8,523,748 6,919,827 8,972,040
TOTAL LIABILITIES 60,635,100 63,552,205 70,872,575 61,947,150 71,870,220
COMMITMENTS AND CONTINGENCIES
CAPITAL ADVANCES - - - - -
NET ASSETS 60,379,338 56,747,877 53,174,921 55,964,424 53,673,824
TOTAL LIABILITIES AND NET ASSETS 121,014,438$ 120,300,082$ 124,047,496$ 117,911,574$ 125,544,044$
(Audited) September 30, (Unaudited)
MIAMI JEWISH HEALTH SYSTEMS, INC. (OBLIGOR GROUP)
COMBINED BALANCE SHEETS - TREND ANALYSIS
JUNE 30, 2014 THROUGH 2016
ASSETS
LIABILITIES AND NET ASSETS
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Combined Statements of Operations
The following table summarizes the Obligated Group’s combined revenue and expenses for the dates indicated. This summary should be read together with the information under “Management Discussion and Analysis” below and the audited combined financial statements of MJHS for the fiscal years ended June 30, 2016 and 2015 and the notes to those combined financial statements included in Appendix B to this Official Statement. The combined statement of operations for June 30, 2014 is derived from audited combined financial statements of MJHS not included in this Official Statement. The financial position information for September 30, 2016 and 2015, is derived from unaudited combined financial statements of MJHS, and includes all adjustments that management considers necessary for a fair presentation on a consistent basis with the audited combined financial statements. Financial information for September 30, 2016, is not necessarily indicative of the financial position that may be expected on June 30, 2017. See “Management Discussion and Analysis” herein.
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2014 2015 2016 2015 2016REVENUES, GAINS (LOSSES), AND OTHER SUPPORT
Program services fees:
Government agencies 11,164,744$ 117,000$ 185,277$ -$ 62,176$
Client fees and other third party payors 81,787,455 88,991,602 98,535,548 22,817,525 24,581,065
Contributions 8,207,660 6,501,456 8,846,704 884,083 335,479
Investment income and realized gains and losses, net 2,356,527 2,278,906 563,025 392,891 437,694
Management and administrative fees 180,000 180,000 180,000 45,000 -
Other revenue 2,008,219 2,263,140 1,226,245 56,304 178,118
TOTAL REVENUES, GAINS (LOSSES) AND OTHER SUPPORT 105,704,605 100,332,104 109,536,799 24,195,803 25,594,532
EXPENSES
Program services:
Case management/Day care 17,213,483 13,015,064 14,503,072 3,373,083 3,370,669
Dietary 4,523,430 4,689,027 4,832,870 1,206,359 1,239,082
Health care 47,041,506 44,516,784 45,396,881 10,758,998 11,670,868
Residential care 9,078,973 9,180,387 9,520,087 2,360,229 2,408,532
Social services 918,988 1,057,416 1,068,413 244,231 282,989
Supporting Allocations 6,360,804 3,609,663 4,826,318 98,995
TOTAL PROGRAM SERVICES 85,137,184 76,068,341 80,147,641 18,041,895 18,972,140
Supporting services
Fundraising 1,201,291 1,854,640 1,607,439 295,858 267,454
General and administrative 19,662,716 21,268,175 24,282,657 5,423,236 6,190,060
TOTAL SUPPORTING SERVICES 20,864,007 23,122,815 25,890,096 5,719,094 6,457,514
TOTAL EXPENSES 106,001,191 99,191,156 106,037,737 23,760,989 25,429,654
CHANGE IN NET ASSETSBEFORE NON-OPERATING ITEMS (296,586) 1,140,948 3,499,062 434,814 164,878
NON-OPERATING ITEMS
Change in net unrealized gain (loss) on investments 1,385,033 (152,308) 690,434 (1,218,267) 334,025
Pension related changes other than net periodic cost (42,896) (6,552,246) (7,762,452) - -
SERP related changes other than net periodic cost 1,291,920 - - - -
Gain from discontinued operations - 1,932,144 - - -
CHANGE IN NET ASSETS 2,337,471$ (3,631,462)$ (3,572,956)$ (783,453)$ 498,903$
MIAMI JEWISH HEALTH SYSTEMS, INC. (OBLIGATED GROUP)
COMBINED STATEMENTS OF OPERATIONS - TREND ANALYSIS
Fiscal Year Ended June 30, Three Months Ended(Audited) September 30, (Unaudited)
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Combined Statements of Cash Flows
The following table summarizes the Obligated Group’s combined cash flows from operating activities for the dates indicated. This summary should be read together with the information under “Management Discussion and Analysis” below and the audited combined financial statements of MJHS for the fiscal years ended June 30, 2016 and 2015 and the notes to those combined financial statements included in Appendix B to this Official Statement. The combined cash flows for June 30, 2014 are derived from audited combined financial statements of MJHS not included in this Official Statement. The combined cash flow information for September 30, 2016 and 2015, is derived from unaudited combined financial statements of MJHS, and includes all adjustments that management considers necessary for a fair presentation on a consistent basis with the audited combined financial statements. Financial information for September 30, 2016, is not necessarily indicative of the financial position that may be expected on June 30, 2017. See “Management Discussion and Analysis” herein.
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2014 2015 2016 2015 2016
2,337,471$ (3,631,462)$ (3,572,956)$ (783,453)$ 498,903$
4,391,777 4,857,601 4,889,314 1,215,196 1,231,983
(2,534,904) 3,356,945 5,476,171 (582,130) (562,346)
2,165,860 1,997,630 2,689,871 541,952 508,190
1,385,033 (152,308) 690,434 (1,218,267) 334,025
- (1,932,144) - - -
(3,999,019) (4,748,694) (9,824,403) (2,386,402) 6,251,560
205,682 117,309 106,446 37,500 -
583,658 (526,152) (280,055) 35,046 4,074
(396,649) (228,314) 234,314 221,854 (187,628)
(419,238) 683,517 (254,498) (905,154) (166,908)
(1,301,885) 838,813 2,324,838 (371,378) 1,125,036
(636,166) 128,651 (509,533) (73,378) 2,054,030
(1,152,727) 826,282 1,896,863 346,369 294,003
628,893 1,587,674 3,866,806 (3,922,245) 11,384,922
(508,174) (53,436) (317,697) 343,618 81,636
(1,857,000) (578,608) (894,631) 2,500,094 (1,729,190)
(133,055) 263,769 770,645 1,244,018 2,777,286
(5,030,893) (4,013,923) (1,792,683) (358,615) (387,539)
(7,529,122) (4,382,198) (2,234,366) 3,729,115 742,193
39,338,794 32,725,000 36,863,000 10,377,000 9,131,000
(38,375,000) (31,952,000) (36,491,000) (10,002,000) (9,166,000)
(710,000) (710,000) (710,000) (710,000) (1,700,000)
(193,227) (188,473) (516,989) (38,167) (30,379)
8,000,000 - - - -
Payments on term loan - (333,333) (666,667) (166,664) (166,664)
8,060,567 (458,806) (1,521,656) (539,831) (1,932,043)
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 1,160,338 (3,253,330) 110,784 (732,961) 10,195,072
18,235,934 19,396,272 16,142,942 16,142,942 16,253,726
19,396,272$ 16,142,942$ 16,253,726 15,409,981$ 26,448,798$
Change in net unrealized gains on investments
CASH FLOWS FROM OPERATING ACTIVITIES
Change in net assets
Fiscal Year Ended June 30, Three Months Ended
Adjustments to reconcile change in net assets to net cash
provided by (used in) operating activities:
Depreciation and amortization
Unfunded pension benefit obligation
Provision for doubtful accounts
MIAMI JEWISH HEALTH SYSTEMS, INC. (OBLIGATED GROUP)
COMBINED STATEMENTS OF CASH FLOWS
Gain from discontinued operations
Changes in operating assets and liabilities:
Accounts receivable
Pledges receivable
Prepaid expenses and other assets
Accounts payable
Accrued expenses and other current liabilities
Estimated third-party payor settlements, net
Deferred revenue
Other liabilities
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES
Decrease (increase) in due from affiliate
Net change in investments
Net change in assets whose use is limited
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD
CASH AND CASH EQUIVALENTS - END OF PERIOD
(Audited) September 30, (Unaudited)
Payments on bonds payable
Payments on annuity liability
Proceeds from term loan
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
Purchase of property and equipment
NET (USED IN) PROVIDED BY IN INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from revolving credit facility balance
Payments on revolving credit facility balance
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Debt Service Coverage Ratio
The following table sets forth MJHS’ Historical Debt Service Coverage Ratio and Historical Pro-Forma Debt Service Coverage Ratio for the Fiscal Years ended June 30, 2014 through 2016, based upon the audited combined financial statements of MJHS and for the three month period ended September 30, 2016, as derived from unaudited combined financial statements. Debt Service Requirements and the Historical Debt Service Coverage Ratio are calculated in accordance with the Master Indenture to be executed in connection with the issuance of the Series 2017 Bonds.
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2014 2015 2016 9/30/2015 9/30/2016
2,337,471$ (3,631,462)$ (3,572,956)$ (783,453)$ 498,903$
Unrealized gain (loss) on investments (1,385,033) 152,308 (690,434) 1,218,267 (334,025)
Pension related changes other than net periodic cost 42,896 6,552,246 7,762,452 - -
SERP related changes other than net periodic cost (1,291,920) - - - -
- (1,932,144) - - -
2,165,860 1,997,630 2,689,871 541,952 508,190
4,391,777 4,857,601 4,889,314 1,215,196 1,231,983
854,531 1,025,485 970,112 241,336 190,330
7,115,582 9,021,664 12,048,359 2,433,298 2,095,381
Payments on bonds payable 710,000 710,000 710,000 177,500 425,000
Payments on term loan - 333,333 666,667 83,333 166,667
Interest expense 854,531 1,025,485 970,112 241,336 190,330
1,564,531 2,068,818 2,346,779 502,169 781,997
4.55 4.36 5.13 4.85 2.68
3,062,988 3,062,988 3,062,988 765,747 765,747
2.32 2.95 3.93 3.18 2.74
Debt Service Requirement
DEBT SERVICE COVERAGE RATIO
Interest expense
Income Available for Debt Service
Debt Service Requirement:
Historical Debt Service Requirement
HISTORICAL DEBT SERVICE COVERAGE RATIO
Change in net assets
Adjustments:
Gain (loss) from discounted operations
Provision for doubtful accounts
Depreciation and amortization
MIAMI JEWISH HEALTH SYSTEMS, INC. (OBLIGOR GROUP)
DEBT SERVICE COVERAGE RATIO
Fiscal Year Ended June 30, Three Months Ended(Audited) September 30, (Unaudited)
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Days Cash on Hand
The following table sets forth MJHS’ Days Cash on Hand for the Fiscal Years ended June 30, 2014 through 2016, based upon the audited combined financial statements of MJHS and for the three month period ended September 30, 2016, as derived from unaudited combined financial statements. Days Cash on Hand is calculated in accordance with the Master Indenture to be executed in connection with the issuance of the Series 2017 Bonds.
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2014 2015 2016 2015 2016
Cash and cash equivalents 19,396,272$ 16,142,942$ 16,253,726$ 15,409,981$ 26,448,798$
Investments 19,512,281 20,243,197 20,447,394 18,961,370 21,842,559
Assets whose use is limited 10,970,747 10,706,978 9,936,333 9,462,960 7,159,047
Less:
Donor-restricted funds (5,634,061) (4,441,672) (4,540,183) (4,441,672) (4,540,183)
Limited use assets (9,646,337) (10,195,337) (10,437,862) (10,195,337) (11,113,112)
Total cash and cash equivalents 34,598,902 32,456,108 31,659,408 29,197,302 39,797,109
Annual Cash Operating Expenses 106,001,191 99,191,156 106,037,737 23,760,989 25,429,654
Adjustments:
Provision for doubtful accounts (2,165,860) (1,997,630) (2,689,871) (541,952) (508,190)
Depreciation and Amortization (4,391,777) (4,857,601) (4,889,314) (1,215,196) (1,231,983)
Total Operating Expenses for Calculation 99,443,554 92,335,925 98,458,552 22,003,841 23,689,481
Annualized Expenses 88,015,364 94,757,924
Daily Cash Operating Expenses 272,448 252,975 269,012 244,487 263,216
DAYS CASH ON HAND 127 128 118 119 151
MIAMI JEWISH HEALTH SYSTEMS, INC. (OBLIGOR GROUP)
DAYS CASH ON HAND
Fiscal Year Ended June 30, Three Months Ended(Audited) September 30, (Unaudited)
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Management Discussion and Analysis
For the Three Months Ended September 30, 2016
For the three months ended September 30, 2016, Change in Net Assets Before Non-Operating Items was $164,878 or 0.65% operating margin. Revenues for the period increased year over year by 5.8% or $1,398,729 to $25,594,532. The growth in PACE census year over year resulted in increased revenues of nearly $2,480,875 or 32% over 2015. Contributions for the period were down $548,604 as the summer months prove to be a difficult time for fundraising. Expenses for the period rose in line with increased service revenues by 7% or $1,668,665. General and Administrative expenses for the period were up 14.1% or $766,824 over the previous year as a result of costs associated with the creation of a Special Area Plan (“SAP”) with the City of Miami and other one-time expenses in connection with the future development of the Main Campus.
The Non-Operating items for the period only reflected the change in net unrealized gain (loss) on investment of $334,025 which was $1,552,292, better than the previous year. Change in Net Assets for the period was $498,903, an improvement of $1,282,356 over the previous year.
The Debt Service Coverage Ratio for the three months ending September 30, 2016 was 2.65 compared to 3.07l for the three months ending September 30, 2015.
Unrestricted Cash and Investments at September 30, 2016 totaled $39,797,109 compared to $29,197,302 at September 30, 2015, representing an increase of $10,599,807 (or 36.3%). Days Cash on Hand was 151 days at September 30, 2016 compared to 119 days at September 30, 2015.
Fiscal Year Ended June 30, 2016
For the Fiscal Year ended June 30, 2016, Change in Net Assets Before Non-Operating Items was $3,499,062 or 3.5% margin resulting in a $2,358,115 increase over the previous year. Revenues grew by 6.8% or $9,204,695 to $109,536,799. The largest contributor to this year’s growth in revenue was Florida PACE Centers which saw a 10% increase in its participant census and an average 14.4% increase in its Medicare payments. Nursing Home operations saw a 2% increase in census and a 2% increase in rates. Total expenses for the period increased 6.9% primarily to cover costs in connection with the growth of the PACE programs’ census. Bad debt for the period increased approximately $651,658 or 32% to reserve for potential post-audit recoupment of payments by PACE. Support Services increased 12% as a result of increased support personnel, funding of an overall marketing plan for the organization and continuation of the future development of the MJHS Campus Master Plan along with an SAP with the City of Miami.
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Contributions and supporting allocations contributions from obligor and non-obligor affiliates increased from the previous year by $2,345,248 or 36% from $$6,501,456 in 2015 to $8,846,704 in 2016. Contributions to Miami Jewish Health Systems Foundation were $3,678,399 in 2016 versus $2,729,619 in 2015 up $948,780 or 34.8%. The supporting allocations contributions from obligor and non-obligor entities were $5,486,309 in 2016 versus $4,036,353 in 2015, an increase of $1,449,956 highlighted by a contribution of $659,991 from Wolf Cypen Foundation, $3,600,000 from Florida PACE Centers and $1,143,644 from Miami Jewish Health Foundation, Inc.
Accounts Receivable year over year grew by 63% as a result of a delayed payment of approximately $7,000,000 due to the Florida Pace Centers from Medicare for adjustments in its capitated premium. The payment was received in July 2016.
Unfunded pension benefit obligations increased approximately $7,762,452 which is derived from actuarial gains/(losses) due to demographic experience, including any assumption changes, and investment return different from assumed during the prior year. The return on the fair value of plan assets since the prior measurement date was less than expected. The discount rate declined 86 basis points compared to the prior year. Contributions totaling $2,923,548 made during the year helped offset the above factors. During the fiscal year ending June 30, 2016, a one-time opportunity was given to terminated vested participants to elect a lump sum benefit and $10,223,186 in lump sums was paid out, with a corresponding $14,003,311 reduction in liabilities. This also helped to offset the factors described above.
The overall investment return for the Fiscal Year ended June 30, 2016 was a negative 3% return as compared to the investment benchmark of 1.8%. The Debt Service Coverage Ratio for the fiscal year ended June 30, 2016 was 3.80 compared to 2.85 for the fiscal year ended June 30, 2015.
Unrestricted Cash and Investments at June 30, 2016 totaled $31,659,408 compared to $32,456,108 at June 30, 2015, representing a decrease of $796,700. This was due to the delay in receipt of a PACE receivable from Medicare of approximately $7,000,000. Days Cash on Hand was 118 days at June 30, 2016 compared to 128 days at June 30, 2015.
Fiscal Year Ended June 30, 2015
For the Fiscal Year ended June 30, 2015, Change in Net Assets Before Non-Operating Items was $1,140,947 or 1.2% operating margin resulting in a $1,437,534 increase over the previous year. Revenues declined by 5.1% or $5,372,501 to $100,332,104. The decline stems from the remaining impact of $11,189,984 loss of revenue from the implementation of the Statewide Medicaid Managed Care Long Term Care Program (“SMMCLTCP”) as discussed in the previous Fiscal Year Ended June 30, 2014. The reduction in revenue was offset by approximately a 10% increase in PACE participant census resulting in a $3.03M increase in revenue. The nursing home patient census grew by 1.4% providing an additional $2.56M. The new managed care services program serving Molina Healthcare increased revenues by $2.4M. Expenses for the period declined 4.5% or $4,339,168, which was consistent with the decline of
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revenue. Nursing operations experienced higher than normal personnel costs due to shortages in the labor force during the period.
Contributions and supporting allocations contributions from obligor and non-obligor affiliates declined from the previous year by $1,706,204 or 20.8% from $8,207,660 in 2014 versus $6,501,456 in 2015. Contributions to Miami Jewish Health Systems Foundation were $2,729,619 in 2015 versus $2,131,746 in 2014, up $597,873. The supporting allocations contributions from obligor and non-obligor entities were $4,036,353 in 2015 versus $6,360,804 in 2014, a decrease of $2,324,451.
The overall investment return for the Fiscal Year ended June 30, 2015 was 4.1% as compared to the investment benchmark of 4.2%. Changes in the mortality tables used by the Society of Actuaries and a decrease in the discount rate resulting in an increase of pension related assumption changes increased the pension liability by $6.55M. A gain of $1.9M was recognized during the period from the closing of the nursing home diversion programs.
The Debt Service Coverage Ratio for the fiscal year ended June 30, 2015 was 2.85 compared to 2.25 for the fiscal year ended June 30, 2014.
Unrestricted Cash and Investments at June 30, 2015 totaled $33,447,178 compared to $34,367,607 at June 30, 2014, representing a decrease of $920,429 or (2.7%). Days Cash on Hand was 128 days at June 30, 2015 compared to 127 days at June 30, 2014.
Fiscal Year Ended June 30, 2014
For the Fiscal Year ended June 30, 2014, Change in Net Assets Before Non-Operating Items was ($296,587), resulting in an $8,146,455 decrease over the previous year. Revenues, Gains (Losses) and Other Support declined by 15.2% or $18,939,038 to $105,704,605. In 2011, the State of Florida announced the creation of the SMMCLTCP effective December 1, 2013. This program would result in all nursing home diversion programs like Channeling and Project Independence at Home terminating resulting in an approximately $27.3M loss in revenues to the Obligated Group. The SMMCLTCP went into effect December 2013 reducing revenues for the Fiscal Year ended June 30, 2014 by $16,113,780 and reducing revenues for the Fiscal Year ended June 30, 2015 an additional $$11,189,984. A new revenue stream was created with the establishment of the SMMCLTCP. An agreement was entered into between MJHS and Molina Healthcare to provide case management services to the members of Molina Healthcare in the SMMCLTCP. This new managed care services program serving Molina Healthcare provided $2,052,107 in revenue for 2014. The reduction in revenue was further minimized by a 9% increase in PACE participation with the opening of its Westchester Center and growth in the Hialeah Center revenues increased by $3.2M. Expenses for the period declined 10.2% or $10,792,584 which was in line with the loss of revenue.
Contributions and supporting allocations contributions from obligor and non-obligor affiliates declined from the previous year by $6,974,619 or 46% from $15,182,279 in 2013 versus $8,207,660 in 2014. The supporting allocations from non-obligor entities in 2013 consisted of a $2,161,567 contribution from the Wolf Cypen Foundation, $2,008,840 from
A-41 �
Douglas Gardens Home Care, Inc. and $1,316,065 from Douglas Gardens Holding in 2013 with no supporting allocations in 2014. In 2013, a one-time grant in the amount of $1,485,000 was awarded. Contributions to Miami Jewish Health Systems Foundation were $2,131,746 in 2014 versus $2,693,636 in 2013 down $561,890.
Unrealized gains on investments of $1.39M and changes in actuarial assumptions related to the Supplemental Executive Retirement Plan (“SERP”) of $1.3M accounted for most of the non-operating items for the period. The overall investment return for the Fiscal Year ended June 30, 2014 was 19.46% percent as compared to the investment benchmark of 14.31% percent.
The Debt Service Coverage Ratio for the fiscal year ended June 30, 2014 was 2.25 compared to 4.36 for the fiscal year ended June 30, 2013.
Unrestricted Cash and Investments at June 30, 2014 totaled $34,598,292 compared to $30,307,332 at June 30, 2013, representing an increase of $3.2M. Days Cash on Hand was 127 days at June 30, 2014 compared to 103 days at June 30, 2013.
Investments
�Investments are segregated into two line items, those assets within a portfolio managed
by Morgan Stanley Private Wealth Management (the “Fund”) and investments in unconsolidated affiliates. The general philosophy of the Fund is to obtain a reasonable rate of return to keep the Fund financially sound. The objectives of the Fund are 1) to achieve a rate of return of 3% above the rate of inflation as measured by the consumer price index over the market cycle, 2) preservation of capital and 3) long-term growth.
The composition mix of the investments at June 30, 2016 is as follows: Equity Securities 55.0% Fixed Income Securities 38.1% Hedge Fund 0.1% Cash 6.8% MJHS’s investment in unconsolidated affiliates is comprised of the following:
1)� 44.118% interest in Village Green Townhomes, a multi-family apartment complex in Detroit, Michigan.
2)� 20.0% interest in a hospice and palliative care corporation operating in Miami-Dade County.
3)� 15.0% interest in a hospice and palliative care corporation operating in Broward County.
4)� 50.0% interest in a home health agency operating in Miami-Dade County.
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Pensions
MJHS has a defined benefit plan for those employees hired prior to July 1, 2010. No new entrants have been admitted into the defined benefit plan since June 30, 2010. Effective September 1, 2011, MJHS’s management adopted a hard freeze in the defined benefit plan’s benefit structure and stopped the accrual of future employee benefits for plan participants.
The defined benefit plan is fully funded based on estimates for a non-terminating plan. Management continuously monitors for opportunities to further de-risk the plan through lump sum or annuity buyouts.
Insurance
The Obligated Group maintains insurance coverage in compliance with the requirements of the Master Indenture. MJHS management believes that adequate provision has been made to insure the property and operations of the Obligated Group. The Obligated Group is self-funded for workers compensation liability supplemented with an excess policy for claims over $500,000.
Miami Jewish Health Systems, Inc. participates in a captive self-insurance program for its general and professional liability. The self-insurance program is collateralized through a combination of cash deposited in escrow and a standby letter of credit. MJHS has a $680,000 cash collateral account in support of the standby letter of credit. MJHS is involved in various claims and legal actions arising in the ordinary course of business. Provision has been made for probable losses in excess of insurance coverage limitations related to incurred claims and known incidents likely to result in claims. The reserves for uninsured losses are based on an actuarial study prepared by an independent third party. Management believes, based on advice from the third-party administrator and legal counsel, that the provision for such losses in excess of insurance coverage limits as of June 30, 2016 is adequate.
The Employee Health Insurance program is partially self-insured by the organization. The program is supplemented with a stop loss insurance policy when total claims for a participant exceed $185,000. Management establishes reserves that estimate the incurred but not recorded claims and currently is not aware of any claims that would exceed these reserves.
Litigation
From time to time, there are certain actions pending against the Obligated Group that arise in the ordinary course of business. MJHS management believes that adequate provision has been made to cover estimated losses and that the ultimate disposition of any such pending actions will not materially adversely affect the financial condition of the Obligated Group. Future Plans
As part of its overall master plan, MJHS plans to develop a memory care residential center currently known as Miami Jewish EmpathiCare Village (the “Village”). The Village, housed on the Main Campus, will be a state of the art center providing individualized care for seniors living with dementia within a home-like, non-institutional setting. Development of the
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Village is contingent on receiving significant donor provided capital contributions to fund either all or a significant portion of the project costs.
Currently, MJHS is working with the City of Miami towards approval of a Special Area Plan to accommodate the long term development of its Main Campus, including the development of the Village, along with other improvements and additions.
Further, as a multi-faceted and diverse healthcare provider, MJHS is routinely presented with opportunities to expand its reach and for new revenue and cash flow generating ventures. Currently, these include potential new developments of senior care and residential living facilities, PACE centers, day care operations, consulting and other community-based services, both on and off the Main Campus.
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MIAMI JEWISH HEALTH SYSTEMS, INC. AND SUBSIDIARIES AND AFFILIATES
COMBINED FINANCIAL STATEMENTS AND SUPPLEMENTAL INFORMATION
Years Ended June 30, 2016 and 2015
C O N T E N T S ______
Page Number
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS 1
COMBINED FINANCIAL STATEMENTS
Combined Balance Sheets 3
Combined Statements of Operations and Changes in Net Assets 4
Combined Statements of Cash Flows 6
Combined Statements of Functional Expenses 7
Notes to Combined Financial Statements 9
SUPPLEMENTAL INFORMATION
Combining Balance Sheet 37
Combining Statements of Operations and Changes in Net Assets 39
Schedule of Expenditures of Federal Awards 41
Notes to Schedule of Expenditures of Federal Awards 42 REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH
� GOVERNMENT�AUDITING�STANDARDS 43
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED
BY THE UNIFORM GUIDANCE 45 SCHEDULE OF FINDINGS AND QUESTIONED COSTS -
FEDERAL PROGRAMS 47
MOORE STEPHENS LOVELACE, P. A. CERTIFIED PUBLIC ACCOUNTANTS
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors of Miami Jewish Health Systems, Inc. Miami, Florida
Report on the Financial Statements
We have audited the accompanying combined financial statements of Miami Jewish Health Systems, Inc. and Subsidiaries and Affiliates ("MJHS"), which comprise the combined balance sheets as of June 30, 2016 and 2015, and the related combined statements of operations and changes in net assets, cash flows, and functional expenses for the years then ended, and the related notes to the combined financial statements.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these combined financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance ofintemal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express an opinion on these combined financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perfonn the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves perfonning procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the combined financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the combined financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the combined financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
- I -
To the Board of Directors of Miami Jewish Health Systems, Inc.
Opinion
In our opinion, the combined financial statements referred to in the first paragraph present fairly, in all material respects, the financial position of MJHS as of June 30, 2016 and 2015, and the combined changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.
Other Matters
Supplementary Information
Our audits were conducted for the purpose of forming an opinion on the combined financial statements as a whole. The accompanying schedule of expenditures of federal awards, as required by Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, and the schedules appearing on pages 37 to 40 are presented for purposes of additional analysis and is not a required part of the combined financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the combined financial statements. The information has been sUbjected to the auditing procedures applied in the audit of the combined financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the combined financial statements or to the combined financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the combined financial statements as a whole.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated September 26, 2016, on our consideration of MJHS' s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements, and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial rep0l1ing or on compliance. That report is an integral part of an audit perfonned in accordance with Government Auditing Standards in considering MJHS's internal control over financial reporting and compliance.
MOORE STEPHENS LOVELACE, P.A. Certified Public Accountants
Miami, Florida September 26, 2016
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The accompanying notes are an integral part of the combined financial statements.
2015
18,574,819$
974,448
12,150,104
199,440
7,730,720
1,199,663
40,829,194
15,792,593
10,870,337
3,647,383
PLEDGES RECEIVABLE, net, less current portion 575,446
78,308,652
920,747
150,944,352$
CURRENT ASSETS
Pledges receivable, net
Accounts receivable, net
INVESTMENTS, less current portion
Cash and cash equivalents
TOTAL CURRENT ASSETS
Investments
TOTAL ASSETS
Assets whose use is limited
Prepaid expenses and other current assets
OTHER ASSETS
ASSETS WHOSE USE IS LIMITED, less current portion
PROPERTY AND EQUIPMENT, net
INVESTMENTS IN UNCONSOLIDATED AFFILIATES
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2015
1,637,042$ 12,996,137
4,346,000 348,641 306,131 710,000 666,667 250,294
21,260,912
18,700,000
7,000,000
1,631,705
1,315,315
UNFUNDED PENSION BENEFIT OBLIGATION 7,372,925
OTHER LIABILITIES 6,691,419
63,972,276
CAPITAL ADVANCES 21,430,479
Unrestricted 61,099,925 Temporarily restricted 3,317,797 Permanently restricted 1,123,875
65,541,597
150,944,352$ TOTAL LIABILITIES AND NET ASSETS
TOTAL LIABILITIES
COMMITMENTS AND CONTINGENCIES
NET ASSETS
TOTAL NET ASSETS
BONDS PAYABLE, less current portion
ANNUITY PAYMENT LIABILITY, less current portion
INTEREST RATE SWAP
Accounts payableAccrued expenses and other current liabilitiesRevolving credit facility
Bonds payable
Annuity payment liabilityTerm loan
TERM LOAN, less current portion
TOTAL CURRENT LIABILITIES
Estimated third-party payor settlements, netDeferred revenue
CURRENT LIABILITIES
The accompanying notes are an integral part of the combined financial statements.
- 4 -
2015
CHANGES IN UNRESTRICTED NET ASSETS
1,353,100$
93,950,600
2,847,625
3,011,751
109,614
1,377,790
102,650,480
1,271,168
385,222
1,656,390
11,791,202
4,689,027
48,204,841
11,021,040
862,654
1,057,416
TOTAL PROGRAM SERVICES 77,626,180
1,704,640
22,239,403
TOTAL SUPPORTING SERVICES 23,944,043
101,570,223
2,736,647
NON-OPERATING ITEMS
(285,336)
(6,784,700)
-
1,932,144
(2,401,245) CHANGE IN UNRESTRICTED NET ASSETS
NON-OPERATING ITEMS
Change in net unrealized loss on investments
Pension related changes other than net periodic cost
Gain from discontinued operations
Gain on sale of property and equipment
CHANGE IN UNRESTRICTED NET ASSETS BEFORE
Supporting services:
Fundraising
General and administrative
TOTAL EXPENSES
Dietary
Health care
Residential care
Research, training, and planning
Social services
TOTAL NET ASSETS RELEASED FROM RESTRICTION
EXPENSES
Program services:
Case management/Day care
TOTAL REVENUES, GAINS (LOSSES), AND OTHER SUPPORT
NET ASSETS RELEASED FROM RESTRICTION
Satisfaction of property and equipment purchase restrictions
Satisfaction of program restrictions
Investment income and realized gains and losses, net
Management and administrative fees
Other revenue
REVENUES, GAINS (LOSSES), AND OTHER SUPPORT
Program service fees:
Government agencies
Client fees and other third-party payors
Contributions
The accompanying notes are an integral part of the combined financial statements.
- 5 -
2015
CHANGE IN UNRESTRICTED NET ASSETS (2,401,245)$
CHANGES IN TEMPORARILY RESTRICTED NET ASSETS
343,514
119,866
(1,656,390)
(1,193,010)
CHANGE IN NET ASSETS (3,594,255)
69,135,852
65,541,597$
NET ASSETS AT BEGINNING OF YEAR
NET ASSETS AT END OF YEAR
CHANGE IN TEMPORARILY RESTRICTED NET ASSETS
REVENUES, GAINS, AND OTHER SUPPORT
Contributions
Investment income
Net assets released from restrictions
(Continued)
The accompanying notes are an integral part of the combined financial statements.
- 6 -
2015
(3,594,255)$
5,894,887
Amortization of capital advances (622,406)
3,356,945
2,036,501
285,336
(1,932,144)
-
(4,817,817)
117,309
(214,444)
671,671
1,013,302
(526,152)
(1,639)
837,272
2,504,366
(1,865,658)
277,265
-
(4,052,228)
(5,640,621)
32,725,000
(31,952,000)
(710,000)
(200,091)
(333,333)
(470,424)
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (3,606,679)
22,181,498
18,574,819$ CASH AND CASH EQUIVALENTS - END OF YEAR
Payments on annuity liability
NET CASH USED IN FINANCING ACTIVITIES
Payments on term loan
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR
Deferred revenue
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from revolving credit facility balance
Payments on bonds payable
NET CASH PROVIDED BY OPERATING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES
Net change in investments
Net change in assets whose use is limited
Purchase of property and equipment
Other liabilities
Payments on revolving credit facility balance
Proceeds from sale of property and equipment
Accounts receivable
Pledges receivable
Estimated third-party payor settlements, net
Prepaid expenses and other assets
Accounts payable
Accrued expenses and other current liabilities
CASH FLOWS FROM OPERATING ACTIVITIES
Changes in operating assets and liabilities:
Unfunded pension benefit obligation
Provision for doubtful accounts
Change in net assets
Change in net unrealized loss on investments
Gain from discontinued operations
Adjustments to reconcile change in net assets to net cash
provided by operating activities:
Depreciation and amortization
Gain on sale of property and equipment
The accompanying notes are an integral part of the combined financial statements.
- 7 -
CASE RESEARCH TOTAL TOTAL
MANAGEMENT/ HEALTH RESIDENTIAL TRAINING SOCIAL PROGRAM FUND GENERAL & SUPPORT
DAY CARE DIETARY CARE CARE & PLANNING SERVICES SERVICES RAISING ADMINISTRATIVE SERVICES TOTAL
Salaries 6,153,384$ 147,366$ 19,569,154$ 2,556,944$ 647,518$ 883,049$ 29,957,415$ 569,014$ 7,988,824$ 8,557,838$ 38,515,253$
Employee health and retirement benefits 633,273 12,088 2,150,719 314,382 42,136 100,566 3,253,164 39,860 2,022,493 2,062,353 5,315,517
Payroll taxes 443,724 11,238 1,409,725 187,421 42,389 67,104 2,161,601 37,293 472,899 510,192 2,671,793
7,230,381 170,692 23,129,598 3,058,747 732,043 1,050,719 35,372,180 646,167 10,484,216 11,130,383 46,502,563
Conferences and conventions 1,883 - 58,016 95,520 1,445 - 156,864 274,248 220,676 494,924 651,788
Equipment rental and maintenance 4,487 39,290 193,095 259,538 1,077 47 497,534 - 122,990 122,990 620,524
Food supplies 153,583 1,939,290 241,441 825,016 3,293 77 3,162,700 17,299 64,837 82,136 3,244,836
Local transportation 191,209 - 341,159 12,182 8,654 9,224 562,428 - 33,569 33,569 595,997
Miscellaneous expense 660,196 - 503,102 19,379 763 - 1,183,440 69,687 441,213 510,900 1,694,340
Occupancy (including interest of approximately $972,000) 396,045 48,275 3,141,697 1,891,157 8,017 - 5,485,191 4,598 4,354,413 4,359,011 9,844,202
Organizational membership dues 250 - - 6,064 - - 6,314 1,367 151,033 152,400 158,714
Other supplies 101,244 20,588 600,276 250,415 107,833 6,771 1,087,127 13,802 167,131 180,933 1,268,060
Pharmacy supplies 166,743 40,995 4,592,800 68,108 5,108 - 4,873,754 - 5,925 5,925 4,879,679
Postage - - 213 749 45 - 1,007 5,816 31,400 37,216 38,223
Printing and publications 2,290 - 72,416 5,796 17,385 399 98,286 46,329 319,017 365,346 463,632
Professional fees and contract services 3,973,286 2,573,223 13,139,852 3,034,433 61,865 536 22,783,195 363,256 4,105,163 4,468,419 27,251,614
Provisions for doubtful accounts - - 2,285,460 23,088 - - 2,308,548 9,000 377,323 386,323 2,694,871
Telephone 36,353 517 28,480 48,965 - 640 114,955 5,870 293,165 299,035 413,990
TOTAL EXPENSES BEFORE DEPRECIATION
AND AMORTIZATION 12,917,950 4,832,870 48,327,605 9,599,157 947,528 1,068,413 77,693,523 1,457,439 21,172,071 22,629,510 100,323,033
DEPRECIATION AND AMORTIZATION 119,044 - 37,974 1,737,484 830 - 1,895,332 - 4,001,433 4,001,433 5,896,765
TOTAL EXPENSES 13,036,994$ 4,832,870$ 48,365,579$ 11,336,641$ 948,358$ 1,068,413$ 79,588,855$ 1,457,439$ 25,173,504$ 26,630,943$ 106,219,798$
The accompanying notes are an integral part of the combined financial statements.
- 8 -
CASE RESEARCH TOTAL TOTAL
MANAGEMENT/ HEALTH RESIDENTIAL TRAINING SOCIAL PROGRAM FUND GENERAL & SUPPORT
DAY CARE DIETARY CARE CARE & PLANNING SERVICES SERVICES RAISING ADMINISTRATIVE SERVICES TOTAL
Salaries 5,905,260$ 154,223$ 19,507,309$ 2,425,971$ 558,087$ 893,029$ 29,443,879$ 448,119$ 7,403,415$ 7,851,534$ 37,295,413$
Employee health and retirement benefits 605,753 11,193 1,639,763 226,976 33,295 92,645 2,609,625 41,168 1,598,562 1,639,730 4,249,355
Payroll taxes 447,809 11,608 1,328,004 181,122 32,998 67,089 2,068,630 30,964 477,610 508,574 2,577,204
6,958,822 177,024 22,475,076 2,834,069 624,380 1,052,763 34,122,134 520,251 9,479,587 9,999,838 44,121,972
Conferences and conventions 1,626 - 71,862 50,788 227 399 124,902 572,110 206,175 778,285 903,187
Equipment rental and maintenance 404 13,875 177,251 255,053 1,074 - 447,657 3,107 124,793 127,900 575,557
Food supplies 145,807 1,918,952 210,792 798,963 1,550 41 3,076,105 56,512 65,510 122,022 3,198,127
Local transportation 200,404 - 253,815 9,080 10,832 2,774 476,905 2,994 25,232 28,226 505,131
Miscellaneous expense 285,516 - 524,333 41,082 669 - 851,600 8,996 965,231 974,227 1,825,827
Occupancy (including interest of approximately $1,026,000) 421,550 41,058 3,099,593 1,949,555 7,577 - 5,519,333 5,094 3,642,389 3,647,483 9,166,816
Organizational membership dues - - 4,384 3,193 - - 7,577 - 151,129 151,129 158,706
Other supplies 65,983 16,515 535,716 240,762 80,362 378 939,716 28,692 234,618 263,310 1,203,026
Pharmacy supplies 37,797 28,635 4,582,691 58,782 6,930 - 4,714,835 21 5,564 5,585 4,720,420
Postage 2,420 - 180 456 67 - 3,123 5,523 39,027 44,550 47,673
Printing and publications 1,936 - 28,275 7,089 23,572 419 61,291 92,701 341,946 434,647 495,938
Professional fees and contract services 3,511,357 2,492,532 14,191,428 3,000,514 92,725 486 23,289,042 387,431 2,631,917 3,019,348 26,308,390
Provisions for doubtful accounts - - 1,969,658 17,358 - - 1,987,016 2,500 46,985 49,485 2,036,501
Telephone 61,153 436 31,232 49,082 - 156 142,059 10,083 255,923 266,006 408,065
TOTAL EXPENSES BEFORE DEPRECIATION
AND AMORTIZATION 11,694,775 4,689,027 48,156,286 9,315,826 849,965 1,057,416 75,763,295 1,696,015 18,216,026 19,912,041 95,675,336
DEPRECIATION AND AMORTIZATION 96,427 - 48,555 1,705,214 12,689 - 1,862,885 8,625 4,023,377 4,032,002 5,894,887
TOTAL EXPENSES 11,791,202$ 4,689,027$ 48,204,841$ 11,021,040$ 862,654$ 1,057,416$ 77,626,180$ 1,704,640$ 22,239,403$ 23,944,043$ 101,570,223$
- 9 -
MIAMI JEWISH HEALTH SYSTEMS, INC. AND SUBSIDIARIES AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
Years Ended June 30, 2016 and 2015
NOTE 1 - NATURE OF THE ORGANIZATION AND BASIS OF PRESENTATION
Nature of the Organization Miami Jewish Health Systems, Inc. (“MJHS”), formally known as Miami Jewish Home and Hospital for the Aged, Inc., was incorporated in 1940 to provide shelter for the elderly and develop social and health programs relating to their care. Since its inception, the organization has expanded to include a number of affiliated entities, organized to provide an array of additional programs, such as assistive housing, outpatient services, and community-based programs. These programs offer alternatives to institutionalization, as well as research, education, and training in areas primarily focused on care for the elderly. These combined financial statements include Miami Jewish Health Systems, Inc. and its controlled and supporting affiliated entities which operate and provide the following programs in furtherance of its mission:
�� A 438-bed skilled nursing facility
�� A Medicare certified specialty hospital unit with 32 acute care beds
�� Irving Cypen Tower – A 99-unit independent living facility with overlaid services
�� Hazel Cypen Tower – A 100-unit assisted living facility with overlaid services
�� Managed Care Services - Provides case management services for community Medicaid waiver and diversion recipients, as well as nursing home residents who choose Molina Healthcare of Florida as their long-term managed care plan provider.
�� HUD Housing (DGN) – 95-unit, 52-unit, and 75-unit apartment buildings, which provide subsidized housing for the elderly
�� An ambulatory health center
�� The Rosomoff Comprehensive Rehabilitation Center
�� Florida PACE Centers – A Medicare program for the all-inclusive care of the elderly is a prepaid health plan which provides managed care services for older adults and people over 55 with disabilities who otherwise need nursing home level of care.
�� Stein Gerontological Institute – Performs research, training, and consulting services related to aging and care of the elderly.
�� Douglas Gardens Home Care – A nurse registry program which provides private duty nursing care, personal care, and companion services.
�� Douglas Gardens Senior Housing – Provides management services to senior housing providers.
- 10 -
NOTE 1 - NATURE OF THE ORGANIZATION AND BASIS OF PRESENTATION (Continued)�
Nature of the Organization (Continued)� �� Two charitable foundations created for the benefit of MJHS which raise and
distribute funds in support of MJHS and its mission
�� Douglas Gardens Community Care – Provides home and community based services, including Community Care for the Elderly, Aged and Disabled Medicaid Waiver, Assisted Living Waiver, Home Care for the Elderly and Older American Act Title IIIE and IIIB programs (funding ceased in December 2013) and the program closed on June 30, 2015.
�� Channeling – A State of Florida Medicaid waiver project which provides community based services (funding ceased in December 2013) and the program closed on June 30, 2015.
�� Project Independence at Home – A Medicaid program which provides case management and coordination and a variety of home and community based services (funding ceased in December 2013) and the program closed on June 30, 2015.
The Florida Medicaid Managed Care Long-Term Care Program became effective during the year ended June 30, 2015. As a result, MJHS ceased receiving funding for its Channeling, Project Independence at Home, and Douglas Gardens Community Care programs in December 2013, and the programs closed on June 30, 2015. All significant inter-organization accounts and transactions have been eliminated in the consolidation of MJHS and its subsidiaries and the combination of MJHS with its affiliates.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following are the significant accounting policies followed by MJHS in the preparation of its combined financial statements:
Cash and Cash Equivalents MJHS considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents, excluding cash and cash equivalents included in investments and assets whose use is limited.
Investments Investments are reported at fair value in the combined balance sheets. Realized gains and losses are calculated based on proceeds received less carrying value. The cost of securities sold is based on the average cost method. Changes in net unrealized gains and losses are reported in the combined statements of operations and represent the change in the fair value of investment holdings during the year. Dividends are recorded in income when paid. Interest is recognized when earned.
- 11 -
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Accounts Receivable Accounts receivable are reported net of an allowance for doubtful accounts, to represent MJHS’s estimate of the amount that ultimately will be realized in cash. The allowance for doubtful accounts was approximately $6,924,000 and $6,002,000 as of June 30, 2016 and 2015, respectively. The adequacy of MJHS’s allowance for doubtful accounts is reviewed on an ongoing basis, using historical payment trends, write-off experience, analysis of receivable portfolios by payor source and aging of receivables, as well as a review of specific accounts, and adjustments are made to the allowance as necessary.
Pledges Receivable
Unconditional pledges to give cash and other assets (including multi-year pledges) are recognized at fair value in the period the pledge is made. Pledges to be received over more than one year are measured at the present value of estimated future cash flows. The discount rate used in the present value computation at June 30, 2016 and 2015 was 4%. The pledge recognition policy requires that pledge payments be in compliance with the original terms or amended pledge agreement for the pledge to be carried at fair value without a reserve for uncollectible accounts being established against it (see Note 7). Assets Whose Use is Limited
Assets whose use is limited includes both unrestricted and restricted cash and investment amounts set aside under provisions of borrowing and contractual arrangements. A detail of the amounts comprising assets whose use is limited is presented in Note 6.
Property and Equipment
Property and equipment are recorded at cost, if purchased, or at fair market value at the date of gift, if donated. Depreciation and amortization are provided using the straight-line method over the shorter of the lease terms or estimated useful lives of the various classes of assets: 40 years for buildings and improvements, between 5 and 10 years for furniture, equipment, and vehicles and 15 years for land improvements. Expenditures that improve or extend the life of property and equipment are capitalized. The cost of maintenance, repairs, and recurring replacements are charged to operations as incurred.
Property and equipment purchased with government grants are classified as unrestricted net assets, when the likelihood of the return of the assets to the government is considered remote and there are no specific requirements.
Deferred Financing Costs
Costs related to obtaining financing have been deferred and are being systematically amortized to operations over the term of the related debt obligations. As of June 30, 2016 and 2015, deferred financing costs, net consists of gross costs of approximately $407,000 and accumulated amortization of approximately $211,000 and $192,000, respectively, and are included in other assets in the combined balance sheets. Amortization of deferred costs amounted to approximately $19,000 in 2016 and 2015.
- 12 -
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)�
Impairment of Long-Lived Assets and Intangible Assets
MJHS’s management continually monitors conditions that may affect the carrying value of its long-lived assets and intangible assets. When changes in conditions indicate potential impairment, management re-evaluates projected future cash flows associated with the asset. When projected future cash flows over the useful life of the asset, discounted for the time value of money at 4% per annum, are less than the carrying value of the asset, the asset is written down to its estimated net realizable value. No impairment losses were recorded in the years ended June 30, 2016 and 2015.
Net Asset Classification
Net assets are presented based on the existence or absence of donor-imposed restrictions. In these combined financial statements, net assets are reported as follows:
Unrestricted - Net assets that are not subject to donor-imposed restrictions.
Temporarily� Restricted - Net assets whose use is subject to donor-imposed restrictions that can be fulfilled by actions of MJHS or by the passage of time.
Permanently� Restricted - Net assets subject to donor-imposed restrictions that neither expire by the passage of time nor can be fulfilled or otherwise removed by actions of MJHS.
Revenue Recognition
Healthcare Services Revenue
Payment arrangements for providing healthcare services include reimbursed costs, discounted charges, and per diem payments. Revenue is reported at the estimated net realizable amounts receivable from residents, third-party payors, and others at the time services are rendered.
Under the Florida Medicaid program, providers of skilled nursing services are reimbursed their reasonable costs subject to certain limitations, as defined in the applicable regulations and State Plan. Skilled nursing services rendered to Medicare program beneficiaries are reimbursed using prospectively determined case-mix rates. These rates vary according to a classification system that is based on clinical assessments.
Revenue recognized under Medicaid, Medicare, and other third-party payor agreements is generally subject to audit and retroactive adjustment by the payors or their intermediaries. Provisions for estimated third-party payor settlements, if any, are made in the period the related services are rendered. Differences between the estimated amounts accrued and interim and final settlements are reported in operations in the year they become known.
- 13 -
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Revenue Recognition (Continued)
Independent and Assisted Living Revenue
Rental income is recorded on the accrual basis in the period in which occupancy rights
are provided. Ancillary charges for various additional services are recorded in the period the services are provided.
Grant and Contract Revenues
Revenues from grants and contracts are recognized when expenses are incurred or services are provided, as defined in the contract or grant agreement. Contributions and Donations
Contributions are recorded at their estimated fair values on the date of receipt.
Contributions are considered to be available for unrestricted use unless specifically
restricted by the donor. Gifts of cash and other assets received with donor stipulations
that limit the use of the donated assets are reported as a restricted contribution. When a restriction ends, or the purpose of the restriction is accomplished, temporarily
restricted net assets are reclassified to unrestricted net assets and are reported in the
combined statements of operations as net assets released from restrictions. Donor-restricted contributions whose restrictions are met in the same reporting period are
reported as unrestricted contributions in that period.
Donated merchandise used for fundraising activities is recorded as support upon sale,
rather than upon receipt, since no objective basis is available to measure its value.
Numerous individuals volunteer their time and effort in support of MJHS and its
mission. No amounts have been reflected in these combined financial statements for
those donated services, as there is no objective basis to measure its value.
Income Taxes MJHS, its subsidiaries and its affiliates, except Douglas Gardens Coral Way, which
was closed in 2010 and is currently in the process of dissolution, are not-for-profit
organizations exempt from income taxes, as described under Sections 501(c)(3) and 501(c)(2) of the Internal Revenue Code. Accordingly, no provision for income taxes
has been included in these combined financial statements. As of June 30, 2016, with few exceptions, MJHS and subsidiaries and affiliates are no longer subject to income tax examinations by the United States federal taxing authority for any tax years before the tax year ended June 30, 2013.
- 14 -
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Estimates
The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.
Subsequent Events MJHS has evaluated subsequent events for recording and disclosure in these combined financial statements through September 26, 2016, which is the date the combined financial statements were available to be issued.
NOTE 3- FAIR VALUE MEASUREMENTS
Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment. Changes in assumptions and in MJHS’s operating environment could significantly affect these estimates.
The fair value of financial instruments is presented based upon a hierarchy of levels that prioritize the inputs of valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described as follows:
Level 1 Unadjusted quoted prices in active markets for identical assets or
liabilities.
Level 2 Inputs other than quoted prices in active markets within Level 1 that are either directly or indirectly observable, including quoted prices for similar assets or liabilities in active markets.
Level 3 Significant, unobservable inputs for the asset or liability in which little or no market data exists.
A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.
If available, quoted market prices are used to value investments, including investments classified as assets whose use is limited. Equity and fixed income securities are valued at the closing price reported on the most active market on which the individual securities are traded. Mutual funds are valued at the closing price reported on the most active market on which the fund is traded or at the net asset value calculated daily by the fund administrator, based upon the quoted market prices of the underlying securities held by the fund less unpaid expenses. Hedge funds and private equity funds not traded on active markets are valued using a combination of market and income approaches related to the specific characteristics of the investment.
- 15 -
NOTE 3 - FAIR VALUE MEASUREMENTS (Continued)� The following tables set forth by level, within the fair value hierarchy, MJHS’s investments and assets whose use is limited measured at fair value as of June 30, 2016 and 2015:
2016 Level 1 Level 2 Level 3 Total ASSETS Investments: Equity Securities: Energy $ 455,704 $ - $ - $ 455,704 Materials 303,952 - - 303,952 Industrials 756,432 - - 756,432 Consumer discretionary 996,375 - - 996,375 Consumer staples 593,638 - - 593,638 Healthcare 723,661 - - 723,661 Financials 828,592 - - 828,592 Information technology 1,281,508 - - 1,281,508 Commodity ETFS 188,805 - - 188,805 Mutual funds 342,089 - - 342,089 Preferred stocks 112,680 - - 112,680 Telecommunications services 247,272 - - 247,272 Utilities 28,739 - - 28,739 Exchange traded funds 3,127,505 - 3,127,505 Total Equity Securities 9,986,952 - - 9,986,952
Fixed Income Securities:
Collateralized mortgage obligations
$ 18,796
$ -
$ -
$ 18,796
Corporate bonds and notes 2,918,111 - - 2,918,111 Foreign debt securities 443,167 - - 443,167 Mortgage backed securities 235,717 - - 235,717 Medium term notes 50,503 - - 50,503 High yield bonds 653,420 - - 653,420 Municipal bonds 170,463 - - 170,463 Mutual funds 199,611 - - 199,611 Structured notes 473,769 - - 473,769 Treasury notes 638,789 - - 638,789 U.S. government agencies 209,667 - - 209,667 Total Fixed Income Securities 6,012,013 - - 6,012,013 Hedge fund - - 7,825 7,825 Private equity fund - - 376,419 376,419 Total Investments $ 15,998,965 $ - $ 384,244 $ 16,383,209
- 16 -
NOTE 3 - FAIR VALUE MEASUREMENTS (Continued)�
2016
Level 1 Level 2 Level 3 Total Assets Whose Use is Limited: Cash and cash equivalents $ 7,675,384 $ - $ - $ 7,675,384 Mutual funds 589,213 - - 589,213 Equity Securities: Energy 61,298 - - 61,298 Materials 58,256 - - 58,256 Industrials 137,578 - - 137,578 Consumer discretionary 205,140 - - 205,140 Consumer staples 99,522 - - 99,522 Healthcare 125,259 - - 125,259 Financials 132,291 - - 132,291 Information technology 204,597 - - 204,597 Telecommunications services 59,211 - - 59,211 Other 3,358 - - 3,358 Exchange traded funds 200,391 - - 200,391 Total Equity Securities 1,286,901 - - 1,286,901
Fixed Income Securities: Corporate bonds and notes $ 449,586 $ - $ - $ 449,586 Foreign debt securities 79,959 - - 79,959 Government bonds 6,427 - - 6,427 Mortgage backed securities 254,358 - - 254,358 Medium term notes 26,341 - - 26,341 Municipal bonds 36,159 - - 36,159 Mutual Funds 24,944 - - 24,944 Treasury notes 65,873 - - 65,873 High yield bonds 82,001 - - 82,001 Supranational Bonds 25,071 - - 25,071 U.S. government agencies 35,006 - - 35,006 Total Fixed Income Securities 1,085,725 - - 1,085,725 Total Assets Whose Use is Limited
$ 10,637,223
$ -
$ -
$ 10,637,223
LIABILITIES
Annuity payment liability $ - $ - $ 1,048,620 $ 1,048,620 Interest rate swap $ - $ 1,696,239 $ - $ 1,696,239
- 17 -
NOTE 3 - FAIR VALUE MEASUREMENTS (Continued)�
2015
Level 1 Level 2 Level 3 Total
ASSETS Investments:
Equity Securities: Energy $ 654,570 $ - $ - $ 654,570 Materials 321,589 - - 321,589 Industrials 825,908 - - 825,908 Consumer discretionary 1,786,012 - - 1,786,012 Consumer staples 806,189 - - 806,189 Healthcare 1,256,138 - - 1,256,138 Financials 1,721,671 - - 1,721,671 Information technology 1,386,731 - - 1,386,731 Telecommunications services 247,007 - - 247,007 Utilities 357,809 - - 357,809 Exchange traded funds 1,511,042 - 1,511,042
Total Equity Securities 10,874,666 - - 10,874,666
Fixed Income Securities:
Collateralized mortgage obligations
$ 22,654
$ -
$ -
$ 22,654
Corporate bonds and notes 2,264,403 - - 2,264,403 Foreign debt securities 662,378 - - 662,378 Foreign agency debt securities 75,856 - - 75,856 Government bonds 177,085 - - 177,085 Mortgage backed securities 281,530 - - 281,530 Medium term notes 419,363 - - 419,363 High yield bonds 593,409 - - 593,409 State of Israel bonds 275,837 - - 275,837
Total Fixed Income Securities 4,772,515 - - 4,772,515 Hedge fund - - 12,022 12,022 Private equity fund - - 1,107,838 1,107,838
Total Investments $ 15,647,181 $� - $ 1,119,860 $ 16,767,041
- 18 -
NOTE 3 - FAIR VALUE MEASUREMENTS (Continued)�
2015
Level 1 Level 2 Level 3 Total
Assets Whose Use is Limited: Cash and cash equivalents $ 7,615,776 $ - $ - $ 7,615,776 Mutual funds 979,862 - - 979,862 Equity Securities: Energy 84,064 - - 84,064 Materials 60,117 - - 60,117 Industrials 114,305 - - 114,305 Consumer discretionary 341,481 - - 341,481 Consumer staples 108,910 - - 108,910 Healthcare 200,646 - - 200,646 Financials 241,044 - - 241,044 Information technology 212,268 - - 212,268 Telecommunications services 40,103 - - 40,103 Other 3,963 - - 3,963 Exchange traded funds 233,532 - - 233,532
Total Equity Securities 1,640,433 - - 1,640,433 Fixed Income Securities: Corporate bonds and notes $ 338,755 $ - $ - $ 338,755 Foreign debt securities 125,402 - - 125,402 Government bonds 46,014 - - 46,014 Mortgage backed securities 359,308 - - 359,308 Medium term notes 50,122 - - 50,122 Municipal bonds 75,589 - - 75,589 Treasury notes 43,712 - - 43,712 High yield bonds 53,106 - - 53,106 State of Israel bonds 25,076 - - 25,076 U.S. government agencies 24,948 - - 24,948
Total Fixed Income Securities 1,142,032 - - 1,142,032
Total Assets Whose Use is Limited
$ 11,378,103
$ -
$ -
$ 11,378,103
LIABILITIES
Annuity payment liability $ - $ - $ 1,565,609 $ 1,565,609 Interest rate swap $ - $ 1,631,705 $ - $ 1,631,705
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NOTE 3 - FAIR VALUE MEASUREMENTS (Continued)�
The tables below summarize changes in the fair value of Level 3 assets for the years ended June 30, 2016 and 2015:
2016 Level 3 Rollforward Fair
Value at June 30, 2015
Net
Activity
Change in Fair
Value
Fair Value at
June 30, 2016 ASSETS: Hedge funds $ 12,022 $ (4,197) $ - $ 7,825 Private equity fund 1,107,838 (5,282) (726,137) 376,419
$ 1,119,860 $ (9,479) $ (726,137) $ 384,244
Fair Value at June 30, 2015
Issuances
Repayments and Settlements
Present Value of Estimated Cash Flows
Fair Value at June 30, 2016
LIABILITIES: Annuity payment liability $ 1,565,609 $ - $ (459,568) $ (57,421) $ 1,048,620
2015
Level 3 Rollforward
Fair Value at
June 30, 2014
Net
Activity
Change in Fair
Value
Fair Value at
June 30, 2015
ASSETS:
Hedge funds $ 13,649 $ (1,447) $ - $ 12,022 Private equity fund 1,247,545 (268,975) 129,268 1,107,838
$ 1,261,014 $ (270,422) $ 129,268 $ 1,119,860
Fair Value at June 30, 2014
Issuances
Repayments and Settlements
Present Value of Estimated Cash Flows
Fair Value at June 30, 2015
LIABILITIES:
Annuity payment liability $ 1,754,082 $ - $ (250,294) $ 61,821 $ 1,565,609
During the years ended June 30, 2016 and 2015, MJHS received cash reducing the value in the Level 3 hedge and private equity fund investments.
The carrying value of pledges receivable approximates fair value, as they have been discounted using the present value of future cash flows. The carrying value of MJHS’s long-term debt approximates fair value, as the stated interest rates approximate rates at which similar types of borrowing could be currently obtained by MJHS. The fair value and carrying value of the interest-rate swap is the estimated amount that MJHS would receive or pay to terminate the swap agreement at the reporting date, taking into account current interest rates and the current creditworthiness of the swap counterparty. The carrying amounts of the following instruments approximate fair value because of their short maturities: cash and cash equivalents, accounts receivable, prepaid expenses, accounts payable, accrued expenses, and other current liabilities.
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NOTE 4 - INVESTMENTS
The composition of investments at June 30, 2016 and 2015 is as follows:
2016
Fair Value Cost Equity securities $ 9,986,952 $ 9,362,341 Fixed income securities 6,012,013 5,853,094 Hedge fund 7,825 18,178 Private equity fund 376,419 69,811 16,383,209 15,303,424 Less current portion (414,327) (631,034) Total long-term portion $ 15,968,882 $ 14,672,390
2015
Fair Value Cost
Equity securities $ 10,874,666 $ 9,516,597
Fixed income securities 4,772,515 5,374,755
Hedge fund 12,022 21,991
Private equities 1,107,838 42,500
16,767,041 14,955,843
Less current portion (974,448) (1,140,000)
Total long-term portion $ 15,792,593 $ 13,815,843
The following summarizes investment income and its classification in the combined statements of operations for the fiscal years ended June 30, 2016 and 2015:
2016
Unrestricted Temporarily
Restricted Dividends and interest $ 710,575 $ 96,098 Net realized gain 284,657 - Return on permanently restricted investments transferred to unrestricted
56,715
-
Total investment income $ 1,051,947 $ 96,098
2015
Unrestricted Temporarily
Restricted
Dividends and interest $ 1,168,416 $ 119,866
Net realized gain 1,786,621 -
Return on permanently restricted investments transferred to unrestricted
56,715
-
Total investment income $ 3,011,752 $ 119,866
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NOTE 5 - INVESTMENTS IN UNCONSOLIDATED AFFILIATES
MJHS’s investment in unconsolidated affiliates as of June 30, 2016 and 2015 is comprised of the following:
2016 2015
Village Green Townhomes $ 8,600,000 $ 8,600,000
Hospice and palliative care 1,838,112 1,595,337
Home health agency 675,000 675,000
Total investment in unconsolidated affiliates $ 11,113,112 $ 10,870,337
MJHS’s investment of 44% of the membership interest of Village Green Townhomes is carried at cost because MJHS does not exercise significant influence over its operating and financial activities. Dividends received from this investment are included in investment gains or losses in the combined statements of operations and changes in net assets, which amounted to approximately $794,000 and $858,000 for the years ended June 30, 2016 and 2015, respectively. Dividends received in excess of MJHS’s proportionate share of accumulated earnings are applied as a reduction of the cost of the investment. MJHS holds a 20% ownership interest in a hospice and palliative care corporation, located in Miami-Dade County. The investment in this unconsolidated affiliate is accounted for by the equity method. Under the equity method, MJHS records its share of income/loss in the combined statements of operations and changes in net assets as investment gains or losses, and the carrying value of the MJHS investment in the unconsolidated affiliate is recorded in the combined balance sheets. MJHS acquired a 15% ownership interest in a hospice and palliative care corporation, located in Broward County, for approximately $302,000 during the year ended June 30, 2016. The investment in this unconsolidated affiliate is accounted for by the cost method because MJHS does not exercise significant influence over its operating and financial activities. Dividends received from this investment are included in investment income and realized gains and losses, net in the combined statements of operations and changes in net assets. There were no dividends received for the year ended June 30, 2016. MJHS holds a 50% ownership interest in a home health agency corporation. The investment in this unconsolidated affiliate is accounted for by the equity method. Under the equity method, MJHS records its share of income/loss in the combined statements of operations and changes in net assets as investment gains or losses, and the carrying value of the MJHS investment in the unconsolidated affiliate is recorded in the combined balance sheets.
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NOTE 6 - ASSETS WHOSE USE IS LIMITED MJHS’s Board of Directors has designated a portion of its cash and cash equivalents and investments for capital improvements, debt requirements, and other future needs of MJHS. The HUD restricted funds were established under an agreement with the U.S. Department of Housing and Urban Development (“HUD”) for the purpose of repairing and replacing assets of the affordable housing projects (see Note 15). The designation of assets whose use is limited as of June 30, 2016 and 2015 are as follows:
2016 2015
Use limited as per bond indenture $ 3,285,882 $ 3,265,773
Use limited as per revolving credit facility 3,000,000 3,000,000
General and professional liability insurance 680,000 680,000
Split-interest agreements 1,593,375 2,475,932
HUD restricted funds 700,890 671,125
Permanently restricted endowments 1,377,076 1,285,273
10,637,223 11,378,103
Less current portion (7,644,702) (7,730,720)
Long-term portion $ 2,992,521 $ 3,647,383
The composition of assets whose use is limited at June 30, 2016 and 2015 are as follows: 2016
Fair Value Cost
Cash and cash equivalents $ 7,644,702 $ 7,644,702 Mutual funds 589,213 693,428 Equity securities 1,317,583 1,234,724 Fixed income securities 1,085,725 1,070,075
$ 10,637,223 $ 10,642,929 2015
Fair Value Cost
Cash and cash equivalents $ 7,615,776 $ 7,615,776 Mutual funds 979,862 1,026,808 Equity securities 1,640,433 1,414,296 Fixed income securities 1,142,032 1,139,403
$ 11,378,103 $ 11,196,283
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NOTE 7 - PLEDGES RECEIVABLE, NET Total net pledges receivable as of June 30, 2016 and 2015 were as follows:
2016 2015
Gross pledges receivable $ 845,496 $ 1,196,164
Less allowance for uncollectable pledges (113,363) (332,973)
Less discounts to net present value (63,693) (88,305)
Net pledges receivable $ 668,440 $ 774,886
Amounts due in:
Less than one year $ 176,929 $ 199,440
One to five years 369,839 353,260
More than five years 121,672 222,186 Net pledges receivable 668,440 774,886
Less current portion (176,929) (199,440)
Long-term portion $ 491,511 $ 575,446
NOTE 8 - PROPERTY AND EQUIPMENT, NET
Property and equipment, net, at June 30, 2016 and 2015 is comprised of the following:
2016 2015
Land $ 9,830,770 $ 9,830,770
Land improvements 9,391,758 9,400,308
Buildings and improvements 104,705,403 106,486,289
Furniture and equipment 38,036,774 37,089,340
Vehicles 2,159,925 1,870,574
Construction in progress 1,951,079 1,516,142
166,075,709 166,193,423
Less accumulated depreciation and amortization
(92,451,125)
(87,884,771)
Property and equipment, net $ 73,624,584 $ 78,308,652
Depreciation and amortization of property and equipment approximated $5,876,000 for each of the years ended June 30, 2016 and 2015. Construction in progress relates to various upgrades and improvement projects throughout the organization. During the year ended June 30, 2016, MJHS transferred approximately $1,038,000 from construction in progress to various property and equipment categories primarily relating to the PACE Miramar location, Chernin building renovations, and main campus building and land improvements. During the year ended June 30, 2016, MJHS sold a building that was previously used as a thrift shop for $2,500,000, which resulted in a net gain of approximately $1,624,000.
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NOTE 9 - SPLIT-INTEREST AGREEMENTS AND CHARITABLE ANNUITIES
MJHS has been named as a beneficiary in numerous charitable gift annuities, split interest agreements, and remainder trusts. Under these agreements, specified amounts or percentages of investments are payable to the donor, or to the donor’s designee, for life. Upon the death of the donor or the donor’s designee, the balance of the investment is paid to MJHS.
MJHS recognizes a portion of each agreement as contribution income at the time that the agreement becomes effective. The amount of the contribution is the difference between the fair value of the contributed assets and the present value of the total estimated future payments to be made over the expected life of the donor or designee. The present value of the estimated future payments is recorded as a liability. The agreements are valued using discount rates established by the American Council on Gift Annuities. Adjustment of the liability to reflect actuarial valuation of the future cash flows, due to revisions of life expectancies or changes in discount factors, is recognized in subsequent periods in the combined statements of operations and changes in net assets. The following tables present additional detail regarding the assets (included in the caption assets whose use is limited) and liability amounts related to these agreements presented in the combined balance sheets:
June 30, 2016 Assets Liability
Charitable remainder annuities $ 652,761 $ 599,012 Gift life annuities 940,613 449,608 1,593,374 1,048,620 Less current portion (197,197) (197,197)
Long-term portion $ 1,396,177 $ 851,423
June 30, 2015
Assets Liability
Charitable remainder annuities $ 1,064,877 $ 1,006,012
Gift life annuities 1,411,055 559,597
2,475,932 1,565,609
Less current portion (250,294) (250,294)
Long-term portion $ 2,225,638 $ 1,315,315
NOTE 10 - BORROWING ARRANGEMENTS
Revolving Credit Facility MJHS has a revolving credit facility from a financial institution which provides for maximum borrowings of up to $5,000,000. Advances on the credit facility are to provide cash for working capital, debt payments, and reserve funding. Allowable advances are based on eligible receivables, as defined in the revolving credit facility agreement (the “Revolving Credit Agreement”). The borrowings are collateralized by MJHS cash and cash equivalents, receivables, and investments. The credit facility expires December 31, 2016.
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NOTE 10 - BORROWING ARRANGEMENTS (Continued)�
Revolving Credit Facility (Continued) Borrowings under the revolving credit facility bear interest based upon the 30-day LIBOR rate plus 1.72% (2.19% at June 30, 2016). As of June 30, 2016 and 2015, the unutilized borrowings on the revolving credit facility approximated $282,000 and $654,000, respectively. The Revolving Credit Agreement includes restrictive covenants which require MJHS to maintain certain levels within its borrowing base and above minimum financial covenants based on earnings before interest, income tax, depreciation and amortization expenses and net contributions received from donors, as defined by the Revolving Credit Agreement. As of June 30, 2016, MJHS was in full compliance with all covenants of the Revolving Credit Agreement. Cash paid for interest on the revolving credit facility was approximately $84,000 and $80,000 for the years ended June 30, 2016 and 2015, respectively.
Term Loan On December 20, 2013, MJHS entered into an $8,000,000 term loan agreement to finance the renovations of certain operating facilities. The term loan is secured by certain property and equipment and requires monthly principal payments of $55,556, commencing January 1, 2015. Interest on the outstanding principal balance is payable monthly and accrues at the 30-day LIBOR rate plus 2.1% (2.57% at June 30, 2016). The lender has the option to convert the rate to the Prime Rate plus an applicable margin at the beginning of each month. The term loan matures on December 20, 2026, but includes acceleration or a five-year extension option, at the discretion of the lender, on the fifth anniversary of the term loan effective date (Put Date). The term loan is subject to restrictive financial covenants which require MJHS to maintain a minimum debt service coverage ratio and unrestricted liquidity to funded debt ratio. It also limits capital expenditure spending not financed by the proceeds of this loan agreement. As of June 30, 2016, MJHS was in full compliance with all covenants of the term loan. Cash paid for interest on the term loan was approximately $179,000 and $182,000 for the years ended June 30, 2016 and 2015, respectively. Future maturities on the term loan are as follows for each of the years ending June 30:
Year Amount
2017 $ 666,667 2018 666,667 2019 666,667 2020 666,667 2021
Thereafter 666,667
3,666,665
$ 7,000,000
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NOTE 10 - BORROWING ARRANGEMENTS (Continued)� Bonds Payable On August 1, 2005, MJHS completed the refinancing of the 1992 and 1996 City of Miami, Florida Health Facilities Authority Revenue Bonds, with the issuance of the Series 2005, City of Miami, Florida Health Facilities Authority Revenue Bonds (“the Bonds”). The Bonds, issued in the original amount of $25,800,000, will mature on August 1, 2026. The proceeds of the Bonds were applied to finance and refinance the cost of construction, acquisition and equipping of certain capital improvements of MJHS’s operating facilities. The Bonds are enhanced by an irrevocable letter of credit from a financial institution, which expires in December 2016. The letter of credit is collateralized by the assignment of certain rents and leases and a first mortgage on certain real and personal property of MJHS. MJHS is also required to maintain certain deposits with a trustee. Such deposits are included in assets whose use is limited in the combined balance sheets (see Note 6).
The Bonds are payable in annual principal payments of $710,000 due every August 1, through 2015 and $1,700,000 from 2016 through 2026. The Bonds bear interest at variable rates, which ranged from 0.09% to 0.49% and 0.19% to 0.29% during the years ended June 30, 2016 and 2015, respectively. The effective rate for the year ending 2016 was 0.29%.
Future maturities on the Bonds are as follows for each of the years ending June 30:
Year Amount
2017 $ 1,700,000 2018 1,700,000 2019 1,700,000 2020 1,700,000 2021
Thereafter 1,700,000
10,200,000
$ 18,700,000
Cash paid for interest and fees related to the Bonds approximated $695,000 and $728,000 for the years ended June 30, 2016 and 2015, respectively.
Interest Rate Swap Agreement
MJHS has entered into an Interest Rate Swap Agreement (the “Swap Agreement”) related to its Bonds to hedge against increases in short-term interest rates. The Swap Agreement provides, among other things, for MJHS to pay a fixed rate of 4.45% and receive interest at a variable rate based on the BMA Municipal Swap Index. The Swap Agreement expires in August 2026 and has certain cancellation options. The notional amount on the Swap Agreement is equal to 50% of the outstanding principal on the Bonds ($9,350,000 at June 30, 2016). Credit loss from counterparty nonperformance is not anticipated.
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NOTE 10 - BORROWING ARRANGEMENTS (Continued)�
Interest Rate Swap Agreement (Continued)
The fair value of the Swap Agreement resulted in a liability of approximately $1,696,000 and $1,632,000 at June 30, 2016 and 2015, respectively, which represents the amount MJHS would have to pay the counterparty to terminate the Swap Agreement. The change in fair value of the Swap Agreement is reflected in the combined statements of operations and changes in net assets as a change in unrestricted net assets before non-operating items of approximately $(64,000) and $11,000 for the years ended June 30, 2016 and 2015, respectively.
NOTE 11 - EMPLOYEE BENEFIT PROGRAMS
Defined Benefit Pension Plan
MJHS and a former affiliated entity, Douglas Gardens Community Mental Health Center, Inc. (the “Center”), have a joint defined benefit pension plan (the “Plan”), providing retirement, death, and disability benefits to eligible employees of MJHS and the Center over the age of 21 with at least one year of service. The annual retirement benefits, to be paid to employees with five or more years of service when they reach normal retirement age are based on credited service and earnings, as defined by the Plan. The assets and corresponding liabilities of the Plan are not included in MJHS’s combined financial statements since they are held in trust for the benefit of the Plan participants and are not owned by MJHS. Effective April 1, 2011, the Center terminated its employees from the Plan’s benefit structure which stopped the accruals of future employee benefits. Since the Center’s participants represent less than 10% of all participants, no special accounting was required. The Center has agreed to honor its portion of the defined benefit plan obligation held by MJHS on behalf of the Center. Effective September 1, 2011, MJHS’s management adopted a hard freeze in the Plan’s benefit structure and ceased accruals of future employee benefits for Plan participants. During the fiscal year ending June 30, 2016, a one-time opportunity was given to terminated vested participants to elect a lump-sum benefit. The Plan paid out approximately $10,223,000 in lump-sum payments, which reduced the projected benefit obligation by approximately $14,003,000.
The net periodic pension cost of the Plan for the years ended June 30, 2016 and 2015 was determined as follows:
2016 2015
Service cost $ 385,000 $�� 344,764�Interest cost 3,535,796 3,184,059 Expected return on Plan assets (4,600,898) (5,087,046) Amortization of net actuarial loss 909,742 705,731
Net period pension cost $ 229,640 $ (852,492)
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NOTE 11 - EMPLOYEE BENEFIT PROGRAMS (Continued) Defined Benefit Pension Plan (Continued) The following assumptions were used to determine the net periodic pension cost:
2016 2015
Discount rate 3.76% 4.62% Expected long-term rate of return on assets 6.53% 7.36% Rate of increase in salary levels N/A N/A
The following table reconciles the changes in the Plan’s projected benefit obligation for the years ended June 30, 2016 and 2015:
2016 2015
Projected benefit obligation at beginning of year $ 78,814,227 $ 73,022,905 Service cost 385,000 344,764 Interest cost 3,535,796 3,184,059 Actuarial loss 10,031,892 6,067,960 Benefits paid (3,458,528) (3,502,925) Administrative costs (383,418) (302,536) Lump-sum benefit election reduction (14,003,311) -
Projected benefit obligation at end of year $ 74,921,658 $ 78,814,227
Changes in the Plan for the years ended June 30, 2016 and 2015 were as follows:
2016 2015
Fair value of Plan assets at beginning of year $ 70,686,210 $ 68,595,142 Actual return on Plan assets 1,288,211 2,972,981 Employer contributions 2,923,548 2,923,548 Benefits paid (3,458,528) (3,502,925) Administrative costs (383,418) (302,536) Lump-sum benefit election payments (10,223,186) -
Fair value of Plan assets at end of year $ 60,832,737 $ 70,686,210
The Plan’s weighted-average asset allocations at June 30, 2016 and 2015, by asset category, were as follows:
2016 2015
Equity securities 12% 36% Pooled, common and collective funds 33% 21% Cash and cash equivalents 9% 1% Mutual funds 46% 42%
Total 100% 100%
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NOTE 11 - EMPLOYEE BENEFIT PROGRAMS (Continued) Defined Benefit Pension Plan (Continued) The overall objective of the Plan’s investment policy is to achieve a rate of return which equals or exceeds the expected long-term rate of return assumed for measuring the Plan’s projected obligations. A wide variety of investment vehicles can be purchased, as authorized in the Plan’s investment policy. Quarterly performance of the equity portfolio is measured against the Russell 1000/2500 and MSCI EAFE indices, while the fixed income portfolio is measured against the Merrill Lynch US Corp 1-5 year/5-10 year indices Barclay’s Intermediate Gov’t/Credit Index. Risk-adjusted returns are compared with other risk-adjusted returns for similar portfolios. The total portfolio will be compared against a benchmark portfolio utilizing the Russell 1000/2500 indices, MSCI EAFE Index, Merrill Lynch US Corp 1-5 year/5-10 year indices Barclay’s Intermediate Gov’t/Credit Index and 90-day T bills.
The Plan’s unfunded pension benefit obligation at June 30, 2016 and 2015 was calculated as follows:
2016 2015
Projected benefit obligation $ 74,921,658 $ 78,814,227 Less: Plan assets at fair value (60,832,737) (70,686,210)
Unfunded pension benefit obligation $ 14,088,921 $ 8,128,017
The Plan’s unfunded pension benefit obligation at June 30, 2016 and 2015 is classified as follows:
2016 2015
Current liabilities $ - $ -
Noncurrent liabilities 14,088,921 8,128,017
Unfunded pension benefit obligation $ 14,088,921 $ 8,128,017
Other changes in Plan assets and benefit obligations recognized in unrestricted net assets are as follows:
2016 2015
Actuarial net loss $ (13,364,197) $ (8,182,025) Amortization of net loss 909,742 705,731 Lump sum benefit election reduction 3,780,125 -
Total recognized in unrestricted net assets $ (8,674,330) $ (7,476,294)
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NOTE 11 - EMPLOYEE BENEFIT PROGRAMS (Continued)
Defined Benefit Pension Plan (Continued) MJHS and the Center expect, but are not required, to jointly contribute approximately $2,923,548 to the pension plan in 2017. The June 30, 2016 and 2015 allocations of MJHS’s and the Center’s respective share of the required unfunded pension liability, net periodic pension cost and other pension related changes are illustrated in the following table:
June 30, 2016 MJHS The Center Total
Unfunded Pension Liability Current liabilities $ - $ - $ - Noncurrent liabilities 12,849,096 1,239,825 14,088,921
Total unfunded liability $ 12,849,096 $ 1,239,825 $ 14,088,921
Net periodic pension cost Net periodic pension cost $ 209,432 $ 20,208 $ 229,640
Other pension related changes net loss $ 7,912,707 $ 761,623 $ 8,674,330
June 30, 2015
MJHS The Center Total
Unfunded Pension Liability
Current liabilities $ - $ - $ - Noncurrent liabilities 7,372,925 755,092 8,128,017
Total unfunded liability $ 7,372,925 $ 755,092 $ 8,128,017
Net periodic pension cost Net periodic pension cost $ (773,210) $ (79,282) $ (852,492)
Other pension related changes net loss $ 6,784,700 $ 691,595 $ 7,476,295
The following benefit payments are projected to be made by the Plan for each of the years ending June 30:
Year Amount
2017 $ 4,945,591 2018 4,727,988 2019 4,701,074 2020 4,639,143 2021 4,699,043
Thereafter 21,448,055
$ 45,160,894
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NOTE 11 - EMPLOYEE BENEFIT PROGRAMS (Continued) Defined Contribution Pension Plan
On July 1, 2010, MJHS established a qualified defined contribution employee benefit plan (the “403(b) Plan”) as allowed under Section 403(b) of the Internal Revenue Code (the “Code”). All MJHS employees are eligible to make elective contributions. Employees who have completed 12 months of service, are 21 years old, and work at least 20 hours per week are eligible to receive employer contributions in the 403(b) Plan.
The 403(b) Plan permits participant contributions up to a limit set by the Code. MJHS matches 100% of employee’s elective contributions up to 3% of annual compensation, plus 50% of the employee’s contribution in excess of 3% but not greater than 5% of annual compensation. Employees are immediately vested in the matching portion of the contributions. For the years ended June 30, 2016 and 2015, the employer match contributions were approximately $693,000 and $605,000, respectively.
Supplemental Executive Retirement Plan MJHS offers a nonqualified executive pension benefit through a Supplemental Executive Retirement Plan (“SERP”) agreement. The SERP’s projected benefit obligation as of June 30, 2016 and 2015 amounted to $4,766,337 and $3,503,623, respectively. No SERP assets were held as of June 30, 2016 and 2015. Therefore, the projected benefit obligation was equal to the unfunded SERP benefit obligation as of June 30, 2016 and 2015. The SERP’s unfunded benefit obligation is classified as noncurrent and is included in other liabilities in the combined balance sheets at June 30, 2016 and 2015.
NOTE 12 - TEMPORARILY RESTRICTED NET ASSETS
Temporarily restricted net assets as of June 30, 2016 and 2015 were available for the following purposes:
2016 2015
Property and equipment Generator - Meyer Building
$ 28,076 990,550
$ 277,189 990,550
Love on Wheels (patient transportation) 129,667 217,951 Music Therapy 365,335 8,865 Feterson Regal Arts and Crafts program 199,020 181,600 Girsh Memory Enrichment Institute Empathic Village Memory Center
620,493 560,675 178,541
688,641 50,000 118,873
Various specific programs 343,951 784,128
Total temporarily restricted net assets $ 3,416,308 $ 3,317,797
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NOTE 12 - TEMPORARILY RESTRICTED NET ASSETS (Continued) For the fiscal years ended June 30, 2016 and 2015, net assets were released from donor restrictions by incurring expenses and prior year program losses for the following purposes:
2016 2015
Property and equipment expenditures $ 267,878 $ 1,271,168
Other activities 364,194 385,222
Total net assets released from restrictions $ 632,072 $ 1,656,390
NOTE 13 - ENDOWMENTS
MJHS’s endowments consist of individual funds established for a variety of purposes. The endowments include donor-restricted contributions. Net assets associated with endowment funds are classified and reported based on the existence or absence of donor-imposed restrictions. Endowment net assets by type of fund as of June 30, 2016 and 2015 consisted of:
2016
Unrestricted Temporarily
Restricted Permanently
Restricted
Total Donor-restricted endowment funds
$ 222,318
$ 2,376,578
$ 1,123,875
$ 3,722,771
2015
Unrestricted
Temporarily Restricted
Permanently Restricted
Total
Donor-restricted endowment funds
$ 165,603
$ 1,930,103
$ 1,123,875
$ 3,219,581
Changes in endowment net assets for the fiscal years ended June 30, 2016 and 2015 were as follows: 2016
Unrestricted
Temporarily Restricted
Permanently Restricted
Total
Endowment net assets, beginning of year
$ 165,603
$ 1,930,103
$ 1,123,875
$ 3,219,581
Investment income 56,715 89,859 - 146,574 Contributions - 602,860 - 602,860 Appropriation of endowment assets for current year expenditures
-
(246,244)
-
(246,244) Endowment net assets, end of year
$ 222,318
$ 2,376,578
$ 1,123,875
$ 3,722,771
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NOTE 13 - ENDOWMENTS (Continued) 2015
Unrestricted
Temporarily Restricted
Permanently Restricted
Total
Endowment net assets, beginning of year
$ 108,888
$ 1,898,297
$ 1,123,875
$ 3,131,060
Investment income 56,715 74,450 - 131,165 Contributions - 222,534 - 222,534 Appropriation of endowment assets for current year expenditures
-
(265,178)
-
(265,178)
Endowment net assets, end of year
$ 165,603
$ 1,930,103
$ 1,123,875
$ 3,219,581
Endowments are spent in accordance with the restrictions placed upon them. Restrictions may include time-based restrictions and use-based restrictions, among other restrictions.
NOTE 14 - DISCONTINUED OPERATIONS
Channeling During the year ended June 30, 2014, Channeling and its subsidiary program Douglas Gardens Community Care ceased operations. MJHS realized a gain from discontinued operations primarily as a result of the resolution of previously accrued expenses. As a result, a net gain of approximately $786,000 has been realized and is included in the statements of operations and changes in net assets for the year ended June 30, 2015.
Project Independence at Home During the year ended June 30, 2014, the Project Independence at Home program ceased operations. MJHS realized a gain from discontinued operations as a result of the resolution of previously accrued expenses. As a result, a net gain of approximately $1,161,000 has been realized and is included in the statements of operations and changes in net assets for the year ended June 30, 2015.
NOTE 15 - COMMITMENTS AND CONTINGENCIES
Capital Advances from HUD MJHS received three grant awards providing a total capital advance of approximately $24,896,000 for the construction of three affordable housing projects for very low-income elderly persons under HUD Section 202. A Use Agreement restricts the use of the projects to rental housing for HUD-approved eligible households for a 40-year period. The advances are noninterest-bearing, and repayment is not required as long as the housing remains available to eligible, very low-income elderly households for the 40-year period. In the event of noncompliance, the debt will become due and interest will possibly be assessed. MJHS expects to be in compliance.
- 34 -
NOTE 15 - COMMITMENTS AND CONTINGENCIES (Continued)
Capital Advances from HUD (Continued) MJHS amortizes these grant awards to income using the straight-line method over the 40-year period. Amortization approximated $622,000 for each of the years ended June 30, 2016 and 2015, and is included in government agencies in the combined statements of operations and changes in net assets. Accumulated amortization as of June 30, 2016 and 2015 approximated $4,088,000 and $3,466,000, respectively.
Grants MJHS is subject to audit examination by funding sources to determine compliance with grant conditions. In the event that expenditures would be disallowed, repayment could be required. Management does not believe that disallowed amounts, if any, would be material. During the year ended June 30, 2013, MJHS received a grant from the City of Miami in the amount of $990,550 to replace the generator of the Meyer Building (Nursing Home). Under the terms of the grant, MJHS is to provide nursing home care to at least 62 of its 120 available residents, of which more than 50% must be low-income residents over a 20-year period. As part of the agreement, MJHS entered into a loan agreement and promissory note. All principal and interest required payments, as per the promissory note, will be forgiven if MJHS complies with the terms of the grant through the 20-year term. Failure to comply with the grant terms will require MJHS to repay the grant amount under the terms specified in the promissory note. The grant amount of $990,550 is classified as temporarily restricted net assets until the 20-year term expires.
Medicare and Medicaid Programs and Healthcare Reform During the years ended June 30, 2016 and 2015, MJHS derived 60% and 58%, respectively, of its net patient service revenue from the Medicare and Medicaid programs. Laws and regulations governing programs are complex and are subject to interpretation. MJHS believes that it is in compliance with all applicable laws and regulations and is not aware of any pending or threatened investigations involving allegations of potential wrongdoing. While no such regulatory inquiries have been made, compliance with such laws and regulations can be subject to future governmental review and interpretation, as well as significant regulatory action, including fines, penalties, and exclusion from the Medicare and Medicaid programs. Governmental funding for healthcare programs is subject to statutory and regulatory changes, administrative rulings, interpretations of policy, intermediary determinations, and governmental funding restrictions, all of which may materially affect program reimbursement to healthcare facilities. Changes in the reimbursement policies of the Medicaid and Medicare programs, as a result of legislative and regulatory actions, could adversely affect MJHS’s revenues.
- 35 -
NOTE 15 -COMMITMENTS AND CONTINGENCIES (Continued)
Resident Trust Funds MJHS offers a cash management service to its residents. These funds remain the sole property of each resident, to be disbursed only as requested and, accordingly, these funds are excluded from these combined financial statements. MJHS has a fiduciary duty of accountability for these funds and acts only as a custodian. At June 30, 2016 and 2015, the aggregate balance in these resident trust funds was approximately $224,000 and $164,000, respectively.
Professional Liability Insurance and Litigation
MJHS participates in a captive self-insurance program for its general and professional liability. The self-insurance program is collateralized through a combination of cash deposited in escrow and a standby letter of credit. MJHS has a $680,000 cash collateral account in support of the standby letter of credit. MJHS is involved in various claims and legal actions arising in the ordinary course of business. Provision has been made for probable losses in excess of insurance coverage limitations related to incurred claims and known incidents likely to result in claims. The reserves for uninsured losses are based on an actuarial study prepared by an independent third party. Management believes, based on advice from the third-party administrator and legal counsel, that the provision for such losses in excess of insurance coverage limits as of June 30, 2016 is adequate.
Employee Health Insurance
MJHS is partially self-insured for employee health insurance claims. MJHS has established reserves that estimate its exposure to uninsured claims. Management is not currently aware of any claims that could exceed these reserves.
Douglas Gardens Community Mental Health Center, Inc. The Plan requires annual payments by the Center for its portion of the unfunded pension liability, which at June 30, 2016 was $1,239,825. In addition, the Center participated in the workers’ compensation self-insurance program with MJHS until April 1, 2011 and would be responsible for any losses in excess of reserves. Provision has been made for probable losses in excess of insurance coverage limits related to incurred claims and known incidents likely to result in claims. The reserves for uninsured losses are based on an actuarial study prepared by an independent third party. An estimate of losses in excess of reserves cannot be estimated at this time. MJHS would incur the liability of the required annual payment for the Plan and for any losses in excess of reserves in the event the Center defaults on these obligations.
- 36 -
NOTE 15 - COMMITMENTS AND CONTINGENCIES (Continued) Leases The Hialeah, Miramar, and Westchester Florida Pace Centers (the “Centers”) entered into office leases with unrelated third parties. The Hialeah and Miramar leases provide for rent abatements in the beginning of the lease term, and the Miramar and Westchester leases call for escalating payments of 3% per year. The monthly rental payments total approximately $43,000, of which approximately $33,000 is subject to the 3% escalation. The Centers are also responsible for their proportionate share of insurance, taxes and operating costs. The leases are scheduled to expire between 2020 and 2026. Occupancy costs totaled approximately $636,000 and $480,000 for the years ended June 30, 2016 and 2015, respectively, and are included in occupancy on the accompanying combined statements of functional expenses. The future minimum lease payments as of June 30, 2016, approximate the following:
Year Ending
June 30, Amount
2017 $ 522,000 2018 534,000 2019 546,000 2020 559,000 2021 472,000
Thereafter 1,202,000
$ 3,835,000
Concentrations and Credit Risk
Financial instruments, which potentially subject MJHS to concentrations of credit risk, consist principally of cash and cash equivalents, investments, pledges receivable, and assets whose use is limited. MJHS maintains its cash and cash equivalents in bank deposit accounts, which, at times, may exceed federally insured limits. Investment securities are exposed to various risks, such as interest rate, market, and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and those changes could materially affect the amounts reported in these combined financial statements.
SUPPLEMENTAL INFORMATION
See Report of Independent Certified Public Accountants.
- 37 -
5,656,527$ 2,086,188$ 361,969$ 12,541,910$ -$
167,556 147,266 99,505 - -
11,037,631 - - 8,286,971 (474,028)
23,679 153,250 - - -
6,943,812 - 700,890 -
870,406 132,602 16,519 589,744 -
1,759,956 5,752,269 (7,512,225)
26,459,567 2,519,306 477,993 27,871,784 (7,986,253)
(64,474) 9,759,184 6,274,172 - -
10,437,862 - - 675,250 -
2,992,521 - - - -
PLEDGES RECEIVABLE, net, less current portion 47,120 444,391 - - -
47,582,104 - - 26,042,480 -
644,456 - - 139,311 -
88,099,156$ 12,722,881$ 6,752,165$ 54,728,825$ (7,986,253)$
1,068,897$ -$ -$ 316,804$ -$ 8,580,555 165,734 - 6,397,254 (474,028)
Revolving credit facility 4,718,000 - - - - 68,586 - - - -
150,903 - - 219,305 - 1,700,000 - - - -
666,667 - - - - 197,197 - - - -
- 188,240 9,830 7,314,155 (7,512,225)
17,150,805 353,974 9,830 14,247,518 (7,986,253)
17,000,000 - - - -
6,333,333 - - - -
1,696,239 - - - -
851,423 - - - -
UNFUNDED PENSION BENEFIT OBLIGATION 12,849,096 - - - -
OTHER LIABILITIES 8,523,748 - - - -
64,404,644 353,974 9,830 14,247,518 (7,986,253)
CAPITAL ADVANCES - - - 20,808,073 -
Unrestricted 21,236,366 10,286,870 6,742,335 19,673,234 - Temporarily restricted 1,334,271 2,082,037 - - -
Permanently restricted 1,123,875 - - - -
TOTAL NET ASSETS 23,694,512 12,368,907 6,742,335 19,673,234 -
88,099,156$ 12,722,881$ 6,752,165$ 54,728,825$ (7,986,253)$
Investments
Due from affiliates
Accounts payable
ASSETS WHOSE USE IS LIMITED, less current portion
Deferred revenue
Due to affiliates
TOTAL ASSETS
CURRENT LIABILITIES
INVESTMENTS IN UNCONSOLIDATED AFFILIATES
Accounts receivable, net
Term loan
TOTAL CURRENT ASSETS
Annuity payment liability
CURRENT ASSETS
Cash and cash equivalents
TOTAL LIABILITIES AND NET ASSETS
BONDS PAYABLE, less current portion
INTEREST RATE SWAP
ANNUITY PAYMENT LIABILITY, less current portion
TOTAL LIABILITIES
NET ASSETS
COMMITMENTS AND CONTINGENCIES
TERM LOAN, less current portion
TOTAL CURRENT LIABILITIES
Bonds payable
Estimated third-party payor settlements, net
PROPERTY AND EQUIPMENT, net
Pledges receivable, net
Assets whose use is limited
Prepaid expenses and other current assets
Accrued expenses and other current liabilities
OTHER ASSETS
INVESTMENTS, less current portion
See Report of Independent Certified Public Accountants.
- 38 -
8,511,011$ 182,665$ 71,482$ -$ 170,804$ -$ 864,989$ 434,834$ 2,306,125$ 12,541,910$
- - - - - - - - -
Accounts receivable, net 7,375,418 - 2,208 - 523,502 - 373,727 12,116 - 8,286,971
- - - - - - - - - -
- - 700,890 - - - - - - 700,890
499,935 - 89,028 - - - 781 - - 589,744
2,749,083 753,818 - - - - 227,692 - 2,021,676 5,752,269
19,135,447 936,483 863,608 - 694,306 - 1,467,189 446,950 4,327,801 27,871,784
- - - - - - - - -
- - 250 - - - 675,000 - - 675,250
- - - - - - - - - -
PLEDGES RECEIVABLE, net, less current portion - - - - - - - - - -
3,969,865 - 20,617,909 1,449,986 - - 4,720 - - 26,042,480
120,147 - 19,164 - - - - - - 139,311
23,225,459$ 936,483$ 21,500,931$ 1,449,986$ 694,306$ -$ 2,146,909$ 446,950$ 4,327,801$ 54,728,825$
226,497$ -$ 5,064$ -$ 435$ -$ 84,808$ -$ -$ 316,804
5,668,155 78,323 202,176 82 132,640 163,723 152,155 - - 6,397,254
- - - - - - - - - -
- - - - - - - - - -
219,305 - - - - - - - - 219,305
- - - - - - - - - -
- - - - - - - - - -
Annuity payment liability - - - - - - - - - -
- - 718,444 4,322,999 1,733,947 538,026 - 739 - 7,314,155
6,113,957 78,323 925,684 4,323,081 1,867,022 701,749 236,963 739 - 14,247,518
- - - - - - - - - -
- - - - - - - - - -
- - - - - - - - - -
- - - - - - - - - -
UNFUNDED PENSION BENEFIT OBLIGATION - - - - - - - - - -
OTHER LIABILITIES - - - - - - - - - -
6,113,957 78,323 925,684 4,323,081 1,867,022 701,749 236,963 739 - 14,247,518
CAPITAL ADVANCES - - 20,808,073 - - - - - - 20,808,073
Unrestricted 17,111,502 858,160 (232,826) (2,873,095) (1,172,716) (701,749) 1,909,946 446,211 4,327,801 19,673,234
Temporarily restricted - - - - - - - - - -
Permanently restricted - - - - - - - - - -
TOTAL NET ASSETS 17,111,502 858,160 (232,826) (2,873,095) (1,172,716) (701,749) 1,909,946 446,211 4,327,801 19,673,234
23,225,459$ 936,483$ 21,500,931$ 1,449,986$ 694,306$ -$ 2,146,909$ 446,950$ 4,327,801$ 54,728,825$
Investments
Revolving credit facility
Pledges receivable, net
Assets whose use is limited
Prepaid expenses and other current assets
OTHER ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
(Continued)
CURRENT ASSETS
Cash and cash equivalents
TOTAL CURRENT LIABILITIES
Term loan
Estimated third-party payor settlements, net
INVESTMENTS IN UNCONSOLIDATED AFFILIATES
Due from affiliates
Deferred revenue
TOTAL CURRENT ASSETS
ASSETS WHOSE USE IS LIMITED, less current portion
Bonds payable
INVESTMENTS, less current portion
PROPERTY AND EQUIPMENT, net
Accounts payable
Accrued expenses and other current liabilities
Due to affiliates
TOTAL LIABILITIES AND NET ASSETS
BONDS PAYABLE, less current portion
INTEREST RATE SWAP
ANNUITY PAYMENT LIABILITY, less current portion
TOTAL LIABILITIES
COMMITMENTS AND CONTINGENCIES
TERM LOAN, less current portion
NET ASSETS
See Report of Independent Certified Public Accountants.
- 39 -
61,546$ -$ -$ 1,524,172$ -$
61,644,754 - - 44,380,162 (3,458,211)
5,168,305 3,678,399 - - (5,222,501)
433,228 129,797 585,020 - -
180,000 - - 155,383 (275,383)
1,125,732 - - 125,235 (485,334)
68,613,565 3,808,196 585,020 46,184,952 (9,441,429)
4,818,156 - - 9,684,916 (1,466,078)
4,451,521 - - 381,349 -
35,496,003 - - 14,523,173 (1,653,597)
9,520,087 - - 1,981,133 (164,579)
- - - 1,017,159 (68,801)
506,522 - - 561,891 -
82,674 1,143,644 659,991 3,600,000 (5,486,309)
54,874,963 1,143,644 659,991 31,749,621 (8,839,364)
- 1,607,439 - - (150,000)
14,149,880 113 49,310 11,426,266 (452,065)
69,024,843 2,751,196 709,301 43,175,887 (9,441,429)
(411,278) 1,057,000 (124,281) 3,009,065 -
1,145,739 (455,305) (994,811) - -
(7,375,534) - - (537,173) -
- - - 1,623,969 -
(6,641,073) 601,695 (1,119,092) 4,095,861 -
30,335,585 11,767,212 7,861,427 15,577,373 -
NET ASSETS AT END OF YEAR 23,694,512$ 12,368,907$ 6,742,335$ 19,673,234$ -$
PENSION RELATED CHANGES OTHER THAN NET PERIODIC COSTS
GAIN ON SALE OF PROPERTY AND EQUIPMENT
Program services:
Case management / Day care
Dietary
CHANGE IN NET UNREALIZED (LOSS) GAIN ON INVESTMENTS
Health care
Social services
TOTAL PROGRAM EXPENSES
Supporting services:
Fund raising
CHANGE IN NET ASSETS
NET ASSETS AT BEGINNING OF YEAR
General and administrative
TOTAL EXPENSES
CHANGE IN NET ASSETS BEFORE NON-OPERATING ITEMS
Supporting allocations
Program service fees:
Residential care
Research, training, and planning
Government agencies
Client fees and other third-party payors
Contributions
Investment income and realized gains and losses, net
Management and administrative fees
Other revenue
TOTAL REVENUES, GAINS (LOSSES), AND OTHER SUPPORT
EXPENSES
REVENUES, GAINS (LOSSES), AND OTHER SUPPORT
See Report of Independent Certified Public Accountants.
- 40 -
123,731$ -$ 1,400,441$ -$ -$ -$ -$ -$ -$ 1,524,172$
36,890,794 - 608,965 - 1,347,528 - 5,532,875 - - 44,380,162
- - - - - - - - - -
- - - - - - - - - -
- - - - - - - 155,383 - 155,383
100,513 - 22,799 - - - - - 1,923 125,235
37,115,038 - 2,032,205 - 1,347,528 - 5,532,875 155,383 1,923 46,184,952
9,684,916 - - - - - - - - 9,684,916
381,349 - - - - - - - - 381,349
9,900,878 - - - - - 4,622,295 - - 14,523,173
- - 1,981,133 - - - - - - 1,981,133
- - - - 1,017,159 - - - - 1,017,159
561,891 - - - - - - - - 561,891
3,600,000 - - - - - - - - 3,600,000
24,129,034 - 1,981,133 - 1,017,159 - 4,622,295 - - 31,749,621
- - - - - - - - - -
10,132,664 - - 276,833 193,869 - 619,105 132,129 71,666 11,426,266
34,261,698 - 1,981,133 276,833 1,211,028 - 5,241,400 132,129 71,666 43,175,887
2,853,340 - 51,072 (276,833) 136,500 - 291,475 23,254 (69,743) 3,009,065
- - - - - - - - - -
(386,918) - (35,329) - (65,976) - (48,950) - - (537,173)
GAIN ON SALE OF REAL PROPERTY - - - - - - - - 1,623,969 1,623,969
2,466,422 - 15,743 (276,833) 70,524 - 242,525 23,254 1,554,226 4,095,861
14,645,080 858,160 (248,569) (2,596,262) (1,243,240) (701,749) 1,667,421 422,957 2,773,575 15,577,373
17,111,502$ 858,160$ (232,826)$ (2,873,095)$ (1,172,716)$ (701,749)$ 1,909,946$ 446,211$ 4,327,801$ 19,673,234$
PENSION RELATED CHANGES OTHER THAN NET PERIODIC PESION COST
CHANGE IN NET ASSETS
Program services:
Case management / Day care
Dietary
CHANGE IN NET UNREALIZED (LOSS) GAIN ON INVESTMENTS
Health care
Social services
TOTAL PROGRAM EXPENSES
Supporting services:
Fundraising
NET ASSETS AT BEGINNING OF YEAR
NET ASSETS AT END OF YEAR
CHANGE IN NET ASSETS BEFORE NON-OPERATING ITEMS
General and administrative
TOTAL EXPENSES
Supporting allocations
Program service fees:
Residential care
Research, training, and planning
Government agencies
Client fees and other third-party payors
Contributions
Investment income and realized gains and losses, net
Management and administrative fees
Other revenue
TOTAL REVENUES, GAINS (LOSSES), AND OTHER SUPPORT
EXPENSES
�(Continued)
REVENUES, GAINS (LOSSES), AND OTHER SUPPORT
See accompanying notes on page 42.
See Report of Independent Certified Public Accountants.
- 41 -
Miami Jewish Health Systems
U.S. Department of Transportation:
Pass-through:
State of Florida Department of Transportation
Elderly and Persons with Disabilities 20.513 435210-6-93-11 61,546$
Florida PACE Center Project Independence
U.S. Department of Transportation:
Pass-through:
State of Florida Department of Transportation
Elderly and Persons with Disabilities 20.513 435210-6-93-12 62,185
Florida PACE Center Project Independence
U.S. Department of Transportation:
Pass-through:
State of Florida Department of Transportation
Elderly and Persons with Disabilities 20.513 435210-6-93-11 61,546
DGN, Inc.
U.S. Department of Housing and Urban Development:
Supportive Housing for the Elderly 14.157 N/A 7,443,800
Project Rental Assistance Contract 14.195 FL-29-S021-009 312,300
DGN II, Inc.
U.S. Department of Housing and Urban Development:
Supportive Housing for the Elderly 14.157 N/A 6,894,300
Project Rental Assistance Contract 14.195 FL-29-S051-006 212,575
DGN III, Inc.
U.S. Department of Housing and Urban Development:
Supportive Housing for the Elderly 14.157 N/A 10,558,096
Project Rental Assistance Contract 14.195 FL-29-S091-002 253,160
25,859,508$
** Represents the initial amount of the capital advance and not funds expended during the year.
TOTAL EXPENDITURES OF FEDERAL AWARDS
- 42 -
MIAMI JEWISH HEALTH SYSTEMS, INC. AND SUBSIDIARIES AND AFFILIATES
NOTES TO SCHEDULE OF EXPENDITURES
OF FEDERAL AWARDS
Year Ended June 30, 2016 (1) General The accompanying schedule of expenditures of federal awards (the “Schedule”)
includes the federal activity of Miami Jewish Health Systems, Inc. and Subsidiaries and Affiliates (“MJHS”) under the programs of the federal government for the year ended June 30, 2016. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code� of� Federal� Regulations,� Part 200, Uniform�Administrative� Requirements,�Cost�Principles,� and�Audit�Requirements�for�Federal�Awards�(“Uniform Guidance”). Because the Schedule presents only a selected portion of the operations of MJHS, it is not intended to and does not represent the financial position, changes in net assets or cash flows of MJHS.
(2) Basis of Accounting Expenditures reported on the Schedule are reported on the accrual basis of
accounting. Such expenditures are recognized following the cost principles in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement.
MOORE STEPHENS LOVELACE, P. A. CERTIFIED PUBLIC ACCOUNTANTS
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND
OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE \VITH
GOVERNMENT AUDITING STANDARDS
To the Board of Directors of Miami Jewish Health Systems, Inc. Miami, Florida
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the combined financial statements of Miami Jewish Health Systems, Inc. and Subsidiaties and Affiliates ("MJHS"), which comprise the combined balance sheet as of June 30, 2016, and the related combined statements of operations and changes in net assets, cash flows, and functional expenses for the year then ended, and the related notes to the combined financial statements, and have issued our report thereon dated September 26,2016.
Internal Control over Financial Reporting
In planning and perfonning our audit of the combined financial statements, we considered MJHS' s internal control over financial reporting (internal control) to detennine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of MJHS's internal control. Accordingly, we do not express an opinion on the etIectiveness of MJHS's internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the nonnal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material H'eakness is a deticiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and cOlTected, on a timely basis. A sign(/lcant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the tirst paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identitied.
- 43 -
To the Board of Directors of Miami Jewish Health Systems, Inc.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether MJHS's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions oflaws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the detennination of combined financial statements amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results ofthat testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
MOORE STEPHENS LOVELACE, P.A. Certified Public Accountants
Miami, Florida September 26, 2016
- 44-
MSL I
MOORE STEPHENS LOVELACE, P. A. CERTIFIED PUBLIC ACCOUNTANTS
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM
AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE
To the Board of Directors of Miami Jewish Health Systems, Inc. Miami, Florida
Report on Compliance for Each Major Federal Program
We have audited Miami Jewish Health Systems, Inc. and Subsidiaries and Affiliates' ("MJHS") compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on MJHS's major federal programs for the year ended June 30, 2016. MJHS's major federal programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs.
Management's Responsibility
Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its federal programs.
Auditor's Responsibility
Our responsibility is to express an opinion on compliance for MJHS's major federal programs based on our audit of the compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code oj Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements Jor Federal Awards ("Uniform Guidance"). Those standards and the Unifonn Guidance require that we plan and perfol111 the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements refelTed to above that could have a direct and material effect on a major federal program OCCUlTed. An audit includes examining, on a test basis, evidence about MJHS's compliance with those requirements and perfonning such other procedures as we considered necessary in the circumstances.
We believe that our audit provides a reasonable basis for OLlr opinion on compliance for its major federal programs. However, our audit does not provide a legal detel111ination of MJHS's compliance.
- 45 -
To the Board of Directors of Miami Jewish Health Systems, Inc.
Opinion on its Major Federal Programs
In our opinion, MJHS complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on its major federal programs for the year ended June 30, 2016.
Report on Internal Control over Compliance
Management of MJHS is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered MJHS' s internal control over compliance with the types of requirements that could have a direct and material effect on its major federal programs to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for its major federal programs and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness ofMJHS's internal control over compliance.
A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.
Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose.
MOORE STEPHENS LOVELACE, P.A. Certified Public Accountants
Miami, Florida September 26, 2016
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Financial�Statements
Type of Auditor's report issued Unmodified
Internal control over financial reporting:
Material weakness(es) identified? Yes X No
Significant deficiencies identified? Yes X None Reported
Noncompliance material to financial statements noted Yes X No
Federal�Awards
Internal control over major federal programs:
Material weakness(es) identified? Yes X No
Significant deficiencies identified? Yes X None Reported
Type of auditor's report issued on compliance for
major federal programs and/or state projects: Unmodified
Any audit findings disclosed that are required
to be reported in accordance with
Title 2 CFR Section 200.516(a) Yes X No
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(Continued)
CFDA
Name of Federal Program or Cluster Number(s)
Department of Housing and Urban Development
Project Rental Assistance Contract 14.195
Supportive Housing for the Elderly 14.157
Dollar threshold used to distinguish between
Type A and Type B programs for federal awards: 750,000$
Auditee qualified as low-risk auditee pursuant to
Uniform Guidance X Yes No
No findings were reported.
No findings were reported.
No findings were reported.
(Continued)
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MASTER TRUST INDENTURE
by and among
MIAMI JEWISH HEALTH SYSTEMS, INC., MIAMI JEWISH HEALTH SYSTEMS FOUNDATION, INC., and FLORIDA PACE CENTERS, INC.,
as the Initial Members
and
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,
as Master Trustee
Dated as of January 1, 2017
TABLE OF CONTENTS
Page
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ARTICLE I DEFINITION OF TERMS, CONSTRUCTION AND CERTAIN GENERAL PROVISIONS .................................................................................. 5
Section 1.01. Definition of Terms ................................................................................. 5 Section 1.02. Compliance Certificates and Reports .................................................... 28 Section 1.03. Form of Documents Delivered to Master Trustee ................................. 29 Section 1.04. Acts of Holders of Obligations .............................................................. 29 Section 1.05. Notices, etc., to Master Trustee and Obligated Group Members .......... 31 Section 1.06. Notices to Holders of Obligations; Waiver ........................................... 31 Section 1.07. Notices to Rating Agencies ................................................................... 32 Section 1.08. Effect of Headings and Table of Contents ............................................ 32 Section 1.09. Successors and Assigns ......................................................................... 32 Section 1.10. Separability Clause ................................................................................ 32
ARTICLE II THE OBLIGATIONS ....................................................................................... 33
Section 2.01. Series and Amount of Obligations ........................................................ 33 Section 2.02. Appointment of Obligated Group Representative ................................. 33 Section 2.03. Execution and Authentication of Obligations ....................................... 34 Section 2.04. Supplement Creating Obligations .......................................................... 34 Section 2.05. Conditions to Issuance of Obligations Hereunder ................................. 35 Section 2.06. List of Holders of Obligations ............................................................... 36 Section 2.07. Optional and Mandatory Redemption ................................................... 36 Section 2.08. Mutilated, Destroyed, Lost and Stolen Obligations .............................. 36 Section 2.09. Cancellation ........................................................................................... 36
ARTICLE III FUNDS AND ACCOUNTS .............................................................................. 38
Section 3.01. Revenue Fund ........................................................................................ 38 Section 3.02. Investment of Funds .............................................................................. 39 Section 3.03. Allocation and Transfers of Investment Income ................................... 39 Section 3.04. Master Trustee Relieved From Responsibility ...................................... 40
ARTICLE IV COVENANTS OF THE OBLIGATED GROUP MEMBERS ......................... 41
Section 4.01. Title to Trust Estate ............................................................................... 41 Section 4.02. Further Assurances ................................................................................ 41 Section 4.03. Recording and Filing ............................................................................. 41 Section 4.04. Payment of Principal, Premium and Interest ......................................... 42 Section 4.05. Payment of Taxes and Other Claims ..................................................... 42 Section 4.06. Maintenance of Properties ..................................................................... 43 Section 4.07. Corporate Existence; Status of Initial Members .................................... 43 Section 4.08. Preservation of Qualifications ............................................................... 44 Section 4.09. Additions to Facilities ............................................................................ 44 Section 4.10. Insurance ................................................................................................ 44 Section 4.11. Rates and Charges ................................................................................. 45 Section 4.12. Damage or Destruction .......................................................................... 47 Section 4.13. Condemnation ........................................................................................ 49
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TABLE OF CONTENTS (continued)
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Section 4.14. Other Provisions with Respect to Net Proceeds .................................... 50 Section 4.15. Financial Statements, Etc ...................................................................... 51 Section 4.16. Permitted Additional Indebtedness ........................................................ 54 Section 4.17. Calculation of Debt Service and Debt Service Coverage ...................... 58 Section 4.18. Sale or Lease of Property ...................................................................... 61 Section 4.19. Liens on Property .................................................................................. 63 Section 4.20. Liquidity Covenant ................................................................................ 63 Section 4.21. Approval of Consultants ........................................................................ 64 Section 4.22. Management .......................................................................................... 65
ARTICLE V CONSOLIDATION, MERGER, CONVEYANCE AND TRANSFER ........... 66
Section 5.01. Merger, Consolidation, Sale or Conveyance ......................................... 66
ARTICLE VI MEMBERSHIP IN THE OBLIGATED GROUP ............................................. 68
Section 6.01. Admission of Obligated Group Members ............................................. 68 Section 6.02. Obligated Group Members .................................................................... 69 Section 6.03. Withdrawal of Obligated Group Members ............................................ 69 Section 6.04. Successor Obligated Group Representative .......................................... 70
ARTICLE VII REMEDIES OF THE MASTER TRUSTEE AND HOLDERS OF SECURED OBLIGATIONS IN EVENT OF DEFAULT ................................ 72
Section 7.01. Events of Default ................................................................................... 72 Section 7.02. Acceleration of Maturity; Rescission and Annulment .......................... 73 Section 7.03. Powers of Sale, Transfer, Assignment, Lease, and Other
Dispositions; Suits for Enforcement ...................................................... 74 Section 7.04. Incidents of Sale .................................................................................... 75 Section 7.05. Collection of Indebtedness and Suits for Enforcement by Master
Trustee ................................................................................................... 76 Section 7.06. Master Trustee May File Proofs of Claim ............................................. 77 Section 7.07. Master Trustee May Enforce Claims Without Possession of
Obligations ............................................................................................ 77 Section 7.08. Application of Money Collected ........................................................... 78 Section 7.09. Limitation on Suits ................................................................................ 78 Section 7.10. Unconditional Right of Holders of Obligations to Receive
Principal, Premium and Interest ............................................................ 79 Section 7.11. Restoration of Rights and Remedies ..................................................... 79 Section 7.12. Rights and Remedies Cumulative ......................................................... 79 Section 7.13. Delay or Omission Not Waiver ............................................................. 79 Section 7.14. Control by Holders of Obligations ........................................................ 79 Section 7.15. Waiver of Past Defaults and Future Covenant Requirements ............... 80 Section 7.16. Undertaking for Costs ............................................................................ 80 Section 7.17. Waiver of Stay or Extension Laws ........................................................ 80
ARTICLE VIII CONCERNING THE MASTER TRUSTEE .................................................... 82
Section 8.01. Duties and Liabilities of Master Trustee ............................................... 82
TABLE OF CONTENTS (continued)
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Section 8.02. Notice of Defaults .................................................................................. 83 Section 8.03. Certain Rights of Master Trustee .......................................................... 83 Section 8.04. Not Responsible For Recitals or Issuance of Obligations ..................... 86 Section 8.05. Master Trustee or Registrar May Own Obligations .............................. 86 Section 8.06. Money to Be Held in Trust .................................................................... 87 Section 8.07. Compensation and Expenses of Master Trustee .................................... 87 Section 8.08. Corporate Master Trustee Required; Eligibility .................................... 87 Section 8.09. Resignation and Removal; Appointment of Successor ......................... 87 Section 8.10. Acceptance of Appointment by Successor ............................................ 89 Section 8.11. Merger or Consolidation ........................................................................ 89 Section 8.12. Master Trustee as Related Bond Trustee ............................................... 89
ARTICLE IX SUPPLEMENTS AND AMENDMENTS ........................................................ 90
Section 9.01. Supplements Without Consent of Holders of Obligations .................... 90 Section 9.02. Supplements With Consent of Holders of Obligations ......................... 91 Section 9.03. Execution of Supplements ..................................................................... 91 Section 9.04. Effect of Supplement ............................................................................. 92 Section 9.05. Obligations May Bear Notation of Changes ......................................... 92
ARTICLE X SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS ................................................................................. 93
Section 10.01. Satisfaction and Discharge of Indenture ................................................ 93 Section 10.02. Obligations Deemed Paid ...................................................................... 93 Section 10.03. Application of Trust Money .................................................................. 94 Section 10.04. Payment of Related Bonds .................................................................... 94
ARTICLE XI MISCELLANEOUS PROVISIONS ................................................................. 95
Section 11.01. No Personal Liability ............................................................................. 95 Section 11.02. Florida Contract ..................................................................................... 95 Section 11.03. Legal Holidays ....................................................................................... 95 Section 11.04. Benefits of Provisions of Master Trust Indenture and Obligations ....... 95 Section 11.05. Execution in Counterparts ..................................................................... 95 Section 11.06. UCC Financing Statements ................................................................... 95 Section 11.07. Providers of Credit Facilities Deemed Holders ..................................... 96 Section 11.08. Waiver of Jury Trial .............................................................................. 96
EXHIBIT A LEGAL DESCRIPTION OF THE PREMISES EXHIBIT B EXISTING LIENS EXHIBIT C TITLE EXCEPTIONS
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MASTER TRUST INDENTURE
THIS MASTER TRUST INDENTURE, dated as of January 1, 2017 (the “Master Trust Indenture”), among MIAMI JEWISH HEALTH SYSTEMS, INC. (“MJHS”), MIAMI JEWISH HEALTH SYSTEMS FOUNDATION, INC. (“Foundation”) and FLORIDA PACE CENTERS, INC. (“Pace”), each a Florida nonprofit corporation, as the initial Obligated Group Members (collectively, the “Initial Members”), and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., a national banking association with trust powers in the State of Florida, as master trustee (the “Master Trustee”),
W I T N E S S E T H:
WHEREAS, the Initial Members are authorized and deem it necessary and desirable to enter into this Master Trust Indenture for the purpose of providing for the issuance from time to time by the Initial Members or other Persons electing to become Obligated Group Members (as defined herein) of Obligations (as defined herein) to finance or refinance the acquisition or betterment of health care facilities or other facilities, or for other lawful and proper purposes; and
WHEREAS, all acts and things necessary to constitute this Master Trust Indenture a valid indenture and agreement according to its terms have been done and performed, the Initial Members have duly authorized the execution and delivery of this Master Trust Indenture, and the Initial Members, in the exercise of the legal right and power invested in them, execute this Master Trust Indenture and propose to make, execute, issue and deliver Obligations hereunder; and
WHEREAS, the Master Trustee agrees to accept and administer the trusts created hereby,
GRANTING CLAUSES
NOW, THEREFORE, THIS MASTER TRUST INDENTURE WITNESSETH, that, to secure the payment of the principal of (and premium, if any) and interest on the Outstanding Obligations (hereinafter defined) and the performance of the covenants therein and herein contained and to declare the terms and conditions on which the Outstanding Obligations are secured, and in consideration of the premises, of the purchase of the Obligations by the Holders thereof, and of the sum of One Dollar ($1.00) to the Obligated Group Members in hand paid by the Master Trustee at or before the execution and delivery hereof, the receipt and sufficiency of which are hereby acknowledged, the Obligated Group Members by these presents do hereby pledge, set over, and confirm to the Master Trustee, forever, all and singular the following described properties, and grant a security interest therein for the purposes herein expressed, to wit:
GRANTING CLAUSE FIRST
All revenue, accounts receivable, and Gross Revenues (as defined herein) of the Obligated Group Members, including without limitation rights to receive payments from third party payors such as Medicare and Medicaid, but except and excluding all such items, whether now owned or hereafter acquired by the Obligated Group Members, which by their terms or by
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reason of applicable law would become void or voidable if granted, assigned, or pledged hereunder by the Obligated Group Members, or which cannot be granted, pledged, or assigned hereunder without the consent of other parties whose consent is not secured, or without subjecting the Master Trustee to a liability not otherwise contemplated by the provisions hereof, or which otherwise may not be, or are not, hereby lawfully and effectively granted, pledged, and assigned by the Obligated Group Members, provided that the Obligated Group Members may make subject to the lien hereof any such excepted property, whereupon the same shall cease to be excepted property; and
GRANTING CLAUSE SECOND
The land described on EXHIBIT A hereto (the “Premises”) and incorporated herein for all purposes, including, without limitation, all buildings, structures, fixtures, additions, enlargements, extensions, improvements, modifications or repairs now or hereafter located thereon or therein and with the tenements, hereditaments, servitudes, appurtenances, rights, privileges and immunities thereunto belonging or appertaining which may from time to time be owned by the Obligated Group Members, and all claims or expectancy, of, in and to the Premises, it being the intention of the parties hereto that, so far as may be permitted by law, all property of the character hereinabove described, which is now owned or is hereafter acquired by the Obligated Group Members, and is affixed or attached or annexed to the Premises, shall be and remain or become and constitute a portion of the Premises, and the security covered by and subject to the lien of this Master Trust Indenture and the Mortgage; and
GRANTING CLAUSE THIRD
All of the rights, titles, interests and estates, now owned or hereafter acquired by the Obligated Group Members in and to any and all accounts, chattel paper, goods, documents, instruments, general intangibles, deposit accounts, investment property, equipment, inventory, fixtures, and any and all other personal property of any kind or character defined in and subject to the provisions of the Florida Uniform Commercial Code, including the supporting obligations thereof, proceeds and products of and from any and all of such personal property used in connection with or arising out of the operation and use of the improvements located on the Premises and any substitutions or replacements therefor; and
GRANTING CLAUSE FOURTH
Any amounts on deposit from time to time in any fund or account created hereunder, subject to the provisions of this Master Trust Indenture permitting the application thereof for the purposes and on the terms and conditions set forth herein; and
GRANTING CLAUSE FIFTH
Any and all property that may, from time to time hereinafter, by delivery or by writing of any kind, be subjected to the lien and security interest hereof by the Obligated Group Members or by anyone on their behalf (and the Master Trustee is hereby authorized to receive the same at any time as additional security hereunder), which subject to the lien and security interest hereof of any such property as additional security may be made subject to any reservations, limitations, or conditions which shall be set forth in a written instrument executed by the grantor or the
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person so acting in its behalf or by the Master Trustee respecting the use and disposition of such property or the proceeds thereof;
TO HAVE AND TO HOLD, IN TRUST, WITH THE POWER OF SALE, all said property, rights, privileges, and franchises of every kind and description, real, personal, or mixed, hereby and hereafter (by supplemental instrument or otherwise) pledged, set over, or confirmed as aforesaid, or intended, agreed, or covenanted so to be, together with all the appurtenances thereto appertaining (said properties, rights, privileges, leasehold, and franchises including any cash and securities hereafter deposited or required to be deposited with the Master Trustee (other than any such cash which is specifically stated herein not to be deemed part of the Trust Estate) being herein collectively referred to as the “Trust Estate”) unto the Master Trustee and its successors and assigns forever;
SUBJECT AND SUBORDINATE, HOWEVER, to the Liens (as defined herein) described in EXHIBIT B hereto and to any and all mortgages, liens, charges, encumbrances, pledges, and security interests granted, created, assumed, incurred, or existing pursuant to the provisions of Section 4.19 hereof and all revenue, accounts receivable, and Gross Revenues derived from such property;
BUT IN TRUST, NEVERTHELESS, for the equal and proportionate benefit and security of the Holders from time to time of all the Outstanding Obligations without any priority of any such Obligations over any other such Obligations except as herein or by Supplement otherwise expressly provided;
UPON CONDITION that, if the Obligated Group Members or their successors or assigns shall well and truly pay, or cause to be paid, the principal of (and premium, if any) and interest on the Outstanding Obligations according to the true intent and meaning thereof, or there shall be deposited with the Master Trustee such amounts in such form in order that none of the Obligations shall remain Outstanding as herein defined and provided, and shall pay or cause to be paid to the Master Trustee all sums of money due or to become due to it in accordance with the terms and provisions hereof, then upon the full and final payment of all such sums and amounts secured hereby or upon such deposit, the rights, titles, liens, security interests, and assignments herein granted shall cease, determine, and be void and this grant shall be released by the Master Trustee in due form at the expense of the Obligated Group Members, except only as herein provided; otherwise this grant to be and shall remain in full force and effect;
UPON FURTHER CONDITION as to any property included in the Trust Estate that, upon Request of the Obligated Group Representative accompanied by an Officer’s Certificate and an Opinion of Counsel to the effect that the conditions precedent for the disposition of such property set forth in Section 4.18 hereof (other than the condition precedent set forth in Section 4.18(d) hereof) have been satisfied, the rights, title, liens, security interests and assignments herein granted shall cease, determine and be void as to such property only and this grant shall be released by the Master Trustee as to such property in due form at the expense of the Obligated Group Members;
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ALL THINGS NECESSARY to make this Master Trust Indenture a valid agreement and contract for the security of the Obligations in accordance with the terms of such Obligations and this Master Trust Indenture have been done;
IT IS HEREBY COVENANTED AND DECLARED that the Trust Estate is to be held and applied by the Master Trustee, subject to the further covenants, conditions, and trusts hereinafter set forth, and the Obligated Group Members do hereby covenant and agree to and with the Master Trustee, for the equal and proportionate benefit of all Holders of the Obligations except as herein otherwise expressly provided; and
THIS MASTER TRUST INDENTURE FURTHER WITNESSETH and it is expressly declared that all Obligations issued and secured hereunder are to be issued, authenticated and delivered and all said rights hereby pledged and assigned are to be dealt with and disposed of under, upon and subject to the terms, conditions, stipulations, covenants, agreements, trusts, uses and purposes as hereinafter expressed and the Obligated Group Members have agreed and covenanted, and do hereby agree and covenant, with the Master Trustee for the equal and proportionate benefit of the respective holders from time to time of the Obligations as follows:
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ARTICLE I DEFINITION OF TERMS, CONSTRUCTION
AND CERTAIN GENERAL PROVISIONS
SECTION 1.01.� DEFINITION OF TERMS. For all purposes of this Master Trust Indenture, except as otherwise expressly provided or unless the context otherwise requires:
(a)� “this Master Trust Indenture” means this instrument as originally executed and “Master Indenture” refers to this instrument as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof;
(b)� all references in this instrument designated “Articles,” “Sections,” and other subdivisions are to the designated Articles, Sections and other subdivisions of this instrument as originally executed. The words “herein,” “hereof,” and “hereunder” and other words of similar import refer to this Master Trust Indenture as a whole and not to any particular Article, Section, or other subdivision;
(c)� the terms defined in this Article have the meanings assigned to them in this Article, and include the plural as well as the singular number; and
(d)� all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles applied in accordance with Section 1.02 of this Master Trust Indenture.
“Accountant” means a certified public accountant, or a firm of certified public accountants, who or which is “independent” as that term is defined in Rule 101 and related interpretations of the Code of Professional Ethics of the American Institute of Certified Public Accountants, of recognized standing, who or which does not devote his or its full time to any Member or its Affiliates (but who or which may be regularly retained by a Member or its Affiliates).
“Act” when used with respect to any Holder of Obligations has the meaning specified in Section 1.04 and not the meaning assigned such term in any documents delivered in connection with the issuance of Obligations or Related Bonds, unless specifically provided for in such documents.
“Additional Indebtedness” means Indebtedness incurred by any Member subsequent to the issuance of the Series 2017 Note.
“Additional Obligation” means any evidence of Indebtedness or evidence of any repayment obligation under any Interest Rate Agreement issued after the issuance of the Series 2017 Note, which is authorized to be issued by a Member pursuant to this Master Trust Indenture which has been authenticated by the Master Trustee pursuant to Section 2.03 hereof.
“Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, “control” when used with respect to any specified Person
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means the power to direct the policies of such Person, directly or indirectly, whether through the power to appoint and remove its directors, the ownership of voting securities, by contract, or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.
“Annual Budget” means the annual budget of the Obligated Group required to be provided by the Obligated Group Representative pursuant to Section 4.15 hereof.
“Authorized Representative” shall mean, with respect to the Obligated Group Representative and each Obligated Group Member, its respective Chief Executive Officer or any other person or persons designated an Authorized Representative thereof by an Officer’s Certificate of the Obligated Group Representative or the Obligated Group Member and delivered to the Master Trustee.
“Balloon Indebtedness” means Funded Indebtedness, 25% or more of the original principal amount of which matures during any consecutive 12 month period, if such maturing principal amount is not required to be amortized below such percentage by mandatory redemption or prepayment prior to such 12 month period. Balloon Indebtedness does not include Indebtedness which otherwise would be classified hereunder as Put Indebtedness.
“Board Resolution” of any specified Person means a copy of a resolution certified by the Person responsible for maintaining the records of the Governing Body of such Person to have been duly adopted by the Governing Body of such Person and to be in full force and effect on the date of such certification, and delivered to the Master Trustee.
“Bond Counsel” means any attorney at law or firm of attorneys of nationally recognized experience in matters pertaining to the validity of, and exclusion from gross income for federal income tax purposes of interest on, the obligations of states and their political subdivisions as may be selected by the Obligated Group Representative but is reasonably acceptable to the issuer of the Related Bonds.
“Book Value” when used with respect to Property of a Member, means the value of such Property, net of accumulated depreciation and amortization, as reflected in the most recent audited financial statements of such Member that have been prepared in accordance with generally accepted accounting principles, and when used with respect to Property of all Members, means the aggregate of the values of such Property, net of accumulated depreciation and amortization, as reflected in the most recent audited combined financial statements of the Obligated Group prepared in accordance with generally accepted accounting principles, provided that such aggregate shall be calculated in such a manner that no portion of the value of any Property of any Member is included more than once.
“Business Day” means any day other than (a) a Saturday, a Sunday, (b) a day the payment system of the U.S. Federal Reserve is not operational (c) a day on which banking institutions are authorized or required by law or executive order to close, or (d) a day on which the New York Stock Exchange is closed.
“Capital Addition” means any addition, improvements, extensions, alterations, relocations, enlargements, expansions, modifications or replacement of or to the Facilities and
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the cost of which is properly capitalized under generally accepted accounting principles applied in accordance with Section 1.02 hereof.
“Capitalized Lease” means any lease of real or personal property which, in accordance with generally accepted accounting principles, is required to be capitalized on the balance sheet of the lessee.
“Capitalized Rentals” means, as of the date of determination, the amount at which the aggregate Net Rentals due and to become due under a Capitalized Lease under which a Person is a lessee would be reflected as a liability on a balance sheet of such Person.
“Cash and Investments” means the sum of cash, cash equivalents, marketable securities of the Obligated Group Members, including without limitation Related Bonds held by the Obligated Group Members, board-designated assets, and amounts, if any, on deposit in the Operating Reserve Fund, Renewal and Replacement Fund and Working Capital Fund, but at all times excluding (a) any debt service reserve fund for the benefit of Related Bonds and other trustee-held funds (including amounts held in escrow or otherwise set aside pursuant to the requirements of the Residency Agreement or law) other than those specific funds listed above in this definition, (b) funds restricted by the donor to a use that would not permit the use of such funds to pay expenses or debt service on Indebtedness of the Obligated Group, and (c) any funds pledged or otherwise subject to a security interest for debt other than the Obligations, as shown on the most recent audited or unaudited financial statements of the Obligated Group. For the purposes of calculations hereunder, an Unrestricted Contribution from an Affiliate shall be treated as being made during the period of such calculation so long as the Unrestricted Contribution is made prior to the date the applicable certificate is required to be delivered with respect to such calculation.
“Code” means the Internal Revenue Code of 1986, as amended from time to time, including, when appropriate, the statutory predecessor thereof, or any applicable corresponding provisions of any future laws of the United States of America relating to federal income taxation, and except as otherwise provided herein or required by the context hereof, includes interpretations thereof contained or set forth in the applicable regulations of the Department of the Treasury (including applicable final or temporary regulations and also including regulations issued pursuant to the statutory predecessor of the Code), the applicable rulings of the Internal Revenue Service (including published Revenue Rulings and private letter rulings), and applicable court decisions.
“Commitment Indebtedness” means the obligation of any Member to repay amounts disbursed pursuant to a commitment from a financial institution to refinance or purchase when due, when tendered or when required to be purchased (a) other Indebtedness of such Member, or (b) Indebtedness of a Person who is not a Member, which Indebtedness is guaranteed by a Guaranty of such Member or secured by or payable from amounts paid on Indebtedness of such Member, in either case which Indebtedness or Guaranty of such Member was incurred in accordance with the provisions of Section 4.16 hereof, and the obligation of any Member to pay interest payable on amounts disbursed for such purposes, plus any fees, costs or expenses payable to such financial institution for, under or in connection with such commitment, in the
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event of disbursement pursuant to such commitment or in connection with enforcement thereof, including without limitation any penalties payable in the event of such enforcement.
“Completion Funded Indebtedness” means any Funded Indebtedness for borrowed money: (a) incurred for the purpose of financing the completion of the acquisition, construction, remodeling, renovation or equipping of Facilities or marketing or other pre-opening expenses of such Facilities with respect to which Funded Indebtedness has been incurred in accordance with the provisions hereof; and (b) with a principal amount not in excess of the amount which is required to provide completed and equipped Facilities of substantially the same type and scope contemplated at the time such prior Funded Indebtedness was originally incurred, to provide for Funded Interest during the period of construction, to provide any reserve fund relating to such Completion Funded Indebtedness and to pay the costs and expenses of issuing such Completion Funded Indebtedness.
“Consent” means of any specified Person a written consent signed in the name of such Person by the Chairman of the Governing Body, the Chief Executive Officer, the President, a Vice President, the Treasurer, an Assistant Treasurer or the Chief Financial Officer of such Person or any other person or persons designated by an Officer’s Certificate and delivered to the Master Trustee.
“Construction Index” means the most recent issue of the “Dodge Momentum Index for U.S. and Canadian Cities” with reference to the city in which the subject property is located (or, if such index is not available for such city, with reference to the city located closest geographically to the city in which the subject property is located), or, if such index is no longer published or used by the federal government in measuring costs under Medicare or Medicaid programs, such other index which is certified to be comparable and appropriate by the Obligated Group Representative in an Officer’s Certificate delivered to the Master Trustee.
“Consultant” means a professional consulting, accounting, investment banking or commercial banking firm or individual selected by the Obligated Group Representative having the skill and experience necessary to render the particular report required and having a favorable reputation for such skill and experience, which firm or individual does not control any Member of the Obligated Group or any Affiliate thereof and is not controlled by or under common control with any Member of the Obligated Group or an Affiliate thereof.
“Contributions” means the aggregate amount of all contributions, grants, gifts, bequests and devises actually received in cash or marketable securities by any Person in the applicable fiscal year of such Person and any such contributions, grants, gifts, bequests and devises originally received in a form other than cash or marketable securities by any Person which are converted in such fiscal year to cash or marketable securities and deposited into the accounts of the Obligated Group.
“Credit Facility” means any Liquidity Facility, letter of credit, bond insurance policy, standby purchase agreement, guaranty, line of credit, surety bond or similar credit or liquidity facility securing any Indebtedness of any Obligated Group Member.
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“Crossover Date”�means, with respect to Crossover Refunding Indebtedness, the date on which the principal portion of the Crossover Refunded Indebtedness is paid or redeemed, or on which it is anticipated that such principal portion will be paid or redeemed, from the proceeds of such Crossover Refunding Indebtedness.
“Crossover Refunded Indebtedness” means Indebtedness of a Person refunded by Crossover Refunding Indebtedness.
“Crossover Refunding Indebtedness” means Indebtedness of a Person issued for the purpose of refunding other Indebtedness of such Person if the proceeds of such Crossover Refunding Indebtedness are irrevocably deposited in escrow to secure the payment on the applicable Crossover Date of the Crossover Refunded Indebtedness and earnings on such escrow deposit are required to be applied to pay interest or principal on either or both of such Crossover Refunding Indebtedness or such Crossover Refunded Indebtedness until the Crossover Date.
“Current Value” means (a) with respect to Property, Plant and Equipment: (i) the aggregate fair market value of such Property, Plant and Equipment as reflected in the most recent written report of an appraiser selected by the Obligated Group Representative and, in the case of real property, who is a member of the American Institute of Real Estate Appraisers (MAI), delivered to the Master Trustee (which report shall be dated not more than three years prior to the date as of which Current Value is to be calculated) increased or decreased by a percentage equal to the aggregate percentage increase or decrease in the Construction Index from the date of such report to the date as of which Current Value is to be calculated, minus the fair market value (as reflected in the most recent appraiser’s report) of any Property, Plant and Equipment included in such report but disposed of since the last such report increased or decreased by a percentage equal to the aggregate percentage increase or decrease in the Construction Index from the date of such report to the date as of which Current Value is to be calculated; plus (ii) the Book Value of any Property, Plant and Equipment acquired since the last such report increased or decreased by a percentage equal to the aggregate percentage increase or decrease in the Construction Index from the date of such acquisition to the date as of which Current Value is to be calculated, minus (iii) the Book Value of any such Property, Plant and Equipment acquired since the last such report but disposed of; and (b) with respect to any other Property, the fair market value of such Property.
“Days Cash on Hand” means, as of the date of calculation, the amount determined by dividing (a) the amount of Cash and Investments on such date by, (b) the quotient obtained by dividing Expenses (including interest on Indebtedness but excluding provisions for bad debt amortization, depreciation or any other non cash expenses) as shown on the most recent annual audited financial statements (or, with respect to any calculation of Days Cash on Hand as of any December 31, as reflected in the unaudited trailing twelve month financial statements for the period ending such December 31, as derived from the quarterly financial statements delivered pursuant to Section 4.15(b)(i) hereof), by 365.
“Debt Service Requirements” means, with respect to the period of time for which calculated, the aggregate of the payments required to be made during such period in respect of principal (whether at maturity, as a result of mandatory sinking fund redemption, mandatory prepayment or otherwise) and interest on outstanding Funded Indebtedness of each Person or a
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group of Persons with respect to which such requirements are calculated; provided that: (a) the amount of such payments for a future period shall be calculated in accordance with the assumptions contained in Sections 4.16 and 4.17 hereof; (b) interest shall be excluded from the determination of the Debt Service Requirements to the extent that Funded Interest is available to pay such interest; (c) principal of Indebtedness shall be excluded from the determination of Debt Service Requirements to the extent that amounts are on deposit in an irrevocable escrow and such amounts (including, where appropriate, the earnings or other increment to accrue thereon) are required to be applied to pay such principal and such amounts so required to be applied are sufficient to pay such principal; (d) principal of Indebtedness due in its final year shall be excluded from the determination of Debt Service Requirements to the extent moneys were initially deposited and are on deposit as of the date of calculation in a debt service reserve fund which required that moneys on deposit in the debt service reserve fund be used to pay a principal payment in the final year of such Indebtedness; (e) any annual fees payable in respect of a Credit Facility (other than annual fees to be paid from proceeds of a bond issue escrowed for such purpose) shall be included in the determination of Debt Service Requirements; and (f) all payments due on any Affiliate Subordinated Indebtedness shall be excluded from the determination of Debt Service Requirements.
“Defeasance Obligations” means:
(a)� Direct obligations of the United States of America or obligations to the full and prompt payment of which the full faith and credit of the United States of America is pledged or evidences of ownership of proportionate interests in future interest and principal payments on such obligations held by a bank or trust company as custodian, under which the owner of the investment is the real party in interest and has the right to proceed directly and individually against the obligor on such obligations, and which underlying obligations are not available to satisfy any claim of the custodian or any Person claiming through the custodian or to whom the custodian may be obligated; and
(b)� Obligations issued or guaranteed by the following instrumentalities or agencies of the United States of America:
(1)� Federal Home Loan Bank System;
(2)� Export-Import Bank of the United States;
(3)� Federal Financing Bank;
(4)� Government National Mortgage Association;
(5)� Farmers Home Administration;
(6)� Federal Home Loan Mortgage Company;
(7)� Federal Housing Administration;
(8)� Federal National Mortgage Association;
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(9)� Agency for International Development;
(10)� Any other agency or instrumentality of the United States of America created by an Act of Congress which is substantially similar to the foregoing in its legal relationship to the United States of America; and
(c)� Obligations described in Section 103(a) of the Code, provision for the payment of the principal of (and premium, if any) and interest on which shall have been made by the irrevocable deposit with a bank or trust company acting as a trustee or escrow agent for holders of such obligations of money, or obligations described in clause (1) above, the maturing principal of and interest on which, when due and payable, without reinvestment will provide money, sufficient to pay when due the principal of (and premium, if any) and interest on such obligations, and which money, or obligations described in clause (1) above, are not available to satisfy any other claim, including any claim of the trustee or escrow agent or any claim of any Person claiming through the trustee or escrow agent or any claim of any Person to whom the Person on whose behalf such irrevocable deposit was made, the trustee, or the escrow agent may be obligated, whether arising out of the insolvency of the Person on whose behalf such irrevocable deposit was made, the trustee or escrow agent or otherwise.
“Electronic Means” shall mean the following communications methods: e-mail, facsimile transmission, secure electronic transmission containing applicable authorization codes, passwords and/or authentication keys issued by the Master Trustee or Related Bond Trustee, or another method or system specified by the Master Trustee or Related Bond Trustee as available for use in connection with its services hereunder.
“EMMA” means the Electronic Municipal Market Access System, or any successor depository or system, designated and/or maintained by the Municipal Securities Rulemaking Board and its successors.
“Encumbered” means, with respect to Property, Property which is subject to (1) a Lien described in the following subsections of the definition of Permitted Encumbrances: subsection (b) other than a Lien securing Non-Recourse Indebtedness; subsection (e) but including only Capitalized Leases; subsection (m)(ii); subsection (s); and subsection (u)(ii), and (2) all other Liens not described in the definition of Permitted Encumbrances; provided that any amounts on deposit in a construction fund created in connection with the issuance of an Obligation which are held as security for the payment of such Obligation or any Indebtedness incurred to purchase such Obligation or the proceeds of which are advanced or otherwise made available in connection with the issuance of such Obligation, shall not be deemed to be Encumbered if the amounts are to be applied to construct or otherwise acquire Property which is not subject to a Lien.
“Event of Default” has the meaning set forth in Article VII hereof.
“Expenses” means, for any period, the aggregate of all expenses calculated under generally accepted accounting principles, including without limitation any accrual for taxes, assessments and insurance, incurred by the Person or group of Persons involved during such period, but excluding (a) interest on Funded Indebtedness (taking into account any Interest Rate
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Agreement as provided in Section 4.17 hereof), (b) depreciation and amortization, (c) extraordinary expenses, losses on the sale or disposition of assets other than in the ordinary course of business and losses on the extinguishment of debt or termination of pension plans, (d) any expenses resulting from a forgiveness of or the establishment of reserves against Indebtedness of an Affiliate which does not constitute an extraordinary expense, (e) losses resulting from any reappraisal, revaluation or write down of assets other than bad debts, including, but not limited to, unrealized losses resulting from changes in the valuation of an Interest Rate Agreement, (f) non cash expenses or losses, (g) any expenses paid with proceeds of any Related Bonds, and (h) any development, marketing, operating, overhead or management fees that have been deferred from the year in which they were originally due. If such calculation of Expenses is being made with respect to the Obligated Group, any such expenses attributable to transactions between any Member and any other Member shall be excluded.
“Extendable Indebtedness” means Indebtedness which is repayable or subject to purchase at the option of the holder thereof prior to its Stated Maturity, but only to the extent of money available for the repayment or purchase therefor and not more frequently than once every year.
“Facilities” means the land, building and all fixtures and equipment comprising the healthcare facilities owned by the Obligated Group Members located on the Premises, including any independent living units, assisted living units, a health center including nursing beds, all necessary and useful furnishings, equipment and machinery, and such interests in land as may be necessary or suitable for the foregoing, including roads and rights of access, utilities and other necessary site preparation facilities.
“Feasibility Report” means a report prepared and signed by a Consultant, who is an Accountant, setting forth for a forecast period not exceeding five Fiscal Years from the later of the date of the issuance of the Indebtedness in question, or the completion of the Capital Additions financed with such Indebtedness: (a) forecasted financial statements prepared on the same basis as the Obligated Group’s audited financial statement; and (b) a full explanation of the assumptions and rationale used in preparing such forecasts, including that such forecasts have taken into account the projected utilization of the Facilities, the rates and charges to patients and residents and such other data and information as may be necessary to support the forecasted financial statements; which shall be accompanied by an opinion of such Consultant that the underlying assumptions provide a reasonable basis for such forecast.
“Federal Subsidy Payments” means the direct payments made by the United States Department of Treasury or other federal governmental agency or entity authorized to make such payments to the issuer or conduit borrower for any Related Bonds which constitute Subsidy Bonds.
“Fiscal Year” means any 12-month period beginning on July 1 of any calendar year and ending on June 30 of the next calendar year, or such other consecutive 12 month period selected by the Obligated Group Representative as the fiscal year for the Members.
“Fitch” means Fitch Ratings, Inc., a corporation organized and existing under the laws of the State of Delaware, its successors and assigns, and if such corporation shall be dissolved or
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liquidated or shall no longer perform the functions of a securities rating agency, “Fitch” shall be deemed to refer to any other nationally recognized securities rating agency designated by the Obligated Group, with written notice to the Master Trustee.
“Foundation” means Miami Jewish Health Systems Foundation, Inc., a Florida nonprofit corporation, and any and all successors thereto in accordance with this Master Indenture.
“Funded Indebtedness” means, with respect to any Person, (a) all Indebtedness of such Person for money borrowed, credit extended, incurred or assumed which is not Short Term; (b) all Short Term Indebtedness incurred by the Person which is of the type described in Section 4.16(d) hereof; (c) the Person’s Guaranties of Indebtedness which are not Short Term (but including Guaranties of Short Term Indebtedness described in Section 4.16(d) hereof); and (d) Capitalized Rentals under Capitalized Leases entered into by the Person; provided, however, that Indebtedness that could be described by more than one of the foregoing categories shall not in any case be considered more than once for the purpose of any calculation made pursuant to this Master Trust Indenture.
“Funded Interest” means amounts irrevocably deposited in an escrow or other trust account (other than a debt service reserve fund held under a Related Bond Indenture) to pay interest on Funded Indebtedness or Related Bonds and interest earned on such amounts to the extent such interest earned is required to be applied to pay interest on Funded Indebtedness or Related Bonds.
“Governing Body” means, with respect to a Member, the board of directors, the board of trustees or similar group, including, without limitation, an executive committee, in which the right to exercise the powers of corporate directors or trustees is vested.
“Government Obligations” means direct obligations of the United States of America or obligations the full and timely payment of the principal of and interest on which is unconditionally guaranteed by the United States of America.
“Gross Revenues” means all receipts, revenues, rentals, income, insurance proceeds (including, without limitation, all Medicaid, Medicare and other third party payments), condemnation awards, Federal Subsidy Payments and other moneys received by or on behalf of any Obligated Group Member, including (without limitation) revenues derived from (a) the ownership, operation or leasing of any portion of the Facilities (including, without limitation, fees payable by or on behalf of residents of the Facilities) and all rights to receive the same (other than the right to receive Medicaid and Medicare payments), whether in the form of accounts, general intangibles or other rights, and the proceeds of such accounts, general intangibles and other rights, whether now existing or hereafter coming into existence or whether now owned or held or hereafter acquired, (b) proceeds received from (i) accounts, (ii) securities and other investments, (iii) inventory and other tangible and intangible property, and (iv) accounts receivable, general intangibles, contract rights, chattel paper, instruments and other rights and assets now existing or hereafter coming into existence or whether now owned or held or hereafter acquired, and (c) gifts, grants, bequests, donations and contributions heretofore or hereafter made that are legally available to meet any of the obligations of the Obligated Group Member incurred in the financing, operation, maintenance or repair of any portion of the
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Facilities; provided, however, that there shall be excluded from Gross Revenues (i) all such items, whether now owned or hereafter acquired by the Obligated Group Members, which by their terms or by reason of applicable law cannot be granted, assigned or pledged hereunder or which would become void or voidable if granted, assigned or pledged hereunder by the Obligated Group Members, or which cannot be granted, pledged or assigned hereunder without the consent of other parties whose consent is not secured, or without subjecting the Master Trustee to a liability not otherwise contemplated by the provisions hereof, or which otherwise may not be, or are not, hereby lawfully and effectively granted, pledged and assigned by the Obligated Group Members, (ii) any amounts received by an Obligated Group Member as a billing agent for another entity, except for fees received for serving as billing agent, (iii) gifts, grants, bequests, donations and contributions to an Obligated Group Member heretofore or hereafter made, and the income and gains derived therefrom, which are specifically restricted by the donor or grantor to a particular purpose which is inconsistent with their use of payments required under this Master Trust Indenture, and (iv) any moneys received by any Obligated Group Member from prospective residents or commercial tenants in order to pay for customized improvements to those independent living units or other areas of the Facilities to be occupied or leased to such residents or tenants.
“Guaranty” means all obligations of a Person guaranteeing, or in effect guaranteeing, any Indebtedness, dividend or other obligation of any Primary Obligor in any manner, whether directly or indirectly, including but not limited to obligations incurred through an agreement, contingent or otherwise, by such Person: (a) to purchase such Indebtedness or obligation or any Property constituting security therefor; (b) to advance or supply funds: (i) for the purchase or payment of such Indebtedness or obligation, or (ii) to maintain working capital or other balance sheet condition; (c) to purchase securities or other Property or services primarily for the purpose of assuring the owner of such Indebtedness or obligation of the ability of the Primary Obligor to make payment of the Indebtedness or obligation; or (d) otherwise to assure the owner of such Indebtedness or obligation against loss in respect thereof.
“Historical Debt Service Coverage Ratio” means, for any period of time, the ratio consisting of a numerator equal to the amount determined by dividing Income Available for Debt Service for that period by the Debt Service Requirements for such period and a denominator of one; provided, however, that in calculating the Debt Service Requirements for such period, (a) the principal amount of any Indebtedness included in such calculation which is paid during such period shall be excluded to the extent such principal amount is paid from the proceeds of other Indebtedness incurred in accordance with the provisions of this Master Trust Indenture, and (b) to the extent an Interest Rate Agreement has been entered into in connection with any particular Indebtedness, the actual debt service paid after the effect of payments made to or received from the provider of the Interest Rate Agreement shall be used in the calculation.
“Historical Pro Forma Debt Service Coverage Ratio” means, for any period of time, the ratio consisting of a numerator equal to the amount determined by dividing Income Available for Debt Service for that period by the Maximum Annual Debt Service Requirement for the Funded Indebtedness then outstanding (other than any Funded Indebtedness being refunded with the Funded Indebtedness then proposed to be issued) and the Funded Indebtedness then proposed to be issued and a denominator of one.
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“Holder” means a bearer of any Obligation issued in bearer form, and the registered owner of any Obligation issued in registered form.
“Holder Consent” means the written consent of the Holders of a majority in aggregate principal amount of the total amount of Obligations then Outstanding.
“Income Available for Debt Service” means for any period, the excess of Revenues over Expenses of the Person or group of Persons involved.
“Indebtedness” means, for any Person, (a) all Guaranties by such Person, (b) all liabilities (exclusive of reserves such as those established for deferred taxes or litigation) recorded or required to be recorded as such on the audited financial statements of such Person in accordance with generally accepted accounting principles, and (c) all obligations for the payment of money incurred or assumed by such Person (i) due and payable in all events, or (ii) if incurred or assumed primarily to assure the repayment of money borrowed or credit extended, due and payable upon the occurrence of a condition precedent or upon the performance of work, possession of Property as lessee, rendering of services by others or otherwise; provided that Indebtedness shall not include Indebtedness of one Member to another Member, any Guaranty by any Member of Indebtedness of any other Member, the joint and several liability of any Member on Indebtedness issued by another Member, Interest Rate Agreements (but any amounts then due but unpaid thereunder shall constitute Indebtedness), any Subordinated Indebtedness owed to an Affiliate of such Person evidencing an obligation to repay funds advanced or to pay fees owed to such Affiliate or moneys deposited by patients or others with a Member as security for or as prepayment of the cost of patient care or any rights of residents of life care, senior living facilities or similar facilities to endowment or similar funds deposited by or on behalf of such residents.
“Independent Counsel” means an attorney duly admitted to practice law in any state and, without limitation, may include independent legal counsel for any Member, the Master Trustee or any Related Bond Trustee.
“Initial Members” means, collectively, MJHS, Foundation and Pace, the initial Obligated Group Members.
“Initial Purchaser” means, collectively, B.C. Ziegler and Company and SunTrust Robinson Humphrey, Inc., the initial purchasers of the Series 2017 Bonds.
“Initial Supplemental Indenture” means Supplemental Indenture Number 1 dated as of January 1, 2017, between the Obligated Group Representative and the Master Trustee, related to the issuance of the Series 2017 Note.
“Initial Testing Period” means the Fiscal Year ending June 30, 2017.
“Insurance Consultant” means a person or firm who in the case of an individual is not an employee or officer of any Member and which, in the case of a firm, does not control any Member of the Obligated Group or any Affiliate thereof and is not controlled by or under common control with any Member of the Obligated Group or an Affiliate thereof, appointed by the Obligated Group Representative, qualified to survey risks and to recommend insurance
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coverage for senior living facilities or health care facilities and services of the type involved, and having a favorable reputation for skill and experience in such surveys and such recommendations, and which may include a broker or agent with whom any Member transacts business.
“Interest Rate Agreement” means an interest rate exchange, hedge or similar agreement, expressly identified in an Officer’s Certificate of the Obligated Group Representative delivered to the Master Trustee as being entered into in order to hedge the interest payable on all or a portion of any Indebtedness, which agreement may include, without limitation, an interest rate swap, a forward or futures contract or an option (e.g., a call, put, cap, floor or collar) and which agreement does not constitute an obligation to repay money borrowed, credit extended or the equivalent thereof. An Interest Rate Agreement shall not constitute Indebtedness hereunder unless and to the extent amounts due thereunder are unpaid.
“Lien” means any mortgage, pledge or lease of, security interest in or lien, charge or encumbrance on any Property of the Person involved in favor of, or which secures any obligation to, any Person other than any Member, and any Capitalized Lease under which any Member is lessee and the lessor is not another Member.
“Liquidity Facility” means a written commitment to provide money to purchase or retire any Indebtedness if (a) on the date of delivery of such Liquidity Facility, the unsecured Funded Indebtedness or claims-paying ability of the provider of such Liquidity Facility or its parent holding company or other controlling entity is rated at least “A” by a least one of the Rating Agencies, and (b) as of any particular date of determination, no amount realized under such Liquidity Facility for the payment of the principal or the purchase or redemption price of such Indebtedness (exclusive of amounts realized for the payment of accrued interest on such Indebtedness) shall be required to be repaid by the obligor on such Funded Indebtedness for a period of at least one year.
“Liquidity Requirement” has the meaning given such term in Section 4.20 hereof.
“Master Trustee” means The Bank of New York Mellon Trust Company, N.A., a national banking association with trust powers in the State of Florida, as trustee hereunder, and any successor in trust appointed pursuant to Article VIII hereof.
“Maturity” when used with respect to any Indebtedness means the date on which the principal of such Indebtedness or any installment thereof becomes due and payable as therein provided, whether at the Stated Maturity thereof or by declaration of acceleration, call for redemption, or otherwise.
“Maximum Annual Debt Service Requirement” means the largest total Debt Service Requirements for the current or any succeeding Fiscal Year.
“MJHS” means Miami Jewish Health Systems, Inc., a Florida nonprofit corporation, and any and all successors thereto in accordance with this Master Trust Indenture.
“Moody’s” means Moody’s Investors Service, a corporation organized and existing under the laws of the State of Delaware, its successors and assigns, and, if such corporation shall
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be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, “Moody’s” shall be deemed to refer to any other nationally recognized securities rating agency designated by the Obligated Group, with written notice to the Master Trustee.
“Mortgage” means the Mortgage, Fixture Filing and Security Agreement dated as of January 1, 2017, from MJHS to the Master Trustee.
“Mortgaged Property” means the real property and personal property of the Members which is subject to the Lien and security interest of this Master Trust Indenture and the Mortgage.
“Net Proceeds” means, when used with respect to any insurance (other than the proceeds of business interruption insurance) or condemnation award or sale consummated under threat of condemnation, the gross proceeds from the insurance or condemnation award or sale with respect to which that term is used less all expenses (including attorney’s fees, adjuster’s fees and any expenses of the Obligated Group or the Master Trustee) incurred in the collection of such gross proceeds.
“Net Rentals” means all fixed rents (including as such all payments which the lessee is obligated to make to the lessor on termination of the lease or surrender of the leased Property other than upon termination of the lease for a default thereunder) payable under a lease or sublease of real or personal Property excluding any amounts required to be paid by the lessee (whether or not designated as rents or additional rents) on account of maintenance, repairs, insurance, taxes and similar charges. Net Rentals for any future period under any so called “percentage lease” shall be computed on the basis of the amount reasonably estimated to be payable thereunder for such period, but in any event not less than the amount paid or payable thereunder during the immediately preceding period of the same duration as such future period; provided that the amount estimated to be payable under any such percentage lease shall in all cases recognize any change in the applicable percentage called for by the terms of such lease.
“Non-Recourse Indebtedness” means any Indebtedness the liability for which is effectively limited to Property, Plant and Equipment (other than the Premises) and the income therefrom, with no recourse, directly or indirectly, to any other Property of any Member.
“Obligated Group” means, collectively, all of the Obligated Group Members.
“Obligated Group Member” or “Member” means each of the Initial Members and any other Person who has satisfied the requirements set forth in this Master Trust Indenture for becoming an Obligated Group Member and its successors until any such Person or a successor or transferee Person satisfies the requirements set forth in this Master Trust Indenture for ceasing to be an Obligated Group Member.
“Obligated Group Representative” means MJHS, or any successor Obligated Group Representative appointed pursuant to Section 6.04 hereof.
“Obligation” means any promissory note, guaranty, lease, contractual agreement to pay money or other obligation of any Obligated Group Member which is authenticated and delivered
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pursuant to this Master Trust Indenture and which is entitled to the benefits of this Master Trust Indenture.
“Obligation Register” means the register of ownership of the Obligations to be maintained pursuant to this Master Trust Indenture.
“Officer’s Certificate” means a certificate signed, in the case of a certificate delivered by a Member of the Obligated Group, by the Chief Executive Officer, the Chief Financial Officer, the Chief Operating Officer, the President, any Vice President, Director of Finance or any other Authorized Representative of any Member of the Obligated Group or in the case of a certificate delivered by any other corporation, by the President, any Vice President, Chief Operating Officer, Chief Financial Officer, Director of Finance or any other officer or agent authorized to sign by resolution of the Governing Body of such corporation or, in the case of a certificate delivered by any other Person, the chief executive or chief financial officer of such other Person.
“Operating Reserve Fund” means any operating reserve fund or account established pursuant to a Supplement in connection with the financing of a Capital Addition.
“Opinion of Bond Counsel” shall mean an opinion in writing signed by Bond Counsel.
“Opinion of Counsel” means a written opinion of counsel who may (except as otherwise expressly provided herein) be counsel to any Obligated Group Member.
“Outstanding” when used with respect to Obligations means, as of the date of determination, all Obligations theretofore authenticated and delivered under this Master Trust Indenture, except:
(a)� Obligations theretofore cancelled and delivered to the Master Trustee or delivered to the Master Trustee for cancellation;
(b)� Obligations for whose payment or redemption money (or Defeasance Obligations to the extent permitted by Section 10.02 of this Master Trust Indenture) shall have theretofore been deposited with the Master Trustee or any Paying Agent for such Obligations in trust for the Holders of such Obligations pursuant to this Master Trust Indenture; provided, that, if such Obligations are to be redeemed, notice of such redemption has been duly given or waived pursuant to this Master Trust Indenture or irrevocable provision for the giving of such notice satisfactory to the Master Trustee has been made pursuant to this Master Trust Indenture; and
(c)� Obligations upon transfer of or in exchange for or in lieu of which other Obligations have been authenticated and delivered pursuant to this Master Trust Indenture;
provided, however, that in determining whether the Holders of the requisite principal amount of Outstanding Obligations have given any request, demand, authorization, direction, notice, consent, or waiver hereunder, Obligations owned by any Obligated Group Member or any Affiliate of any Obligated Group Member shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Master Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent, or waiver, only
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Obligations that a Responsible Officer of the Master Trustee actually knows to be so owned shall be so disregarded. Obligations so owned that have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Master Trustee the pledgee’s right so to act with respect to such Obligations and that the pledgee is not an Obligated Group Member or an Affiliate of any Obligated Group Member.
“Pace” means Florida Pace Centers, Inc., a Florida nonprofit corporation, and any and all successors thereto in accordance with the Master Indenture.
“Paying Agent” means any Person authorized by the Obligated Group Representative to pay the principal of (and premium, if any) or interest on any Obligations on behalf of the Obligated Group.
“Permitted Encumbrances” means any Related Loan Agreement, any Related Bond Indenture and, as of any particular date:
(a)� Liens arising by reason of good faith deposits with a Member in connection with tenders, leases of real estate, bids or contracts (other than contracts for the payment of money), deposits by any Member to secure public or statutory obligations, or to secure, or in lieu of, surety, stay or appeal bonds, and deposits as security for the payment of taxes or assessments or other similar charges; any Lien arising by reason of deposits with, or the giving of any form of security to, any governmental agency or any body created or approved by law or governmental regulation for any purpose at any time as required by law or governmental regulation as a condition to the transaction of any business or the exercise of any privilege or license, or to enable any Member to maintain self-insurance or to participate in any funds established to cover any insurance risks or in connection with workers’ compensation, unemployment insurance, pensions or profit sharing plans or other social security plans or programs, or to share in the privileges or benefits required for corporations participating in such arrangements;
(b)� any Lien described in EXHIBIT B hereto which is existing on the date of execution of this Master Trust Indenture provided that no such Lien may be extended, renewed or modified to apply to any Property of a Member of the Obligated Group not subject to such Lien on such date, unless such Lien as so extended, renewed or modified otherwise qualifies as a Permitted Encumbrance;
(c)� any Lien on the Property of any Member granted in favor of or securing Indebtedness to any other Member, with Holder Consent;
(d)� this Master Trust Indenture, the Mortgage and any other Lien on Property if such Lien equally and ratably secures all of the Obligations and only the Obligations;
(e)� leases which relate to Property of the Obligated Group which is of a type that is customarily the subject of such leases, such as office space for physicians and educational institutions, food service facilities, gift shops, commercial, beauty shop, banking, radiology, other similar specialty services, pharmacy and similar departments or employee rental apartments; and any leases, licenses or similar rights to use Property whereunder a Member is lessee, licensee or the equivalent thereof upon fair and reasonable terms no less favorable to the lessee or licensee than would obtain in a comparable arm’s length transaction;
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(f)� Liens for taxes and special assessments owed by an Obligated Group Member which are not then delinquent, or if then delinquent are being contested in accordance with Section 4.05 hereof;
(g)� utility, access and other easements and rights of way, restrictions, encumbrances and exceptions which do not materially interfere with or materially impair the operation of the Property affected thereby (or, if such Property is not being then operated, the operation for which it was designed or last modified);
(h)� any mechanic’s, laborer’s, materialman’s, broker’s, appraiser’s, supplier’s or vendor’s Lien or right in respect thereof if payment is not yet due under the contract in question or has been due for less than 60 days, or if such Lien is being contested in accordance with the provisions of this Master Trust Indenture;
(i)� such Liens, defects, irregularities of title and encroachments on adjoining property as normally exist with respect to property similar in character to the Property involved and which do not materially adversely affect the value of, or materially impair, the Property affected thereby for the purpose for which it was acquired or is held by the owner thereof;
(j)� zoning laws and similar restrictions which are not violated by the Property affected thereby;
(k)� statutory rights under Section 291, Title 42 of the United States Code, as a result of what are commonly known as Hill Burton grants, and similar rights under other federal statutes or statutes of the state in which the Property involved is located;
(l)� all right, title and interest of the state where the Property involved is located, municipalities and the public in and to tunnels, bridges and passageways over, under or upon a public way;
(m)� Liens on or in Property given, granted, bequeathed or devised by the owner thereof existing at the time of such gift, grant, bequest or devise, provided that (i) such Liens consist solely of restrictions on the use thereof or the income therefrom, or (ii) such Liens secure Indebtedness which is not assumed by any Member and such Liens attach solely to the Property (including the income therefrom) which is the subject of such gift, grant, bequest or devise;
(n)� Liens of or resulting from any judgment or award, the time for the appeal or petition for rehearing of which shall not have expired, or in respect of which any Member shall at any time in good faith be prosecuting an appeal or proceeding for a review and in respect of which a stay of execution pending such appeal or proceeding for review shall be in existence;
(o)� Liens on moneys deposited by patients or others with a Member as security for or as prepayment of the cost of patient care or any rights of residents of life care, senior living facilities or similar facilities to endowment, prepayment or similar funds deposited by or on behalf of such residents;
(p)� Liens on Property due to rights of third party payors for recoupment of excess reimbursement paid owed by an Obligated Group Member;
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(q)� any security interest in a rebate fund, any depreciation reserve, debt service or interest reserve, debt service, construction fund or any similar fund established pursuant to the terms of any Supplement, Related Bond Indenture or Related Loan Agreement in favor of the Master Trustee, a Related Bond Trustee or the holder of the Indebtedness issued pursuant to such Supplement, Related Bond Indenture or Related Loan Agreement or the holder of any related Commitment Indebtedness;
(r)� any Lien on any Related Bond or any evidence of Indebtedness of any Member acquired by or on behalf of any Member which secures Commitment Indebtedness and only Commitment Indebtedness;
(s)� any Lien on Property acquired by a Member which Lien secures Indebtedness issued, incurred or assumed by any Member, in connection with and to effect such acquisition or existing Indebtedness assumed as part of such acquisition which will remain outstanding after such acquisition which Lien encumbers Property other than Property that is pledged pursuant to Granting Clause Second of this Master Trust Indenture, if in any such case the aggregate principal amount of such Indebtedness does not exceed 100% of the fair market value of such property subject to such Lien as determined in good faith by the Governing Body of the Member;
(t)� Liens on accounts receivable arising as a result of the sale of such accounts receivable with or without recourse, provided that the principal amount of Indebtedness secured by any such Lien does not exceed the face amount of such accounts receivable sold;
(u)� such Liens, covenants, conditions and restrictions, if any, which do not secure Indebtedness and which are other than those of the type referred to above, and which (i) in the case of Property owned by the Obligated Group on the date of execution of this Master Trust Indenture, do not and will not, so far as can reasonably be foreseen, materially adversely affect the value of the Property currently affected thereby or materially impair the same, and (ii) in the case of any other Property, do not materially impair or materially interfere with the operation or usefulness thereof for the purpose for which such Property was acquired or is held by a Member; and
(v)� any title policy exceptions described in EXHIBIT C hereto relating to the Premises.
“Permitted Investments” means, if and to the extent the same are at the time legal for investment of funds held under this Master Trust Indenture, dollar denominated investments in any of the following:
(a)� Government Obligations;
(b)� debt obligations which are (i) issued by any state or political subdivision thereof or any agency or instrumentality of such state or political subdivision, and (ii) at the time of purchase, rated investment grade by any Rating Agency;
(c)� any bond, debenture, note, participation certificate or other similar obligation which is either (i) issued or guaranteed by the Federal National Mortgage Association, the
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Federal Home Loan Bank System, the Federal Home Loan Mortgage Corporation, or the Federal Farm Credit Bank, or (ii) backed by the full faith and credit of the United States of America;
(d)� U.S. denominated deposit account, certificates of deposit and banker’s acceptances with domestic commercial banks, including the Master Trustee or its affiliates, which have a rating on their short-term certificates of deposit on the date of purchase of “A 1” by Standard & Poor’s, “F 1+” by Fitch or “P 1” by Moody’s, without regard to gradation, and which matures not more than 360 days after the date of purchase;
(e)� commercial paper which is rated at the time of purchase within the classification or higher, “A 1” by Standard & Poor’s, “F 1+” by Fitch or “P 1” by Moody’s, without regard to gradation, and which matures not more than 270 days after the date of purchase;
(f)� bonds, notes, debentures or other evidences of indebtedness issued or guaranteed by a corporation which are, at the time of purchase, rated investment grade by any Rating Agency;
(g)� investment agreements with banks that at the time such agreement is executed are rated by any Rating Agency in one of the three highest rating categories assigned by such Rating Agency (without regard to any refinement or gradation of rating category by numerical modifier or otherwise) or investment agreements with non-bank financial institutions which, (1) all of the unsecured, direct long-term debt of either the non-banking financial institution or the related guarantor of such non-bank financial institution is rated by any Rating Agency at the time such agreement is executed in one of the three highest rating categories (without regard to any refinement or gradation of rating category by numerical modifier or otherwise) for obligations of that nature; or (2) if such non-bank financial institutions have no outstanding long-term debt that is rated, all of the short-term debt of either the non-banking financial institution or the related guarantor of such non-bank financial institution is rated by any Rating Agency in the three highest rating categories (without regard to any refinement or gradation of the rating category by numerical modifier or otherwise) assigned to short term indebtedness by such Rating Agency; provided that if at any time after purchase the provider of the investment agreement drops below the three highest rating categories assigned by such Rating Agency, the investment agreement must, within 30 days, either (1) be assigned to a provider rated in one of the three highest rating categories, or (2) be secured by the provider with collateral securities the fair market value of which, in relation to the amount of the investment agreement including principal and interest, is equal to at least 102%; investment agreements with banks or non-bank financial institutions shall not be permitted if no rating is available with respect to debt of the investment agreement provider or the related guarantor of such provider;
(h)� repurchase agreements with respect to and secured by Government Obligations or by obligations described in clause (b) and ( c) above, which agreements may be entered into with a bank (including without limitation the Bond Trustee or the Master Trustee or its affiliates), a trust company, financial services firm or a broker dealer which is a member of the Securities Investors Protection Corporation, provided that (i) the Master Trustee or a custodial agent of the Master Trustee has possession of the collateral and that the collateral is, to the knowledge of the Master Trustee, free and clear of third-party claims, (ii) a master repurchase agreement or specific written repurchase agreement governs the transaction, (iii) the collateral securities are
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valued no less frequently than monthly, (iv) the fair market value of the collateral securities in relation to the amount of the repurchase obligation, including principal and interest, is equal to at least 103%, and (v) such obligations must be held in the custody of the Bond Trustee or the Master Trustee’s agent; and
(i)� shares of a money market mutual fund or other collective investment fund registered under the federal Investment Company Act of 1940, whose shares are registered under the Securities Act of 1933, having assets of at least $100,000,000 and having a rating of “AAAm” or “AAAm-G” by a Rating Agency, including money market mutual funds from which the Master Trustee or its affiliates derive a fee for investment advisory or other services to the fund.
The Master Trustee shall be entitled to assume that any investment which at the time of purchase is a Permitted Investment remains a Permitted Investment thereafter (even if any rating is downgraded), absent receipt by a Responsible Officer of written notice or actual information to the contrary. To the extent such investment is no longer a Permitted Investment, the Obligated Group Representative shall promptly provide the Master Trustee written notice of such status and the Master Trustee shall proceed to invest such amounts pursuant to Section 3.02 herein.
For the purposes of this definition, obligations issued or held in the name of the Master Trustee in book-entry form on the books of the Department of Treasury of the United States shall be deemed to be deposited with the Master Trustee.
“Person” means any individual, corporation, partnership, limited liability company, firm, joint venture, association, joint stock company, trust, unincorporated organization, or government or any agency or political subdivision thereof or any other entity.
“Place of Payment” for a series of Obligations means a city or political subdivision designated as such pursuant to this Master Trust Indenture or a Supplement.
“Premises” means the real property described in EXHIBIT A hereto, as it may be amended from time to time.
“Primary Obligor” means the Person who is primarily obligated on an obligation which is guaranteed by another Person.
“Projected Debt Service Coverage Ratio” means, for any future period, the ratio consisting of a numerator equal to the amount determined by dividing the projected Income Available for Debt Service for that period by the Maximum Annual Debt Service Requirement for the Funded Indebtedness expected to be outstanding during such period and a denominator of one; provided, however, that in calculating the Debt Service Requirements in order to calculate the Maximum Annual Debt Service Requirement for such period, (i) the principal amount of any Funded Indebtedness included in such calculation which is paid during such period shall be excluded to the extent such principal amount will be paid from the proceeds of other Indebtedness incurred in accordance with the provisions of this Master Trust Indenture, and (ii) to the extent an Interest Rate Agreement has been or will be entered into in connection with any particular Indebtedness, the actual debt service paid after the effect of Regularly Scheduled
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Payments to be made to or to be received from the provider of the Interest Rate Agreement shall be used in the calculation.
“Projected Rate” means the projected yield at par of an obligation as set forth in the report of a Consultant. Such report shall state that in determining the Projected Rate such Consultant reviewed the yield evaluations at par of not less than three obligations (or such lesser number as the Consultant shall deem appropriate, but in no event less than one) selected by such Consultant, the interest on which is entitled to the exemption from federal income tax afforded by Section 103(a) of the Code or any successor thereto (or, if it is not expected that it will be reasonably possible to issue such tax-exempt obligations, or if the interest on the Indebtedness for which the Projected Rate is being calculated is not entitled to such exemption, then obligations the interest on which is subject to federal income taxation) which obligations such Consultant states in its report are reasonable comparators for utilizing in developing such Projected Rate and which obligations: (a) were outstanding on a date selected by the Consultant which date so selected occurred during the 90 day period preceding the date of the calculation utilizing the Projected Rate in question, (b) to the extent practicable, are obligations of Persons engaged in operations similar to those of the Obligated Group and having a credit rating similar to that of the Obligated Group, (c) are not entitled to the benefits of any credit enhancement (including without limitation any letter or line of credit or insurance policy) if the obligation for which the Projected Rate is being determined is not benefited by any credit enhancement, and (d) to the extent practicable, have a remaining term and amortization schedule substantially the same as the obligation with respect to which such Projected Rate is being developed.
“Property” means any and all rights, titles and interests in and to any and all property, whether real or personal, tangible (including cash) or intangible, wherever situated and whether now owned or hereafter acquired by a Person.
“Property, Plant and Equipment” means all Property of each Member which is classified as property, plant and equipment under generally accepted accounting principles.
“Put Date” means (a) any date on which an owner of Put Indebtedness may elect to have such Put Indebtedness paid, purchased or redeemed by or on behalf of the underlying obligor prior to its Stated Maturity date, or (b) any date on which Put Indebtedness is required to be paid, purchased or redeemed from the owner by or on behalf of the underlying obligor (other than at the option of the owner) prior to its Stated Maturity date, other than pursuant to any mandatory sinking fund or other similar fund or other than by reason of acceleration upon the occurrence of an event of default.
“Put Indebtedness” means Indebtedness which is (a) payable or required to be purchased or redeemed by or on behalf of the underlying obligor, at the option of the owner thereof, prior to its Stated Maturity date, or (b) payable or required to be purchased or redeemed from the owner by or on behalf of the underlying obligor (other than at the option of the owner) prior to its Stated Maturity date, other than pursuant to any mandatory sinking fund or other similar fund or other than by reason of acceleration upon the occurrence of an event of default.
“Rating Agency” means, as applicable, Moody’s, Standard & Poor’s or Fitch.
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“Regularly Scheduled Payments” means payments scheduled for regular payment on specified dates or at specific intervals pursuant to an Interest Rate Agreement.
“Related Bond Indenture” means any indenture, bond resolution or other comparable instrument pursuant to which a series of Related Bonds is issued including, without limitation, the Series 2017 Bond Indenture.
“Related Bond Trustee” means the bond trustee and its successor in the trust created under any Related Bond Indenture including, without limitation, the Series 2017 Bond Trustee.
“Related Bonds” means the Series 2017 Bonds and any other revenue bonds or other obligations issued by any state, territory or possession of the United States or any municipal corporation or political subdivision formed under the laws thereof or any constituted authority or agency or instrumentality of any of the foregoing empowered to issue obligations on behalf thereof (“governmental issuer”), pursuant to a single Related Bond Indenture, the proceeds of which are loaned or otherwise made available to any Obligated Group Member in consideration of the execution, authentication and delivery of an Obligation to or for the order of such governmental issuer.
“Related Bonds Debt Service Reserve Fund” means a debt service reserve fund established pursuant to a Related Bond Indenture to secure payment on any Related Bonds.
“Related Loan Agreement” means the Series 2017 Loan Agreement, any loan agreement, financing agreement, credit agreement or other comparable instrument entered into in connection with a series of Related Bonds.
“Renewal and Replacement Fund” means any repair, renewal or capital facility replacement fund or account established in connection with the financing of any Capital Addition. The term “Renewal and Replacement Fund” shall not include any similar account or fund created as part of the Minimum Liquid Reserve Accounts unless otherwise provided by the Supplement creating such fund or account.
“Request” means of any specified Person a written request signed in the name of such Person by the Chairman of the Governing Body, the Chief Executive Officer, the President, a Vice President, the Treasurer, an Assistant Treasurer, Secretary or the Chief Financial Officer of such Person or any other person or persons designated by an Officer’s Certificate and delivered to the Master Trustee.
“Required Information Recipient” means the Master Trustee, each Related Bond Trustee, each provider of a Credit Facility so long as such Credit Facility is in effect, the Initial Purchaser, the Municipal Securities Rulemaking Board, which currently accepts continuing disclosure submissions through its EMMA web portal, or any successor entity authorized and approved by the Securities and Exchange Commission from time to time to act as a recognized municipal securities repository, and all Holders of Related Bonds who hold $500,000 or more in principal amount of Related Bonds and request such reports in writing (which written request shall include a certification as to such ownership).
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“Residency Agreement” means each and every contract between an Obligated Group Member and a resident of the Facilities giving the resident certain rights of occupancy in the Facilities, including, without limitation, the independent living units, assisted living units, skilled nursing beds or specialty care (dementia) beds and providing for certain services to such resident.
“Responsible Officer” when used with respect to the Master Trustee means the officer of the Master Trustee having direct responsibility for administration of this Master Trust Indenture.
“Revenue Fund” means the Revenue Fund created by Section 3.01 hereof.
“Revenues” means, for any period, (a) in the case of any Person providing health care services and/or senior living services, the sum of (i) net patient service revenues and resident service revenues, plus (ii) other operating revenues, plus (iii) non-operating revenues (other than Contributions, income derived from the sale of assets not in the ordinary course of business, any gain from the extinguishment of debt or other extraordinary item, earnings which constitute Funded Interest or earnings on amounts which are irrevocably deposited in escrow to pay the principal of or interest on Indebtedness, but including investment income), plus (iv) Unrestricted Contributions, plus (v) payments received from any Affiliate of an Obligated Group Member, plus (vi) any Federal Subsidy Payments; and (b) in the case of any other Person, gross revenues less sale discounts and sale returns and allowances, as determined in accordance with generally accepted accounting principles; but excluding in either case (i) any unrealized gain or loss resulting from changes in the valuation of investment securities or unrealized changes in the value of derivative instruments, (ii) any gains on the sale or other disposition of fixed or capital assets not in the ordinary course, (iii) earnings resulting from any reappraisal, revaluation or write up of fixed or capital assets, and (iv) insurance (other than business interruption) and condemnation proceeds; provided, however, that if such calculation is being made with respect to the Obligated Group, such calculation shall be made in such a manner so as to exclude any revenues attributable to transactions between any Member and any other Member. For purposes of calculations under this Master Trust Indenture, an Unrestricted Contribution from an Affiliate shall be treated as being made during the period of such calculation so long as the Unrestricted Contribution is made prior to the date the applicable certificate is required to be delivered with respect to such calculation.
“Series 2017 Bond Indenture” means the Indenture of Trust, dated as of January 1, 2017, between the City of Miami, Florida Health Facilities Authority and the Series 2017 Bond Trustee, relating to the Series 2017 Bonds.
“Series 2017 Bonds” means the City of Miami, Florida Health Facilities Authority Health Facilities Revenue and Revenue Refunding Bonds (Miami Jewish Health Systems, Inc. Project), Series 2017 issued pursuant to the Series 2017 Bond Indenture.
“Series 2017 Bond Trustee” means The Bank of New York Mellon Trust Company, N.A., as bond trustee under the Series 2017 Bond Indenture.
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“Series 2017 Loan Agreement” means the Loan Agreement, dated as of January 1, 2017, between the City of Miami, Florida Health Facilities Authority and MJHS, relating to the Series 2017 Bonds.
“Series 2017 Note” means the initial Obligation issued by the Obligated Group Representative pursuant to the terms hereof and of the Initial Supplemental Indenture to secure repayment of the Series 2017 Bonds.
“Short Term” when used in connection with Indebtedness, means having an original Maturity less than or equal to one year and not renewable at the option of the debtor for a term greater than one year beyond the date of original issuance.
“Stable Occupancy” means in connection with the incurrence of Additional Indebtedness for any Capital Addition, the meaning given such term in the Supplement relating to such Additional Indebtedness, based on the sustainable capacity for which such facility was designed as stated in the Consultant’s report issued at such time.
“Standard & Poor’s” means S&P Global Ratings and its successors and assigns, and, if such entity shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, “Standard & Poor’s” shall be deemed to refer to any other nationally recognized securities rating agency designated by the Obligated Group Representative, with written notice to the Master Trustee.
“Stated Maturity” when used with respect to any Indebtedness or any installment of interest thereon means any date specified in the instrument evidencing such Indebtedness or such installment of interest as a fixed date on which the principal of such Indebtedness or any installment thereof or the fixed date on which such installment of interest is due and payable.
“Subordinated Indebtedness” means any promissory note, guaranty, lease, contractual agreement to pay money or other obligation the terms of the documents providing for the issuance of which expressly provide that all payments on such indebtedness shall be subordinated to the timely payment of all Obligations, whether currently Outstanding or subsequently issued.
“Subsidy Bonds” means any Related Bonds for which the issuer or conduit borrower is entitled to receive Federal Subsidy Payments directly from the United States Department of Treasury or other federal governmental agency or entity authorized to make such payments under the Code.
“Supplement” means an indenture supplemental to, and authorized and executed pursuant to the terms of, this Master Trust Indenture.
“Tax-Exempt Organization” means a Person organized under the laws of the United States of America or any state thereof that is exempt from federal income taxes under Section 501(a) of the Code as an organization described in Section 501(c)(3) of the Code, or corresponding provisions of federal income tax laws from time to time in effect.
“Testing Date” shall have the meaning ascribed to it in Section 4.20 hereof.
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“Threshold Amount” means the greater of (a) 5% of Book Value or, at the option of the Obligated Group Representative, the Current Value of the Property, Plant and Equipment of the Obligated Group, or (b) $1,000,000 plus an amount equal to $1,000,000 multiplied by a percentage equal to the aggregate percentage increase or decrease in the Construction Index from its level as of January 1, 2016.
“Trust Estate” has the meaning given such term in the Granting Clauses hereof.
“Unrestricted Contributions” means Contributions which are not restricted in any way that would prevent their application to the payment of debt service on Indebtedness of the Person receiving such Contributions.
“Working Capital Fund” means any working capital fund or account established in connection with the financing of a Capital Addition.
SECTION 1.02.� COMPLIANCE CERTIFICATES AND REPORTS. Whenever the amount or date of any of the following is a condition to the taking of any action permitted hereby,
(a)� Estimated Revenues, Expenses, Cash and Investments and Income Available for Debt Service of any Person for any future Fiscal Year shall be established by a certificate or report of a Consultant stating the amount of such estimated item based upon assumptions provided by such Person and stating that such assumptions are, in the opinion of the Consultant, reasonable.
(b)� any of:
(1)� Revenues, Expenses, Cash and Investments and Income Available for Debt Service of any Person for any prior Fiscal Year or period,
(2)� Maximum Annual Debt Service Requirement of any Person, and
(3)� principal of and interest on any Indebtedness
shall be established by an Officer’s Certificate of the Obligated Group Representative stating the amount of such item and that such amounts have been derived from either the most recent audited or unaudited financial statements of the Obligated Group delivered to the Master Trustee pursuant to Section 4.15 hereof or, for any period other than a prior Fiscal Year, from the internally prepared financial statements of the Obligated Group for such period;
(c)� the anticipated date of completion of any construction project of any Person shall be established by an Officer’s Certificate of the Obligated Group Representative; and
(d)� securities shall include any amounts invested in marketable securities, whether classified as short term or long term assets.
All calculations required to be made hereunder with respect to the Obligated Group shall be made after elimination of intercompany items on a combined basis. The character or amount
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of any asset, liability or item of income or expense required to be determined or any consolidation, combination or other accounting computation required to be made for the purposes hereof, shall be determined or made in accordance with generally accepted accounting principles in effect on the date hereof, or at the option of the Obligated Group Representative, at the time in effect (provided that such generally accepted accounting principles are applied consistently with the requirements existing either on the date hereof or at the time in effect) except that assets, liabilities, items of income and expenses of Affiliates which are not included in the Obligated Group shall not be taken into account, and except where such principles are inconsistent with the requirements of this Master Trust Indenture; provided, however, that there shall not be included in any calculation of any item otherwise required to be included in such calculation with respect to any Person which has withdrawn or is withdrawing from the Obligated Group.
SECTION 1.03.� FORM OF DOCUMENTS DELIVERED TO MASTER TRUSTEE. In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents.
Any certificate or opinion of any officer of a Person may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any such certificate or Opinion of Counsel or Opinion of Bond Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of a specified Person stating that the information with respect to such factual matters is in the possession of such Person, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Master Trust Indenture, they may, but need not, be consolidated and form one instrument.
SECTION 1.04.� ACTS OF HOLDERS OF OBLIGATIONS. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Master Trust Indenture to be given or taken by Holders of Obligations may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders of Obligations in person or by agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Master Trustee, and, where it is hereby expressly required, to the Obligated Group Representative. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the “Act” of the Holders of Obligations signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent, or of the holding by any Person of unregistered Obligations,
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shall be sufficient for any purpose of this Master Trust Indenture and conclusive in favor of the Master Trustee and the Obligated Group Members, if made in the manner provided in this Section.
(b)� The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by the certificate of any notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by an officer of a corporation or a member of a partnership, on behalf of such corporation or partnership, such certificate or affidavit shall also constitute sufficient proof of his authority.
The amount of Obligations held in bearer form held by any Person executing any such instrument or writing as a Holder of Obligations, the numbers of such Obligations, and the date of his holding the same, may be proved by the production of such Obligations or by a certificate executed, as depositary, by any trust company, bank, banker or member of a national securities exchange (wherever situated), if such certificate is in form satisfactory to the Master Trustee, showing that at the date therein mentioned such Person had on deposit with such depositary, or exhibited to it, the Obligations held in bearer form therein described; or such facts may be proved by the certificate or affidavit of the Person executing such instrument or writing as a Holder of Obligations, if such certificate or affidavit is in form satisfactory to the Master Trustee. The Master Trustee and the Obligated Group Members may assume that such ownership of any Obligation held in bearer form continues until (1) another certificate bearing a later date issued in respect of the same Obligation is produced, or (2) such Obligation is produced by some other Person, or (3) such Obligation is registered as to principal or is surrendered in exchange for an Obligation in registered form, or (4) such Obligation is no longer Outstanding.
(c)� The fact and date of execution of any such instrument or writing and the amount and numbers of Obligations held in bearer form held by the Person so executing such instrument or writing may also be proved in any other manner which the Master Trustee deems sufficient; and the Master Trustee may in any instance require further proof with respect to any of the matters referred to in this Section.
(d)� The ownership of Obligations in registered form shall be proved by the Obligation Register.
(e)� Any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any Obligation shall bind every future Holder of the same Obligation and the Holder of every Obligation issued upon the transfer thereof or in exchange therefor or in lieu thereof, in respect of anything done or suffered to be done by the Master Trustee or the Obligated Group Members in reliance thereon, whether or not notation of such action is made upon such Obligation.
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SECTION 1.05.� NOTICES, ETC., TO MASTER TRUSTEE AND OBLIGATED GROUP MEMBERS. Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders of Obligations or other document provided or permitted by this Master Trust Indenture to be made upon, given or furnished to, or filed with,
(a)� the Master Trustee by any Holder of Obligations or by any specified Person shall be sufficient for every purpose hereunder if actually received by the Master Trustee at The Bank of New York Mellon Trust Company, N.A., 10161 Centurion Parkway N., Jacksonville, Florida 32256, Attention: Corporate Trust Services;
(b)� the Obligated Group Members by the Master Trustee or by any Holder of Obligations shall be sufficient for every purpose hereunder if in writing and mailed, first class postage prepaid, to the Obligated Group Representative addressed to it at Miami Jewish Health Systems, Inc., 5200 N.E. Second Avenue, Miami, Florida 33137, Attention: Chief Financial Officer and General Counsel, with a copy to Greenberg Traurig, P.A., 333 S.E. Second Avenue, Miami, Florida 33131, Attention Robert C. Gang, or at any other address previously furnished in writing to the Master Trustee by the Obligated Group Representative; or
(c)� any Obligated Group Member by the Master Trustee or by any Holder of Obligations shall be sufficient for every purpose hereunder if in writing and mailed, registered or certified first class postage prepaid, to the Obligated Group Member addressed to it at the address specified in the Supplement executed by such Obligated Group Member or at any other address previously furnished in writing to the Master Trustee by such Obligated Group Member.
Subject to Section 8.03(r), any such notice, demand or request may also be transmitted to the appropriate above-mentioned parties by Electronic Means. The Master Trustee has agreed pursuant to this Master Trust Indenture to accept and act upon instruction or directions sent by Electronic Means, provided that the Master Trustee has been provided with an incumbency certificate listing such designated persons, which may be amended from time to time. If the Obligated Group elects to give the Master Trustee instructions by Electronic Means and the Master Trustee in its discretion elects to act upon such instructions, the Master Trustee’s understanding of such instructions shall be deemed controlling. The Master Trustee shall not be liable for losses, costs or expenses arising directly or indirectly from the Master Trustee’s reliance upon and compliance with such instructions notwithstanding such instructions conflict or are inconsistent with subsequent written instructions. The Obligated Group hereby assumes all risks arising out of the use of Electronic Means to submit instructions, including without limitation acting on unauthorized instructions, and the risk of interception and misuse by third parties.
SECTION 1.06.� NOTICES TO HOLDERS OF OBLIGATIONS; WAIVER. Where this Master Trust Indenture provides for notice to Holders of Obligations of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first class postage prepaid, to each Holder of such Obligations, at his address as it appears on the Obligation Register, not later than the latest date, and not earlier than the earliest date, prescribed for the transmission of such notice; provided, however, if notice is permitted by the terms of this Master Trust Indenture to be sent by electronic mail, the provisions of Section 1.05 hereof shall apply. Where this Master Trust Indenture provides for notice in any manner,
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such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders of Obligations shall be filed with the Master Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver.
SECTION 1.07.� NOTICES TO RATING AGENCIES. If any Related Bonds are then rated by a Rating Agency, the Obligated Group Representative shall give prompt notice to such Rating Agency of any of the following events:
(a)� any Event of Default hereunder;
(b)� the incurrence by any Obligated Group Member of any Funded Indebtedness (however, notice need not be provided for Capitalized Leases where the net present value of the minimum Capitalized Lease payment is less than $100,000);
(c)� any addition to or withdrawal from the Obligated Group; and
(d)� any Interest Rate Agreement entered into by any Obligated Group Member.
SECTION 1.08.� EFFECT OF HEADINGS AND TABLE OF CONTENTS. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof.
SECTION 1.09.� SUCCESSORS AND ASSIGNS. All covenants and agreements in this Master Trust Indenture by the Obligated Group Members shall bind their respective successors and assigns, whether so expressed or not.
SECTION 1.10.� SEPARABILITY CLAUSE. In case any provision in this Master Trust Indenture or in the Obligations shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
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ARTICLE II THE OBLIGATIONS
SECTION 2.01.� SERIES AND AMOUNT OF OBLIGATIONS. (a) Obligations shall be issued under this Master Trust Indenture in series created by Supplements permitted hereunder. Each series shall be designated to differentiate the Obligations of such series from the Obligations of any other series. No Obligation issued hereunder shall be secured on a basis senior to other Obligations; provided, however, that the provision of an Interest Rate Agreement, letter or line of credit, standby bond purchase agreement, bond insurance policy or other similar instrument or obligation issued by a financial institution or municipal bond insurer or the establishment of a debt service reserve fund or account for the sole benefit of the Holders of certain Obligations, shall be permitted provided, further, that any Subordinated Indebtedness issued by an Obligated Group Member shall contain a provision to the effect that payment on the Subordinated Indebtedness is subordinate to payment on Obligations issued pursuant to this Master Trust Indenture. The number of series of Obligations that may be created under this Master Trust Indenture is not limited. The aggregate principal amount of Obligations of each series that may be created under this Master Trust Indenture is not limited except as restricted by Supplement and the provisions of Article IV of this Master Trust Indenture.
(b)� Any Obligated Group Member proposing to incur Indebtedness, other than the Series 2017 Note, whether evidenced by Obligations issued pursuant to a Supplement or by evidences of Indebtedness issued pursuant to documents other than this Master Trust Indenture, shall give written notice of its intention to incur such Indebtedness, including in such notice the amount of Indebtedness to be incurred, to the Obligated Group Representative and the other Obligated Group Members. The Obligated Group Representative shall provide the Master Trustee with a copy of any such notice it receives prior to the date such Indebtedness is to be incurred. Any such Obligated Group Member, other than the Obligated Group Representative, proposing to incur such Indebtedness other than the Series 2017 Note, shall obtain the written consent of the Obligated Group Representative, which consent shall be evidenced by an Officer’s Certificate of the Obligated Group Representative filed with the Master Trustee or an endorsement to such Indebtedness signed by the Obligated Group Representative. The Series 2017 Note is issued simultaneously with the execution and delivery hereof.
(c)� Obligations that are issued to secure payments other than Regularly Scheduled Payments under an Interest Rate Agreement shall constitute Subordinated Indebtedness hereunder. Obligations may adopt by reference the terms of an Interest Rate Agreement. Obligations issued pursuant to this provision (i) do not constitute Indebtedness (unless and to the extent amounts due thereunder are unpaid) and may be incurred without regard to provisions of this Master Indenture restricting or limiting the issuance or incurrence of Indebtedness, and (ii) shall not be treated as Outstanding hereunder and shall be excluded for purposes of determining whether the Holders of the requisite amount of Obligations Outstanding have given any request, demand, authorization, direction, notice, consent or waiver under this Master Indenture (including a request, demand, authorization, notice, consent or waiver pursuant to the remedy provisions of Article VII or an amendment pursuant to Article IX of this Master Indenture).
SECTION 2.02.� APPOINTMENT OF OBLIGATED GROUP REPRESENTATIVE. Each Obligated Group Member, by becoming an Obligated Group
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Member, irrevocably appoints the Obligated Group Representative as its agent and true and lawful attorney in fact and grants to the Obligated Group Representative (a) full and exclusive power to execute Supplements authorizing the issuance of Obligations or series of Obligations, (b) full and exclusive power to execute Obligations for and on behalf of the Obligated Group and each Obligated Group Member, (c) full and exclusive power to execute Supplements on behalf of the Obligated Group and each Obligated Group Member pursuant to Sections 9.01 and 9.02 hereof, and (d) full power to prepare, or authorize the preparation of, any and all documents, certificates or disclosure materials reasonably and ordinarily prepared in connection with the issuance of Obligations hereunder, or Related Bonds associated therewith, and to execute and deliver such items to the appropriate parties in connection therewith.
SECTION 2.03.� EXECUTION AND AUTHENTICATION OF OBLIGATIONS. All Obligations shall be executed for and on behalf of the Obligated Group and the Obligated Group Members by an Authorized Representative of the Obligated Group Representative. The signature of any such Authorized Representative may be manual or may be mechanically or photographically reproduced on the Obligation. If any Authorized Representative whose signature appears on any Obligation ceases to be such Authorized Representative before delivery thereof, such signature shall remain valid and sufficient for all purposes as if such Authorized Representative had remained in office until such delivery. Each Obligation shall be manually authenticated by an authorized representative of the Master Trustee, without which authentication no Obligation shall be entitled to the benefits hereof.
The Master Trustee’s authentication certificate shall be substantially in the following form:
MASTER TRUSTEE’S AUTHENTICATION CERTIFICATE
This [Obligation] is one of the Obligations referred to in the aforementioned Master Trust Indenture.
Date of Authentication: as Master Trustee By: Authorized Signatory
SECTION 2.04.� SUPPLEMENT CREATING OBLIGATIONS. The Obligated Group Representative (on behalf of the Obligated Group Members) and the Master Trustee may from time to time enter into a Supplement in order to create Obligations hereunder. Each Supplement authorizing the issuance of Obligations shall specify and determine the date of the Obligations, the principal amount thereof, the purposes for which such Obligations are being issued, the form, title, designation, and the manner of numbering or denominations, if applicable, of such Obligations, the date or dates of Maturity of such Obligations, the rate or rates of interest (or method of determining the rate or rates of interest) and premium, if any, borne by such Obligations, the arrangement for place and medium of payment, and any other provisions deemed advisable or necessary, and any of the foregoing terms may be incorporated into such
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Supplement by reference. Each Obligation shall be issuable, shall be transferable and exchangeable and shall be subject to redemption as specified in this Master Trust Indenture and in the Supplement. Any Obligation to be held by a Related Bond Trustee in connection with the issuance of Related Bonds shall be in the principal amount equal to the aggregate principal amount of such Related Bonds and shall be registered in the name of the Related Bond Trustee as assignee of the issuer of the Related Bonds. Unless an Obligation has been registered under the Securities Act of 1933, as amended (or similar legislation subsequently enacted), each such Obligation shall be endorsed with a legend which shall read substantially as follows: “This [describe Obligation] has not been registered under the Securities Act of 1933 or any state securities law (or any such similar subsequent legislation);” provided, however, such legend shall not be required if the Master Trustee is provided with an Opinion of Counsel to the effect that such legend is not required.
A Supplement and the Obligations issued thereunder may contain, as applicable, provisions relating to bond insurance or other forms of credit or liquidity enhancement, as well as any and all compatible provisions necessary in order to make the Obligations meet the requirements of an issuer of any credit or liquidity enhancement. Similarly, a Supplement may provide for Obligations to be issued in fixed or variable rate forms, as the case may be, with such tender and redemption provisions as may be deemed necessary for the issuance thereof and provide for the execution of required documents necessary for such purposes, and may specifically subordinate payment, remedies and any other provisions of the Obligations issued thereunder to the provisions of any other Obligations.
SECTION 2.05.� CONDITIONS TO ISSUANCE OF OBLIGATIONS HEREUNDER. With respect to Obligations created hereunder, simultaneously with or prior to the execution, authentication and delivery of Obligations pursuant to this Master Trust Indenture:
(a)� the Obligated Group Representative (on behalf of the Obligated Group Members) and the Master Trustee shall have entered into a Supplement as provided in Section 2.04 hereof, and all requirements and conditions to the issuance of such Obligations set forth in the Supplement and in this Master Trust Indenture, including, without limitation, the provisions of Sections 4.16 and 9.01 hereof (provided that such provisions shall not be applicable to the Series 2017 Note), shall have been complied with and satisfied, as provided in an Officer’s Certificate of the Obligated Group Representative, a copy of which shall be delivered to the Master Trustee; and
(b)� the Obligated Group Representative shall have delivered to the Master Trustee an Opinion of Counsel to the effect that (i) registration of such Obligations under the Securities Act of 1933, as amended, and qualification of this Master Trust Indenture or the Supplement under the Trust Indenture Act of 1939, as amended, is not required, or, if such registration or qualification is required, that all applicable registration and qualification provisions of said acts have been complied with, and (ii) this Master Trust Indenture, as amended and supplemented by such Supplement, and the Obligations are valid, binding and enforceable obligations of each of the Obligated Group Members in accordance with their terms, except as enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance and other laws affecting creditors’ rights generally, usual equity principles and other customary exclusions.
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SECTION 2.06.� LIST OF HOLDERS OF OBLIGATIONS. The Master Trustee shall keep on file at its office the Obligation Register which shall consist of a list of the names and addresses of the Holders of all Obligations. At reasonable times and under reasonable regulations established by the Master Trustee, the Obligation Register may be inspected and copied by any Obligated Group Member, the Holder of any Obligation or the authorized representative thereof; provided that the ownership by such Holder and the authority of any such designated representative shall be evidenced to the satisfaction of the Master Trustee.
SECTION 2.07.� OPTIONAL AND MANDATORY REDEMPTION. Obligations of each series may be subject to optional and mandatory redemption in whole or in part and may be redeemed prior to Maturity, as provided in the Supplement creating such series, but not otherwise.
SECTION 2.08.� MUTILATED, DESTROYED, LOST AND STOLEN OBLIGATIONS. If (a) any mutilated Obligation is surrendered to the Master Trustee, or the Master Trustee receives evidence to its satisfaction of the destruction, loss or theft of any Obligation, and (b) there is delivered to the Master Trustee such security or indemnity as may be required by the Master Trustee to save it and the Obligated Group Representative harmless, then, in the absence of actual notice to the Obligated Group Representative or a Responsible Officer of the Master Trustee that such Obligation has been acquired by a bona fide purchaser, the Obligated Group Representative shall execute and upon its written request the Master Trustee shall authenticate and deliver in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Obligation, a new Obligation of like tenor, series, interest rate and principal amount, bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Obligation has become or is about to become due and payable, the Obligated Group Representative in its discretion may, instead of issuing a new Obligation, pay such Obligation.
Upon the issuance of any new Obligation under this Section, the Obligated Group Representative and the Master Trustee may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Master Trustee and any attorney’s fees, costs and expenses) in connection therewith.
Every new Obligation issued pursuant to this Section in lieu of any destroyed, lost or stolen Obligation shall constitute an original additional contractual obligation of the maker thereof, whether or not the destroyed, lost or stolen Obligation shall be at any time enforceable by anyone, and shall be entitled to all the benefits and security of this Master Trust Indenture equally and proportionately with any and all other Obligations duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Obligations.
SECTION 2.09.� CANCELLATION. All Obligations surrendered for payment, redemption, transfer or exchange shall, if delivered to any Person other than the Master Trustee,
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be delivered to the Master Trustee and, if not already canceled or required to be otherwise delivered by the terms of the Supplement authorizing the series of Obligations of which such Obligation is a part, shall be promptly canceled by it. The Obligated Group Representative may at any time deliver to the Master Trustee for cancellation any Obligations previously authenticated and delivered hereunder, which the Obligated Group Representative may have acquired in any manner whatsoever, and all Obligations so delivered shall be promptly canceled by the Master Trustee. No Obligations shall be authenticated in lieu of or in exchange for any Obligations canceled as provided in this Section, except as expressly permitted by this Master Trust Indenture. All canceled Obligations held by the Master Trustee shall be treated by the Master Trustee in accordance with its current document retention policies.
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ARTICLE III FUNDS AND ACCOUNTS
SECTION 3.01.� REVENUE FUND. (a) If an Event of Default under Section 7.01(a) of this Master Trust Indenture shall occur and continue for a period of five days, the Master Trustee shall establish a fund to be known as the “Revenue Fund” and each Obligated Group Member shall deposit with the Master Trustee all Gross Revenues of such Obligated Group Member (except to the extent otherwise provided by or inconsistent with any instrument creating any mortgage, lien, charge, encumbrance, pledge or other security interest granted, created, assumed, incurred or existing in accordance with the provisions of Section 4.19 of this Master Trust Indenture) during each succeeding month, beginning on the first day thereof and on each day thereafter, until no default under Section 7.01(a) of this Master Trust Indenture or in the payment of any other Obligations then exists.
(b)� On the fifth Business Day preceding the end of each month in which any Obligated Group Member has made payments to the Master Trustee for deposit into the Revenue Fund, the Master Trustee shall withdraw and pay or deposit from the amounts on deposit in the Revenue Fund the following amounts in the order indicated:
First: to the payment of all amounts due the Master Trustee under this Master Trust Indenture;
Second: to an operating account designated by the Obligated Group Representative (which shall be subject to the lien of this Master Trust Indenture), the amount necessary to pay the Expenses due or expected to become due in the month in which such transfer is made, all as set forth in the then-current Annual Budget;
Third: to the payment of the amounts then due and unpaid upon the Obligations, other than Obligations constituting Subordinated Indebtedness, for principal (and premium, if any) and interest, in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Obligations for principal (and premium, if any) and interest, respectively, and payments of Regularly Scheduled Payments due under any Interest Rate Agreement;
Fourth: to restore any deficiency in a Related Bonds Debt Service Reserve Fund;
Fifth: to the payment of the amounts then due and unpaid upon the Obligations constituting Subordinated Indebtedness for principal (and premium, if any) and interest, in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Obligations for principal (and premium, if any) and interest, respectively;
Sixth: to the payment of all other amounts due under any Interest Rate Agreement that are not Regularly Scheduled Payments; and
Seventh: to the Obligated Group Representative for the benefit of the Obligated Group.
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(c)� The money deposited to the Revenue Fund, together with all investments thereof and investment income therefrom, shall be held in trust and applied solely as provided in this Section and in Section 7.08 hereof. Pending disbursements of the amounts on deposit in the Revenue Fund, the Master Trustee shall promptly invest and reinvest such amounts in accordance with Section 3.02 hereof. All such investments shall have a maturity not greater than 91 days from date of purchase.
(d)� Except as described in Section 3.01(a) above, each Obligated Group Member shall be entitled to full possession and use of its Gross Revenues.
SECTION 3.02.� INVESTMENT OF FUNDS. Any moneys held by the Master Trustee hereunder, including any fund or account established pursuant to any Supplement, shall be invested or reinvested by the Master Trustee in Permitted Investments upon the receipt of an Obligated Group Representative Request (upon which the Master Trustee is entitled to conclusively rely). Any such investments shall be held by or under the control of the Master Trustee and shall mature, or be redeemable at the option of the Master Trustee at such times as it is anticipated by the Obligated Group Representative that moneys from the particular fund will be required for the purposes of this Master Trust Indenture. For the purpose of any investment or reinvestment under this Section, investments shall be deemed to mature at the earliest date on which the obligor under such investment is, on demand, obligated to pay a fixed sum in discharge of the whole of such obligation. Any Permitted Investments may be purchased from or sold to the Master Trustee or any of its respective affiliates and may charge its customary fees for such trades, including cash sweep account fees, provided that a schedule of such fees is provided in advance to the Obligated Group Representative. Ratings of Permitted Investments shall be determined at the time of purchase of such Permitted Investments and without regard to ratings subcategories. The Master Trustee shall have no responsibility to monitor the ratings of Permitted Investments after the initial purchase of such Permitted Investments. Confirmations of investments are not required to be issued by the Master Trustee for each month in which a monthly statement is rendered. The Master Trustee shall keep or cause to be kept proper and detailed records containing complete and correct entries of all transactions relating to the receipt, investment, disbursement, allocation and application of the moneys held under this Master Trust Indenture. The Master Trustee shall make copies of such records available to the Obligated Group Representative, upon its reasonable written request. The Master Trustee may make any and all such investments through its own investment department or that of its affiliates or subsidiaries, and may charge its ordinary and customary fees for such trades.
The Obligated Group acknowledges that to the extent the regulations of the United States of America Office of the Comptroller of the Currency or other applicable regulatory entity grant the Obligated Group the right to receive individual confirmations of security transactions at no additional cost, as they occur, the Obligated Group specifically waives receipt of such confirmations to the extent permitted by law. The Master Trustee will furnish the Obligated Group periodic cash transaction statements that include detail for all investment transactions by the Master Trustee hereunder.
SECTION 3.03.� ALLOCATION AND TRANSFERS OF INVESTMENT INCOME. Any investments in any fund or account shall be held by or under the control of the Master Trustee and shall be deemed at all times a part of the fund or account from which the
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investment was made. Any loss resulting from such investments shall be charged to such fund or account. Any interest or other gain from any fund or account from any investment or reinvestment pursuant to Section 3.02 hereof on deposit in such fund or account (other than the Revenue Fund) or such other account or funds designated by Supplement on each January 1, April 1, July 1 and October 1 shall be transferred to the Obligated Group Representative upon its written request.
SECTION 3.04.� MASTER TRUSTEE RELIEVED FROM RESPONSIBILITY. The Master Trustee shall be fully protected in conclusively relying upon any Obligated Group Representative Request relating to investments in any fund, and shall not be liable for any losses or prepayment penalties as a result of complying with any such Obligated Group Representative Request, and shall not be required to ascertain any facts with respect to such Request. In the event that the Master Trustee is not provided direction as to investments in any fund, the Master Trustee is entitled to hold funds on deposit therein uninvested.
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ARTICLE IV COVENANTS OF THE OBLIGATED GROUP MEMBERS
SECTION 4.01.� TITLE TO TRUST ESTATE. The Initial Members warrant that they have good and indefeasible title to the Trust Estate free and clear of any liens, charges, encumbrances, security interests and adverse claims whatsoever except the encumbrances permitted by Section 4.19 hereof. MJHS represents that it has the right to mortgage the Mortgaged Property and to enter into the Mortgage. The Obligated Group Members will warrant and defend to Master Trustee, the title and the lien of this Master Trust Indenture and the Mortgage as a valid and enforceable mortgage thereon and lien on the Trust Estate, including the Mortgaged Property, and a security interest therein subject to Permitted Encumbrances. This Master Trust Indenture constitutes a valid and subsisting lien on and security interest in the Trust Estate, all in accordance with the terms hereof, subject to Permitted Encumbrances.
SECTION 4.02.� FURTHER ASSURANCES. The Obligated Group Members, upon the request of the Master Trustee or any Related Bond Trustee, will execute, acknowledge, deliver and record and/or file such further instruments and do such further acts as may be necessary, desirable or proper to carry out more effectively the purpose of this Master Trust Indenture and to subject the Trust Estate to the liens and security interests hereof.
SECTION 4.03.� RECORDING AND FILING. The Obligated Group Representative shall cause the Mortgage and all other instruments necessary to create and/or preserve the liens and security interests granted hereunder and all amendments and supplements thereto and substitutions therefor and any initial financing statements, amendments thereto and continuation statements to be recorded, filed, re-recorded and refiled in such manner and in such places as are necessary to protect the lien on and security interests in the Trust Estate and will pay all such recording, filing, re-recording and refiling taxes, fees and other charges. Additionally, subject to Section 11.06 hereof, the Obligated Group hereby authorizes the Master Trustee at any time and from time to time to file any financing statements, amendments thereto and continuation statements with or without the signature of the Obligated Group Members as authorized by applicable law, as applicable to all or part of the Property for the purpose of securing the lien on and security interest in the Trust Estate created pursuant to this Master Trust Indenture and the Mortgage. Notwithstanding the preceding sentence, the Master Trustee shall not be liable for failure to effect any such filings. For purposes of such filings, each Obligated Group Member agrees to furnish any information requested by the Master Trustee promptly upon request by the Master Trustee. The Obligated Group hereby irrevocably constitutes and appoints the Master Trustee and any officer or agent of the Master Trustee, with full power of substitution, as its true and lawful attorneys in fact with full irrevocable power and authority in the place and stead of the Obligated Group or in the Obligated Group’s own name to execute in the Obligated Group’s name any documents and otherwise to carry out the purposes of this Section 4.03, to the extent that the Obligated Group’s authorization above is not sufficient. To the extent permitted by law, the Obligated Group hereby ratifies all acts said attorneys in fact have lawfully done in the past or shall lawfully do or cause to be done in the future by virtue hereof. This power of attorney is coupled with an interest and shall be irrevocable. Furthermore, the Mortgage shall also constitute a “fixture filing” for the purpose of Article 9 of the Florida Uniform Commercial Code against all of the Trust Estate which is or to become fixtures. Information concerning the security interest herein granted may be obtained at the addresses of the Obligated Group
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Representative and the Master Trustee as set forth in Section 1.05 of this Master Trust Indenture. Each Obligated Group Member shall promptly notify the Master Trustee of any change in its organizational identification number or address.
SECTION 4.04.� PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST. The Obligated Group Members will duly and punctually pay the principal of (and premium, if any) and interest on the Obligations in accordance with the terms of the Obligations and this Master Trust Indenture.
Each Obligated Group Member hereby jointly and severally unconditionally agrees to the full and timely payment of the principal of, and premium, if any, and interest on all Outstanding Obligations which such Person has not created or otherwise made (and on which such Person is not otherwise primarily liable) in accordance with the terms thereof, whether at Stated Maturity, declaration of acceleration, call for redemption or otherwise. Such agreement shall not be affected, modified or impaired upon the happening from time to time of any event, other than the payment of such Obligations (or provision therefor), including, without limitation, any of the following, whether or not with notice to, or the consent of, each Obligated Group Member:
(a)� the waiver, compromise, settlement, release or termination by any Person of the obligations evidenced by such Obligations or any covenant or security in support thereof;
(b)� the failure to give notice to any guarantor of the occurrence of an event of default under the terms and provisions of this Master Trust Indenture or any agreement under which such Obligations are created, assumed, guaranteed or secured;
(c)� any failure, omission, or delay on the part of the Master Trustee or the Holder of such Obligations to enforce, assert or exercise any right, power or remedy conferred on the Master Trustee or such Holder in this Master Trust Indenture or any other agreement under which such Obligations are created, assumed, guaranteed or secured;
(d)� the voluntary or involuntary liquidation, dissolution, sale or other disposition of all or substantially all the assets, marshaling of assets and liabilities, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization or arrangement under bankruptcy or similar laws, composition with creditors or readjustment of, or other similar proceedings affecting any such guarantor or any other obligor on Obligations;
(e)� the invalidity, irregularity, illegality, unenforceability, or lack of value of, or any defect in any of the Obligations so guaranteed or any collateral security therefor; or
(f)� to the extent permitted by law, any event or action that would, in the absence of this Section, result in the release or discharge by operation of laws of such guarantor from the performance or observance of any obligation, covenant, or agreement contained in this Master Trust Indenture.
SECTION 4.05.� PAYMENT OF TAXES AND OTHER CLAIMS. Each Obligated Group Member will pay or discharge or cause to be paid or discharged before the same shall become delinquent, (a) all taxes, assessments, and other governmental charges lawfully levied or assessed or imposed upon it or upon its income, profits, or property, and (b) all lawful claims for
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labor, materials, and supplies which, if unpaid, might by law become a lien upon its property; provided, however, that no such Person shall be required to pay and discharge or cause to be paid and discharged any such tax, assessment, governmental charge, or claim to the extent that the amount, applicability, or validity thereof shall currently be contested in good faith by appropriate proceedings, such Person shall have established and shall maintain adequate reserves on its books for the payment of the same and such property is not jeopardized as a result of nonpayment.
SECTION 4.06.� MAINTENANCE OF PROPERTIES. Each Obligated Group Member will cause all its properties used or useful in the conduct of its business to be maintained and kept in good condition, repair, and working order and supplied with all necessary equipment, ordinary wear and tear, casualty, condemnation, and acts of God excepted. Each Obligated Group Member will cause to be made all necessary repairs, renewals, replacements, betterments, and improvements thereof, all as in the judgment of the Obligated Group Representative may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times; provided, however, that nothing in this Section shall prevent any such Person from discontinuing the operation and maintenance of any of its properties if such discontinuance is, in the judgment of such Person (and in the opinion of the Governing Body of such Person if the property involved is any substantial part of the properties of such Person taken in the aggregate), desirable in the conduct of its business and not disadvantageous in any material respect to the Holders of the Obligations.
SECTION 4.07.� CORPORATE EXISTENCE; STATUS OF INITIAL MEMBERS. (a) Subject to Section 5.01 hereof, each Obligated Group Member will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence, rights (charter and statutory), and franchises; provided, however, that no Person shall be required to preserve any right or franchise if the Governing Body of such Person shall determine that the preservation thereof is no longer desirable in the conduct of its business and that the loss thereof is not disadvantageous in any material respect to the Holders of the Obligations.
(b)� Each of the Initial Members exact legal name is correctly set forth at the beginning of this Master Trust Indenture, and each of the Initial Members is an organization of the type specified in this Master Trust Indenture. Each of the Initial Members is formed or incorporated in or organized under the laws of the State of Florida. No Obligated Group Member will cause or permit any change to be made in its name or identity unless the Obligated Group Representative shall have first notified the Master Trustee in writing of such change at least 30 days prior to the effective date of such change, and shall have first taken all action required by applicable law for the purpose of perfecting or protecting the lien and security interest of the Master Trustee created hereby or by the Mortgage. The Initial Members principal place of business and chief executive office, and the place where the Initial Members keep their books and records, including recorded data of any kind or nature, regardless of the medium or recording, including software, writings, plans, specifications and schematics, has been for the preceding two months and will continue to be the address of the Initial Members set forth in Section 1.05 hereof (unless the Obligated Group Representative notifies the Master Trustee in writing at least 30 days prior to the date of such change).
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(c)� Each of the Initial Members covenants and agrees to take all action necessary to preserve its status as an organization described in Section 501(c)(3) of the Code.
SECTION 4.08.� PRESERVATION OF QUALIFICATIONS. Each Obligated Group Member will not allow any permit, right, license, franchise or privilege so long as it is necessary for the ownership or operation of the Trust Estate to lapse or be forfeited. If an Obligated Group Member becomes a provider of services under and a participant in the Medicare program or any successor program thereto or any program by a federal, state or local government providing for payment or reimbursement for services rendered for health care, such Obligated Group Member shall use its commercially reasonable efforts to remain fully qualified as a provider of services and a participant in such program; provided, however, that no Obligated Group Member shall be required to maintain any such qualification if (a) the Governing Board of such Person shall determine that the maintenance of such qualification is not in the best economic interest of such Person, and (b) at least 30 days prior to the discontinuance of such qualification, such Person shall provide a brief explanation of the basis for such determination to each Required Information Recipient.
SECTION 4.09.� ADDITIONS TO FACILITIES. Any additions, improvements and extensions to the Facilities and repairs, renewals and replacements thereof, including (without limitation) any capital improvements, shall upon their acquisition become part of the Facilities.
SECTION 4.10.� INSURANCE. Each Member shall maintain, or cause to be maintained at its sole cost and expense, insurance with respect to its Property, the operation thereof and its business against such casualties, contingencies and risks (including but not limited to public liability and employee dishonesty) and in amounts not less than is customary in the case of corporations engaged in the same or similar activities and similarly situated and as is adequate to protect its Property and operations. Except in the case of self-insurance described below, all insurance provided shall be maintained with an insurer rated “A-” or higher by A.M. Best & Company or by Standard & Poor’s if available at commercially reasonable rates. The Master Trustee shall be named as an additional insured under all such policies (to the extent such option is commercially available). The Obligated Group Representative shall annually review the insurance each Member maintains as to whether such insurance is customary and adequate. In addition, the Obligated Group Representative shall, at least once every two Fiscal Years with respect to commercial insurance and at least once every Fiscal Year with respect to self-insurance (commencing with its Fiscal Year ending June 30, 2017), cause a certificate of an Insurance Consultant or Insurance Consultants to be delivered to the Master Trustee within 120 days of the applicable Fiscal Year which indicates that the insurance then being maintained by the Members meets the standards described above. The Obligated Group Representative shall cause copies of its review, or the certificates of the Insurance Consultant or Insurance Consultants, as the case may be, to be delivered promptly to the Master Trustee. The Obligated Group or any Member may self-insure if the Insurance Consultant or Insurance Consultants determine(s) that such self-insurance meets the standards set forth in the first sentence of this paragraph and is prudent under the circumstances.
Naming of the Master Trustee as an insured or additional insured under any insurance policy, or the furnishing to the Master Trustee of information relating thereto, shall not impose upon the Master Trustee any responsibility or duty to approve the form of such policy, the level
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of coverage, compliance with the requirements of the Master Trust Indenture, the qualifications of the company issuing same or any other matters relating thereto.
SECTION 4.11.� RATES AND CHARGES. (a) Each Member covenants and agrees to operate its Facilities on a revenue producing basis (if applicable to the nature of the Member’s facilities) and to charge such fees and rates for its Facilities and services and to exercise such skill and diligence, including obtaining payment for services provided, as to provide income from its Property together with other available funds sufficient to pay promptly all payments of principal and interest on its Indebtedness, all expenses of operation, maintenance and repair of its Property and all other payments required to be made by it hereunder to the extent permitted by law. Each Member further covenants and agrees that it will from time to time as often as necessary and to the extent permitted by law, revise its rates, fees and charges in such manner as may be necessary or proper to comply with the provisions of this Section.
The Members covenant and agree that the Obligated Group Representative will calculate the Historical Debt Service Coverage Ratio of the Obligated Group for each Fiscal Year, commencing with the Initial Testing Period and will deliver a copy of such calculation to the Persons to whom such report is required to be delivered under Section 4.15 hereof.
(b)� If the Historical Debt Service Coverage Ratio of the Obligated Group for the Fiscal Year commencing with the Initial Testing Period, and for any Fiscal Year thereafter is less than 1.20:1, the Obligated Group Representative, at the Obligated Group’s expense, shall select a Consultant and notify the Master Trustee in writing of the selection within 30 days following the calculation described herein, and shall engage a Consultant in accordance with Section 4.21 hereof to make recommendations with respect to the rates, fees and charges of the Members and the Obligated Group’s methods of operation and other factors affecting its financial condition in order to increase such Historical Debt Service Coverage Ratio to at least 1.20:1 for the following Fiscal Year.
(c)� Within 60 days of the actual engagement of any such Consultant, the Obligated Group Representative shall cause a copy of the Consultant’s report and recommendations, if any, to be filed with each Member and each Required Information Recipient. Each Member shall follow each recommendation of the Consultant applicable to it to the extent feasible (as determined in the reasonable judgment of the Governing Body of the Obligated Group Representative) and permitted by law. This Section shall not be construed to prohibit any Member from serving indigent residents to the extent required for such Member to continue its qualification as a Tax-Exempt Organization or from serving any other class or classes of residents without charge or at reduced rates so long as such service does not prevent the Obligated Group from satisfying the other requirements of this Section.
(d)� The foregoing provisions notwithstanding, if the Historical Debt Service Coverage Ratio of the Obligated Group for any Fiscal Year does not meet the levels required above, the Master Trustee shall not be obligated to require the Obligated Group to select a Consultant to make such recommendations if: (i) there is filed with each Required Information Recipient a written report addressed to them of a Consultant which contains an opinion of such Consultant that applicable laws or regulations have prevented the Obligated Group from generating Income Available for Debt Service during such Fiscal Year sufficient to meet the
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requirements of this Section, and such report is accompanied by a concurring opinion of Independent Counsel as to any conclusions of law supporting the opinion of such Consultant; (ii) the report of such Consultant indicates that the rates charged by the Obligated Group are such that, in the opinion of the Consultant, the Obligated Group has generated the maximum amount of Revenues reasonably practicable given such laws or regulations; and (iii) the Historical Debt Service Coverage Ratio of the Obligated Group for such Fiscal Year was at least 1.00:1. The Obligated Group shall not be required to cause the Consultant’s report referred to in the preceding sentence to be prepared more frequently than once every two Fiscal Years if at the end of the first of such two Fiscal Years the Obligated Group provides to the Master Trustee (who shall provide a copy to each Related Bond Trustee) an opinion of Independent Counsel to the effect that the applicable laws and regulations underlying the Consultant’s report delivered in respect of the previous Fiscal Year have not changed in any material way.
(e)� Notwithstanding any other provisions of this Master Trust Indenture, an Event of Default arising with respect to the failure to achieve the required Historical Debt Service Coverage Ratio shall only occur if one or more of the following conditions applies:
(i)� the Obligated Group (A) fails to achieve a Historical Debt Service Coverage Ratio of at least 1.20:1 for any Fiscal Year, and (B) fails to take all necessary action to comply with the procedures described under this Section for preparing a report, adopting a plan, and following all recommendations contained in such report or plan to the extent feasible (as determined in the reasonable judgment of the Governing Body of the Obligated Group Representative) and permitted by law; or
(ii)� the Obligated Group fails to achieve a Historical Debt Service Coverage Ratio of at least 1.00:1 for any Fiscal Year and the Days’ Cash on Hand of the Obligated Group as of the last day of such Fiscal Year is less than 300; or
(iii)� the Obligated Group fails to achieve a Historical Debt Service Coverage Ratio of at least 1.00:1 for two (2) consecutive Fiscal Years.
(f)� Notwithstanding any other provisions of this Master Trust Indenture, in the event that any Member of the Obligated Group incurs any Additional Indebtedness for any Capital Addition, the Debt Service Requirements on such Additional Indebtedness and the Revenues and Expenses relating to the project or projects financed with the proceeds of such Additional Indebtedness shall be excluded from the calculation of the Historical Debt Service Coverage Ratio of the Obligated Group for the purposes of complying with this Section 4.11 until the first full Fiscal Year following the later of (i) the estimated completion of the Capital Addition being paid for with the proceeds of such Additional Indebtedness provided that such completion occurs no later than six months following the completion date for such project set forth in the Consultant’s report described in paragraph (A) below, or (ii) the first full Fiscal Year in which Stable Occupancy is achieved in the case of construction, renovation or replacement of senior living facilities or nursing facilities financed with the proceeds of such Additional Indebtedness, which Stable Occupancy shall be projected in the report of the Consultant referred to in paragraph (A) below to occur no later than during the fifth full Fiscal Year following the incurrence of such Additional Indebtedness, or (iii) the end of the fifth full Fiscal Year after the incurrence of such Additional Indebtedness, if the following conditions are met:
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(A)� there is delivered to the Master Trustee a report or opinion of a Consultant to the effect that the Projected Debt Service Coverage Ratio for the first full Fiscal Year following the later of (1) the estimated completion of the Capital Addition being paid for with the proceeds of such Additional Indebtedness, or (2) the first full Fiscal Year following the year in which Stable Occupancy is achieved in the case of construction, renovation or replacement of senior living facilities or nursing facilities being financed with the proceeds of such Additional Indebtedness, which Stable Occupancy shall be projected to occur no later than during the fifth full Fiscal Year following the incurrence of such Additional Indebtedness, will be not less than 1.25:1 after giving effect to the incurrence of such Additional Indebtedness and the application of the proceeds thereof; provided, however, that in the event that a Consultant shall deliver a report to the Master Trustee to the effect that state or federal laws or regulations or administrative interpretations of such laws or regulations then in existence do not permit or by their application make it impracticable for Members to produce the required ratio, then such ratio shall be reduced to the highest practicable ratio then permitted by such laws or regulations but in no event less than 1.00:1; provided, further, however, that in the event a Consultant’s report is not required to incur such Additional Indebtedness, the Obligated Group may deliver an Officer’s Certificate to the Master Trustee in lieu of the Consultant’s report described in this subparagraph (A); and
(B)� there is delivered to the Master Trustee an Officer’s Certificate on the date on which financial statements are required to be delivered to the Master Trustee pursuant to Section 4.15 hereof until the first Fiscal Year in which the exclusion from the calculation of the Historical Debt Service Coverage Ratio no longer applies, calculating the Historical Debt Service Coverage Ratio of the Obligated Group at the end of each Fiscal Year, and demonstrating that such Historical Debt Service Coverage Ratio is not less than 1.00:1, such Historical Debt Service Coverage Ratio to be computed without taking into account (1) the Additional Indebtedness to be incurred if (x) the interest on such Additional Indebtedness during such period is funded from proceeds thereof or other funds of the Member then on hand and available therefore, and (y) no principal of such Additional Indebtedness is payable during such period, and (2) the Revenues to be derived from the project to be financed from the proceeds of such Additional Indebtedness.
SECTION 4.12.� DAMAGE OR DESTRUCTION. Each Member agrees to notify the Master Trustee in writing immediately in the case of the destruction of its Facilities or any portion thereof as a result of fire or other casualty, or any damage to such Facilities or portion thereof as a result of fire or other casualty, the Net Proceeds of which are estimated to exceed the Threshold Amount. If such Net Proceeds do not exceed the Threshold Amount, such Net Proceeds may be paid directly to the Member suffering such casualty or loss. The Members covenant that they will expend or contract to expend an amount not less than the amount of any such Net Proceeds within 24 months after receipt thereof to (a) repair, replace or restore the damaged or destroyed Facilities, (b) acquire or construct additional capital assets for any one or more Members (provided, if the damaged or destroyed Facilities were financed with proceeds of any Related Bonds the Related Bond Trustee shall receive an Opinion of Bond Counsel to the effect that the use of the Net Proceeds in such manner will not adversely affect (i) the validity of such Related Bonds, and (ii) with respect to any Related Bonds the interest on which is tax-
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exempt, the exclusion of interest on such Related Bonds from the gross income of the owners thereof for federal income tax purposes), or (c) repay the principal portion of any Indebtedness incurred by any one or more Members of the Obligated Group to acquire or construct capital assets or refinance Indebtedness incurred for such purpose.
In the event such Net Proceeds exceed the Threshold Amount, the Member suffering such casualty or loss shall within 12 months after the date on which the Net Proceeds are finally determined, elect by written notice to the Master Trustee one of the following three options:
(a)� Option A - Repair and Restoration. Such Member may elect to replace, repair, reconstruct, restore or improve any of the Facilities of the Obligated Group or acquire additional Facilities for the Obligated Group or repay Indebtedness incurred for any such purpose pending the receipt of such Net Proceeds. In such event an amount equal to the Net Proceeds of any insurance relating thereto shall be deposited, when received, with the Master Trustee and such Member shall proceed forthwith to replace, repair, reconstruct, restore or improve Facilities of the Obligated Group or to acquire additional Facilities and will apply the Net Proceeds of any insurance relating to such damage or destruction received from the Master Trustee to the payment or reimbursement of the costs of such replacement, repair, reconstruction, restoration, improvement or acquisition or to the repayment of such Indebtedness. So long as an Event of Default has not occurred and is continuing hereunder, any Net Proceeds of insurance relating to such damage or destruction received by the Master Trustee shall be released from time to time by the Master Trustee to such Member upon the receipt by the Master Trustee of:
(i)� financial projections, which may be prepared by management, demonstrating that the Obligated Group will have sufficient funds, including the proceeds of business interruption insurance, to pay all Debt Service Requirements, and pay necessary operating expenses until completion of the replacement, repair, reconstruction, restoration, improvement or acquisition;
(ii)� the Request of such Member specifying the expenditures made or to be made or the Indebtedness incurred in connection with such replacement, repair, reconstruction, restoration, improvement or acquisition and stating that such Net Proceeds, together with any other moneys legally available for such purposes, will be sufficient to complete such replacement, repair, reconstruction, restoration, improvement or acquisition; and
(iii)� if such expenditures were or are to be made or such Indebtedness was incurred for the construction or renovation of Facilities, the written approval of such Request by an independent architect.
It is further understood and agreed that in the event such Member shall elect this Option A, such Member shall complete the replacement, repair, reconstruction, restoration, improvement and acquisition of the Facilities, whether or not the Net Proceeds of insurance received for such purposes are sufficient to pay for the same.
(b)� Option B - Prepayment of Obligations. Such Member may elect to have all of the Net Proceeds payable as a result of such damage or destruction applied to the prepayment of the
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Obligations. In such event such Member shall, in its notice of election to the Master Trustee, direct the Master Trustee to apply such Net Proceeds, when and as received, to the prepayment of Obligations on a pro rata basis among all Obligations Outstanding.
(c)� Option C - Partial Restoration and Partial Prepayment of Obligations. Such Member may elect to have a portion of such Net Proceeds applied to the replacement, repair, reconstruction, restoration and improvement of the Facilities of the Obligated Group or the acquisition of additional Facilities for the Obligated Group or the repayment of Indebtedness incurred for any such purpose pending the receipt of such Net Proceeds with the remainder of such Net Proceeds to be applied to prepay Obligations on a pro rata basis among all Obligations Outstanding, in which event such Net Proceeds to be used for replacement, repair, reconstruction, restoration, improvement and acquisition shall be applied as set forth in subparagraph (a) of this Section 4.12 and such Net Proceeds to be used for prepayment of the Obligations shall be applied as set forth in subparagraph (b) of this Section.
Notwithstanding the foregoing, the proceeds of business interruption insurance are not subject to the provisions of this Section.
SECTION 4.13.� CONDEMNATION. The Master Trustee shall cooperate fully with the Members in the handling and conduct of any prospective or pending condemnation proceedings with respect to their Facilities or any part thereof. Each Member hereby irrevocably assigns to the Master Trustee, as its interests may appear, all right, title and interest of such Member in and to any Net Proceeds of any award, compensation or damages payable in connection with any such condemnation or taking, or payment received in a sale transaction consummated under threat of condemnation (any such award, compensation, damages or payment being hereinafter referred to as an “award”), which exceeds the Threshold Amount. Such Net Proceeds shall be initially paid to the Master Trustee for disbursement or use as hereinafter provided. If such Net Proceeds do not exceed the Threshold Amount, such Net Proceeds may be paid to the Member in question. The Members covenant that they will expend or contract to expend an amount not less than the amount of any such Net Proceeds within 24 months of the receipt thereof to (a) restore, replace or repair the condemned Facilities, (b) acquire or construct additional capital assets for any one of more Members (provided, if the condemned Facilities were financed with proceeds of any Related Bonds the Related Bond Trustee shall receive an Opinion of Bond Counsel to the effect that the use of the Net Proceeds in such manner will not adversely affect (i) the validity of such Related Bonds, and (ii) with respect to any Related Bonds the interest on which is tax-exempt, the exclusion of interest on such Related Bonds from the gross income of the owners thereof for federal income tax purposes), or (c) repay the principal portion of Indebtedness incurred by one or more Members of the Obligated Group to acquire or construct capital assets or to refinance Indebtedness incurred for such purpose.
In the event such Net Proceeds exceed the Threshold Amount, the Member in question shall within 12 months after the date on which the Net Proceeds are finally determined elect by written notice of such election to the Master Trustee one of the following three options:
(a)� Option A - Repairs and Improvements. The Member may elect to use the Net Proceeds of the award for restoration or replacement of or repairs and improvements to the
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Facilities of the Obligated Group or the acquisition of additional Facilities for the Obligated Group or the repayment of Indebtedness incurred for any such purpose pending the receipt of such Net Proceeds. In such event, so long as an Event of Default has not occurred and is continuing hereunder, such Member shall have the right to receive such Net Proceeds from the Master Trustee from time to time upon the receipt by the Master Trustee of:
(i)� financial projections, which may be prepared by management, demonstrating that the Obligated Group will have sufficient funds, including the proceeds of business interruption insurance, to pay all Debt Service Requirements, and pay necessary operating expenses until completion of the replacement, repair, reconstruction, restoration, or improvement;
(ii)� the Request of such Member specifying the expenditures made or to be made or the Indebtedness incurred in connection with such restoration, replacement, repairs, improvements and acquisitions and stating that such Net Proceeds, together with any other moneys legally available for such purposes, will be sufficient to complete such restoration, replacement, repairs, improvements and acquisition; and
(iii)� if such expenditures were or are to be made or such Indebtedness was incurred for the construction or renovation of Facilities, the written approval of such Request by an independent architect.
(b)� Option B - Prepayment of Obligations. Such Member may elect to have such Net Proceeds of the award applied to the prepayment of the Obligations. In such event such Member shall, in its notice of election to the Master Trustee, direct the Master Trustee to apply such Net Proceeds, when and as received, to the prepayment of Obligations on a pro rata basis among all Obligations Outstanding.
(c)� Option C - Partial Restoration and Partial Prepayment of Obligations. Such Member may elect to have a portion of such Net Proceeds of the award applied to the repair, replacement, restoration and improvement of the Facilities of the Obligated Group or the acquisition of additional Facilities for the Obligated Group or the repayment of Indebtedness incurred for any such purpose pending the receipt of such Net Proceeds, with the remainder of such Net Proceeds to be applied to the prepayment of Obligations on a pro rata basis among all Obligations Outstanding, in which event such Net Proceeds to be used for repair, replacement, restoration, improvement and acquisition shall be applied as set forth in subparagraph (a) of this Section 4.13 and such Net Proceeds to be used for prepayment of the Obligations shall be applied as set forth in subparagraph (b) of this Section.
SECTION 4.14.� OTHER PROVISIONS WITH RESPECT TO NET PROCEEDS. Amounts received by the Master Trustee in respect of any awards shall, at the Request of the Obligated Group Representative, be deposited with the Master Trustee in a special trust account and be invested or reinvested by the Master Trustee as directed in writing by the Obligated Group Representative in Permitted Investments subject to any Member’s right to receive the same (or to have the same applied) pursuant to Sections 4.12 and 4.13 hereof. If any Member elects to proceed under either Section 4.12(a) or (c) hereof or 4.13(a) or (c) hereof, any amounts
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in respect of such Net Proceeds not so paid to such Member shall be used to prepay Obligations on a pro rata basis among all Obligations Outstanding.
SECTION 4.15.� FINANCIAL STATEMENTS, ETC. (a) The Members covenant that they will keep or cause to be kept proper books of records and accounts in which full, true and correct entries will be made of all dealings or transactions of or in relation to the business and affairs of the Obligated Group in accordance with generally accepted accounting principles consistently applied except as may be disclosed in the notes to the audited financial statements referred to in subparagraph (b) below. To the extent that generally accepted accounting principles would require consolidation of certain financial information of entities which are not Members of the Obligated Group with financial information of one or more Members, consolidated financial statements prepared in accordance with generally accepted accounting principles which include information with respect to entities which are not Members of the Obligated Group may be delivered in satisfaction of the requirements of this Section 4.15 so long as: (i) supplemental information in sufficient detail to separately identify the information with respect to the Members of the Obligated Group is delivered to the Required Information Recipients with the audited financial statements; (ii) such supplemental information has been subjected to the auditing procedures applied in the audit of the consolidated financial statements delivered to the Required Information Recipients and, in the opinion of the Accountant, is fairly stated in all material respects in relation to the consolidated financial statements taken as a whole; and (iii) such supplemental information is used for the purposes hereof or for any agreement, document or certificate executed and delivered in connection or pursuant to this Master Trust Indenture. At least fifteen (15) days prior to the first day of each Fiscal Year, the Obligated Group Representative will prepare the Annual Budget for the following Fiscal Year. If the Obligated Group Representative fails to prepare the Annual Budget for any Fiscal Year, the Annual Budget for the preceding Fiscal Year will continue until the Annual Budget is prepared for the remainder of the applicable Fiscal Year. The Annual Budget shall be provided to each Required Information Recipient.
(b)� The Obligated Group Representative will furnish or cause to be furnished to each Required Information Recipient (and the Master Trustee shall have no duty or obligation to review or examine the contents thereof), all of the following:
(i)� Commencing with the fiscal quarter ended December 31, 2016, quarterly unaudited financial statements of the Obligated Group as soon as practicable after they are available but in no event more than 75 days after the completion of the fiscal quarter ended December 31, 2016 and 45 days after the completion of the fiscal quarter ending March 31, 2017 and thereafter, including a combined or combining statement of revenues and expenses and statement of cash flows and accumulated depreciation of the Obligated Group during such period, a combined or combining balance sheet as of the end of each such fiscal quarter, and a calculation of Days Cash on Hand, Historical Debt Service Coverage Ratio and occupancy, for such fiscal quarter, all prepared in reasonable detail and certified, subject to year-end adjustment, by an officer of the Obligated Group Representative. Such financial statements and calculations shall be accompanied by a comparison to the Annual Budget, a summary of (A) occupancy by each level of care (on a units available/units occupied/percentage occupied basis), and (B) payor mix, and an
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update on the construction status of the 2017 Project (as defined in the Series 2017 Loan Agreement).
If the Historical Debt Service Coverage Ratio of the Obligated Group for any Fiscal Year is less than 1.00:1 and Days Cash on Hand of the Obligated Group is less than the Liquidity Requirement on a Testing Date as provided herein, the Obligated Group will deliver the financial information and the calculations described in the above paragraph on a monthly basis within 45 days of the end of each month until the Historical Debt Service Coverage Ratio of the Obligated Group is at least 1.00:1 and Days Cash on Hand is at least equal to the applicable Liquidity Requirement.
(ii)� Within 150 days of the end of each Fiscal Year, an annual audited financial report of the Obligated Group prepared by Accountants, including a combined and an unaudited combining balance sheet as of the end of such Fiscal Year, a combined and an unaudited combining statement of cash flows for such Fiscal Year, and a combined and an unaudited combining statement of revenues and expenses for such Fiscal Year, showing in each case in comparative form the financial figures for the preceding Fiscal Year, together with a separate written statement of the Accountants preparing such report (or another firm of Accountants) containing calculations of the Obligated Group’s Historical Debt Service Coverage Ratio and Days Cash on Hand at the end of such Fiscal Year and a statement that such Accountants have no knowledge of any default under this Master Trust Indenture insofar as it relates to accounting matters or to the Obligated Group’s financial covenants, or if such Accountants shall have obtained knowledge of any such default or defaults, they shall disclose in such statement the default or defaults and the nature thereof.
(iii)� On or before the date of delivery of the financial reports referred to in subsection (b)(ii) above, an Officer’s Certificate of the Obligated Group Representative (A) stating that the Obligated Group is in compliance with all of the terms, provisions and conditions of this Master Trust Indenture, any Related Loan Agreement, and any Related Bond Indenture or, if not, specifying all such defaults and the nature thereof, and (B) calculating and certifying Days Cash on Hand, the Historical Debt Service Coverage Ratio and occupancy, as of the end of such month or Fiscal Year, as appropriate.
(iv)� On or before the date of delivery of the financial reports referred to in subsections (b)(i) and (ii) above, a management’s discussion and analysis of results for the applicable fiscal period.
(v)� Copies of (A) any board approved revisions to the Annual Budget, or (B) any correspondence to or from the Internal Revenue Service concerning the status of any of the Initial Members as an organization described in Section 501(c)(3) of the Code or with respect to the tax-exempt status of any Related Bonds, promptly upon receipt.
(vi)� To the extent that any Obligated Group Member incurs permitted Additional Indebtedness of a form for which there is not a CUSIP number (the “non-Public Debt”), the Obligated Group Representative will provide a debt service schedule showing the principal and interest associated with each series of Related Bonds then
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outstanding as well as the non-Public Debt and the aggregate debt service of the Obligated Group; provided, however, to the extent that the non-Public Debt is used to construct additional units at the Facilities, the Obligated Group Representative will provide monthly reports (A) regarding whether the construction of additional units is within the construction budget and if not, a brief explanation and a copy of any revised budget, and on schedule with the construction timetable and if not, a brief explanation and a copy of any revised timetable, and (B) reconciling the amount of construction contingency remaining and the uses of the contingency funds to date.
(vii)� Such additional information as the Master Trustee or any Related Bond Trustee may reasonably request concerning any Member in order to enable the Master Trustee or such Related Bond Trustee to determine whether the covenants, terms and provisions of this Master Trust Indenture have been complied with by the Members and for that purpose all pertinent books, documents and vouchers relating to the business, affairs and Property (other than patient, donor and personnel records) of the Members shall, to the extent permitted by law, at all times during regular business hours be open to the inspection of such Accountant or other agent (who may make copies of all or any part thereof) as shall from time to time be designated by the Master Trustee or such Related Bond Trustee.
(c)� The Members also agree that, within 10 days after its receipt thereof, the Obligated Group Representative will file with the Required Information Recipients a copy of each Consultant’s final report or counsel’s opinion required to be prepared under the terms of this Master Trust Indenture.
(d)� The Obligated Group Representative shall give prompt written notice of a change of Accountants by the Obligated Group to the Master Trustee and each Related Bond Trustee. The notice shall state (i) the effective date of such change; (ii) whether there were any unresolved disagreements with the former Accountants on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which the Accountants claimed would have caused them to refer to the disagreement in a report on the disputed matter, if it was not resolved to their satisfaction; and (iii) such additional information relating thereto as such Related Bond Trustee or the Master Trustee may reasonably request.
(e)� Without limiting the foregoing, each Member will permit, upon reasonable notice, the Master Trustee or any such Related Bond Trustee (or such persons as they may designate) to visit and inspect, at the expense of such Person, its Property and to discuss the affairs, finances and accounts of the Obligated Group with its officers and independent accountants, all at such reasonable times and locations and as often as the Master Trustee or such Related Bond Trustee may reasonably desire.
(f)� The Obligated Group Representative may designate a different Fiscal Year for the Members of the Obligated Group by delivering a notice to the Master Trustee designating the first and last day of such new Fiscal Year and whether or not there will be any interim fiscal period (the “Interim Period”) of a duration of greater than or less than 12 months preceding such new Fiscal Year. The Members covenant that they will furnish to the Master Trustee and each Related Bond Trustee, as soon as practicable after they are available, but in no event more than
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150 days after the last day of such Interim Period, a financial report for such Interim Period certified by Accountants selected by the Obligated Group Representative covering the operations of the Obligated Group for such Interim Period and containing a combined balance sheet as of the end of such Interim Period and a combined statement of changes in fund balances and changes in financial position for such Interim Period and a combined statement of revenues and expenses for such Interim Period, showing in each case in comparative form the financial figures for the comparable period in the preceding Fiscal Year, together with a separate written statement of the Accountants preparing such report containing a calculation of the Obligated Group’s Historical Debt Service Coverage Ratio for the Interim Period and a statement that such Accountants have obtained no knowledge of any default by any Member in the fulfillment of any of the terms, covenants, provisions or conditions of this Master Trust Indenture, or if such Accountants shall have obtained knowledge of any such default or defaults, they shall disclose in such statement the default or defaults and the nature thereof (but such Accountants shall not be liable directly or indirectly to anyone for failure to obtain knowledge of any default).
(g)� Delivery of such reports, information and documents described in this Section 4.15 to the Master Trustee is for informational purposes only, and the Master Trustee’s receipt thereof shall not constitute notice to it of any information contained therein or determinable from information contained therein, including compliance by the Obligated Group or the Members with any of its or their covenants hereunder, as to which the Master Trustee is entitled to rely exclusively on Officer’s Certificates.
SECTION 4.16.� PERMITTED ADDITIONAL INDEBTEDNESS. So long as any Obligations are outstanding, the Obligated Group will not incur any Additional Indebtedness (whether or not incurred through the issuance of Additional Obligations) other than:
(a)� Funded Indebtedness, if prior to incurrence thereof or, if such Funded Indebtedness was incurred in accordance with another subsection of this Section 4.16 and any Member wishes to have such Indebtedness classified as having been issued under this subsection (a), prior to such classification, there is delivered to the Master Trustee:
(i)� an Officer’s Certificate to the effect that for the most recent Fiscal Year for which audited financial statements have been filed with the Master Trustee as required by this Master Trust Indenture, the Historical Pro Forma Debt Service Coverage Ratio of the Obligated Group was not less than 1.20:1; or
(ii)� (A) an Officer’s Certificate to the effect that for the most recent Fiscal Year or four consecutive quarters for which audited financial statements have been filed with the Master Trustee as required by this Master Trust Indenture, the Historical Debt Service Coverage Ratio of the Obligated Group was not less than 1.20:1; and (B) a written report of a Consultant (prepared in accordance with industry standards) to the effect that the estimated Projected Debt Service Coverage Ratio of the Obligated Group will be not less 1.25:1 for the first full Fiscal Year following the later of (1) the estimated completion of the development, marketing, acquisition, construction, renovation or replacement facilities being paid for with the proceeds of such additional Funded Indebtedness, or (2) the first full Fiscal Year following the attainment of Stable Occupancy in the case of construction, renovation or replacement of senior living
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facilities being financed with the proceeds of such additional Funded Indebtedness, provided that the attainment of Stable Occupancy is projected to occur no later than during the fifth full Fiscal Year following the incurrence of such Funded Indebtedness, or (3) following the incurrence of Funded Indebtedness for other purposes; provided that such report shall include forecast balance sheets, statements of revenues and expenses and statements of changes in financial position for such Fiscal Year and a statement of the relevant assumptions upon which such forecasted statements are based, which financial statements must indicate that sufficient revenues and cash flow could be generated to pay the operating expenses of the Obligated Group’s proposed and existing Facilities and the debt service on the Obligated Group’s other existing Indebtedness during such Fiscal Year.
(b)� Completion Funded Indebtedness in an amount of no more than 10% of the Funded Indebtedness originally incurred to finance the construction of the Facilities, if there is delivered to the Master Trustee: (i) an Officer’s Certificate of the Member for whose benefit such Indebtedness is being issued stating that at the time the original Funded Indebtedness for the Facilities to be completed was incurred, such Member had reason to believe that the proceeds of such Funded Indebtedness together with other moneys then expected to be available would provide sufficient moneys for the completion of such Facilities, (ii) a statement of an independent architect or an expert setting forth the amount estimated to be needed to complete the Facilities, and (iii) an Officer’s Certificate of such Member stating that the proceeds of such Completion Funded Indebtedness to be applied to the completion of the Facilities, together with a reasonable estimate of investment income to be earned on such proceeds and available to pay such costs, the amount of moneys, if any, committed to such completion from available cash or marketable securities and reasonably estimated earnings thereon, enumerated loans from Affiliates or bank loans (including letters or lines of credit) and federal or state grants reasonably expected to be available, will be in an amount not less than the amount set forth in the statement of an independent architect or other expert, as the case may be, referred to in (ii) above.
(c)� Funded Indebtedness for the purpose of refunding (whether in advance or otherwise, including without limitation refunding through the issuance of Crossover Refunding Indebtedness) any outstanding Funded Indebtedness if prior to the incurrence thereof an Officer’s Certificate of a Member is delivered to the Master Trustee stating that, taking into account the issuance of the proposed Funded Indebtedness and the application of the proceeds thereof and any other funds available to be applied to such refunding, the Maximum Annual Debt Service Requirement of the Obligated Group will not be increased by more than 10%, provided that if only a portion of any outstanding Funded Indebtedness is being refunded, such Officer’s Certificate shall state that under such assumptions the Maximum Annual Debt Service Requirement of the Obligated Group will not be increased.
(d)� Short Term Indebtedness (other than accounts payable under subsection (h) hereof), in a total principal amount which at the time incurred does not, together with the principal amount of all other such Short Term Indebtedness of the Obligated Group then outstanding under this subsection (d) but excluding the principal payable on all Funded Indebtedness during the next succeeding 12 months and also excluding such principal to the extent that amounts are on deposit in an irrevocable escrow and such amounts (including, where appropriate, the earnings or other increments to accrue thereon) are required to be applied to pay
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such principal and such amounts so required to be applied are sufficient to pay such principal, exceed 10% of the Revenues of the Obligated Group for the most recent Fiscal Year for which financial statements reported upon by independent certified public accountants are available; provided, however, that for a period of 20 consecutive calendar days in each Fiscal Year the total amount of such Short Term Indebtedness of the Obligated Group outstanding under this subsection (d) shall be not more than 5% of the Revenues of the Obligated Group during the preceding Fiscal Year plus such additional amount as the Obligated Group Representative certifies in an Officer’s Certificate is (i) attributable to Short Term Indebtedness incurred to offset a temporary delay in the receipt of funds due from third party payors, and (ii) in the minimum amount reasonably practicable taking into account such delay. For the purposes of this subsection, Short Term Indebtedness shall not include overdrafts to banks to the extent there are immediately available funds of the Obligated Group sufficient to pay such overdrafts and such overdrafts are incurred and corrected in the normal course of business.
(e)� Balloon Indebtedness or Put Indebtedness provided that the conditions described in subsection (a) above are satisfied with respect to the incurrence of such Balloon Indebtedness or Put Indebtedness utilizing the assumptions specified in Section 4.17 hereof.
(f)� [Reserved].
(g)� Liabilities for contributions to self-insurance or shared or pooled risk insurance programs required or permitted to be maintained under this Master Trust Indenture.
(h)� Indebtedness consisting of accounts payable incurred in the ordinary course of business or other Indebtedness not incurred or assumed primarily to assure the repayment of money borrowed or credit extended which Indebtedness is incurred in the ordinary course of business.
(i)� Indebtedness incurred in connection with a sale or pledge of accounts receivable with or without recourse by any Member consisting of an obligation to repurchase all or a portion of such accounts receivable upon certain conditions, provided that the principal amount of such Indebtedness permitted hereby shall not exceed the aggregate sale price of such accounts receivable received by such Member, with Holder Consent.
(j)� Non-Recourse Indebtedness, without limit.
(k)� Extendable Indebtedness if the conditions set forth in subsection (a) above are met when it is assumed that (i) such Indebtedness bears interest at the Projected Rate and is amortized on a level debt service basis over a term equal to the remaining term of the Extendable Indebtedness, or (ii) such Extendable Indebtedness bears interest at the Projected Rate and is payable according to its actual principal amortization schedule, but only if the debt service of all Indebtedness of the Obligated Group outstanding, when the Extendable Indebtedness debt service being calculated is calculated according to this subsection (ii), varies no more than 10% per year.
(l)� Subordinated Indebtedness, without limit.
(m)� Commitment Indebtedness, without limit.
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(n)� Indebtedness the principal amount of which at the time incurred, together with the aggregate principal amount of all other Indebtedness then outstanding which was issued pursuant to the provisions of this subsection (n) and which has not been subsequently reclassified as having been issued under another subsection of this Section 4.16, does not exceed 10% of the Revenues of the Obligated Group for the latest preceding Fiscal Year for which financial statements reported upon by independent certified public accountants are available; provided, however, that the total amount of all Indebtedness outstanding which was issued pursuant to the provisions of subsections (d), (l) and this subsection (n) shall not exceed 15% of the Revenues of the Obligated Group for the most recent Fiscal Year for which financial statements reported on by independent certified public accountants are available.
It is agreed and understood by the parties hereto that various types of Indebtedness may be incurred under any of the above referenced subsections with respect to which the tests set forth in such subsection are met and need not be incurred under only a subsection specifically referring to such type of Indebtedness (e.g., Balloon Indebtedness and Put Indebtedness may be incurred under subsection (a) above if the tests therein are satisfied).
Each Member covenants that Indebtedness of the type permitted to be incurred under subsection (h) above will not be allowed to become overdue for a period in excess of that which is in the ordinary course of business, based on applicable industry standards and taking into consideration the size and type of the facility, without being contested in good faith and by appropriate proceedings.
Each Member covenants that prior to, or as soon as reasonably practicable after, the incurrence of Indebtedness by such Member for money borrowed or credit extended, or the equivalent thereof, after the date of issuance of the Series 2017 Note, it will deliver to the Master Trustee an Officer’s Certificate which identifies the Indebtedness incurred, identifies the subsection of this Section 4.16 pursuant to which such Indebtedness was incurred, demonstrates compliance with the provisions of such subsection and attaches a copy of the instrument evidencing such Indebtedness; provided, however, that this requirement shall not apply to Indebtedness incurred pursuant to subsection (g) or (h) of this Section 4.16.
Each Member agrees that, prior to incurring Additional Indebtedness for money borrowed from or credit extended by entities other than issuers of Related Bonds, sellers of real or personal property for purchase money debt, lessors of such property or banks or other institutional lenders, it will provide the Master Trustee with an opinion of Independent Counsel to the effect that, to such Counsel’s knowledge, such Member has complied in all material respects with all applicable state and federal laws regarding the sale of securities in connection with the incurrence of such Additional Indebtedness (including the issuance of any securities or other evidences of indebtedness in connection therewith) and such Counsel has no reason to believe that a right of rescission under such laws exists on the part of the entities to which such Additional Indebtedness is to be incurred.
The provisions of this Master Trust Indenture notwithstanding, the Members of the Obligated Group may not incur any Additional Indebtedness the proceeds of which will be used for the acquisition of real Property or the construction of any Facilities unless the right, title and interest in any assets to be financed or refinanced with the proceeds of such Additional
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Indebtedness and the real estate upon which such assets will be located have been mortgaged and assigned to the Master Trustee pursuant to the Mortgage or pursuant to a mortgage in substantially the form of the Mortgage and such assets and real estate are not subject to any other Lien except for Permitted Encumbrances.
SECTION 4.17.� CALCULATION OF DEBT SERVICE AND DEBT SERVICE COVERAGE. The various calculations of the amount of Indebtedness of a Person, the amortization schedule of such Indebtedness and the debt service payable with respect to such Indebtedness required under certain provisions of this Master Trust Indenture shall be made in a manner consistent with that adopted in Section 4.16 hereof and in this Section 4.17. In the case of Balloon or Put Indebtedness issued pursuant to subsection (b) or (n) of Section 4.16 hereof, unless such Indebtedness is reclassified pursuant to this Section 4.17 as having been issued pursuant to another subsection of Section 4.16 hereof, the amortization schedule of such Indebtedness and the debt service payable with respect to such Indebtedness for future periods shall be calculated on the assumption that such Indebtedness is being issued simultaneously with such calculation. With respect to Put Indebtedness, if the option of the holder to require that such Indebtedness be paid, purchased or redeemed prior to its Stated Maturity date, or if the requirement that such Indebtedness be paid, purchased or redeemed prior to its Stated Maturity date (other than at the option of such holder and other than pursuant to any mandatory sinking fund or any similar fund), has expired or lapsed as of the date of calculation, such Put Indebtedness shall be deemed payable in accordance with its terms.
In determining the amount of debt service payable on Indebtedness in the course of the various calculations required under certain provisions of this Master Trust Indenture, if the terms of the Indebtedness being considered are such that interest thereon for any future period of time is expressed to be calculated at a varying rate per annum, a formula rate or a fixed rate per annum based on a varying index, then for the purpose of making such determination of debt service, interest on such Indebtedness for such period (the “Determination Period”) shall be computed by assuming that the rate of interest applicable to the Determination Period is equal to the average of the rate of interest (calculated in the manner in which the rate of interest for the Determination Period is expressed to be calculated) which was in effect (or, with respect to Indebtedness that is being incurred or that has not been outstanding for at least 12 full calendar months, would have been in effect had such Indebtedness been outstanding) on the last date of each of the 12 full calendar months immediately preceding the month in which such calculation is made; provided that if the index or other basis for calculating such interest was not in existence for at least 12 full calendar months next preceding the date of calculation, the rate of interest for such period shall be deemed to be the average rate of interest that was in effect on the last day of each full calendar month next preceding the date of calculation; and if the average rate of interest borne by such Indebtedness for such shorter period cannot be calculated, the rate of interest for such period shall be deemed to be the Projected Rate. No debt service shall be deemed payable upon the exercise by a holder of Extendable Indebtedness of the option to tender such Indebtedness for payment.
Obligations issued to secure Indebtedness permitted to be incurred under Section 4.16 hereof shall not be treated separately as Additional Indebtedness from the Indebtedness secured thereby in a manner which would require such Indebtedness to be included more than one time in the calculations performed under this Master Trust Indenture.
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No debt service shall be deemed payable with respect to Commitment Indebtedness until such time as funding occurs under the commitment which gave rise to such Commitment Indebtedness. From and after such funding, the amount of such debt service shall be calculated in accordance with the actual amount required to be repaid on such Commitment Indebtedness and the actual interest rate and amortization schedule applicable thereto. No Additional Indebtedness shall be deemed to arise when any funding occurs under any such commitment or any such commitment is renewed upon terms which provide for substantially the same terms of repayment of amounts disbursed pursuant to such commitment as obtained prior to such renewal. In addition, no Additional Indebtedness shall be deemed to arise when Indebtedness which bears interest at a variable rate of interest is converted to Indebtedness which bears interest at a fixed rate or the method of computing the variable rate on such Indebtedness is changed or the terms upon which Indebtedness, if Put Indebtedness, may be or is required to be tendered for purchase are changed, if such conversion or change is in accordance with the provisions applicable to such variable rate Indebtedness or Put Indebtedness in effect immediately prior to such conversion or change.
For the purpose of determining the Debt Service Requirements on that portion of Additional Indebtedness which constitutes Balloon Indebtedness or Put Indebtedness, at the option of the Obligated Group Representative:
(i)� If such Balloon Indebtedness or Put Indebtedness is less than 5% of Revenues for the Fiscal Year preceding the date it is incurred, the Debt Service Requirements on such Additional Indebtedness shall be deemed to be those if such Additional Indebtedness were amortized over a term equal to the lesser of (A) the actual remaining term of such Additional Indebtedness or (B) 25 years, based on level payments of principal and interest, using the Projected Rate (if necessary);
(ii)� If the Historical Debt Service Coverage Ratio for the preceding Fiscal Year was at least 1.35 and Days Cash on Hand as of the most recent Testing Date was at least 120, the Debt Service Requirements on such Additional Indebtedness shall be deemed to be those which would be payable if such Additional Indebtedness were amortized over a term equal to the lesser of (A) the actual remaining term of such Additional Indebtedness or (B) 25 years, based on level payments of principal and interest, using the Projected Rate (if necessary);
(iii)� If the Obligated Group received an enforceable commitment for funding new Additional Indebtedness to repay prior Indebtedness, the Debt Service Requirements of such prior Indebtedness shall be deemed to be those of the new Additional Indebtedness obligation;
(iv)� If such Additional Indebtedness is secured by a Credit Facility in an amount at least equal to the principal amount of such Additional Indebtedness, the Debt Service Requirements shall be deemed to be those which will become due from the Obligated Group assuming such Credit Facility is drawn upon to pay such Additional Indebtedness at any maturity of such Balloon Indebtedness; or
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(v)� If such Additional Indebtedness does not meet any of the requirements of subparagraphs (i), (ii), (iii) or (iv) above, or if such Balloon Indebtedness or Put Indebtedness matures within 12 months of the date of calculation, the Debt Service Requirements shall include the full amount of principal stated to be due in any year on such Additional Indebtedness.
For the purpose of determining whether any particular Guaranty may be incurred, it shall be assumed that 100% of the Indebtedness guaranteed is Funded Indebtedness of the guarantor under such Guaranty. For the purpose of calculating any historical Debt Service Requirements, the guarantor’s Debt Service Requirements under a Guaranty shall be deemed to be the actual amount paid on such Guaranty by the guarantor. For any other purpose, a guarantor shall be considered liable only for 20% of the annual debt service requirement on the Indebtedness guaranteed; provided, however, if the guarantor has been required by reason of its guaranty to make a payment in respect of such Indebtedness within the immediately preceding 24 months, the guarantor shall be considered liable for 100% of the annual debt service requirement on the Indebtedness guaranteed.
For purposes of the various calculations required under this Master Trust Indenture for Capitalized Leases, the Capitalized Rentals under a Capitalized Lease at the time of such calculation shall be deemed to be the principal payable thereon.
In the case of Indebtedness related to any Subsidy Bonds, debt service payable shall be computed net of Federal Subsidy Payments scheduled to be received by the issuer of such Subsidy Bonds or the obligor in connection with such Subsidy Bonds during the applicable time period; provided, however, that to avoid double counting in such instance, the Federal Subsidy Payments shall be excluded from the calculation of Revenues in any related tests.
Each Member may elect to have Indebtedness issued pursuant to one provision of Section 4.16 hereof, including without limitation subsection (n) of Section 4.16 hereof, reclassified as having been incurred under another provision of Section 4.16 hereof, by demonstrating compliance with such other provision on the assumption that such Indebtedness is being reissued on the date of delivery of the materials required to be delivered under such other provision including the certification of any applicable Projected Rate. From and after such demonstration, such Indebtedness shall be deemed to have been incurred under the provision with respect to which such compliance has been demonstrated until any subsequent reclassification of such Indebtedness.
Anything herein to the contrary notwithstanding, any portion of any Indebtedness of any Member for which an Interest Rate Agreement has been obtained or will be obtained simultaneously with the issuance of such Indebtedness by such Member shall be deemed to bear interest for the period of time that such Interest Rate Agreement is in effect at a net rate which takes into account the interest payments made by such Member on such Indebtedness and the Regularly Scheduled Payments made or received by such Member on such Interest Rate Agreement; provided that the long term credit rating of the provider of such Interest Rate Agreement (or any guarantor thereof) is in one of the three highest rating categories of any Rating Agency (without regard to any refinements of gradation of rating category by numerical modifier or otherwise) or is at least as high as that of the Obligated Group. In addition, so long
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as any Indebtedness is deemed to bear interest at a rate taking into account an Interest Rate Agreement, any payments (regularly scheduled, termination or otherwise) made by a Member on such Interest Rate Agreement shall be excluded from Expenses and any payments (regularly scheduled, termination or otherwise) received by a Member on such Interest Rate Agreement shall be excluded from Revenues, in each case, for all purposes of this Master Trust Indenture.
SECTION 4.18.� SALE OR LEASE OF PROPERTY. Each Member agrees that it will not sell, lease, donate, transfer or otherwise dispose (including without limitation any involuntary disposition) of Property (either real or personal property, including Cash and Investments) unless the Obligated Group Representative determines that the Property has been sold, leased, donated, transferred or otherwise disposed of in one or more of the following transfers or other dispositions of Property:
(a)� in return for other Property of equal or greater value and usefulness (if such value is estimated to be greater than $25,000 it shall be evidenced by an independent appraisal of such Property obtained in the manner provided for under the definition of “Current Value” herein);
(b)� in the ordinary course of business consistent with past practice and upon fair and reasonable terms;
(c)� to any Person, if prior to such sale, lease or other disposition there is delivered to the Master Trustee an Officer’s Certificate of a Member stating that, in the judgment of the signer, such Property has, or within the next succeeding 24 calendar months is reasonably expected to, become inadequate, obsolete, worn out, unsuitable, unprofitable, undesirable or unnecessary and the sale, lease or other disposition thereof will not impair the structural soundness, efficiency or economic value of the remaining Property;
(d)� from a Member to another Member; provided that no portion of any Facilities financed with proceeds of any Related Bonds shall be transferred by any Member to any other Member unless the Related Bond Trustee has received an Opinion of Bond Counsel to the effect that such transfer will not adversely affect (i) the validity of such Related Bonds, and (ii) with respect to any Related Bonds the interest on which is tax-exempt, the exclusion of interest on such Related Bonds from the gross income of the owners thereof for federal income tax purposes;
(e)� upon fair and reasonable terms no less favorable to the Member than would be obtained in a comparable arm’s length transaction;
(f)� the Property sold, leased, donated, transferred or otherwise disposed of does not, for any consecutive 12 month period, exceed 3% of the total Book Value or, at the option of the Obligated Group Representative, the Current Value of all Property of the Obligated Group and (i) the Historical Debt Service Coverage Ratio was not less than 1.30:1 for the last Fiscal Year for which audited financial statements have been delivered to the Master Trustee; provided that if such transfer is of cash or investments, then in calculating the Historical Debt Service Coverage Ratio for purposes of such transfer, the Income Available for Debt Service will be reduced by one year’s estimated interest earnings attributable to the moneys to be used for such transfer using, at the option of the Obligated Group Representative, either (A) the current budgeted
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investment rate identified in the Annual Budget, or (B) the actual average investment rate on the transferred funds, each as certified in an Officer’s Certificate, and (ii) as of the end of the last fiscal quarter for which financial statements have been delivered to the Master Trustee as required under Section 4.15 hereof, the Obligated Group had not less than 120 Days Cash on Hand after giving effect to the transaction. If the Historical Debt Service Coverage Ratio as calculated above is not less than 1.30:1, the foregoing percentage of the total Book Value or Current Value may be increased as follows under the following conditions:
(A)� to 5%, if Days Cash on Hand would not be less than 180 after the effect of such sale, lease or disposition of assets; or
(B)� to 7.5%, if Days Cash on Hand would not be less than 240 after the effect of such sale, lease or disposition of assets; or
(C)� to 10%, if Days Cash on Hand would not be less than 300 after the effect of such sale, lease or disposition of assets;
(g)� to any Person if such Property consists solely of assets which are specifically restricted by the donor or grantor to a particular purpose which is inconsistent with their use for payment on the Obligations; or
(h)� payments permitted in accordance with Section 3.05 hereof.
For purposes of this Section 4.18, payments by the Obligated Group of any development, marketing, operating, or other subordinated fees that have been deferred from the year in which they were originally due as a result of subordination will not be treated as a disposition of Property.
In connection with any sale, lease or other disposition of Property, to the extent the Member of the Obligated Group receives Property in return for such sale, lease or disposition, the Property which is sold, leased or disposed of shall be treated, for purposes of the provisions of this Section 4.18, as having been transferred in satisfaction of the provisions of subsection (a) above to the extent of the fair market value of the Property received by the Member of the Obligated Group. The Member shall be required, however, to satisfy the conditions contained in one of the other provisions of this Section 4.18 with respect to the remaining value, if any, of such Property in excess of the fair market value of the Property received by the Member in return therefor prior to any such sale, lease or other disposition.
Each Member further agrees that it will not sell, lease, donate or otherwise dispose of Property (A) which could reasonably be expected at the time of such sale, lease, donation or disposition to result in a reduction of the Historical Debt Service Coverage Ratio for the Obligated Group such that the Master Trustee would be obligated to require the Obligated Group to retain a Consultant pursuant to Section 4.11 hereof, or (B) if a Consultant has been retained in the circumstances described in Section 4.11 hereof, such action, in the opinion of such Consultant, will have an adverse effect on the Income Available for Debt Service of the Obligated Group. The rendering of any service, the making of any loan or gift, the extension of any credit or any other transaction, with any Affiliate shall be permitted if there is compliance with any of subsections (a) through (g) above or if such transaction is pursuant to the reasonable
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requirements of such Member’s activities and upon fair and reasonable terms no less favorable to it than would obtain in a comparable arm’s length transaction with a person not an Affiliate.
Upon Request of the Obligated Group Representative accompanied by an Officer’s Certificate and an Opinion of Counsel to the effect that the conditions precedent for the disposition of such property set forth in this Section 4.18 (other than the condition precedent set forth in Section 4.18(d) above) have been satisfied, the rights, title, liens, security interests and assignments herein granted shall cease, determine and be void as to such property only and the lien of this Master Trust Indenture shall be released by the Master Trustee as to such property in due form at the expense of the Obligated Group Members;
SECTION 4.19.� LIENS ON PROPERTY. (a) Each Member covenants that it will not create or permit to be created or remain and, at its cost and expense, promptly discharge or terminate all Liens on its Property or any part thereof which are not Permitted Encumbrances.
(b)� Subsection (a) notwithstanding, a Lien on Property of any Member securing Indebtedness shall be classified a Permitted Encumbrance (as provided in clause (b) of the definition thereof) and therefore be permitted if:
(i)� such Lien secures Non-Recourse Indebtedness; or
(ii)� (A) after giving effect to such Lien and all other Liens classified as Permitted Encumbrances under this subsection (ii)(A), the Book Value or, at the option of the Obligated Group Representative, the Current Value of the Property of the Obligated Group which is Encumbered is not more than 2% of the value of all of the Property of the Obligated Group (calculated on the same basis as the value of the Encumbered Property), and (B) the conditions described in Section 4.16(a) are met for allowing the incurrence of one dollar of additional Funded Indebtedness.
SECTION 4.20.� LIQUIDITY COVENANT. The Obligated Group covenants that it will calculate the Days Cash on Hand of the Obligated Group as of December 31 and June 30 of each Fiscal Year, commencing with June 30, 2017 (each such date being a “Testing Date”). The Obligated Group shall deliver an Officer’s Certificate setting forth such calculation as of December 31 to the Master Trustee not less than 45 days after such December 31, and include such calculation as of June 30 in the Officer’s Certificate delivered pursuant to Section 4.15 hereof.
Each Obligated Group Member is required to conduct its business so that on each Testing Date the Obligated Group shall have a no less than 90 Days Cash on Hand (the “Liquidity Requirement”).
If the Days Cash on Hand as of any Testing Date is less than the Liquidity Requirement, the Obligated Group Representative shall, within 30 days after delivery of the Officer’s Certificate disclosing such deficiency, deliver an Officer’s Certificate approved by a resolution of the Governing Body of the Obligated Group Representative to the Master Trustee setting forth in reasonable detail the reasons for such deficiency and adopting a specific plan setting forth steps to be taken designed to raise the level of Days Cash on Hand to the Liquidity Requirement for future Testing Dates.
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If the Obligated Group has not raised the level of Days Cash on Hand to the Liquidity Requirement by the next Testing Date immediately subsequent to delivery of the Officer’s Certificate required in the preceding paragraph, the Obligated Group Representative shall, within 30 days after receipt of the Officer’s Certificate disclosing such deficiency, select a Consultant in accordance with Section 4.21 hereof to make recommendations with respect to the rates, fees and charges of the Obligated Group and the Obligated Group’s methods of operation and other factors affecting its financial condition in order to increase Days Cash on Hand to the Liquidity Requirement for future Testing Dates. A copy of the Consultant’s report and recommendations, if any, shall be filed with each Member and each Required Information Recipient within 60 days after the date such Consultant is actually engaged. Each Member of the Obligated Group shall follow each recommendation of the Consultant applicable to it to the extent feasible (as determined in the reasonable judgment of the Governing Body of such Member) and permitted by law.
Notwithstanding any other provision of this Master Trust Indenture, failure of the Obligated Group to achieve the required Liquidity Requirement for any Testing Date shall not constitute an Event of Default under this Master Trust Indenture if the Obligated Group takes all action necessary to comply with the procedures set forth above for adopting a plan and follows each recommendation contained in such plan or Consultant’s report to the extent feasible (as determined in the reasonable judgment of the Governing Body of such Member) and permitted by law.
SECTION 4.21.� APPROVAL OF CONSULTANTS. (a) If at any time the Members of the Obligated Group are required to engage a Consultant under Sections 4.11 or 4.20 hereof, such Consultant shall be engaged in the manner set forth in this Section 4.21.
(b) Upon selecting a Consultant as required under the provisions of this Master Trust Indenture, the Obligated Group Representative will notify the Master Trustee in writing of such selection. The Master Trustee shall, as soon as practicable but in no case longer than five Business Days after receipt of notice, notify the Holders of all Obligations Outstanding under this Master Trust Indenture of such selection. Such notice (which shall be provided by the Obligated Group Representative) shall (i) include the name of the Consultant and a brief description of the Consultant, (ii) state the reason that the Consultant is being engaged including a description of the covenant(s) of this Master Trust Indenture that require the Consultant to be engaged, and (iii) state that the Holder of the Obligation will be deemed to have consented to the selection of the Consultant named in such notice unless such Holder submits an objection to the selected Consultant in writing (in a manner acceptable to the Master Trustee) to the Master Trustee within 15 days of the date that the notice is sent to the Holders. No later than two Business Days after the end of the 15-day objection period, the Master Trustee shall notify the Obligated Group of the number of objections. If 66.6% or more in aggregate principal amount of the Holders of the Outstanding Obligations have been deemed to have consented to the selection of the Consultant or have not responded to the request for consent, the Obligated Group Representative shall engage the Consultant within three Business Days. If 33.4% or more in aggregate principal amount of the Holders of the Obligations Outstanding have objected to the Consultant selected, the Obligated Group Representative shall select another Consultant which may be engaged upon compliance with the procedures of this Section 4.21.
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(c) When the Master Trustee notifies the Holders of Obligations of such selection, the Master Trustee will also request any Related Bond Trustee to send a notice containing the information required by subparagraph (b) above to the owners of all of the Related Bonds outstanding. Such Related Bond Trustee shall, as the owner of an Obligation securing such Related Bonds, consent or object to the selection of the Consultant in accordance with the response of the owners of such Related Bonds. If 66.6% or more in aggregate principal amount of the owners of the Related Bonds have been deemed to have consented to the selection of the Consultant or have not responded to the request for consent, the Obligated Group Representative shall engage the Consultant within three Business Days. If 33.4% or more in aggregate principal amount of the owners of the Related Bonds outstanding have objected to the Consultant selected, the Obligated Group Representative shall select another Consultant which may be engaged upon compliance with the procedures of this Section 4.21.
The 15-day notice period described in (b) above may be extended by the Master Trustee in order to permit each Related Bond Trustee to give the owners of the Related Bonds 15 days to respond to the notice given by the Related Bond Trustee. By acceptance of an Obligation securing any Related Bonds, the Related Bond Trustee agrees to comply with the provisions of this Section 4.21.
SECTION 4.22.� MANAGEMENT. The Obligated Group covenants to provide for management of the Facilities through competent and qualified persons having experience in the management of senior living facilities and related healthcare facilities similar to the Facilities. Any contract with a manager shall provide that such contract may be terminated by the Obligated Group Representative upon advance written notice based on industry standards. While any Obligations with respect to tax-exempt Related Bonds are Outstanding, the Obligated Group shall not enter into any management contract or contract for services at the Facilities unless the contract complies with Internal Revenue Service Rev. Proc. 2016-44, as may be modified further from time to time.
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ARTICLE V CONSOLIDATION, MERGER, CONVEYANCE
AND TRANSFER
SECTION 5.01.� MERGER, CONSOLIDATION, SALE OR CONVEYANCE. (a) Each Member agrees that it will not merge into, or consolidate with, one or more corporations which are not Members, or allow one or more of such corporations to merge into it, or sell or convey all or substantially all of its Property to any Person who is not a Member, unless:
(i)� Any successor corporation to such Member (including without limitation any purchaser of all or substantially all the Property of such Member) is a corporation organized and existing under the laws of the United States of America or a state thereof and shall execute and deliver to the Master Trustee an appropriate instrument containing the agreement of such successor corporation to assume, jointly and severally, the due and punctual payment of the principal of, premium, if any, and interest on all Outstanding Obligations according to their tenor and the due and punctual performance and observance of all the covenants and conditions of this Master Trust Indenture to be kept and performed by such Member;
(ii)� Immediately after such merger or consolidation, or such sale or conveyance, no Member would be in default in the performance or observance of any covenant or condition of any documents delivered in connection with any Indebtedness including, without limitation, Related Bond Indentures, Related Loan Agreements and Credit Facilities, or this Master Trust Indenture;
(iii)� Assuming that any Indebtedness of any successor or acquiring corporation is Indebtedness of such Member and that the Revenues and Expenses of the Member for such most recent Fiscal Year include the Revenues and Expenses of such other corporation, (A) immediately after such merger or consolidation, sale or conveyance, the Historical Pro Forma Debt Service Coverage Ratio of the Obligated Group for the most recent Fiscal Year for which financial statements that have been reported upon by independent certified public accountants are available would be not less than 1.20:1 or that such Historical Pro Forma Debt Service Coverage Ratio of the Obligated Group is greater than the Historical Debt Service Coverage Ratio of the Obligated Group was for such Fiscal Year prior to such merger or consolidation, sale or conveyance, and (B) immediately after such merger or consolidation, sale or conveyance, the Obligated Group would be in compliance with the Liquidity Requirement of Section 4.20 hereof of this Master Trust Indenture for the most recent quarter after adjustment for the change or that such calculation of Days Cash on Hand of the Obligated Group is equal to or greater than such calculation would be immediately prior to such merger or consolidation, sale or conveyance; and
(iv)� If all amounts due or to become due on all Related Bonds have not been fully paid to the holders thereof or fully provided for, there shall be delivered to the Master Trustee an Opinion of Bond Counsel to the effect that the merger complies with this Master Trust Indenture under then existing law the consummation of such merger, consolidation, sale or conveyance would not, in and of itself, adversely affect the validity
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of such Related Bonds or the exemption otherwise available from federal or state income taxation of interest payable on such Related Bonds.
(b)� In case of any such consolidation, merger, sale or conveyance and upon any such assumption by the successor corporation, such successor corporation shall succeed to and be substituted for its predecessor, with the same effect as if it had been named herein as such Member. Each successor, assignee, surviving, resulting or transferee corporation of a Member must agree to become, and satisfy the conditions described in Section 6.01 hereof to becoming, a Member of the Obligated Group prior to any such succession, assignment or other change in such Member’s corporate status. Any successor corporation to such Member thereupon may cause to be signed and may issue in its own name Obligations hereunder and the predecessor corporation shall be released from its obligations hereunder and under any Outstanding Obligations, if such predecessor corporation shall have conveyed all Property owned by it (or all such Property shall be deemed conveyed by operation of law) to such successor corporation. All Obligations so issued by such successor corporation hereunder shall in all respects have the same legal rank and benefit under this Master Trust Indenture as Obligations theretofore or thereafter issued in accordance with the terms of this Master Trust Indenture as though all of such Obligations had been issued hereunder by such prior Member without any such consolidation, merger, sale or conveyance having occurred.
(c)� In case of any such consolidation, merger, sale or conveyance such changes in phraseology and form (but not in substance) may be made in Obligations thereafter to be issued as may be appropriate.
(d)� The Master Trustee may rely upon an opinion of Independent Counsel as conclusive evidence that any such consolidation, merger, sale or conveyance, and any such assumption, complies with the provisions of this Master Trust Indenture summarized under this Section 5.01.
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ARTICLE VI MEMBERSHIP IN THE OBLIGATED GROUP
SECTION 6.01.� ADMISSION OF OBLIGATED GROUP MEMBERS. Any other Person may become a Member of the Obligated Group if:
(a)� Such Person is a business entity;
(b)� Such Person shall execute and deliver to the Master Trustee a Supplement in a form acceptable to the Master Trustee which shall be executed by the Master Trustee and the Obligated Group Representative, containing the agreement of such Person (i) to become a Member of the Obligated Group and thereby to become subject to compliance with all provisions of this Master Trust Indenture, and (ii) unconditionally and irrevocably (subject to the right of such Person to cease its status as a Member of the Obligated Group pursuant to the terms and conditions of Section 6.03 hereof) to jointly and severally make payments upon each Obligation;
(c)� The Obligated Group Representative and each Member shall have approved the admission of such Person to the Obligated Group; and
(d)� The Master Trustee shall have received (i) an Officer’s Certificate of the Obligated Group Representative which (A) demonstrates that (1) immediately upon such Person becoming a Member of the Obligated Group, the Historical Pro Forma Debt Service Coverage Ratio of the Obligated Group for the most recent Fiscal Year for which financial statements that have been reported upon by independent certified public accountants are available, after adjustment for the addition of the new Member, would be not less than 1.20:1, or that such Historical Pro Forma Debt Service Coverage Ratio of the Obligated Group with such Person is greater than the Historical Debt Service Coverage Ratio of the Obligated Group was for such Fiscal Year without such Person becoming a Member of the Obligated Group, and (2) immediately upon such Person becoming a Member of the Obligated Group, the Obligated Group would be in compliance with the Liquidity Requirement of Section 4.20 hereof based on the most recent quarterly financial statements delivered to the Master Trustee pursuant to Section 4.15 hereof or that such calculation of Days Cash on Hand of the Obligated Group is greater than such calculation would be without such Person becoming a Member of the Obligated Group; (B) states that prior to and immediately after such Person becoming a Member of the Obligated Group, no Event of Default exists hereunder and no event shall have occurred which with the passage of time or the giving of notice, or both, would become such an Event of Default; and (C) prior to and immediately after such Person becoming a Member of the Obligated Group, the Members would not be in default in the performance or observance of any covenant or condition to be performed or observed hereunder; (ii) an opinion of Independent Counsel in form and substance acceptable to the Master Trustee to the effect that (x) the instrument described in Section 6.01(b) above has been duly authorized, executed and delivered and constitutes a legal, valid and binding agreement of such Person, enforceable in accordance with its terms, subject to customary exceptions for bankruptcy, insolvency and other laws generally affecting enforcement of creditors’ rights and application of general principles of equity, and (y) the addition of such Person to the Obligated Group will not adversely affect the status as a Tax-Exempt Organization of any Member which otherwise has such status; (iii) evidence from each Rating Agency then maintaining a rating on any series of Related Bonds to the effect that the admission of such
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Person to the Obligated Group will not result in a lower rating on such series of Related Bonds; (iv) if all amounts due or to become due on all Related Bonds have not been paid to the holders thereof and provision for such payment has not been made in such manner as to have resulted in the defeasance of all Related Bond Indentures, an Opinion of Bond Counsel to the effect that under then existing law the consummation of such transaction would not, in of itself, adversely affect the validity of any Related Bonds or any exemption from federal or state income taxation of interest payable on such Related Bonds otherwise entitled to such exemption; provided that in making the calculation called for by subsection (d)(i) above, (x) there shall be excluded from Revenues any Revenues generated by Property of such Person transferred or otherwise disposed of by such Person since the beginning of the Fiscal Year during which such Person’s entry into the Obligated Group occurs, and (y) there shall be excluded from Expenses any Expenses related to Property of such Person transferred or otherwise disposed of by such Person since the beginning of the Fiscal Year during which such Person’s entry into the Obligated Group occurs.
Each successor, assignee, surviving, resulting or transferee corporation of a Member must agree to become, and satisfy the above described conditions to becoming, a Member of the Obligated Group prior to any such succession, assignment or other change in such Member’s corporate status.
SECTION 6.02.� OBLIGATED GROUP MEMBERS. Upon any Person’s becoming an Obligated Group Member as provided in Section 6.01:
(a)� the Master Trustee may pursue any remedies consequent upon an Event of Default against any Obligated Group Member, or all of them, without notice to, demand upon or joinder of (and without in any way releasing) any of the others, or against any one or more or all of them at the same time or at different times;
(b)� any right of contribution or right acquired by subrogation by any Obligated Group Member against any other Obligated Group Member arising out of the payment of Indebtedness shall be subordinated to the rights of the Master Trustee and the Holders of Obligations; and
(c)� each Obligated Group Member shall designate the Obligated Group Representative as its attorney in fact with full power of substitution to perform, satisfy, and discharge every obligation, covenant, duty or liability to be performed on the part of the Obligated Group Member hereunder.
SECTION 6.03.� WITHDRAWAL OF OBLIGATED GROUP MEMBERS. Each Member covenants that it will not take any action, corporate or otherwise, which would cause it or any successor thereto into which it is merged or consolidated under the terms of this Master Trust Indenture to cease to be a Member of the Obligated Group unless:
(a)� prior to cessation of such status, there is delivered to the Master Trustee an Opinion of Bond Counsel to the effect that, under then existing law, the cessation by the Member of its status as a Member will not adversely affect the validity of any Related Bond or any exemption from federal or state income taxation of interest payable thereon to which such Bond would otherwise be entitled;
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(b)� prior to the cessation of such status, there is delivered to the Master Trustee an Officer’s Certificate of the Obligated Group Representative to the effect that: (i) (A) immediately after such cessation the Historical Pro Forma Debt Service Coverage Ratio of the Obligated Group for the most recent Fiscal Year for which financial statements that have been reported upon by independent certified public accountants are available, after adjustment for the removal of the Member, would be not less than 1.20:1 or that such Historical Pro Forma Debt Service Coverage Ratio of the Obligated Group is greater than the Historical Debt Service Coverage Ratio of the Obligated Group was for such Fiscal Year prior to such cessation, and (B) immediately after such cessation, the Obligated Group would be in compliance with the Liquidity Requirement of Section 4.20 hereof for the most recent quarter after adjustment for the removal of the Member, or that such calculation of Days Cash on Hand of the Obligated Group is greater than such calculation would be immediately prior to such cessation; (ii) prior to and immediately after such cessation, no Event of Default exists hereunder and no event shall have occurred which with the passage of time or the giving of notice, or both, would become such an Event of Default; (iii) evidence from each Rating Agency then maintaining a rating on any series of Related Bonds to the effect that the withdrawal of such Person from the Obligated Group will not result in a lower rating on such series of Related Bonds; and (iv) prior to and immediately after such cessation, the Members would not be in default in the performance or observance of any covenant or condition to be performed or observed hereunder;
(c)� prior to such cessation there is delivered to the Master Trustee an opinion of Independent Counsel to the effect that the cessation by such Member of its status as a Member will not, in of itself, adversely affect the status as a Tax-Exempt Organization of any Member which otherwise has such status;
(d)� prior to such cessation of such status there is delivered to the Master Trustee evidence from each Rating Agency then maintaining a rating on any series of Related Bonds to the effect that the cessation of such status will not result in a lower rating on such series of Related Bonds;
(e)� any Liens in favor of the withdrawing Member on the Property of a remaining Member is released and satisfied unless such Lien constitutes a Permitted Encumbrance after the withdrawing Member is no longer a Member; and
(f)� prior to cessation of such status, the Obligated Group Representative and each Member, consents in writing to the withdrawal by such Member.
SECTION 6.04.� SUCCESSOR OBLIGATED GROUP REPRESENTATIVE. MJHS shall serve as the Obligated Group Representative until such time as MJHS either (i) withdraws from the Obligated Group in accordance with this Article VI hereof, or (ii) delivers to the Master Trustee its resignation as the Obligated Group Representative. MJHS covenants to fulfill all of the duties of the Obligated Group Representative under this Master Trust Indenture. MJHS agrees that it shall not withdraw from the Obligated Group or resign as Obligated Group Representative until MJHS has appointed another Obligated Group Representative and such successor Obligated Group Representative has accepted its duties in writing. Each Obligated Group Member by becoming an Obligated Group Member acknowledges that the Obligated Group Representative has certain powers and duties under this Master Trust Indenture, including,
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but not limited to, binding all Obligated Group Members to joint and several liability on all Obligations incurred hereunder, and authorizes the Obligated Group Representative to exercise such powers and carry out such duties.
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ARTICLE VII REMEDIES OF THE MASTER TRUSTEE AND HOLDERS OF SECURED OBLIGATIONS IN EVENT OF DEFAULT
SECTION 7.01.� EVENTS OF DEFAULT. Event of Default, as used herein, shall mean any of the following events, whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or come about or be effected by operation of law or pursuant to or in compliance with any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body:
(a)� default in the payment of the principal of (or premium, if any) or interest on any Obligation when it becomes due and payable at its Maturity and the continuance of such default beyond the period of grace, if any, provided in the instrument creating such Obligation; or
(b)� any Obligated Group Member shall fail duly to observe or perform any other covenant or agreement (other than a covenant or agreement whose performance or observance is elsewhere in this Section 7.01 specifically dealt with) on the part of such Person contained in this Master Trust Indenture for a period of 45 days after the date on which written notice of such failure, requiring the same to be remedied, shall have been given to the Obligated Group Representative by the Master Trustee, or to the Obligated Group Representative and the Master Trustee by the Holders of at least 25% in aggregate principal amount of Obligations then Outstanding; provided that if any such default can be cured by such Obligated Group Member but cannot be cured within the 45 day curative period described above, it shall not constitute an Event of Default if corrective action is instituted by such Obligated Group Member within such 45 day period and diligently pursued until the default is corrected; or
(c)� a decree or order by a court having jurisdiction in the premises shall have been entered adjudging any Obligated Group Member as bankrupt or insolvent, or approving as properly filed a petition seeking reorganization or arrangement of any Obligated Group Member under the Federal Bankruptcy Code or any other similar applicable federal or state law, and such decree or order shall have continued undischarged and unstayed for a period of 90 days; or a decree or order of a court having jurisdiction in the premises for the appointment of a receiver or trustee or assignee in bankruptcy or insolvency of any Obligated Group Member or of its Property, or for the winding up or liquidation of its affairs, shall have been entered, and such decree or order shall have remained in force undischarged and unstayed for a period of 90 days; or
(d)� any Obligated Group Member shall institute proceedings to be adjudicated a voluntary bankrupt, or shall consent to the institution of a bankruptcy proceeding against it, or shall file a petition or answer or consent seeking reorganization or arrangement under the Federal Bankruptcy Code or any other similar applicable Federal or state law, or shall consent to the filing of any such petition, or shall consent to the appointment of a receiver or trustee or assignee in bankruptcy or insolvency of it or of its Trust Estate, or shall make assignment for the benefit of creditors, or shall admit in writing its inability to pay its debts generally as they become due, or action shall be taken by the Governing Body of any Obligated Group Member in furtherance of any of the aforesaid purposes; or
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(e)� any Obligated Group Member shall fail to pay or make provision for payment of any recourse Indebtedness (other than Subordinated Indebtedness owed to an Affiliate of the Obligated Group Member) having a principal balance of not less than $100,000 and the continuance of such failure beyond the applicable grace period, if any; or
(f)� the Master Trustee has received written notice that an event of default, as therein defined, under any instrument under which Obligations may be incurred or secured, including, without limitation, Related Bond Indentures, Related Loan Agreements, Credit Facilities, the Mortgage or other documents delivered in connection with the issuance of Related Bonds, has occurred and is continuing beyond the applicable period of grace, if any.
SECTION 7.02.� ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT. If an Event of Default occurs and is continuing, then and in every such case the Master Trustee or the Holders of not less than 25% in principal amount of the Outstanding Obligations (or, in the case of any Event of Default described in subparagraph (f) of Section 7.01 above resulting in the loss of any exclusion from gross income of interest on, or the invalidity of, any Indebtedness secured by a pledge of Obligations, the Holders of not less than 25% in principal amount of the Outstanding Obligations of the affected series) may declare the principal of all the Obligations to be due and payable immediately, by a notice in writing to the Obligated Group Representative and all of the Holders of Obligations (and to the Master Trustee if given by Holders of Obligations), and upon any such declaration such principal shall become immediately due and payable.
At any time after such a declaration of acceleration has been made and before a judgment or decree for payment of the money due has been obtained by the Master Trustee as hereinafter in this Article provided, the Holders of a majority in aggregate principal amount of the affected Outstanding Obligations, by written notice to the Obligated Group Representative and the Master Trustee, shall rescind and annul such declaration and its consequences if:
(a)� one or more Obligated Group Members has paid or deposited with the Master Trustee a sum sufficient to pay:
(1)� all overdue installments of interest on all Obligations,
(2)� the principal of (and premium, if any, on) any Obligations which have become due otherwise than by such declaration of acceleration and interest thereon at the rate borne by the Obligations, and
(3)� all sums paid or advanced by the Master Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Master Trustee, its agents and counsel; and
(b)� all Events of Default, other than the nonpayment of the principal of Obligations which have become due solely by such acceleration, have been cured or waived as provided in Section 7.15 hereof.
No such rescission shall affect any subsequent default or impair any right consequent thereon.
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For all purposes of this Section 7.02, Obligations which secure Interest Rate Agreements shall be disregarded for purposes of determining the principal amount of Obligations the Holders of which are permitted to take an action hereunder.
SECTION 7.03.� POWERS OF SALE, TRANSFER, ASSIGNMENT, LEASE, AND OTHER DISPOSITIONS; SUITS FOR ENFORCEMENT. In case an Event of Default shall occur and be continuing, the Master Trustee, in its discretion may, subject to the provisions of Section 7.17 hereof:
(a)� foreclose the Mortgage or any mortgage or deed of trust delivered pursuant to Section 4.16 hereof;
(b)� protect and enforce its rights and the rights of the Master Trustee and Holders under this Master Trust Indenture by sale pursuant to judicial proceedings or by a suit, action, or proceeding in equity or at law or otherwise, whether for the specific performance of any covenant or agreement contained in this Master Trust Indenture or in aid of the execution of any power granted in this Master Trust Indenture or for the foreclosure of this Master Trust Indenture or for the enforcement of any other legal, equitable, or other remedy, as the Master Trustee, being advised by counsel, shall deem most effectual to protect and enforce any of the rights of the Master Trustee; or
(c)� as to all or part of the personal property (tangible or intangible) and fixtures included in the Trust Estate (such portion of the Trust Estate herein referred to as the “Collateral”),
(i)� proceed under the Florida Uniform Commercial Code and exercise with respect to the Collateral all the rights, remedies, and powers of a secured party under the Florida Uniform Commercial Code, including, without limitation, the right and power to sell, at public or private sale or sales, or otherwise dispose of, lease, or utilize, the Collateral and any part or parts thereof in any manner authorized or permitted under the Florida Uniform Commercial Code after default by a debtor, and, to the extent permitted by law, each Member expressly waives any notice of sale or other disposition of the Collateral and any other rights and remedies of a debtor or formalities prescribed by law relative to sale or disposition of the Collateral or exercise of any other right or remedy of the Master Trustee existing after default hereunder, and, to the extent any such notice is required and cannot be waived, the Obligated Group agrees that if such notice is mailed, postage prepaid, to the Obligated Group Representative at its address stated in the first paragraph hereof at least ten days before the time of the sale or disposition, such notice shall be deemed reasonable and shall fully satisfy any requirement for giving of said notice,
(ii)� take possession of the Collateral and enter upon any premises where the same may be situated for such purpose without being deemed guilty of trespass and without liability for damages thereby occasioned and take any action deemed necessary or appropriate or desirable by the Master Trustee, at its option and in its discretion, to repair, refurbish, or otherwise prepare the Collateral for sale, lease, or other use or disposition as herein authorized,
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(iii)� transfer at any time to itself or to its nominee the Collateral, or any part thereof, and receive the money, income proceeds, or benefits attributable or accruing thereto and hold the same as security for the Outstanding Obligations or apply same as herein provided, and
(iv)� require the Members to assemble the Collateral and make it available to the Master Trustee at a place to be designated by the Master Trustee that is reasonably convenient to all parties.
The Master Trustee shall be fully subrogated to the rights of all vendor’s lienholders and other lienholders whose indebtedness is paid in whole or in part from proceeds of Obligations.
The filing of a suit to foreclose any security interest hereunder shall never be considered an election so as to preclude foreclosure under any power of sale herein contained after dismissal of such a suit.
SECTION 7.04.� INCIDENTS OF SALE. Upon any sale of any of the Trust Estate, whether made under the power of sale hereby given or pursuant to judicial proceedings, to the extent permitted by law:
(a)� any Holder or Holders of Obligations or the Master Trustee may bid for and purchase the property offered for sale, and upon compliance with the terms of sale may hold, retain, and possess and dispose of such property, without further accountability, and may, in paying the purchase money therefor, deliver any Outstanding Obligations or claims for interest thereon in lieu of cash to the amount which shall, upon distribution of the net proceeds of such sale, be payable thereon, and such Obligations, in case the amounts so payable thereon shall be less than the amount due thereon, shall be returned to the Holders thereof after being appropriately stamped to show partial payment;
(b)� the Master Trustee may make and deliver to the purchaser or purchasers a good and sufficient bill of sale, and instrument of assignment and transfer of the property sold;
(c)� the Master Trustee is hereby irrevocably appointed the true and lawful attorney of each Member, in its name and stead, to make all necessary deeds, bills of sale, and instruments of assignment and transfer of the property thus sold; and for that purpose it may execute all necessary deeds, bills of sale, and instruments of assignment and transfer, and may substitute one or more persons, firms, or corporation with like power, each Member hereby ratifying and confirming all that its said attorney or such substitute or substitutes shall lawfully do by virtue hereof; but if so requested by the Master Trustee or by any purchaser, any Member shall ratify and confirm any such sale or transfer by executing and delivering the Master Trustee or to such purchaser or purchasers all proper deeds, bills of sale, instruments of assignment and transfer, and release as may be designated in any such request;
(d)� rights, titles, interests, claims, and demands whatsoever, either at law or in equity or otherwise, of the Members of, in, and to the property so sold shall be divested and such sale shall be a perpetual bar both at law and in equity against each of the Members and their respective successors and assigns, and against any and all persons claiming or who may claim
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the property sold or any part thereof by, through, or under the Members or their respective successors and assigns; and
(e)� receipt of the Master Trustee or of the officer making such sale shall be a sufficient discharge to the purchaser or purchasers at such sale for his or their purchase money and such purchaser or purchasers and his or their assigns or personal representative shall not, after paying such purchase money and receiving such receipt, be obligated to see to the application of such purchase money, or be in any wise answerable for any loss, misapplication, or non application thereof.
Upon a sale of substantially all the Trust Estate, whether made under the power of sale hereby granted or pursuant to judicial proceedings, the Obligated Group Representative will permit, to the extent permitted by law, the purchaser thereof and its successors and assigns to take and use the names of the Members and to carry on business under such name or any variant thereof and to use and employ any and all other trade names, brands, and trademarks of the Members; and in such event, upon written request of such purchaser, its successors, or its assigns, any Member will, at the expense of the purchaser, change its name in such manner as to eliminate any similarity.
SECTION 7.05.� COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY MASTER TRUSTEE. The Obligated Group Members covenant (subject to any notice and grace periods contained herein) that if:
(a)� default is made in the payment of any installment of interest on any Obligation when such interest becomes due and payable, or
(b)� default is made in the payment of the principal of (or premium, if any, on) any Obligation at the Maturity thereof,
each Obligated Group Member will, upon demand of the Master Trustee, pay to it, for the benefit of the Holders of such Obligations, the whole amount then due and payable on such Obligations for principal (and premium, if any) and interest, with interest at the rate borne by the Obligations upon the overdue principal (and premium, if any); and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Master Trustee, its agents and counsel.
If the Obligated Group Members fail to pay any of the foregoing amounts forthwith upon demand, the Master Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, and may prosecute such proceeding to judgment or final decree, and may enforce the same against the Obligated Group Members or any other obligor upon the Obligations and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Obligated Group Members or any other obligor upon the Obligations, wherever situated.
If an Event of Default occurs and is continuing, the Master Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders of Obligations by such appropriate judicial proceedings as the Master Trustee shall deem most effectual to protect and
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enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Master Trust Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy.
If an Event of Default occurs and is continuing, the Master Trustee, as the beneficiary under the Mortgage, may in its discretion proceed to enforce its rights and seek any remedies available to it under the Mortgage.
SECTION 7.06.� MASTER TRUSTEE MAY FILE PROOFS OF CLAIM. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition, or other judicial proceeding relative to the Obligated Group Members or any other obligor upon the Obligations or the property of the Obligated Group Members or of such other obligor or their creditors, the Master Trustee (irrespective of whether the principal of the Obligations shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Master Trustee shall have made any demand on the Obligated Group Members for the payment of overdue principal, premium, or interest) shall be entitled and empowered, by intervention in such proceeding or otherwise,
(i)� to file and prove a claim for the whole amount of principal (and premium, if any) and interest owing and unpaid in respect of the Obligations and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Master Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Master Trustee, its agents and counsel which shall be deemed an administrative claim) and of the Holders of Obligations allowed in such judicial proceeding, and
(ii)� to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and any receiver, assignee, trustee, liquidator, sequestrator, custodian, or other similar official in any such judicial proceeding is hereby authorized by each Holder of Obligations to make such payments to the Master Trustee, and in the event that the Master Trustee shall consent to the making of such payments directly to the Holders of Obligations, to pay to the Master Trustee any amount due to it for the reasonable compensation, expenses, disbursements, and advances of the Master Trustee, its agents and counsel, and any other amounts due the Master Trustee under this Master Trust Indenture which shall be deemed an administrative claim.
Nothing herein contained shall be deemed to authorize the Master Trustee to authorize or consent to or accept or adopt on behalf of any Holder of Obligations any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Holder thereof, or to authorize the Master Trustee to vote in respect of the claim of any Holder of Obligations in any such proceeding.
SECTION 7.07.� MASTER TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF OBLIGATIONS. All rights of action and claims under this Master Trust Indenture or the Obligations may be prosecuted and enforced by the Master Trustee without the possession of any of the Obligations or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Master Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of
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the reasonable compensation, expenses, disbursements, and advances of the Master Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Obligations in respect of which such judgment has been recovered.
SECTION 7.08.� APPLICATION OF MONEY COLLECTED. Any money collected by the Master Trustee pursuant to this Article VII and any proceeds of any sale (after deducting the costs and expenses of such sale, including a reasonable compensation to the Master Trustee, its agents and counsel, and any taxes, assessments, or liens prior to the lien of this Master Trust Indenture, except any thereof subject to which such sale shall have been made), whether made under any power of sale herein granted or pursuant to judicial proceedings, together with, in the case of any entry or sale as otherwise provided herein, any other sums then held by the Master Trustee as part of the Trust Estate, shall be deposited in the Revenue Fund created by this Master Trust Indenture, shall be applied in the order specified in Section 3.01 hereof, at the date or dates fixed by the Master Trustee and, in case of the distribution of such money on account of principal (or premium, if any), upon presentation of the Obligations and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid.
In the event the Master Trustee incurs expenses or renders services in any proceedings which result from the occurrence or continuance of an Event of Default under Section 7.01(c) or 7.01(d) hereof, or from the occurrence of any event which, by virtue of the passage of time, would become such Event of Default, the expenses so incurred and compensation for services so rendered are intended to constitute expenses of administration under the United States Bankruptcy Code or equivalent law.
SECTION 7.09.� LIMITATION ON SUITS. No Holder of any Obligation shall have any right to institute any proceeding, judicial or otherwise, with respect to this Master Trust Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless:
(a)� such Holder has previously given written notice to the Master Trustee of a continuing Event of Default;
(b)� the Holders of not less than 25% in aggregate principal amount of the Outstanding Obligations shall have made written request to the Master Trustee to institute proceedings in respect of such Event of Default in its own name as Master Trustee hereunder;
(c)� such Holder or Holders have offered to the Master Trustee indemnity satisfactory to it against the costs, expenses and liabilities to be incurred in compliance with such request including, but not limited to, attorney’s fees, costs and expenses;
(d)� the Master Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and
(e)� no direction inconsistent with such written request has been given to the Master Trustee during such 60 day period by the Holders of a majority in aggregate principal amount of the Outstanding Obligations; it being understood and intended that no one or more Holders of Obligations shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Master Trust Indenture to affect, disturb or prejudice the rights of any other
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Holders of Obligations, or to obtain or to seek to obtain priority or preference over any other Holders or to enforce any right under this Master Trust Indenture, except in the manner herein provided and for the equal and ratable benefit of all the Holders of Obligations.
SECTION 7.10.� UNCONDITIONAL RIGHT OF HOLDERS OF OBLIGATIONS TO RECEIVE PRINCIPAL, PREMIUM AND INTEREST. Notwithstanding any other provision in this Master Trust Indenture, the Holder of any Obligation shall have the right which is absolute and unconditional to receive payment of the principal of (and premium, if any) and (subject to Section 2.07 hereof) interest on such Obligation on the respective Stated Maturities expressed in such Obligation (or, in the case of redemption, on the redemption date) and to institute suit for the enforcement of any such payment, and such rights shall not be impaired without the consent of such Holder.
SECTION 7.11.� RESTORATION OF RIGHTS AND REMEDIES. If the Master Trustee or any Holder of Obligations has instituted any proceeding to enforce any right or remedy under this Master Trust Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Master Trustee or to such Holder of Obligations, then and in every such case the Obligated Group Members, the Master Trustee and the Holders of Obligations shall, subject to any court determination in such proceeding, be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of the Master Trustee and the Holders of Obligations shall continue as though no such proceeding had been instituted.
SECTION 7.12.� RIGHTS AND REMEDIES CUMULATIVE. No right or remedy herein conferred upon or reserved to the Master Trustee or to the Holders of Obligations is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.
SECTION 7.13.� DELAY OR OMISSION NOT WAIVER. No delay or omission of the Master Trustee or of any Holder of any Obligation to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article VII or by law to the Master Trustee or to the Holders of Obligations may be exercised from time to time, and as often as may be deemed expedient, by the Master Trustee or by the Holders of Obligations, as the case may be.
SECTION 7.14.� CONTROL BY HOLDERS OF OBLIGATIONS. The Holders of a majority in aggregate principal amount of the Outstanding Obligations shall have the right to direct the time, method, and place of conducting any proceeding for any remedy available to the Master Trustee or exercising any trust or power conferred on the Master Trustee, provided that:
(a)� such direction shall not be in conflict with any rule of law or with this Master Trust Indenture,
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(b)� the Master Trustee may take any other action deemed proper by the Master Trustee which is not inconsistent with such direction;
(c)� the Master Trustee shall not be required to act on any direction given to it pursuant to this Section until indemnity as set forth in Section 8.03(e) hereof is provided to it by such Holders; and
(d)� the Master Trustee shall disregard all Obligations which secure Interest Rate Agreements for purposes of this Section 7.14.
SECTION 7.15.� WAIVER OF PAST DEFAULTS AND FUTURE COVENANT REQUIREMENTS. The Holders of not less than a majority in aggregate principal amount of the Outstanding Obligations may on behalf of the Holders of all the Obligations waive any past default hereunder and its consequences (or future covenant requirements), except a default or covenant requirement with respect to:
(a)� in the payment of the principal of (or premium, if any) or interest on any Obligation, or
(b)� a covenant or provision hereof which under Article IX cannot be modified or amended without the consent of the Holder of each Outstanding Obligation affected.
Upon any such waiver, such default shall be deemed to have never occurred, and any Event of Default arising therefrom shall be deemed to have been cured ab� initio, for every purpose of this Master Trust Indenture; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon.
For all purposes of this Section 7.15, Obligations securing Interest Rate Agreements shall be disregarded.
SECTION 7.16.� UNDERTAKING FOR COSTS. All parties to this Master Trust Indenture agree, and each Holder of any Obligation by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Master Trust Indenture, or in any suit against the Master Trustee for any action taken or omitted by it as Master Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit and that such court may in its discretion assess reasonable costs, including reasonable attorneys’ fees, costs and expenses, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall not apply to any suit instituted by the Master Trustee, to any suit instituted by any Holder of Obligations, or group of Holders of Obligations, holding in the aggregate more than 10% in principal amount of the Outstanding Obligations, or to any suit instituted by any Holder of Obligations for the enforcement of the payment of the principal of (or premium, if any) or interest on any Obligation on or after the respective Stated Maturities expressed in such Obligation (or, in the case of redemption, on or after the redemption date).
SECTION 7.17.� WAIVER OF STAY OR EXTENSION LAWS. Each Obligated Group Member covenants (to the extent that it may lawfully do so) that it will not at any time
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insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Master Trust Indenture; and each Obligated Group Member (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay, or impede the execution of any power herein granted to the Master Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.
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ARTICLE VIII CONCERNING THE MASTER TRUSTEE
SECTION 8.01.� DUTIES AND LIABILITIES OF MASTER TRUSTEE. (a) Except during the continuance of an Event of Default, the Master Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Master Trust Indenture and no implied covenants or obligations shall be read into this Master Trust Indenture against the Master Trustee. The Master Trustee shall have no duty to review any financial statements provided by the Obligated Group hereunder, nor shall the Master Trustee be considered to have notice of the content of such statements or a default based on such content. The Master Trustee shall have no duty to verify the accuracy of such financial statements.
(b)� In case any Event of Default has occurred and is continuing, the Master Trustee shall exercise such of the rights and powers vested in it by this Master Trust Indenture, and use the same degree of care and skill in their exercise, as a reasonably prudent man would exercise or use under the circumstances in the conduct of his own affairs.
(c)� No provision of this Master Trust Indenture shall be construed to relieve the Master Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except, that:
(1)� this Subsection shall not be construed to limit the effect of subsection (a) of this Section;
(2)� the Master Trustee shall not be liable for any error of judgment made in good faith, unless it shall be proved that the Master Trustee was negligent in ascertaining the pertinent facts;
(3)� the Master Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of not less than a majority in aggregate principal amount of Obligations then Outstanding relating to the time, method, and place of conducting any proceeding for any remedy available to the Master Trustee, or exercising any trust or power conferred upon the Master Trustee, under this Master Trust Indenture;
(4)� no provision of this Master Trust Indenture shall require the Master Trustee to expend or risk its funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers, without regard to whether it shall have grounds for believing that the repayment of such funds or indemnity reasonably satisfactory to it against such risk or liability is not assured to it; and
(5)� in the absence of bad faith on its part, the Master Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to the Master Trustee and conforming to the requirements of this Master Trust Indenture; but in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Master Trustee, the Master Trustee shall be under a duty to examine the
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same to determine whether or not they conform to the requirements of this Master Trust Indenture.
(d)� Whether or not therein expressly so provided, every provision of this Master Trust Indenture relating to the conduct or affecting the liability of or affording protection to the Master Trustee shall be subject to the provisions of this Section.
SECTION 8.02.� NOTICE OF DEFAULTS. Within 60 days after the occurrence of any default hereunder of which the Master Trustee is deemed to have knowledge as provided in Section 8.03(h) hereof, the Master Trustee shall transmit by mail to all Holders of Obligations, notice of such default, unless such default shall have been cured or waived; provided, however, that except in the case of a default in the payment of the principal of (or premium, if any) or interest on any Obligations or in the payment of any sinking or purchase fund installment, the Master Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of directors and/or Responsible Officers of the Master Trustee in good faith determine that the withholding of such notice is in the interest of the Holders of Obligations; and provided, further, that in the case of any default of the character specified in Section 7.01(b) hereof no such notice to Holders of Obligations shall be given until at least 30 days after the occurrence thereof. For the purpose of this Section, the term “default” means any event which is, or after notice or lapse of time or both would become, an Event of Default.
SECTION 8.03.� CERTAIN RIGHTS OF MASTER TRUSTEE. Except as otherwise provided in Section 8.01 hereof:
(a)� The Master Trustee may conclusively rely and shall be fully protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, approval, bond, debenture, coupon, or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties and shall not be required to verify the accuracy of any information or calculations required to be included therein or attached thereto;
(b)� Any request or direction of any Person mentioned herein shall be sufficiently evidenced by a Request of such Person; and any resolution of the Governing Body of any Person may be evidenced to the Master Trustee by a Board Resolution of such Person;
(c)� Whenever in the administration of this Master Trust Indenture the Master Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering, or omitting any action hereunder, the Master Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, conclusively rely upon an Officer’s Certificate;
(d)� The Master Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon;
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(e)� The Master Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Master Trust Indenture at the request or direction of any of the Holders of Obligations pursuant to the provisions of this Master Trust Indenture, unless such Holders shall have provided to the Master Trustee security or indemnity satisfactory to it against the costs, expenses, and liabilities (including, but not limited to, attorney’s fees, costs and expenses) which might be incurred by it in connection with such request or direction;
(f)� The Master Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, approval, bond, debenture, coupon, or other paper or document but the Master Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Master Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records, and premises of the Obligated Group Members and each other obligor on the Obligations, personally or by agent or attorney;
(g)� The Master Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Master Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care hereunder;
(h)� The Master Trustee shall not be deemed to have knowledge of any default (as defined in Section 8.02 hereof) hereunder, except an Event of Default under Section 7.01(a) hereof, unless a Responsible Officer has actually received notice of such default in writing from any Obligated Group Member or the Holder of any Obligation, referencing the Obligations and describing such default;
(i)� The permissive right of the Master Trustee to do things enumerated in this Master Trust Indenture shall not be construed as a duty (except as otherwise herein provided). It shall not be the duty of the Master Trustee, except as herein provided, to see that any duties or obligations herein imposed upon any Obligated Group Member or any other Person are performed, and the Master Trustee shall not be liable or responsible for the failure of any Obligated Group Member or any other Person to perform any act required of it or them by this Master Trust Indenture;
(j)� The Master Trustee is not required to give any bond or surety with respect to the performance of its duties or the exercise of its powers under this Master Trust Indenture;
(k)� In the event the Master Trustee receives inconsistent or conflicting requests and indemnity from two or more groups of holders of Obligations, each representing less than a majority in aggregate principal amount of the Obligations Outstanding, the Master Trustee, in its sole discretion, may determine what action, if any, shall be taken;
(l)� The Master Trustee’s immunities and protections from liability in connection with the performance of its duties under this Master Trust Indenture shall extend to the Master Trustee’s officers, directors, agents and employees. Such immunities and protections, together
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with the Master Trustee’s right to compensation, shall survive the Master Trustee’s resignation or removal and final payment of the Obligations; and
(m)� Except for information provided by the Master Trustee concerning the Master Trustee, the Master Trustee shall have no responsibility for any information in any offering memorandum or other disclosure material distributed with respect to the Obligations, and the Master Trustee shall have no responsibility for compliance with any state or federal securities laws in connection with the Obligations.
(n)� Notwithstanding anything contained herein or in the Mortgage to the contrary, upon the occurrence and continuance of an Event of Default, before taking any foreclosure action or any action with respect to real property and which may subject the Master Trustee to liability under any environmental law, statute, regulation or similar requirement relating to the environment, the Master Trustee may require that an environmental survey be provided and a satisfactory indemnity bond, indemnity or environmental impairment insurance be furnished for the payment or reimbursement of all expenses to which it may be put and to protect it against all liability resulting from any claims, judgments, damages, losses, penalties, fines, liabilities (including strict liability) and expenses which may result from such foreclosure or other action and the Master Trustee shall not be required to take such foreclosure or similar action if it reasonably determines that the approval of a governmental regulator that cannot be obtained is necessary for such foreclosure or similar action.
(o)� The Master Trustee shall not be responsible or liable for any failure or delay in the performance of its obligations under this Indenture arising out of or caused, directly or indirectly, by circumstances beyond its reasonable control, including, without limitation, acts of God; earthquakes; fire; flood; hurricanes or other storms; wars; terrorism; similar military disturbances; sabotage; epidemic; pandemic; riots; interruptions, loss or malfunctions of utilities, computer (hardware or software) or communications services; accidents; labor disputes; acts of civil or military authority or governmental action; it being understood that the Master Trustee shall use commercially reasonable efforts which are consistent with accepted practices in the banking industry to resume performance as soon as reasonably practicable under the circumstances.
(p)� Notwithstanding the effective date of this Master Trust Indenture or anything to the contrary in this Master Trust Indenture, the Master Trustee shall have no liability or responsibility for any act or event relating to this Master Trust Indenture which occurs prior to the date the Master Trustee formally executes this Master Trust Indenture and commences acting as Master Trustee hereunder.
(q)� Except for damages arising out of the Master Trustee’s gross negligence or willful misconduct, the Master Trustee shall not be responsible or liable for punitive, special, indirect, or consequential loss or damage of any kind whatsoever irrespective of whether the Master Trustee has been advised of the likelihood of such loss or damage and regardless of the form of actions.
(r)� The Master Trustee shall have the right to accept and act upon directions given pursuant to this Master Trust Indenture or any other document reasonably relating thereto and delivered using Electronic Means; provided, however, that the Obligated Group shall provide to
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the Master Trustee an incumbency certificate listing Authorized Representatives with the authority to provide such directions and containing specimen signatures of such Authorized Representatives, which incumbency certificate shall be amended whenever a person is to be added or deleted from the listing. If the Obligated Group elects to give the Master Trustee directions using Electronic Means and the Master Trustee in its discretion elects to act upon such directions, the Master Trustee’s understanding of such directions shall be deemed controlling. The Obligated Group shall be responsible for ensuring that only Authorized Representatives transmit such directions to the Master Trustee and that all Authorized Representatives treat applicable user and authorization codes, passwords and/or authentication keys as confidential and with extreme care. The Obligated Group understands and agrees that the Master Trustee cannot determine the identity of the actual sender of such directions and that the Master Trustee shall conclusively presume that directions that purport to have been sent by an Authorized Representative listed on the incumbency certificate provided to the Master Trustee have been sent by such Authorized Representative. The Master Trustee shall not be liable for any losses, costs or expenses arising directly or indirectly from the Master Trustee’s reliance upon and compliance with such directions notwithstanding such directions conflict or are inconsistent with a subsequent written direction. The Obligated Group agrees: (i) to assume all risks arising out of the use of Electronic Means to submit directions to the Master Trustee, including without limitation the risk of the Master Trustee acting on unauthorized directions, and the risk of interception and misuse by third parties; (ii) that it is fully informed of the protections and risks associated with the various methods of transmitting directions to the Master Trustee and that there may be more secure methods of transmitting directions than the method(s) selected by the Obligated Group; (iii) that the security procedures (if any) to be followed in connection with its transmission of directions provide to it a commercially reasonable degree of protection in light of its particular needs and circumstances; and (iv) to notify the Master Trustee immediately upon learning of any compromise or unauthorized use of the security procedures.
SECTION 8.04.� NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF OBLIGATIONS. The recitals contained herein and in the Obligations (other than the certificate of authentication on such Obligations) shall be taken as the statements of the Obligated Group Members, and the Master Trustee assumes no responsibility for their correctness. The Master Trustee makes no representations as to the validity or sufficiency of this Master Trust Indenture or of the Obligations. The Master Trustee shall not be accountable for the use or application by the Obligated Group Members of any of the Obligations or of the proceeds of such Obligations. The Master Trustee is not a party to, and is not responsible for, and makes no representation with respect to matters set forth in any preliminary official statement, official statement, or similar document prepared and distributed in connection with the transactions contemplated in this Master Trust Indenture.
SECTION 8.05.� MASTER TRUSTEE OR REGISTRAR MAY OWN OBLIGATIONS. The Master Trustee, any Paying Agent, registrar, or any other agent of the Obligated Group Members, in its individual or any other capacity, may become the owner or pledgee of Obligations and may otherwise deal with the Obligated Group Members with the same rights it would have if it were not Master Trustee, Paying Agent, Obligation registrar, or such other agent.
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SECTION 8.06.� MONEY TO BE HELD IN TRUST. All money received by the Master Trustee shall, until used or applied as herein provided, be held in trust for the purposes for which they were received, but need not be segregated from other funds except to the extent required by law. The Master Trustee shall be under no liability for interest on any money received by it hereunder other than such interest as it expressly agrees to pay.
SECTION 8.07.� Compensation and Expenses of Master Trustee. The Obligated Group Members agree:
(a)� to pay to the Master Trustee from time to time compensation for all services rendered by it hereunder in accordance with a written schedule provided by the Master Trustee to the Obligated Group Agent;
(b)� to reimburse the Master Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Master Trustee in accordance with any provision of this Master Trust Indenture (including the reasonable compensation and the expenses and disbursements, of its agents and counsel) except any such expense, disbursement, or advance as may arise from its negligence or willful misconduct;
(c)� each Obligated Group Member shall indemnify the Master Trustee for, and hold it harmless against any loss, liability or expense incurred by it without negligence or willful misconduct on its part, arising out of and in connection with the acceptance or administration of this trust, including the reasonable costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder; and
(d)� In the case of any claim indemnified by an Obligated Group Member hereunder that is covered by a policy of insurance maintained by or on behalf of such Obligated Group Member, Master Trustee agrees to cooperate, at such Obligated Group Member’s expense, with the insurers in the exercise of their rights to investigate, defend or compromise such claim as may be required to retain the benefits of such insurance with respect to such claim.
SECTION 8.08.� CORPORATE MASTER TRUSTEE REQUIRED; ELIGIBILITY. There shall at all times be a Master Trustee hereunder which shall be a banking corporation, bank or trust company organized and doing business under the laws of the United States of America or of any state, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least $50,000,000, subject to supervision or examination by Federal or State banking authority. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Master Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign promptly in the manner and with the effect hereinafter specified in this Article VIII.
SECTION 8.09.� RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR. (a) No resignation or removal of the Master Trustee and no appointment of a
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successor Master Trustee pursuant to this Article VIII shall become effective until the acceptance of appointment by the successor Master Trustee under Section 8.10 hereof.
(b)� The Master Trustee may resign at any time by giving written notice thereof to the Obligated Group Representative. If an instrument of acceptance by a successor Master Trustee shall not have been delivered to the Master Trustee within 30 days after the giving of such notice of resignation, the resigning Master Trustee may petition any court of competent jurisdiction for the appointment of a successor Master Trustee.
(c)� The Master Trustee may be removed (i) if no Event of Default or event with the passage of time would result in an Event of Default has occurred and is continuing under this Master Trust Indenture, then upon 30 days’ written notice, by act of the Obligated Group Representative delivered to the Master Trustee, or (ii) at any time, upon 30 days’ written notice, by act of the Holders of a majority in aggregate principal amount of the Outstanding Obligations delivered to the Master Trustee and to the Obligated Group Representative.
(d)� If at any time:
(1)� the Master Trustee shall cease to be eligible under Section 8.08 hereof and shall fail to resign after written request therefor by the Obligated Group Representative or by any such Holder of Obligations, or
(2)� the Master Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Master Trustee or of its property shall be appointed or any public officer shall take charge or control of the Master Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation,
then, in any such case, (A) the Obligated Group Representative by written request upon 30 days’ written notice may remove the Master Trustee, or (B) subject to Section 7.16 hereof, any Holder of Obligations who has been a bona fide Holder of an Obligation for at least 6 months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Master Trustee and the appointment of successor Master Trustee.
(e)� If the Master Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Master Trustee for any cause, the Obligated Group Representative, by an Obligated Group Representative Request, shall promptly appoint a successor Master Trustee. If, within one year after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Master Trustee shall be appointed by Act of the Holders of a majority in aggregate principal amount of the Outstanding Obligations delivered to the Obligated Group Representative and the retiring Master Trustee, the successor Master Trustee so appointed shall, forthwith upon its acceptance of such appointment, become the successor Master Trustee and supersede the successor Master Trustee appointed by the Obligated Group Representative. If no successor Master Trustee shall have been so appointed by the Obligated Group Representative or the Holders of Obligations and accepted appointment in the manner hereinafter provided, any Holder of Obligations who has been a bona fide Holder of an Obligation for at least 6 months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Master Trustee.
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(f)� The Obligated Group Representative shall give notice of each resignation and each removal of the Master Trustee and each appointment of a successor Master Trustee by mailing written notice of such event by first class mail, postage prepaid, to the registered Holders of Obligations at their addresses as shown in the Obligation Register. Each notice shall include the name and address of the designated corporate trust office of the successor Master Trustee.
SECTION 8.10.� ACCEPTANCE OF APPOINTMENT BY SUCCESSOR. Every successor Master Trustee appointed hereunder shall execute, acknowledge and deliver to the Obligated Group Representative and to the retiring Master Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Master Trustee shall become effective and such successor Master Trustee, without any further act, deed, or conveyance, shall become vested with all the rights, powers, trusts, and duties of the retiring Master Trustee; but, on the written request of the Obligated Group Representative or the successor Master Trustee, such retiring Master Trustee shall, upon payment of its charges and the amounts due to it hereunder, execute and deliver an instrument transferring to such successor Master Trustee all the rights, powers, and trusts of the retiring Master Trustee, and shall duly assign, transfer, and deliver to the successor Master Trustee all property and money held by such retiring Master Trustee hereunder. Upon request of any such successor Master Trustee, the Obligated Group Representative shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Master Trustee all such rights, powers, and trusts.
No successor Master Trustee shall accept its appointment unless at the time of such acceptance such successor Master Trustee shall be qualified and eligible under this Article VIII. The indemnity provided for in Section 8.07(c) hereof herein shall continue to be binding upon the Members of the Obligated Group for the benefit of the retiring or removed Master Trustee.
SECTION 8.11.� MERGER OR CONSOLIDATION. Any entity into which the Master Trustee may be merged or with which it may be consolidated, or any entity resulting from any merger or consolidation to which the Master Trustee shall be a party, or any entity succeeding to all or substantially all of the corporate trust business of the Master Trustee, shall be the successor Master Trustee hereunder, provided such entity shall be otherwise qualified and eligible under this Article VIII, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Obligations shall have been authenticated, but not delivered, by the Master Trustee then in office, any successor by merger or consolidation to such authenticating Master Trustee may adopt such authentication and deliver the Obligations so authenticated with the same effect as if such successor Master Trustee had itself authenticated such Obligations.
SECTION 8.12.� MASTER TRUSTEE AS RELATED BOND TRUSTEE. The Master Trustee may serve as Related Bond Trustee under any Related Bond Indenture so long as the Master Trustee is the Related Bond Trustee for all outstanding Related Bonds. If an entity other than the Master Trustee becomes a Related Bond Trustee, the Master Trustee hereby agrees to promptly resign from its role as Master Trustee or Related Bond Trustee, at its option, on its own motion and a successor Master Trustee or Related Bond Trustee, as appropriate, shall be appointed and qualified as set forth in Section 8.09 hereof or in the Related Bond Indenture.
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ARTICLE IX SUPPLEMENTS AND AMENDMENTS
SECTION 9.01.� SUPPLEMENTS WITHOUT CONSENT OF HOLDERS OF OBLIGATIONS. Without the Consent of the Holders of any Obligations, each Obligated Group Member, when authorized by a Board Resolution, and the Master Trustee at any time may enter into one or more Supplements for any of the following purposes:
(a)� to evidence the succession of another Person to an Obligated Group Member, or successive successions, and the assumption by the successor Person of the covenants, agreements and obligations of an Obligated Group Member as permitted by this Master Trust Indenture or to evidence additions to, or withdrawals from, membership in the Obligated Group in accordance with the provisions of Article VI hereof;
(b)� to add to the covenants of the Obligated Group Members for the benefit of the Holders of Obligations, or to surrender any right or power herein conferred upon the Obligated Group Members, or to add to the Events of Default enumerated in Section 7.01 hereof;
(c)� to cure any ambiguity or to correct or supplement any provision herein that may be defective or inconsistent with any other provision herein, or to make any other provision with respect to matters or questions arising under this Master Trust Indenture that shall not be inconsistent with this Master Trust Indenture, provided such action shall not adversely affect the interests of the Holders of Obligations;
(d)� to modify or supplement this Master Trust Indenture in such manner as may be necessary or appropriate to qualify this Master Trust Indenture under the Trust Indenture Act of 1939 as then amended, or under any similar Federal or State statute or regulation, including provisions whereby the Master Trustee accepts such powers, duties, conditions and restrictions hereunder and the Obligated Group Members undertake such covenants, conditions or restrictions additional to those contained in this Master Trust Indenture as would be necessary or appropriate so to qualify this Master Trust Indenture; provided, however, that nothing herein contained shall be deemed to authorize inclusion in this Master Trust Indenture or in any Supplements provisions referred to in Section 316(a)(2) of the said Trust Indenture Act or any corresponding provision provided for in any similar statute hereafter in effect;
(e)� to create and provide for the issuance of Obligations as permitted hereunder;
(f)� to increase or maintain any credit rating assigned to any series of Related Bonds by a Rating Agency so long as no Obligation issued hereunder shall be secured on a basis senior to other Obligations;
(g)� to change Section 4.15 hereof to permit the financial statements required therein to more accurately reflect the financial position and operations of the Obligated Group or to comply with the requirements of generally accepted accounting principles;
(h)� To specify and determine matters necessary or desirable for the incorporation of any future rules and regulations with respect to Subsidy Bonds; and
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(i)� to make any amendment to any provision of this Master Trust Indenture or to any Supplement which is only applicable to Obligations issued thereafter or which will not apply so long as any Obligation then Outstanding remains Outstanding.
SECTION 9.02.� SUPPLEMENTS WITH CONSENT OF HOLDERS OF OBLIGATIONS. With the Consent of the Holders of not less than a majority in aggregate principal amount of the Outstanding Obligations, by Act of said Holders delivered to the Obligated Group Representative and the Master Trustee, each Obligated Group Member, when authorized by a Board Resolution, and the Master Trustee may enter into Supplements for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Master Trust Indenture or of modifying in any manner the rights of the Holders of the Obligations under this Master Trust Indenture; provided, however, that no such Supplement shall, without the Consent of the Holder of each Outstanding Obligations affected thereby,
(a)� change the Stated Maturity of the principal of, or the date when due of any installment of principal, interest or other amounts owed under, any Obligations or any date for mandatory redemption thereof, or reduce the principal amount thereof or the interest thereon or any premium payable upon the redemption thereof, or change any Place of Payment where, or the coin or currency in which, any Obligations or the interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the Stated Maturity thereof (or, in the case of redemption, on or after the redemption date), or
(b)� reduce the percentage in principal amount of the Outstanding Obligations, the Consent of whose Holders is required for any such Supplement, or the Consent of whose Holders is required for any waiver (of compliance with certain provisions of this Master Trust Indenture or certain defaults hereunder and their consequences) provided for in this Master Trust Indenture, or
(c)� permit the preference or priority of any Obligations over any other Obligations; provided, however, acceleration or tender rights shall not be a preference or priority hereunder, or
(d)� modify any of the provisions of this Section or Section 7.15 hereof, except to increase any such percentage or to provide that certain other provisions of this Master Trust Indenture cannot be modified or waived without the Consent of the Holder of each Obligation affected thereby.
For purposes of this Section 9.02, Obligations which secure Interest Rate Agreements shall be disregarded.
It shall not be necessary for any Act of Holders of Obligation under this Section to approve the particular form of any proposed Supplement, but it shall be sufficient if such Act shall approve the substance thereof.
SECTION 9.03.� EXECUTION OF SUPPLEMENTS. In executing, or accepting the additional trusts created by, any Supplement permitted by this Article or the modifications thereby of the trusts created by this Master Trust Indenture the Master Trustee shall be entitled to
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receive, and shall be fully protected in conclusively relying upon, an Opinion of Counsel stating that the execution of such Supplemental is authorized or permitted by this Master Trust Indenture and that all conditions precedent thereto have been complied with. In connection with the execution and delivery of a Supplement pursuant to Section 9.01(c) hereof, the Master Trustee, in its discretion, may determine whether or not in accordance with such Section the Holders of the Obligations would be affected by such Supplement, and any such determination shall be binding and conclusive on the Members of the Obligated Group, and the Holders of the Obligations. The Master Trustee may receive and be entitled to rely upon an Opinion of Counsel as conclusive evidence as to whether the Holders of the Obligations would be so affected by any such Supplement. The Master Trustee may, but shall not (except to the extent required in the case of a Supplement entered into under Section 9.01(d) hereof) be obligated to, enter into any such Supplement which affects the Master Trustee’s own rights, duties or immunities under this Master Trust Indenture or otherwise.
SECTION 9.04.� EFFECT OF SUPPLEMENT. Upon the execution of any Supplement under this Article, this Master Trust Indenture shall, with respect to each series of Obligations to which such Supplement applies, be modified in accordance therewith, and such Supplement shall form a part of this Master Trust Indenture for all purposes, and every Holder of Obligations thereafter or (except to the extent provided pursuant to Section 9.01(h) hereof) theretofore authenticated and delivered hereunder shall be bound thereby.
SECTION 9.05.� OBLIGATIONS MAY BEAR NOTATION OF CHANGES. Obligations authenticated and delivered after the execution of any Supplement pursuant to this Article may bear a notation in form approved by the Master Trustee as to any matter provided for in such Supplement. If the Obligated Group Representative or the Master Trustee shall so determine, new Obligations so modified as to conform, in the opinion of the Master Trustee and the Obligated Group Representative, to any such Supplement may be prepared and executed by the applicable Obligated Group Member and authenticated and delivered by the Master Trustee in exchange for Obligations then Outstanding.
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ARTICLE X SATISFACTION AND DISCHARGE OF INDENTURE;
UNCLAIMED MONEYS
SECTION 10.01.� SATISFACTION AND DISCHARGE OF INDENTURE. If at any time the Obligated Group Members shall have paid or caused to be paid the principal of (and premium, if any) and interest on all the Obligations Outstanding hereunder, as and when the same shall have become due and payable (in the case of Obligations related to any Subsidy Bonds, without regard to expected Federal Subsidy Payments), and if the Obligated Group Members shall also pay or provide for the payment of all other sums payable hereunder by each Obligated Group Member then this Master Trust Indenture shall cease to be of further effect (except as to (1) rights of registration of transfer and exchange, (2) substitution of mutilated, defaced, or apparently destroyed, lost or stolen Obligations, (3) rights of Holders to receive payments of principal thereof (and premium, if any) and interest thereon, (4) the rights, remaining obligations, if any, and immunities of the Master Trustee hereunder, and (5) the rights of the Holders as beneficiaries hereof with respect to the property so deposited with the Master Trustee payable to all or any of them) and the Master Trustee, on the Obligated Group Representative’s Request accompanied by an Officer’s Certificate and an Opinion of Counsel (both to the effect that all conditions precedent in this Master Trust Indenture relating to the satisfaction and discharge of this Master Trust Indenture have been satisfied) and at the cost and expense of the Obligated Group Representative, shall execute proper instruments acknowledging satisfaction of and discharging this Master Trust Indenture.
Notwithstanding the satisfaction and discharge of this Master Trust Indenture, the obligations of the Obligated Group Members to the Master Trustee under Section 8.07 hereof and, if funds shall have been deposited with the Master Trustee pursuant to Section 10.02 hereof, the obligations of the Master Trustee under Section 10.03 hereof shall survive.
SECTION 10.02.� OBLIGATIONS DEEMED PAID. Obligations of any series shall be deemed to have been paid if (a) (1) in case such Obligations are to be redeemed on any date prior to their Stated Maturity, the Obligated Group Representative by Obligated Group Representative Request shall have given to the Master Trustee in form satisfactory to it irrevocable instructions to give notice of redemption of such Obligations on said redemption date, (2) there shall have been deposited with the Master Trustee or escrow agent either money sufficient, or Defeasance Obligations the principal of and the interest on which will provide money sufficient without reinvestment (as established by an Officer’s Certificate delivered to the Master Trustee accompanied by a verification report of an Accountant setting forth the calculations upon which such Officer’s Certificate is based), to pay when due the principal of (and premium, if any) and interest due and to become due on said Obligations (in the case of Obligations related to any Subsidy Bonds, without regard to expected Federal Subsidy Payments) on and prior to the redemption date or Stated Maturity thereof, as the case may be, and (3) in the event said Obligations are not by their terms subject to redemption within the next 45 days, the Obligated Group Representative shall have given the Master Trustee in form satisfactory to it irrevocable instructions to give a notice to the Holders of such Obligations that the deposit required by clause (2) above has been made with the Master Trustee and that said Obligations are deemed to have been paid in accordance with this Section and stating such Maturity or redemption date upon which money is to be available for the payment of the
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principal of (and premium, if any) and interest on said Obligations (in the case of Obligations related to any Subsidy Bonds, without regard to expected Federal Subsidy Payments), or (b) such Obligations are delivered to the Master Trustee by the Related Bond Trustee together with instructions from the Obligated Group Representative directing the Master Trustee to retire and cancel such Obligations.
SECTION 10.03.� APPLICATION OF TRUST MONEY. The Defeasance Obligations and money deposited with the Master Trustee pursuant to Section 10.02 hereof and principal or interest payments on any such Defeasance Obligations shall be held in trust, shall not be sold or reinvested, and shall be applied by it, in accordance with the provisions of the Obligations and this Master Trust Indenture, to the payment, either directly or through any Paying Agent (including the Obligated Group Representative acting as Paying Agent) as the Master Trustee may determine, to the Persons entitled thereto, of the principal (and premium, if any) and interest for whose payment such money or Defeasance Obligations were deposited; provided that, upon delivery to the Master Trustee of an Officer’s Certificate (accompanied by the verification report of an Accountant setting forth the calculations upon which such Officer’s Certificate is based) establishing that the money and Defeasance Obligations on deposit following the taking of the proposed action will be sufficient for the purposes described in clause (2) of Section 10.02 hereof, any money received from principal or interest payments on Defeasance Obligations deposited with the Master Trustee or the proceeds of any sale of such Defeasance Obligations, if not then needed for such purpose, shall, upon Obligated Group Representative Request be reinvested, to the extent practicable, in other Defeasance Obligations or disposed of as requested by the Obligated Group Representative. For purposes of any calculation required by this Article X, any Defeasance Obligation which is subject to redemption at the option of its issuer, the redemption date for which has not been irrevocably established as of the date of such calculation, shall be assumed to cease to bear interest at the earliest date on which such obligation may be redeemed at the option of the issuer and the principal of such obligation shall be assumed to be received at its Stated Maturity.
SECTION 10.04.� PAYMENT OF RELATED BONDS. Notwithstanding any other provision of this Article X, no Obligation will be considered paid or deemed to have been paid unless the Related Bonds or other Indebtedness evidenced or secured by such Obligation, if any, have been paid or deemed paid pursuant to the Related Bond Indenture or, as applicable the agreement or instrument pursuant to which such other Indebtedness was issued or incurred.
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ARTICLE XI MISCELLANEOUS PROVISIONS
SECTION 11.01.� NO PERSONAL LIABILITY. No recourse under this Master Trust Indenture or any Obligations shall be had against any officer, director, agent or employee, as such, past, present, or future, of any Obligated Group Member, any Affiliate, the Master Trustee or of any successor corporation; it being expressly understood that this Master Trust Indenture and the obligations incurred hereunder are solely obligations of the entities named herein as obligors, and that no personal liability whatever shall attach to such persons or any of them, under this Master Trust Indenture or any Obligations; and that any and all such personal liability of every name and nature, either at common law or in equity or by constitution or statute, of, and any and all such rights and claims against, every such person because of the creation of the indebtedness hereby authorized, or under or by reason of the obligations, covenants, or agreements contained in this Master Trust Indenture or in any Obligations are hereby expressly waived and released as a condition of, and as a consideration for, the execution of this Master Trust Indenture and the issue of such Obligations.
SECTION 11.02.� FLORIDA CONTRACT. This Master Trust Indenture and the Obligations shall be deemed to be contracts made under the laws of the State of Florida, and for all purposes shall be construed in accordance with the laws of said state applicable to contracts made and to be performed in said state without regard to conflict of law principles.
SECTION 11.03.� LEGAL HOLIDAYS. If the date for making any payment or the last date for performance of any act or the exercising of any right, as provided in this Master Trust Indenture, shall be a legal holiday or a day on which the payment system of the U.S. Federal Reserve is not operational, such payment may be made or act performed or right exercised on the next succeeding day not a legal holiday or a day on which the payment system of the U.S. Federal Reserve is operational with the same force and effect as if done on the nominal date provided in this Master Trust Indenture.
SECTION 11.04.� BENEFITS OF PROVISIONS OF MASTER TRUST INDENTURE AND OBLIGATIONS. Nothing in this Master Trust Indenture or in the Obligations, expressed or implied, shall give or be construed to give any Person, other than the parties hereto, and the Holders of such Obligations, any legal or equitable right, remedy, or claim under or in respect of this Master Trust Indenture, or under any covenant, condition, and provision herein contained; all its covenants, conditions, and provisions being for the sole benefit of the parties hereto and of the Holders of such Obligations.
SECTION 11.05.� EXECUTION IN COUNTERPARTS. This Master Trust Indenture may be executed in any number of counterparts, each of which shall be an original; but such counterparts shall together constitute but one and the same instrument.
SECTION 11.06.� UCC FINANCING STATEMENTS. The Members of the Obligated Group hereby expressly grant to the Master Trustee the full right and authority to file any Florida Uniform Commercial Code financing statement, continuation statement or amendment that may be required by law or is, necessary to maintain any security interest granted by the Obligated Group to the Master Trustee pursuant to this Master Trust Indenture.
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Notwithstanding anything to the contrary contained in this Master Trust Indenture, the Master Trustee shall not be responsible for any initial filings of any financing statements or the information contained therein (including the exhibits thereto), the perfection of any such security interests, or the accuracy or sufficiency of any description of collateral in such initial filings or for filing any modifications or amendments to the initial filings required by any amendments to Article 9 of the Uniform Commercial Code. In addition, unless the Master Trustee shall have been notified in writing by the Obligated Group Representative that any such initial filing or description of collateral was or has become defective, the Master Trustee shall be fully protected in (i) conclusively relying on such initial filing and descriptions in filing any financing or continuation statements or modifications thereto and (ii) filing any continuation statements in the same filing offices as the initial filings were made. The Master Trustee shall cause to be filed a continuation statement with respect to each Uniform Commercial Code financing statement relating to the Related Bonds which was filed at the time of the issuance thereof, in such manner and in such places as the initial filings were made, provided that a copy of the filed original financing statement is timely delivered to the Master Trustee. The Obligated Group shall be responsible for and shall pay any reasonable expenses, including legal fees, costs and expenses incurred under this section.
SECTION 11.07.� PROVIDERS OF CREDIT FACILITIES DEEMED HOLDERS. For all purposes hereof including, without limitation, Articles VII and IX of this Master Trust Indenture, so long as a provider of a Credit Facility securing any Obligations or Indebtedness represented by such Obligations (including, without limitation, Related Bonds) is not in default with respect to its obligations under such Credit Facility, such provider shall be deemed to be the Holder of such Obligations and entitled to provide all consents and control all remedies with respect thereto to the exclusion of the Holders thereof so long as its Credit Facility is in effect.
SECTION 11.08.� WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THIS MASTER TRUST INDENTURE, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION HEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY EACH PARTY, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE.
IN WITNESS WHEREOF, the parties hereto have caused this Master Trust Indenture to be duly executed by persons thereunto duly authorized, as of the day and year first above written.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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[SIGNATURE PAGE TO MASTER TRUST INDENTURE]
MIAMI JEWISH HEALTH SYSTEMS, INC., as an Initial Member By: President/Chief Executive Officer MIAMI JEWISH HEALTH SYSTEMS, FOUNDATION, INC., as an Initial Member By: President/Chief Executive Officer FLORIDA PACE CENTERS, INC., as an Initial Member By: President/Chief Executive Officer THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Master Trustee By: Vice President
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EXHIBIT A
LEGAL DESCRIPTION OF THE PREMISES
PARCEL I:
TRACTS B, C, D, E, AND F, “DOUGLAS GARDENS SOUTH REVISED” ACCORDING TO THE PLAT THEREOF AS RECORDED IN PLAT BOOK 146 AT PAGE 63 OF THE PUBLIC RECORDS OF MIAMI-DADE COUNTY FLORIDA,
TOGETHER WITH
TRACT A, “DOUGLAS GARDENS WEST”, ACCORDING TO THE PLAT THEREOF AS RECORDED IN PLAT BOOK 140 AT PAGE 52 OF THE PUBLIC RECORDS OF MIAMI-DADE COUNTY FLORIDA AND THAT PORTION OF TRACT B, OF THE SAID PLAT OF “DOUGLAS GARDENS WEST” LYING NORTHERLY OF THE NORTH LINE OF TRACT “F” OF THE SAID PLAT OF “DOUGLAS GARDENS SOUTH REVISED”;
TOGETHER WITH
TRACTS ‘E’ AND ‘F’, “DOUGLAS GARDENS REVISED” ACCORDING TO THE PLAT THEREOF, AS RECORDED IN PLAT BOOK 123 AT PAGE 49 OF THE PUBLIC RECORDS OF MIAMI-DADE COUNTY FLORIDA AND TRACT ‘A’ OF THE SAID PLAT OF “DOUGLAS GARDENS REVISED”, LESS THAT PORTION OF TRACT ‘B’ OF THE SAID PLAT OF “DOUGLAS GARDENS WEST” THAT LIES NORTHERLY OF THE NORTH LINE OF TRACT ‘F’ OF THE SAID PLAT OF “DOUGLAS GARDENS SOUTH REVISED”
TOGETHER WITH
LOTS 11 AND 12 LESS THE EAST 10 FEET THEREOF, BLOCK 6, “CORRECTED PLAT OF ALTA VISTA”, ACCORDING TO THE PLAT THEREOF, AS RECORDED IN PLAT BOOK 6 AT PAGE 4 OF THE PUBLIC RECORDS OF MIAMI-DADE COUNTY, FLORIDA,
AND
LOTS 6 AND 7, BLOCK 2, “ORCHARD VILLA TRACT THIRD SECTION” ACCORDING TO THE PLAT THEREOF, AS RECORDED IN PLAT BOOK 9 AT PAGE 30 OF THE PUBLIC RECORDS OF MIAMI-DADE COUNTY, FLORIDA.
ALL LYING AND BEING IN MIAMI-DADE COUNTY FLORIDA.
LESS AND EXCEPT THE FOLLOWING DESCRIBED PROPERTY:
A PORTION OF TRACT ‘C’, DOUGLAS GARDENS SOUTH REVISED, ACCORDING TO THE PLAT THEREOF, RECORDED IN PLAT BOOK 146, PAGE 63 OF THE PUBLIC RECORDS OF MIAMI-DADE COUNTY, FLORIDA, ALSO BEING A PORTION OF TRACT ‘B’, DOUGLAS GARDENS REVISED, ACCORDING TO THE PLAT THEREOF,
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RECORDED IN PLAT BOOK 123, PAGE 49 OF THE PUBLIC RECORDS OF MIAMI-DADE COUNTY, FLORIDA AND BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
TRACT ‘B’, DOUGLAS GARDENS REVISED, ACCORDING TO THE PLAT THEREOF, RECORDED IN PLAT BOOK 123, AT PAGE 49 OF THE PUBLIC RECORDS OF MIAMI-DADE COUNTY, FLORIDA, LESS AND EXCEPT THE HEREIN DESCRIBED PARCEL OF LAND:
COMMENCE AT THE SOUTHEAST CORNER OF SAID TRACT ‘C’, DOUGLAS GARDENS SOUTH REVISED, THENCE RUN NORTH 00°23’00” WEST, ALONG THE EAST LINE OF SAID TRACT ‘C’, FOR A DISTANCE OF 180.57 FEET; THENCE CONTINUE NORTH 00°23’00” WEST, ALONG THE EAST LINE OF SAID TRACT ‘C’, SAID LINE BEING COINCIDENT WITH THE EAST LINE OF SAID TRACT ‘B’, DOUGLAS GARDENS REVISED, FOR A DISTANCE OF 234.60 FEET; THENCE RUN NORTH 89°28’15” WEST, ALONG THE NORTH LINE OF SAID TRACT ‘B’, FOR A DISTANCE OF 155.00 FEET; THENCE RUN SOUTH 52°17’07” WEST FOR A DISTANCE OF 77.49; THENCE RUN SOUTH 00°31’45” WEST, ALONG THE WEST LINE OF SAID TRACT ‘B’, FOR A DISTANCE OF 123.26 FEET TO THE POINT OF BEGINNING OF THE HEREINAFTER DESCRIBED PARCEL OF LAND; THENCE CONTINUE SOUTH 00°31’45” WEST ALONG SAID WEST LINE, FOR A DISTANCE OF 88.74 FEET TO THE SOUTHWEST CORNER OF SAID TRACT ‘B’; THENCE RUN SOUTH 89°28’15” EAST, ALONG THE SOUTH LINE OF SAID TRACT ‘B’, FOR A DISTANCE OF 172.71 FEET; THENCE RUN NORTH 00°32’19” EAST FOR A DISTANCE OF 19.11 FEET; THENCE RUN NORTH 89°27’41” WEST, AT RIGHT ANGLES TO THE PREVIOUS COURSE, FOR A DISTANCE OF 66.40 FEET; THENCE RUN NORTH 00°32’19” EAST, AT RIGHT ANGLES TO THE PREVIOUS COURSE FOR A DISTANCE OF 32.80 FEET; THENCE RUN NORTH 89°27’41” WEST AT RIGHT ANGLES TO THE PREVIOUS COURSE, FOR A DISTANCE OF 38.80 FEET; THENCE RUN NORTH 00°32’19” EAST, AT RIGHT ANGLES TO THE PREVIOUS COURSE, FOR A DISTANCE OF 36.80 FEET; THENCE RUN NORTH 89°27’41” WEST, AT RIGHT ANGLES TO THE PREVIOUS COURSE, FOR A DISTANCE OF 67.52 FEET TO A POINT ON THE WEST LINE OF SAID TRACT ‘B’ AND THE POINT OF BEGINNING.
PARCEL II:
A PORTION OF TRACT ‘C’, DOUGLAS GARDENS SOUTH REVISED, ACCORDING TO THE PLAT THEREOF, RECORDED IN PLAT BOOK 146, PAGE 63 OF THE PUBLIC RECORDS OF MIAMI-DADE COUNTY, FLORIDA, ALSO BEING A PORTION OF TRACT ‘B’, DOUGLAS GARDENS REVISED, ACCORDING TO THE PLAT THEREOF, RECORDED IN PLAT BOOK 123, PAGE 49 OF THE PUBLIC RECORDS OF MIAMI-DADE COUNTY, FLORIDA AND BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
TRACT ‘B’, DOUGLAS GARDENS REVISED, ACCORDING TO THE PLAT THEREOF, RECORDED IN PLAT BOOK 123, AT PAGE 49 OF THE PUBLIC RECORDS OF MIAMI-DADE COUNTY, FLORIDA;
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LESS AND EXCEPT THE HEREIN DESCRIBED PARCEL OF LAND:
COMMENCE AT THE SOUTHEAST CORNER OF SAID TRACT ‘C’, DOUGLAS GARDENS SOUTH REVISED, THENCE RUN NORTH 00°23’00” WEST, ALONG THE EAST LINE OF SAID TRACT ‘C’, FOR A DISTANCE OF 180.57 FEET; THENCE CONTINUE NORTH 00°23’00” WEST, ALONG THE EAST LINE OF SAID TRACT ‘C’, SAID LINE BEING COINCIDENT WITH THE EAST LINE OF SAID TRACT ‘B’, DOUGLAS GARDENS REVISED, FOR A DISTANCE OF 234.60 FEET; THENCE RUN NORTH 89°28’15” WEST, ALONG THE NORTH LINE OF SAID TRACT ‘B’, FOR A DISTANCE OF 155.00 FEET; THENCE RUN SOUTH 52°17’07” WEST FOR A DISTANCE OF 77.49; THENCE RUN SOUTH 00°31’45” WEST, ALONG THE WEST LINE OF SAID TRACT ‘B’, FOR A DISTANCE OF 123.26 FEET TO THE POINT OF BEGINNING OF THE HEREINAFTER DESCRIBED PARCEL OF LAND; THENCE CONTINUE SOUTH 00°31’45” WEST ALONG SAID WEST LINE, FOR A DISTANCE OF 88.74 FEET TO THE SOUTHWEST CORNER OF SAID TRACT ‘B’; THENCE RUN SOUTH 89°28’15” EAST, ALONG THE SOUTH LINE OF SAID TRACT ‘B’, FOR A DISTANCE OF 172.71 FEET; THENCE RUN NORTH 00°32’19” EAST FOR A DISTANCE OF 19.11 FEET; THENCE RUN NORTH 89°27’41” WEST, AT RIGHT ANGLES TO THE PREVIOUS COURSE, FOR A DISTANCE OF 66.40 FEET; THENCE RUN NORTH 00°32’19” EAST, AT RIGHT ANGLES TO THE PREVIOUS COURSE FOR A DISTANCE OF 32.80 FEET; THENCE RUN NORTH 89°27’41” WEST AT RIGHT ANGLES TO THE PREVIOUS COURSE, FOR A DISTANCE OF 38.80 FEET; THENCE RUN NORTH 00°32’19” EAST, AT RIGHT ANGLES TO THE PREVIOUS COURSE, FOR A DISTANCE OF 36.80 FEET; THENCE RUN NORTH 89°27’41” WEST, AT RIGHT ANGLES TO THE PREVIOUS COURSE, FOR A DISTANCE OF 67.52 FEET TO A POINT ON THE WEST LINE OF SAID TRACT ‘B’ AND THE POINT OF BEGINNING.
PARCEL III:
LOTS 5 THRU 16 INCLUSIVE, BLOCK 1, ORCHARD VILLA TRACT THIRD SECTION, ACCORDING TO THE PLAT THEREOF, AS RECORDED IN PLAT BOOK 9, PAGE 30 OF THE PUBLIC RECORDS OF MIAMI-DADE COUNTY, FLORIDA;
LESS THE FOLLOWING DESCRIBED PORTIONS:
THE WEST 10 FEET OF LOTS 10 AND 11; THE NORTH 5 FEET OF LOTS 5, 6, 7, 8 AND 9, AND THE SOUTH 5 FEET OF LOTS 12, 13, 14, 15 AND 16; A PORTION OF LOT 11, BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEGIN AT THE SOUTHEAST CORNER OF SAID LOT 11; THENCE NORTHERLY ALONG THE EAST LINE OF SAID LOT 11 FOR 5 FEET; THENCE WESTERLY ALONG A LINE 5 FEET PARALLEL TO THE SOUTH LINE OF SAID LOT 11 FOR 40.18 FEET TO A POINT OF CURVATURE; THENCE NORTHWESTERLY ALONG THE ARC OF A CURVE CONCAVE TO THE NORTHEAST WITH A RADIUS OF 25.00 FEET A DISTANCE OF 39.09 FEET TO A POINT OF TANGENCY; THENCE SOUTH ALONG THE TANGENT OF SAID CURVE AND THE EAST RIGHT OF WAY LINE OF NORTH MIAMI AVENUE AS IT NOW EXIST FOR 5.00 FEET TO A POINT OF CURVATURE; THENCE
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SOUTHEASTERLY ALONG THE ARC OF A CURVE CONCAVE TO THE NORTHEAST WITH A RADIUS OF 25.00 FEET A DISTANCE OF 39.09 FEET TO A POINT OF TANGENCY; THENCE EAST ALONG THE SOUTH LINE OF SAID LOT 11 A DISTANCE OF 40.18 FEET TO THE POINT OF BEGINNING;
AND LESS A PORTION OF LOT 10, BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
COMMENCING AT THE INTERSECTION OF THE CENTERLINES OF NORTH MIAMI AVENUE AND N.E. 53RD STREET (AS THEY NOW EXIST); THENCE S89°57’58”E, ALONG THE CENTERLINE OF SAID N.E. 53RD STREET, FOR 50.32 FEET; THENCE S00°02’02”E, FOR 20.00 FEET TO A POINT ON THE SOUTH RIGHT-OF-WAY LINE OF SAID N.E. 53RD STREET AND THE POINT OF BEGINNING; THENCE S89°57’58”E, ALONG SAID SOUTH RIGHT-OF-WAY LINE OF SAID N.E. 53RD STREET, FOR 49.82 FEET; THENCE S00°22’21”E, ALONG A PORTION OF THE EAST LINE OF SAID LOT 10, FOR 5.00 FEET; THENCE N89°57’58”W, FOR 39.82 FEET TO A POINT OF CURVATURE OF A CIRCULAR CURVE TO THE LEFT HAVING A RADIUS OF 25.00 FEET; THENCE SOUTHWESTERLY ALONG THE ARC OF SAID CURVE HAVING A CENTRAL ANGLE OF 90°24’23”, FOR AN ARC LENGTH OF 39.45 FEET TO A POINT OF CUSP, SAID POINT ALSO BEING A POINT ON THE EAST RIGHT-OF-WAY LINE OF SAID NORTH MIAMI AVENUE; THENCE N00°22’21”W, ALONG SAID EAST RIGHT- OF-WAY LINE OF SAID NORTH MIAMI AVENUE, FOR 25.07 FEET TO A POINT ON THE ARC OF A CIRCULAR CURVE TO THE RIGHT HAVING A RADIUS OF 25.00 FEET; THENCE NORTHEASTERLY ALONG THE ARC OF SAID CURVE HAVING A CENTRAL ANGLE OF 37°16’35”, FOR AN ARC LENGTH OF 16.26 FEET TO THE POINT OF BEGINNING; ALL IN SAID BLOCK 1.
AND FURTHER LESS AND EXCEPT THAT PORTION OF LOT 11 IN BLOCK 1 OF ORCHARD VILLA TRACT THIRD SECTION, ACCORDING TO THE PLAT THEREOF RECORDED IN PLAT BOOK 9, AT PAGE 30, AND DESCRIBED IN FINAL JUDGMENT AS TO PARCEL NO. 51 PURSUANT TO EMINENT DOMAIN PROCEEDINGS (CIRCUIT COURT CASE NO. 67-11163) RECORDED IN OFFICIAL RECORDS BOOK 5903, PAGE 684, AND BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
THAT PART OF SAID LOT 11 WHICH LIES WITHIN THE EXTERNAL AREA FORMED BY A 25.00 RADIUS ARC, CONCAVE TO THE NORTHEAST, TANGENT TO THE SOUTH LINE OF SAID LOT 11, AND TANGENT TO A LINE THAT IS 10.00 FEET EAST OF AND PARALLEL TO THE WEST LINE OF SAID LOT 11.
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EXHIBIT B
EXISTING LIENS
1.� Mortgage and Security Agreement executed by Miami Jewish Health Systems, Inc., in favor of the City of Miami recorded December 5, 2011 in Official Records Book 27915, Page 3110 of Public Records of Miami-Dade County, Florida.
2.� UCC-1 Financing Statement in favor of U.S. Bank Equipment Finance filed with the Florida Secured Transaction Registry on September 6, 2012 as File No. 201207466431.
3.� UCC-1 Financing Statement in favor of U.S. Bank Equipment Finance filed with the Florida Secured Transaction Registry on September 6, 2012 as File No. 20120746644X.
4.� UCC-1 Financing Statement in favor of U.S. Bank Equipment Finance filed with the Florida Secured Transaction Registry on January 4, 2013 as File No. 201308183907.
5.� UCC-1 Financing Statement in favor of GreatAmerica Financial Services Corporation filed with the Florida Secured Transaction Registry on February 20, 2014 as File No. 201400787864.
6.� UCC-1 Financing Statement in favor of U.S. Bank Equipment Finance filed with the Florida Secured Transaction Registry on May 29, 2015 as File No. 201503873283.
7.� UCC-1 Financing Statement in favor of U.S. Bank Equipment Finance filed with the Florida Secured Transaction Registry on July 22, 2015 as File No. 201504474420.
8.� UCC-1 Financing Statement in favor of Milner Document Products, Inc. filed with the Florida Secured Transaction Registry on November 24, 2015 as File No. 201505811013.
9.� [UCC-1 Financing Statement in favor of SunTrust Bank filed with the Florida Secured Transaction Registry on January [ ], 2017 as File No. [ ]].
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EXHIBIT C
TITLE EXCEPTIONS
1.� Taxes and assessments for the year 2017 and subsequent years, which are not yet due and payable.
2.� Any lien provided by County Ordinance or by Chapter 159, Florida Statutes, in favor of any city, town, village or port authority for unpaid service charges for service by any water, sewer or gas system supplying the insured land.
3.� Restrictions, covenants, conditions and easements as contained on the Plat of DOUGLAS GARDENS REVISED, recorded in Plat Book 123, Page 49, of the Public Records of Miami-Dade County, Florida.
4.� Restrictions, covenants, conditions and easements as contained on the Plat of DOUGLAS GARDENS WEST, recorded in Plat Book 140, Page 52, of the Public Records of Miami-Dade County, Florida.
5.� Restrictions, covenants, conditions and easements as contained on the Plat of DOUGLAS GARDENS SOUTH, recorded in Plat Book 142, Page 36, of the Public Records of Miami-Dade County, Florida.
6.� Restrictions, covenants, conditions and easements as contained on the Plat of DOUGLAS GARDENS SOUTH REVISED, recorded in Plat Book 146, Page 63, of the Public Records of Miami-Dade County, Florida.
7.� Restrictions, covenants, conditions and easements as contained on the Plat of DOUGLAS GARDENS, recorded in Plat Book 104, Page 49, of the Public Records of Miami-Dade County, Florida (as to Tracts “C” and “D” of DOUGLAS GARDENS SOUTH REVISED).
8.� Restrictions, covenants, conditions and easements as contained on the Plat of DOUGLAS GARDENS AMENDED, recorded in Plat Book 110, Page 68, of the Public Records of Miami-Dade County, Florida (as to Tracts “C” and “D” of DOUGLAS GARDENS SOUTH REVISED).
9.� Easement(s) in favor of Metropolitan Dade County set forth in instrument(s) recorded in Official Records Book 12631, Page 780 (as to Tracts “C” and “D” of DOUGLAS GARDENS SOUTH REVISED).
10.� Easement(s) in favor of Metropolitan Dade County set forth in instrument(s) recorded in Official Records Book 12631, Page 775.
11.� Easement(s) in favor of Metropolitan Dade County set forth in instrument(s) recorded in Official Records Book 12631, Page 777.
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12.� Easement(s) in favor of Metropolitan Dade County set forth in instrument(s) recorded in Official Records Book 12631, Page 783.
13.� Easement(s) in favor of Florida Power & Light Company set forth in instrument(s) recorded in Official Records Book 12705, Page 1976.
14.� Easement(s) in favor of Metropolitan Dade County set forth in instrument(s) recorded in Official Records Book 13673, Page 1112.
15.� Easement(s) in favor of Metropolitan Dade County set forth in instrument(s) recorded in Official Records Book 15055, Page 2031.
16.� Terms, conditions, and provisions of that certain Covenant, recorded in Official Records Book 15105, Page 1636.
17.� Terms, conditions, and provisions of Unity of Title, recorded in Official Records Book 15105, Page 1640.
18.� Terms, conditions, and provisions of Unity of Title, recorded in Official Records Book 15139, Page 2701, as affected by that certain Partial Release of Unity of Title recorded in Official Records Book 15439, Page 2251.
19.� Easement(s) in favor of Florida Power & Light Company set forth in instrument(s) recorded in Official Records Book 11036, Page 585.
20.� Terms, conditions, and provisions of Lease Agreement by and between Miami Jewish Home and Hospital for the Aged, Inc., and City of Miami, Florida Health Facilities Authority, recorded in Official Records Book 12051, Page 2574.
21.� Terms, conditions, and provisions of of that certain Sub-Lease Agreement by and between City of Miami, Health Facilities Authority and Miami Jewish Home and Hospital for the Aged, Inc., recorded in Official Records Book 12051, Page 2581.
22.� Terms, conditions, and provisions of that certain Agreement Relating to Water and Sewer Facilities, recorded in Official Records Book 15105, Page 1644, as amended by instruments recorded in Official Records Book 16143, Page 3385 and in Official Records Book 17383, Page 4149.
23.� Terms, conditions, easements and provisions of Grant of Easement in favor of Metropolitan Miami-Dade County, recorded in Official Records Book 15883, Page 2533.
24.� Terms, conditions, easements and restrictions of that Declaration of Covenants, Conditions and Restrictions, recorded in Official Records Book 17496, Page 2731, as amended by First Amendment To Declaration of Covenants, Conditions and Restrictions, recorded in Official Records Book 27487, Page 3363.
25.� Terms, conditions, easements and provisions of Grant of Easement in favor of Metropolitan Miami-Dade County, recorded in Official Records Book 18268, Page 2420.
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26.� Terms, conditions, easements and provisions of Traffic Signal Easement, recorded in Official Records Book 22478, Page 843.
27.� Terms, conditions, easements and provisions of that certain Traffic Signal Easement in favor of Miami-Dade County, recorded in Official Records Book 22478, Page 848.
28.� Easement granted to BellSouth Telecommunications Inc., recorded November 15, 2005 in Official Records Book 23960, Page 1883.
29.� Declaration of Restrictive Covenants recorded March 24, 2008 in Official Records Book 26284, Page 3920.
30.� Unity of Title recorded July 23, 2008 in Official Records Book 26492, Page 4658.
31.� Declaration of Restrictive Covenants by Miami Jewish Health Systems, Inc., recorded December 5, 2011 in Official Records Book 27915, Page 3133 and Consent of Mortgagee recorded in Official Records Book 27915, Page 3126.
32.� Affordability Regulatory Agreement between Miami Jewish Health Systems, Inc., and the City of Miami, Florida, recorded December 12, 2011 in Official Records Book 27924, Page 76.
33.� Rights of tenants occupying all or part of the insured land under unrecorded leases or rental agreements.
34.� Resolution No. 08-037 and 08-038 of the Miami Zoning Board recorded in Official Records Book 26522, Page 1630 and Official Records Book 26522, Page 1637.
35.� Survey prepared by Daniel C. Fortin, LS2853 for Fortin, Leavy, Skiles, Inc., under Job No. 161395 dated December 2, 2016 and plotted December 15, 2016 shows the following:
(a)� Wooden fence located upon subject lands along West boundary of Tract E (Plat Book 123, Page 49). (Sheet 1 of 7)
(b)� Wooden fence and chain link fence located upon 10’ Utility Easement along West boundary of Tract E (Plat Book 123, Page 49). (Sheet 1 of 7)
(c)� “Harold & Patricia Toppel Center For Life Enhancement” 3-story building located upon 12’ Water Easement (Official Records Book 15055, Page 2031), 15’ x 32’ Easement (Official Records Book 12631, Page 777), 15’ Easement (Official Records Book 12631, Page 775) and 15’ Sanitary Easement (Official Records Book 15055, Page 2031). (Sheet 1 of 7)
(d)� Brick walkways, wall benches and statue on concrete platform located upon 15’ Easement (Official Records Book 12631, Page 775) and West of “Sam & Isabel Way” 1-story building. (Sheet 2 of 7)
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(e)� Brick walkways and wall benches located upon Easement (Official Records Book 12631, Page 783), 12’ Water Easement (Official Records Book 15055, Page 2031) and 15’ Sanitary Easement (Official Records Book 15055, Page 2031) and West of “Sam & Isabel Way” 1-story building. (Sheet 2 of 7)
(f)� “Irving Cypen Tower” 8 story building and brick walkways located upon 10’ Florida Power & Light Easement (Official Records Book 11036, Page 585). (Sheet 2 of 7)
(g)� “Hazel Cypen Tower” 6-story building located upon 15’ Easement (Official Records Book 12631, Page 780). (Sheet 2 of 7)
(h)� Brick paver drives and 1-story building located upon Easement (Official Records Book 18268, Page 2420) South of “Hazel Cypen Tower”. (Sheet 2 of 7)
(i)� Brick paver drives, median walls and planters located upon 49’ x 44’ Traffic Signal Easement (Official Records Book 22478, Page 843). (Sheet 2 of 7)
(j)� Brick walkways located upon 12’ Easement (Official Records Book 13673, Page 1112) and 12’ Emergency Access Easement (Plat Book 123, Page 49). (Sheet 3 of 7)
(k)� “Central Plant” 1-story building located upon 15’ Utility Easement (Plat Book 123, Page 49). (Sheet 4 of 7)
(l)� Asphalt parking and concrete curbs located upon 15’ Utility Easement (Plat Book 140, Page 52). (Sheet 4 of 7)
(m)� Catch basins, fire hydrants, wells, drains, siamese fire hydrants, cleanouts, manholes, valves, handholes, sanitary sewer and utility line improvements without benefit of known easement.
36.� Notice of Commencement recorded on February 29, 2016 in Official Records Book 29979, Page 4128.
37.� Mortgage and Security Agreement executed by Miami Jewish Health Systems, Inc., in favor of the City of Miami recorded December 5, 2011 in Official Records Book 27915, Page 3110.
All of the above-referenced documents are recorded in the public records of Miami-Date County, Florida.
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MIAMI JEWISH HEALTH SYSTEMS, INC., as an Obligated Group Member and as the Obligated Group Representative
and
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Master Trustee
SUPPLEMENTAL INDENTURE NUMBER 1
DATED AS OF JANUARY 1, 2017
RELATING TO CITY OF MIAMI, FLORIDA HEALTH FACILITIES AUTHORITY
HEALTH FACILITIES REVENUE AND REVENUE REFUNDING BONDS (MIAMI JEWISH HEALTH SYSTEMS, INC. PROJECT),
SERIES 2017
SUPPLEMENTAL INDENTURE NUMBER 1
THIS SUPPLEMENTAL INDENTURE NUMBER 1, dated as of January 1, 2017, between MIAMI JEWISH HEALTH SYSTEMS, INC. (“MJHS”), as an Obligated Group Member and as the Obligated Group Representative (the “Obligated Group Representative”) and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., a national banking association with trust powers (in such capacity, the “Master Trustee”),
W I T N E S S E T H:
WHEREAS, MJHS, Miami Jewish Health Systems Foundation, Inc., and Florida Pace Centers, Inc., as the Initial Members, and the Master Trustee have entered into a Master Trust Indenture dated as of January 1, 2017 (the “Master Trust Indenture”); and
WHEREAS, the City of Miami, Florida Health Facilities Authority (the “Issuer”) has contemporaneously herewith issued its Health Facilities Revenue and Revenue Refunding Bonds (Miami Jewish Health Systems, Inc. Project), Series 2017, in the aggregate principal amount of $44,035,000 (the “Series 2017 Bonds”) under an Indenture of Trust dated as of January 1, 2017 (the “Series 2017 Bond Indenture”), between the Issuer and The Bank of New York Mellon Trust Company, N.A., as trustee (in such capacity, the “Bond Trustee”), to (i) refund the Issuer’s outstanding Health Facilities Revenue Refunding Bonds (Miami Jewish Home and Hospital for the Aged, Inc. Project), Series 2005, and thereby refinance the obligations of MJHS (formerly known as Miami Jewish Home and Hospital for the Aged, Inc.) under a Loan Agreement dated as of August 1, 2005 between the Issuer and MJHS, (ii) refinance a loan from SunTrust Bank to MJHS, (iii) pay a termination payment under an interest rate swap agreement between SunTrust Bank and MJHS, (iv) finance certain capital improvements to the Facilities, (v) fund a debt service reserve fund for the Series 2017 Bonds, and (vi) pay certain costs of issuance of the Series 2017 Bonds; and
WHEREAS, pursuant to a Loan Agreement dated as of January 1, 2017 related to the Series 2017 Bonds (the “Series 2017 Loan Agreement”), between the Issuer and MJHS, the Obligated Group has agreed to issue the Obligation (the “Obligation”) created by this Supplemental Indenture (the “Supplemental Indenture”) to evidence the obligation of the Obligated Group to make the payments required under the Series 2017 Loan Agreement; and
WHEREAS, the Obligated Group Representative is authorized by law and by the Master Trust Indenture, and deems it necessary and desirable, to issue and deliver, on behalf of the Obligated Group, the Obligation pursuant to the Master Trust Indenture and this Supplemental Indenture; and
WHEREAS, pursuant to the terms of the Master Trust Indenture, each of the Obligated Group Members will be jointly and severally liable for payment of the Obligation; and
WHEREAS, all acts and things necessary to make the Obligation authorized by this Supplemental Indenture, when executed by the Obligated Group Representative, on behalf of the Obligated Group, and authenticated and delivered by the Master Trustee as provided in the Master Trust Indenture and this Supplemental Indenture, the valid, binding and legal obligation of the Obligated Group, and to constitute these presents, together with the Master Trust
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Indenture, a valid indenture and agreement according to its terms and the terms of the Master Trust Indenture, have been done and performed and the execution of this Supplemental Indenture and the issue hereunder and under the Master Trust Indenture of the Obligation created by this Supplemental Indenture have in all respects been duly authorized, and the Obligated Group Representative, in the exercise of the legal right and power vested in it, executes this Supplemental Indenture on behalf of the Obligated Group and proposes to make, execute, issue and deliver the Obligation created hereby;
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
That in order to declare the terms and conditions upon which the Obligation authorized hereby is authenticated, issued and delivered, and in consideration of the premises and the purchase and acceptance of the Obligation created hereby by the holder thereof, the Obligated Group Representative, on behalf of the Obligated Group Members, covenants and agrees with the Master Trustee as follows:
ARTICLE I DEFINITION OF TERMS
Section 1.01.� The terms used in this Supplemental Indenture shall, except as otherwise stated herein, have the meanings assigned to them in the Master Trust Indenture.
ARTICLE II SERIES 2017 NOTE
Section 2.01.� There is hereby created as an Obligation under the Master Trust Indenture a promissory note to be known and entitled Miami Jewish Health Systems, Inc. Series 2017 Note (the “Series 2017 Note”). The Series 2017 Note, in the principal amount of $44,035,000, may be executed, authenticated and delivered in accordance with Article II of the Master Trust Indenture.
Section 2.02.� The Series 2017 Note created hereby shall be in the form of a fully registered Obligation without coupons, shall be dated January 25, 2017, shall bear interest from its date on the principal balance thereof in the amount set forth in such Series 2017 Note, payable on the 25th day of each month in each year, and shall be substantially in the following form:
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE STATE SECURITIES OR “BLUE SKY” LAW OF ANY
STATE IN THE UNITED STATES OF AMERICA.
$44,035,000 MIAMI JEWISH HEALTH SYSTEMS, INC.
SERIES 2017 NOTE
MIAMI JEWISH HEALTH SYSTEMS, INC. (“MJHS”), as an obligated group member and the obligated group representative (the “Obligated Group Representative”), on behalf of the Obligated Group (as defined in the Master Trust Indenture, as such term is defined below), for value received, hereby promises to pay to the CITY OF MIAMI, FLORIDA HEALTH
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FACILITIES AUTHORITY (the “Issuer”), or registered assigns, at the Jacksonville, Florida corporate trust office of The Bank of New York Mellon Trust Company, N.A. as Trustee (in such capacity, the “Bond Trustee”), the principal sum of $44,035,000 in installments on the 25th day of each month as set forth on Schedule A attached hereto and incorporated herein, and to pay interest on the unpaid principal balance hereof on the 25th day of each month in the amounts as set forth on Schedule A attached hereto and incorporated herein.
Principal of, premium, if any, and interest on this Note are payable in any coin or currency of the United States of America which, at the respective times of payment, is legal tender for the payment of public and private debts.
The principal hereof, premium, if any, and interest hereon shall be payable in immediately available funds by depositing the same with the Bond Trustee, at or prior to the opening of business on the date the same shall become due and payable, and by giving notice of payment to the Master Trustee, as herein defined, as provided in the Bond Indenture, as herein defined.
This Note is issued in the principal amount of $44,035,000 and is designated as the “Miami Jewish Health Systems, Inc. Series 2017 Note” (the “Note,” and together with all other Obligations issued under the Indenture hereinafter defined, the “Obligations”) issued under and pursuant to Supplemental Indenture Number 1 dated as of January 1, 2017 (the “Supplemental Indenture”), supplementing the Master Trust Indenture, dated as of January 1, 2017 (the “Master Trust Indenture”), among MJHS, Miami Jewish Health Systems Foundation, Inc., and Florida Pace Centers, Inc., as the Initial Members (as defined in the Master Trust Indenture), and The Bank of New York Mellon Trust Company, N.A., as Master Trustee (in such capacity, the “Master Trustee”), and delivered pursuant to a Loan Agreement between the Issuer and MJHS, dated as of January 1, 2017 (the “Loan Agreement”). The Master Trust Indenture, as supplemented by the Supplemental Indenture, is herein called the “Indenture.”
Pursuant to the terms of the Indenture, each of the Obligated Group Members (as defined in the Indenture) described therein will be jointly and severally liable for the payment of this Note and all other Obligations.
This Note is issued for the purpose of securing the payment of the principal of, premium, if any, and interest on the Issuer's Health Facilities Revenue and Revenue Refunding Bonds (Miami Jewish Health Systems, Inc. Project), Series 2017 (the “Series 2017 Bonds”). The Series 2017 Bonds were issued under the laws of the State of Florida, including particularly Part III, Chapter 154, Florida Statutes, Part II, Chapter 159, Florida Statutes, Ordinance No. 79-93 of the City of Miami, Florida, as amended, and other applicable provisions of law (the “Act”), and an Indenture of Trust dated as of January 1, 2017 (the “Bond Indenture”), between the Issuer and the Bond Trustee, for the purposes set forth in the Bond Indenture.
In addition to all payments of the principal of and interest on this Note, the Obligated Group shall pay to the Issuer and its successors and assigns and to the other parties entitled thereto all other amounts due or becoming due under the Loan Agreement, in the amounts and at the times required by the Loan Agreement.
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Copies of the Indenture are on file at the corporate trust office of the Master Trustee and reference is hereby made to the Indenture for the provisions, among others, with respect to the nature and extent of the rights of the holder of this Note, the terms and conditions on which, and the purposes for which, this Note is issued and the rights, duties and obligations of the Obligated Group Members and the Master Trustee under the Indenture, to all of which the holder hereof, by acceptance of this Note, assents. All terms used herein in capitalized form and not otherwise defined herein shall have the meanings ascribed thereto in the Indenture.
Any amounts in any account of the Bond Fund (as defined in the Loan Agreement) at the close of business of the Bond Trustee on the day immediately preceding any payment date on this Note in excess of the aggregate amount then required to be contained in such account of such Bond Fund shall be credited against the payments due by the Obligated Group Representative and the other Obligated Group Members on such next succeeding principal or interest payment date on this Note.
To the extent permitted by, and as provided in, the Indenture, modifications or changes of the Indenture, or of any indenture supplemental thereto, and of the rights and obligations of the Obligated Group Members and of the holders of the Obligation in any particular may be made with the consent of the Master Trustee and the Obligated Group Members and, in certain circumstances, with the consent of the holders of not less than a majority in aggregate principal amount of the Obligation then Outstanding under the Indenture. No such modification or change shall be made which will reduce the percentage of the Obligation, the consent of the holders of which is required to consent to such supplemental indenture, or permit a preference or priority of any Obligation over any other Obligation, or which will affect a change in the times, amount and currency of payment of the principal of, and premium, if any, or interest on any Note or a reduction in the principal amount or redemption price of any Obligation or the rate of interest thereon, without the consent of the holder of such Obligation. Any such consent by the holder of this Note shall be conclusive and binding upon such holder and all future holders and owners hereof irrespective of whether or not any notation of such consent is made upon this Note.
In the manner and with the effect provided in the Indenture, this Note and its principal installments will be subject to prepayment and redemption prior to maturity, in whole at any time, or in part from time to time at the option of the Obligated Group Representative, without penalty, upon payment of a sum, in cash and/or obligations, sufficient, together with any other cash and/or obligations held by the Bond Trustee and available for such purpose, to cause an equal aggregate principal amount of outstanding Series 2017 Bonds to be deemed to have been paid within the meaning of Section 7.01 of the Bond Indenture and to pay all fees and expenses and all Administration Expenses, as defined in the Loan Agreement, accrued and to be accrued to the date of discharge of the Bond Indenture with respect to the Series 2017 Bonds.
Any redemption, either in whole or in part, shall be made upon at least forty-five days' notice in the manner and upon the terms and conditions provided in the Indenture. If this Note shall have been duly called for redemption and payment of the redemption price, together with interest accrued thereon to the date fixed for redemption, shall have been made or provided for, as more fully set forth in the Indenture, interest on this Note shall cease to accrue from the date fixed for redemption, and from and after such date this Note shall be deemed not to be Outstanding, as defined in the Indenture, and shall no longer be entitled to the benefits of the
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Indenture, and the holder hereof shall have no rights in respect of this Note other than payment of the redemption price, together with accrued interest to the date fixed for redemption.
Upon the occurrence of certain Events of Default, the principal of all outstanding Obligations may be declared due and payable, and thereupon shall become due and payable as provided in the Indenture.
The holder of this Note shall have no right to enforce the provisions of the Indenture, or to institute any action to enforce the covenants therein, or to take any action with respect to any default under the Indenture, or to institute, appear in or defend any suit or other proceeding with respect thereto, except as provided in the Indenture.
This Note shall be registered on the register to be maintained by the Master Trustee and this Note shall be transferable only upon said register at said office by the registered owner or by his duly authorized attorney. Such transfer shall be without charge to the holder hereof, but any taxes or other governmental charges required to be paid with respect to the same shall be paid by the holder requesting such transfer as a condition precedent to the exercise of such privilege. Upon any such transfer, the Obligated Group Representative shall execute and the Master Trustee shall authenticate and deliver in exchange for this Note a new registered Note without coupons, registered in the name of the transferee.
The Obligated Group Representative and the other Obligated Group Members, the Master Trustee and any paying agent for the Obligation may deem and treat the person in whose name this Note is registered as the absolute owner hereof for all purposes; and neither the Obligated Group Representative and the other Obligated Group Members, any paying agent, the Master Trustee nor any Obligation registrar shall be affected by any notice to the contrary. All payments made to the registered owner hereof shall be valid and, to the extent of the sum or sums so paid, effectual to satisfy and discharge the liability for moneys payable on this Note.
No covenant or agreement contained in this Note or the Indenture shall be deemed to be a covenant or agreement of any officer, agent or employee of any of the Obligated Group Members in his individual capacity, and neither the Governing Body of any of the Obligated Group Members nor any officer executing this Note shall be liable personally on this Note or be subject to any personal liability or accountability by reason of the issuance of this Note.
This Note shall not be entitled to any benefit under the Indenture, or be valid or become obligatory for any purpose, until this Note shall have been authenticated by execution by the Master Trustee, or its successor as Master Trustee, of the Certificate of Authentication inscribed hereon.
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IN WITNESS WHEREOF, the Obligated Group Representative has caused this Note to be executed in its name and on its behalf by the manual signature of its President/Chief Executive Officer as of January 25, 2017.
MIAMI JEWISH HEALTH SYSTEMS, INC. By: President/Chief Executive Officer
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[Form of Endorsement By Obligated Group Representative]
The undersigned Obligated Group Representative (as defined in the within mentioned Indenture) hereby certifies that, pursuant to the provisions of the Indenture, the obligor on this Note and all other Obligated Group Members referred to and defined in the Indenture are jointly and severally obligated hereon. The Obligated Group Members as of the date of execution and delivery of this Note, including the obligor hereon, are identified on Schedule B attached hereto.
Any Person (as defined in the Indenture) who shall satisfy the conditions set forth in the Indenture and become an Obligated Group Member subsequent to the date of execution and delivery of this Note shall thereupon and thereafter likewise be jointly and severally obligated on this Note, whether or not the name of such Person shall appear on or be added to Schedule B.
If any Person (including the obligor hereon) who is on the date of execution and delivery of this Note, or who shall thereafter become, an Obligated Group Member and thus jointly and severally obligated hereon, shall satisfy the conditions set forth in the Indenture for withdrawal from the Obligated Group and shall withdraw from the Obligated Group pursuant to written release executed by the Master Trustee, such Person shall thereupon and thereafter be released from any further liability or obligation on this Note and under the Indenture, whether or not the name of such person shall appear on or be deleted from Schedule B.
Promptly after any such withdrawal and release, the Master Trustee shall give written notice thereof by mail to each Related Bond Trustee (as defined in the Indenture) and to all other holders of Obligations at their last addresses as they shall appear upon the register maintained as provided in the Indenture. Such notice may set forth, in addition to other matters deemed by the Master Trustee to be properly included therein, a statement that Outstanding Obligations must be presented to the Master Trustee for notation of such withdrawal and release thereon or surrendered to the Master Trustee in exchange for one or more substitute Obligations delivered pursuant to the provisions of the Indenture.
MIAMI JEWISH HEALTH SYSTEMS, INC., as Obligated Group Representative By: President/Chief Executive Officer
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[Form of Master Trustee's Certificate of Authentication]
This Note is one of the Obligations referred to in the aforementioned Master Trust Indenture.
Date of Authentication:
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Master Trustee By: Authorized Signatory
[Form of Assignment to Bond Trustee]
Pay to the order of The Bank of New York Mellon Trust Company, N.A., as Bond Trustee for the owners of the Series 2017 Bonds hereinabove mentioned, without warranty and without recourse against the undersigned except warranty of good title, warranty that the Issuer has not assigned this Note to a person or entity other than the Bond Trustee, and that the original principal amount thereof remains unpaid hereunder.
CITY OF MIAMI, FLORIDA HEALTH FACILITIES AUTHORITY
By: Chair ATTEST: By: Secretary
[Form of Schedule A]
Date Principal Interest Total
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[Form of Schedule B]
Members of the Obligated Group
Name Address for Notices to Each
Miami Jewish Health Systems, Inc. 5200 N.E. Second Avenue Miami Jewish Health Systems Foundation, Inc. Miami, Florida 33137 Florida Pace Centers, Inc. Attention: Chief Financial Officer and
General Counsel
[End of Form of 2017 Note]
ARTICLE III PREPAYMENT; PARTIAL REDEMPTION; MISCELLANEOUS
Section 3.01.� The Series 2017 Note created hereby and its principal installments shall be subject to prepayment, in whole at any time, or in part from time to time, at the option of the Obligated Group Representative, upon payment of a sum, in cash and/or obligations, sufficient, together with any other cash and/or obligations held by the Bond Trustee and available for such purpose, to cause an equal aggregate principal amount of outstanding Series 2017 Bonds to be deemed to have been paid within the meaning of Section 7.01 of the Series 2017 Bond Indenture, and to pay all fees and expenses and all Administration Expenses, as defined in the Series 2017 Loan Agreement, and all fees, costs and expenses of the Master Trustee and the Bond Trustee, accrued and to be accrued to the date of discharge of the Series 2017 Bond Indenture with respect to such Series 2017 Bonds. Any prepayment of the principal of the Series 2017 Note shall be credited against the scheduled principal payment corresponding to the maturity or sinking fund redemption date for the Series 2017 Bonds redeemed with the proceeds of such prepayment.
Section 3.02.� The Series 2017 Note created hereby and its principal installments shall also be subject to prepayment, in whole or in part at any time, at the option of the Obligated Group Representative as elected by the Obligated Group Representative pursuant to Sections 4.12 and 4.13 of the Master Trust Indenture.
Section 3.03.� If the Obligated Group Representative (i) shall have elected to apply the Series 2017 Bonds that have been redeemed or otherwise acquired by the Obligated Group Members or the Issuer and delivered to the Bond Trustee for cancellation by the Bond Trustee, in payment of all or a part of a sinking fund requirement under the Series 2017 Bond Indenture, (ii) shall have delivered written notice to the Issuer and a copy thereof to the Bond Trustee in accordance with the provisions of Section 5.02 of the Series 2017 Bond Indenture, and (iii) the Issuer shall have received a credit against such sinking fund requirement in the amount of 100% of the principal amount of the Series 2017 Bonds thus applied, then the Bond Trustee shall promptly notify the Master Trustee, whereupon the Obligated Group Representative and the other Obligated Group Members shall receive a credit, equal to the credit received by the Issuer, in respect of the payment of principal due on the Series 2017 Note on the same date as the
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sinking fund payment date under the Series 2017 Bond Indenture for the sinking fund requirement in payment of which the Series 2017 Bonds have been applied, and the principal amount of the Series 2017 Note created hereby due on such date will be reduced accordingly.
Section 3.04.� If the Obligated Group Representative shall have complied with the notice requirements of the Series 2017 Loan Agreement, the Series 2017 Note or portion thereof specified in such notice shall become due and payable on the date and at the place stated in such notice at the principal amount thereof, together with interest thereon accrued to the date fixed for prepayment or redemption, and on and after such date fixed for prepayment or redemption (unless the Obligated Group Members shall default in the payment of the Series 2017 Note at the prepayment or redemption price, together with interest accrued to the date fixed for prepayment or redemption) interest on the Series 2017 Note or portion thereof so called for prepayment or redemption shall cease to accrue.
Section 3.05.� In the event of a partial redemption of the Series 2017 Note created hereby pursuant to Section 2.01 hereof, the amount of installments of such Series 2017 Note coming due after such redemption shall be applied against principal instruments in the order provided by the terms of the Series 2017 Loan Agreement.
Section 3.06.� To the extent provided in the Series 2017 Bond Indenture, the Obligated Group Members shall receive a cash credit against the interest obligations on the Series 2017 Note on any interest payment date equal to the difference between amounts required to be paid on any interest payment date and amounts on deposit in the Bond Fund pursuant to the Series 2017 Bond Indenture.
Section 3.07.� The place of payment for the Series 2017 Note shall be the Jacksonville, Florida corporate trust office of The Bank of New York Mellon Trust Company, N.A.
Section 3.08.� Neither MJHS, its successors or assigns shall withdraw as a Member of the Obligated Group while the Series 2017 Note is Outstanding.
Section 3.09.� In the event the Master Trustee, MJHS, the Foundation, PACE, or the Obligated Group Members receive a public records request pursuant to Chapter 119, Florida Statutes, relating to the Master Trust Indenture or the Series 2017 Bonds, such party, as applicable, shall promptly notify the City of Miami, Florida Health Facilities Authority and the custodian of public records at:
Public Records c/o Office of the City Attorney Telephone: 305-416-1800 E-mail: [email protected] Miami Riverside Center, 9th Floor 444 S.W. 2nd Avenue Miami, Florida 33130
Any questions regarding this Section may be directed to the above contact.
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IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed by persons thereunto duly authorized, as of the day and year first written above.
MIAMI JEWISH HEALTH SYSTEMS, INC., as Obligated Group Representative By: President/Chief Executive Officer THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Master Trustee By: Vice President
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CITY OF MIAMI, FLORIDA HEALTH FACILITIES AUTHORITY
TO
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,
AS BOND TRUSTEE
INDENTURE OF TRUST
DATED AS OF JANUARY 1, 2017
CITY OF MIAMI, FLORIDA HEALTH FACILITIES AUTHORITY HEALTH FACILITIES REVENUE AND REVENUE REFUNDING BONDS
(MIAMI JEWISH HEALTH SYSTEMS, INC. PROJECT), SERIES 2017
TABLE OF CONTENTS (This Table of Contents is not a part of this
Indenture of Trust and is only for convenience of reference) Page
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ARTICLE I DEFINITIONS .................................................................................................. 11
Section 1.01. Definitions ............................................................................................. 11 Section 1.02. Recital Incorporation ............................................................................. 11
ARTICLE II AUTHORIZATION, TERMS, EXECUTION AND ISSUANCE OF BONDS .............................................................................................................. 11
Section 2.01. Authorized Amount of Series 2017 Bonds ............................................ 11 Section 2.02. All Bonds Equally and Ratably Secured; Bonds Not an
Obligation of Issuer ............................................................................... 11 Section 2.03. Authorization of Series 2017 Bonds ...................................................... 12 Section 2.04. Execution of Bonds, Signatures ............................................................ 13 Section 2.05. Registration and Exchange of Bonds; Persons Treated as Owners ....... 13 Section 2.06. Lost, Stolen, Destroyed, and Mutilated Bonds ...................................... 14 Section 2.07. Delivery of Series 2017 Bonds .............................................................. 15 Section 2.08. Bond Trustee’s Authentication Certificate ............................................ 15 Section 2.09. Issuance of Additional Bonds ................................................................ 16 Section 2.10. Requirements for Authentication and Delivery of Additional
Bonds ..................................................................................................... 16 Section 2.11. Cancellation and Destruction of Bonds By the Bond Trustee ............... 18 Section 2.12. Book Entry Only System ....................................................................... 18 Section 2.13. Successor Securities Depository; Transfers Outside Book Entry
Only System .......................................................................................... 19 Section 2.14. Payments to Cede & Co ........................................................................ 20
ARTICLE III REVENUES AND FUNDS .............................................................................. 20
Section 3.01. Application of Proceeds of Series 2017 Bonds ..................................... 20 Section 3.02. Creation of the Bond Fund .................................................................... 21 Section 3.03. Payments into the Bond Fund ................................................................ 21 Section 3.04. Use of Moneys in the Principal Account and the Interest Account ...... 22 Section 3.05. Custody of the Bond Fund ..................................................................... 22 Section 3.06. Construction Fund ................................................................................. 22 Section 3.07. Completion Certificate .......................................................................... 23 Section 3.08. Creation of the Reserve Fund ................................................................ 23 Section 3.09. Payments Into the Reserve Fund ........................................................... 23 Section 3.10. Use of Moneys in the Reserve Fund ...................................................... 23 Section 3.11. Custody of the Reserve Fund ................................................................ 24 Section 3.12. Nonpresentment of Bonds ..................................................................... 24 Section 3.13. Bond Trustee’s and Paying Agents’ Fees, Charges, and Expenses ....... 24 Section 3.14. Moneys to be Held in Trust ................................................................... 25 Section 3.15. Repayment to MJHS from the Funds .................................................... 25 Section 3.16. Creation of Rebate Fund; Duties of Bond Trustee; Amounts Held
in Rebate Fund ....................................................................................... 25 Section 3.17. Cost of Issuance Fund ........................................................................... 26
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TABLE OF CONTENTS (continued)
Page
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ARTICLE IV COVENANTS OF THE ISSUER ..................................................................... 26
Section 4.01. Performance of Covenants: Authority .................................................. 26 Section 4.02. Payments of Principal, Premium, If Any, and Interest .......................... 26 Section 4.03. Supplemental Indentures; Recordation of Bond Indenture and
Supplemental Indentures ....................................................................... 27 Section 4.04. Lien of Bond Indenture ......................................................................... 27 Section 4.05. Rights Under the Agreement ................................................................. 27 Section 4.06. Tax Covenants ....................................................................................... 28 Section 4.07. Change in Law ....................................................................................... 28
ARTICLE V REDEMPTION OF BONDS ............................................................................. 28
Section 5.01. Optional Redemption of Series 2017 Bonds ......................................... 28 Section 5.02. Sinking Fund Redemption ..................................................................... 29 Section 5.03. Method of Selection of Bonds in Case of Partial Redemption .............. 30 Section 5.04. Notice of Redemption ............................................................................ 31 Section 5.05. Bonds Due and Payable on Redemption Date; Interest Ceases to
Accrue .................................................................................................... 32 Section 5.06. Cancellation ........................................................................................... 32 Section 5.07. Partial Redemption of Fully Registered Bonds ..................................... 32 Section 5.08. Extraordinary Optional Redemption ..................................................... 32
ARTICLE VI INVESTMENTS ............................................................................................... 33
Section 6.01. Investment of Bond Fund, Construction Fund and Reserve Fund Moneys .................................................................................................. 33
Section 6.02. Allocation and Transfers of Investment Income ................................... 33 Section 6.03. Valuation of Permitted Investments ...................................................... 34
ARTICLE VII DISCHARGE OF BOND INDENTURE .......................................................... 34
Section 7.01. Discharge of the Bond Indenture ........................................................... 34
ARTICLE VIII DEFAULTS AND REMEDIES ........................................................................ 36
Section 8.01. Events of Default ................................................................................... 36 Section 8.02. Remedies on Events of Default ............................................................. 36 Section 8.03. Majority of Bondholders May Control Proceedings ............................. 37 Section 8.04. Rights and Remedies of Bondholders ................................................... 38 Section 8.05. Application of Moneys .......................................................................... 38 Section 8.06. Bond Trustee May Enforce Rights Without Bonds ............................... 40 Section 8.07. Bond Trustee to File Proofs of Claim in Receivership, Etc .................. 40 Section 8.08. Delay or Omission No Waiver .............................................................. 40 Section 8.09. Discontinuance of Proceedings on Default, Position of Parties
Restored ................................................................................................. 41 Section 8.10. Enforcement of Rights ........................................................................... 41 Section 8.11. Undertaking for Costs ............................................................................ 41 Section 8.12. Waiver of Events of Default .................................................................. 41
TABLE OF CONTENTS (continued)
Page
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ARTICLE IX CONCERNING THE BOND TRUSTEE AND PAYING AGENTS ............... 42
Section 9.01. Duties of the Bond Trustee .................................................................... 42 Section 9.02. Fees and Expenses of Bond Trustee and Paying Agent ........................ 46 Section 9.03. Resignation or Replacement of Bond Trustee ....................................... 47 Section 9.04. Conversion, Consolidation or Merger of Bond Trustee ........................ 48 Section 9.05. Designation and Succession of Paying Agent ....................................... 48
ARTICLE X SUPPLEMENTAL INDENTURES AND AMENDMENTS TO THE AGREEMENT .................................................................................................. 48
Section 10.01. Supplemental Indentures Not Requiring Consent of Bondholders ....... 48 Section 10.02. Supplemental Indentures Requiring Consent of Bondholders .............. 49 Section 10.03. Execution of Supplemental Indenture ................................................... 50 Section 10.04. Consent of MJHS .................................................................................. 51 Section 10.05. Amendments, Etc., of the Agreement Not Requiring Consent of
Bondholders ........................................................................................... 51 Section 10.06. Amendments, Etc., of the Agreement Requiring Consent of
Bondholders ........................................................................................... 51
ARTICLE XI MISCELLANEOUS .......................................................................................... 52
Section 11.01. Evidence of Signature of Bondholders and Ownership of Bonds ......... 52 Section 11.02. No Personal Liability ............................................................................. 52 Section 11.03. Limited Obligation ................................................................................ 53 Section 11.04. Parties Interested Herein ........................................................................ 53 Section 11.05. Titles, Headings, Etc .............................................................................. 53 Section 11.06. Severability ............................................................................................ 53 Section 11.07. Governing Law ...................................................................................... 53 Section 11.08. Execution of Counterparts ..................................................................... 53 Section 11.09. Notices ................................................................................................... 53 Section 11.10. Payments Due on Holidays ................................................................... 55 Section 11.11. Public Records ....................................................................................... 55
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INDENTURE OF TRUST
THIS INDENTURE OF TRUST dated as of January 1, 2017, between the CITY OF MIAMI, FLORIDA HEALTH FACILITIES AUTHORITY, a public body corporate and politic and a public instrumentality created and existing under the Constitution and Laws of the State of Florida (the “Issuer”), and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., a national banking association with trust powers having an office in Jacksonville, Florida as Bond Trustee (the “Bond Trustee”), being authorized to accept and execute trusts of the character herein set out,
WITNESSETH:
WHEREAS, under Ordinance No. 79-93 of the City of Miami, Florida (the “City”), as amended, the City created the Issuer pursuant to the Health Facilities Authority Law, Part III of Chapter 154, Florida Statutes, as amended (the “Authority Act”) and the Issuer is a “local agency” as defined in the Florida Industrial Development Financing Act, Part II of Chapter 159, Florida Statutes, as amended (the “Industrial Development Financing Act” and, together with the Authority Act, the “Act”) with the power to assist not-for-profit health care corporations through the issuance of revenue bonds or notes for the purposes of acquiring, constructing, improving or refinancing health care facilities located within the City; and
WHEREAS, the Issuer is further authorized by the Act to make a loan of the proceeds of its bonds in the amount of all or part of the cost of the health facility, health care facility or project for which such bonds have been authorized and, at the option of the Issuer, for the deposit to a reserve fund or reserve funds for such bonds; and
WHEREAS, the execution and delivery of this Indenture of Trust (hereinafter sometimes referred to as the “Bond Indenture”), and the issuance of the bonds hereinafter authorized under this Bond Indenture, pursuant to the provisions of the Act, have been in all respects duly and validly authorized by a resolution duly adopted and approved by the Issuer; and
WHEREAS, the Issuer is authorized by law and deems necessary, in accordance with its powers described above, and has duly authorized and directed the issuance and delivery of its City of Miami, Florida Health Facilities Authority Health Facilities Revenue and Revenue Refunding Bonds (Miami Jewish Health Systems, Inc. Project), Series 2017 (all bonds from time to time outstanding under the terms of this Bond Indenture being hereinafter referred to as the “Bonds”); and
WHEREAS, the proceeds of the Bonds shall be loaned to Miami Jewish Health Systems, Inc. (“MJHS”), a nonprofit corporation organized and existing under the laws of the State of Florida and a qualified health facility under the Act, pursuant to a Loan Agreement dated as of January 1, 2017 (the “Agreement”) between the Issuer and MJHS; and
WHEREAS, to secure the payment of the principal of the Bonds, premium, if any, and the interest thereon and the performance and observance of the covenants and conditions herein contained the Issuer has authorized the execution and delivery of this Bond Indenture; and
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WHEREAS, the Issuer has determined to issue an initial series of Bonds hereunder, designated “City of Miami, Florida Health Facilities Authority Health Facilities Revenue and Revenue Refunding Bonds (Miami Jewish Health Systems, Inc. Project), Series 2017” (hereinafter called the “Series 2017 Bonds”) in the Aggregate Principal Amount of $44,035,000 for the purpose of (i) refunding the Refunded Bonds (as defined in the Agreement) and thereby refinancing the obligations of MJHS (formerly known as Miami Jewish Home and Hospital for the Aged, Inc.) under the Refunded Loan Agreement (as defined in the Agreement), (ii) refinancing the SunTrust Bank Loan (as defined in the Agreement), (iii) paying the Swap Termination Payment (as defined in the Agreement), (iv) financing a Project (as defined in the Agreement), (v) funding the Reserve Fund related to the Series 2017 Bonds, and (iv) paying certain costs of issuance of the Series 2017 Bonds; and
WHEREAS, the Series 2017 Bonds, the Bond Trustee’s Authentication Certificate and the Assignment are to be substantially in the following forms, with such necessary or appropriate variations, omissions, and insertions as permitted or required by this Bond Indenture:
(FORM OF SERIES 2017 BOND)
CITY OF MIAMI, FLORIDA HEALTH FACILITIES AUTHORITY HEALTH FACILITIES REVENUE AND REVENUE REFUNDING BONDS
(MIAMI JEWISH HEALTH SYSTEMS, INC. PROJECT), SERIES 2017
No. R-____ $___________
Interest Rate Maturity Date Delivery Date Cusip No.
_____% July 1, 20__ January 25, 2017 __________ REGISTERED OWNER: PRINCIPAL AMOUNT: ______________________________________________ DOLLARS
CITY OF MIAMI, FLORIDA HEALTH FACILITIES AUTHORITY, a public body corporate and politic of the State of Florida (the “Issuer”), for value received, hereby promises to pay, from the sources described herein, to the registered owner specified above, or registered assigns, the principal amount specified above, on the maturity date specified above (unless this Bond shall have been called for prior redemption) and to pay, from such sources, interest on said sum on January 1 and July 1 of each year, commencing July 1, 2017, at the interest rate specified above, until payment of the principal hereof has been made or provided for. This Bond will bear interest from the most recent interest payment date to which interest has been paid or provided for, or, if no interest has been paid, from the Delivery Date of this Bond.
NEITHER THE STATE OF FLORIDA NOR ANY POLITICAL SUBDIVISION OR AGENCY OF THE STATE OF FLORIDA, SHALL BE LIABLE OR OBLIGATED (GENERALLY, SPECIALLY, MORALLY OR OTHERWISE) TO PAY THE PRINCIPAL OF THIS BOND OR THE PREMIUM, IF ANY, OR INTEREST HEREON, AND NEITHER THE
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3
FAITH AND CREDIT NOR THE TAXING POWER OF THE STATE OF FLORIDA, OR ANY OTHER POLITICAL SUBDIVISION OR AGENCY THEREOF IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON THE BONDS. THE ISSUER HAS NO TAXING POWER.
This Bond and the series of Bonds of which it is a part have been issued under and pursuant to the provisions of Part III, Chapter 154, Florida Statutes, as amended, Part II, Chapter 159, Florida Statutes, as amended, Ordinance No. 79-93 of the City of Miami, Florida, as amended, and other applicable provisions of law (the “Act”). This Bond is a limited obligation of the Issuer payable solely from the revenues, receipts and resources of the Issuer pledged to its payment and not from any other revenues, funds or assets of the Issuer. No owner of any Bonds has the right to compel the Issuer to pay the principal of, interest or redemption premium, if any, on the Bonds.
The principal of and premium, if any, on this Bond are payable upon the presentation and surrender hereof at the Jacksonville, Florida trust office of The Bank of New York Mellon Trust Company, N.A., as trustee, or at the designated corporate trust office of its successor in trust (the “Bond Trustee”) under an Indenture of Trust dated as of January 1, 2017 (the “Bond Indenture”) by and between the Issuer and the Bond Trustee. Interest on this Bond will be paid on each interest payment date (or, if such interest payment date is not a business day, on the next succeeding business day), by check or draft mailed to the person in whose name this Bond is registered (the “registered owner”) in the registration records of the Issuer maintained by the Bond Trustee at the address appearing thereon at the close of business on the last day of the calendar month next preceding such interest payment date (the “Regular Record Date”) or by wire transfer of same day funds upon receipt by the Bond Trustee prior to the Regular Record Date of a written request by a registered owner of $1,000,000 or more in aggregate principal amount of Bonds. The CUSIP number and appropriate dollar amounts for each CUSIP number shall accompany all payments of principal of, redemption premium, if any, and interest on the Bonds. Any such interest not so timely paid or duly provided for shall cease to be payable to the person who is the registered owner hereof at the close of business on the Regular Record Date and shall be payable to the person who is the registered owner hereof at the close of business on a Special Record Date (as defined in the hereinafter defined Agreement), for the payment of any defaulted interest. Such Special Record Date shall be fixed by the Bond Trustee whenever moneys become available for payment of the defaulted interest, and notice of the Special Record Date shall be given to the registered owners of such Bonds not less than ten days prior to such Special Record Date. Alternative means of payment of interest may be used if mutually agreed upon between the owner of this Bond and the Bond Trustee, as provided in the Bond Indenture. All such payments shall be made in lawful money of the United States of America without deduction for the services of the Bond Trustee.
This Bond shall be issued pursuant to a book entry system administered by The Depository Trust Company (together with any successor thereto, “Securities Depository”). The book entry system will evidence beneficial ownership of the Bonds with transfers of ownership effected on the register held by the Securities Depository pursuant to rules and procedures established by the Securities Depository. So long as the book entry system is in effect, transfer of principal, interest and premium payments, and provisions of notices or other communications,
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to beneficial owners of the Bonds will be the responsibility of the Securities Depository as set forth in the Bond Indenture.
This Bond is one of a duly authorized issue of bonds of the Issuer dated January 25, 2017, known as “City of Miami, Florida Health Facilities Authority Health Facilities Revenue and Revenue Refunding Bonds (Miami Jewish Health Systems, Inc. Project), Series 2017” (the “Series 2017 Bonds”) and issued in an Aggregate Principal Amount (as defined in the hereinafter defined Agreement) of $44,035,000 for the purpose of providing funds to be loaned to Miami Jewish Health Systems, Inc., a Florida nonprofit corporation (“MJHS”), to be used to (i) refund the Issuer’s outstanding Health Facilities Revenue Refunding Bonds (Miami Jewish Home and Hospital for the Aged, Inc. Project), Series 2005, and thereby refinance the obligations of MJHS (formerly known as Miami Jewish Home and Hospital for the Aged, Inc.) under a Loan Agreement dated as of August 1, 2005 between the Issuer and MJHS, (ii) refinance the SunTrust Bank Loan (as defined in the Agreement), (iii) pay the Swap Termination Payment (as defined in the Agreement), (iv) finance a Project (as defined in the Agreement), (v) fund the Reserve Fund related to the Series 2017 Bonds, and (vi) pay certain costs of issuance of the Series 2017 Bonds.
To provide for its loan repayment obligations, MJHS has entered into a Loan Agreement dated as of January 1, 2017, between the Issuer and MJHS (the “Agreement”) and issued the Series 2017 Note (the “Series 2017 Note”). The Series 2017 Note is issued pursuant to a Master Trust Indenture dated as of January 1, 2017, among MJHS, Miami Jewish Health Systems Foundation, Inc. and Florida Pace Centers, Inc., as the initial Obligated Group Members (as defined in the hereinafter defined Master Indenture) (collectively, the “Initial Members”), and The Bank of New York Mellon Trust Company, N.A., as master trustee (the “Master Trustee”) and a Supplemental Indenture Number 1, dated as of January 1, 2017 among the Initial Members and the Master Trustee (collectively, the “Master Indenture”). Pursuant to the Master Indenture and a Mortgage, Fixture Filing and Security Agreement dated as of January 1, 2017, from MJHS to the Master Trustee (collectively, the “Mortgage”), the Obligated Group Members have pledged and granted a security interest in, among other things, the Gross Revenues (as defined in the Master Indenture) to the Master Trustee to secure the Series 2017 Note. Additional obligations on a parity with the Series 2017 Note and the other parity notes may be issued pursuant to the Master Indenture subject to the conditions and terms contained therein, and the payments on such additional obligations will also be secured by a pledge of the Gross Revenues and other security.
This Bond and the claims for interest hereon are payable only out of the revenues derived by the Issuer pursuant to the Agreement. The Series 2017 Bonds are issued under and are equally and ratably secured and are entitled to the protection given by the Bond Indenture.
No recourse under or upon any obligation, covenant, or agreement contained in the Bond Indenture, or in any Bond, or under any judgment obtained against the Issuer or by the enforcement of any assessment or by any legal or equitable proceeding by virtue of any constitution or statute or otherwise or under any circumstances, under or independent of the Bond Indenture, shall be had against any director, incorporator, officer, agent, employee, or representative as such, past, present or future, of the Issuer, either directly or through the Issuer or otherwise, for the payment for or to the Issuer or for or to the registered owner of any Bond
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issued thereunder or otherwise, of any sum that may be due and unpaid by the Issuer upon any such Bond.
Neither the directors, incorporators, officers, agents, employees or representatives of the Issuer past, present or future, nor any person executing this Bond or the Bond Indenture, shall be personally liable hereon or thereon or be subject to any personal liability by reason of the issuance hereof and thereof, whether by virtue of any constitution, statute or rule of law or by the enforcement of any assessment or penalty, or otherwise, all such liability being expressly released and waived as a condition of and in consideration for the execution of the Bond Indenture and the issuance of this Bond.
Additional series of Bonds may be issued by the Issuer in accordance with the limitations and conditions of the Bond Indenture, which Bonds shall be in all respects on a parity with the Series 2017 Bonds. Such additional Bonds may be issued at different times, in various principal amounts and denominations, may mature at different times, may bear interest at different rates, may be redeemable at different prices and may otherwise vary as provided in the Bond Indenture. The Series 2017 Bonds and such additional Bonds are herein collectively called the “Bonds.” Reference is hereby made to the Bond Indenture and all indentures supplemental thereto and the Master Indenture for a description of the revenues pledged, the nature and extent of the security, the rights, duties, and obligations of the Issuer, the Bond Trustee and the owners of the Bonds, and the terms and conditions upon which the Bonds are, and are to be, secured.
The Series 2017 Bonds maturing on or after July 1, 2028 are subject to optional redemption prior to maturity by the Issuer, at the written direction of MJHS, on or after July 1, 2027, at any time as a whole or in part by lot, at a redemption price equal to 100% of the principal amount of the Series 2017 Bonds to be redeemed, without redemption premium, plus accrued interest to the redemption date.
The Series 2017 Bonds maturing on July 1, 2038 are subject to mandatory sinking fund redemption at a redemption price equal to the principal amount thereof plus accrued interest to the redemption date. As and for a sinking fund for the redemption of Series 2017 Bonds maturing on July 1, 2038, the Issuer shall cause to be deposited into the Principal Account of the Bond Fund a sum which is sufficient to redeem on July 1 of each of the following years (after credit as provided below) the following principal amounts of Series 2017 Bonds maturing on July 1, 2038, plus accrued interest to the redemption date:
Year Amount
2033 $1,275,000 2034 1,340,000 2035 1,410,000 2036 1,480,000 2037 1,555,000 2038* 1,635,000
_________________ *Maturity
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The Series 2017 Bonds maturing on July 1, 2046 are subject to mandatory sinking fund redemption at a redemption price equal to the principal amount thereof plus accrued interest to the redemption date. As and for a sinking fund for the redemption of Series 2017 Bonds maturing on July 1, 2046, the Issuer shall cause to be deposited into the Principal Account of the Bond Fund a sum which is sufficient to redeem on July 1 of each of the following years (after credit as provided below) the following principal amounts of Series 2017 Bonds maturing on July 1, 2046, plus accrued interest to the redemption date:
Year Amount
2039 $1,720,000 2040 1,810,000 2041 1,900,000 2042 2,000,000 2043 2,100,000 2044 2,205,000 2045 2,320,000 2046* 2,440,000
_________________ *Maturity
At the option of MJHS to be exercised by delivery of a written certificate to the Bond Trustee on or before the forty fifth day next preceding any sinking fund redemption date, it may (i) deliver to the Bond Trustee for cancellation Series 2017 Bonds or portions thereof of the same maturity, in an Aggregate Principal Amount desired by MJHS or (ii) specify a principal amount of Series 2017 Bonds or portions thereof of the same maturity, which prior to said date have been redeemed (otherwise than through the operation of the sinking fund) and canceled by the Bond Trustee at the request of MJHS and not theretofore applied as a credit against any sinking fund redemption obligation.
The Bonds shall be subject to optional redemption by the Issuer at the direction of MJHS prior to their scheduled maturities, in whole or in part at a redemption price equal to the principal amount thereof plus accrued interest from the most recent interest payment date to the redemption date on any date following the occurrence of any of the following events:
(1)� in case of damage or destruction to, or condemnation of, any property, plant, and equipment of any Obligated Group Member, to the extent that the net proceeds of insurance or condemnation award exceed the Threshold Amount (as defined in the Master Indenture) and MJHS has determined not to use such net proceeds or award to repair, rebuild or replace such property, plant, and equipment; or
(2)� as a result of any changes in the Constitution or laws of the State of Florida or of the United States of America or of any legislative, executive, or administrative action (whether state or federal) or of any final decree, judgment, or order of any court or administrative body (whether state or federal), the obligations of MJHS under the Agreement have become, as established by an Opinion of Counsel, void or unenforceable in each case in any material respect in accordance with the intent and purpose of the parties as expressed in the Agreement.
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If less than all Series 2017 Bonds are to be optionally redeemed, MJHS may select the maturities eligible for redemption which are to be redeemed. If less than all Series 2017 Bonds of a single maturity are to be redeemed, the selection shall be made by the Securities Depository or by lot by the Bond Trustee. Notice of the call for any redemption shall be given by the Bond Trustee by sending a copy of the redemption notice by mail not more than 60 nor less than 30 days prior to the redemption date to the registered owner of each Series 2017 Bond to be redeemed as shown on the registration records kept by the Bond Trustee, as provided in the Bond Indenture. All Series 2017 Bonds or portions thereof called for redemption will cease to bear interest after the specified redemption date, provided funds for their payment are on deposit at the place of payment at that time.
The Series 2017 Bonds are issuable as fully registered Bonds in denominations of $5,000 and any integral multiple thereof and are exchangeable for an equal Aggregate Principal Amount of fully registered Series 2017 Bonds of the same maturity of other authorized denominations at the aforesaid office of the Bond Trustee but only in the manner and subject to the limitations and on payment of the charges provided in the Bond Indenture.
This Bond is fully transferable by the registered owner hereof in person or by his or her duly authorized attorney on the registration books kept at the designated office of the Bond Trustee upon surrender of this Bond together with a duly executed written instrument of transfer satisfactory to the Bond Trustee. Upon such transfer a new fully registered Series 2017 Bond of authorized denomination or denominations for the same Aggregate Principal Amount and maturity will be issued to the transferee in exchange herefor, all upon payment of the charges and subject to the terms and conditions set forth in the Bond Indenture.
The Bond Trustee will not be required to transfer or exchange any Series 2017 Bond after the mailing of notice calling such Series 2017 Bond or any portion thereof for redemption has been given as herein provided, nor during the period beginning at the opening of business 15 days before the day of mailing by the Bond Trustee of a notice of prior redemption and ending at the close of business on the day of such mailing.
The Issuer and the Bond Trustee may deem and treat the person in whose name this Bond is registered as the absolute owner hereof for the purpose of making payment (except to the extent otherwise provided hereinabove and in the Bond Indenture with respect to Regular and Special Record Dates for the payment of interest) and for all other purposes, and neither the Issuer nor the Bond Trustee shall be affected by any notice to the contrary. The principal of, premium, if any, and interest on this Bond shall be paid free from and without regard to any equities between MJHS and the original or any intermediate owner hereof, or any setoffs or counterclaims.
The owner of this Bond shall have no right to enforce the provisions of the Bond Indenture or to institute action to enforce the covenants therein, or to take any action with respect to any event of default under the Bond Indenture, or to institute, appear in or defend any suit or other proceedings with respect thereto, except as provided in the Bond Indenture. In case an event of default under the Bond Indenture shall occur, the principal of all of the Bonds at any such time Outstanding under the Bond Indenture may be declared or may become due and payable, upon the conditions and in the manner and with the effect provided in the Bond
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Indenture. The Bond Indenture provides that such declaration may in certain events be waived by the Bond Trustee or the owners of a requisite principal amount of the Bonds Outstanding under the Bond Indenture.
To the extent permitted by, and as provided in, the Bond Indenture, modifications or amendments of the Bond Indenture, or of any indenture supplemental thereto, and of the rights and obligations of the Issuer and of the owners of the Bonds may be made with the consent of the Issuer and the Bond Trustee and, in certain instances, of not less than a majority in Aggregate Principal Amount of the Bonds then Outstanding; provided, however, that no such modification or amendment shall be made which will affect the terms of payment of the principal of, premium, if any, or interest on any of the Bonds, which are unconditional. Any such consent by the owner of this Bond shall be conclusive and binding upon such owner and upon all future owners of this Bond and of any Bond issued upon the transfer or exchange of this Bond whether or not notation of such consent is made upon this Bond.
This Bond shall not be entitled to any benefit under the Bond Indenture, or any indenture supplemental thereto, or become valid or obligatory for any purpose until the Bond Trustee shall have manually signed the certificate of authentication hereon.
This Bond is and has all the qualities and incidents of a negotiable instrument under the law merchant act and the Uniform Commercial Code – Investment Securities Law of the State of Florida.
IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts, conditions and things required to exist, happen and be performed precedent to and in the execution and delivery of the Bond Indenture and issuance of this Bond do exist, have happened and have been performed in due time, form and manner as required by law.
IN WITNESS WHEREOF, the City of Miami, Florida Health Facilities Authority has caused this Bond to be executed with the manual or facsimile signatures of its Chair and attested by the manual or facsimile signature of its Secretary, and its seal to be hereto affixed or printed, all as of the date set forth above.
CITY OF MIAMI, FLORIDA HEALTH FACILITIES AUTHORITY
(SEAL)
By: Chair
ATTEST: Secretary
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(FORM OF TRUSTEE’S CERTIFICATE OF AUTHENTICATION)
This is one of the Series 2017 Bonds referred to in the within mentioned Bond Indenture.
Date of Authentication: THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,
as Bond Trustee By: Authorized Signatory
(END OF FORM OF TRUSTEE’S CERTIFICATE OF AUTHENTICATION)
[FORM OF ASSIGNMENT]
ASSIGNMENT
For value received, the undersigned hereby sells, assigns and transfers unto ________________________________ the within Bond, and does hereby irrevocably constitute and appoint ________________________________ attorney to transfer such Bond on the books kept for registration and transfer of the within Bond, with full power of substitution in the premises.
Date: NOTICE: The signature to this Assignment
must correspond with the name as it appears upon the face of the within Bond in every particular, without enlargement or alteration or any change whatsoever.
Signature Guaranteed By: Authorized Signatory NOTE: The signature to this Assignment must be guaranteed by a financial institution that is a member of the Securities Transfer Agents Medallion Program (“STAMP”), the Stock Exchange Medallion Program (“SEMP”) or the New York Stock Exchange, Inc. Medallion Signature Program (“MSP”).
* * * [END OF SERIES 2017 BOND FORM] * * *
WHEREAS, all things necessary to make the Series 2017 Bonds, when authenticated by the Bond Trustee and issued as in this Bond Indenture provided, the valid, binding, and legal obligations of the Issuer and to constitute this Bond Indenture a valid, binding, and legal
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instrument for the security of the Bonds in accordance with its terms, have been done and performed
NOW, THEREFORE, THIS INDENTURE OF TRUST WITNESSETH:
That the Issuer, in consideration of the premises and of the mutual covenants herein contained and of the purchase and acceptance of the Series 2017 Bonds by the owners thereof and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, in order to secure the payment of the principal of, premium, if any, and interest on all Bonds at any time Outstanding under this Bond Indenture, according to their tenor and effect, and to secure the performance and observance of all the covenants and conditions in the Bonds and herein contained, and to declare the terms and conditions upon and subject to which the Bonds are issued and secured, has executed and delivered this Bond Indenture and has granted, bargained, sold, warranted, alienated, remised, released, conveyed, assigned, pledged, set over, and confirmed, and by these presents does grant, bargain, sell, warrant, alien, remise, release, convey, assign, pledge, set over, and confirm unto The Bank of New York Mellon Trust Company, N.A., as trustee, and to its successors and assigns forever, all and singular the following described property, franchises, and income:
A.� All of the Issuer’s right, title and interest in and to any Note delivered by MJHS to the Issuer pursuant to the Agreement; and
B.� All of the Issuer’s right, title and interest in and to the Agreement (except for the rights of the Issuer to receive payments, if any, under Sections 5.07, 7.05, and 9.05 of the Agreement), together with all powers, privileges, options and other benefits of the Issuer contained in the Agreement; provided, however, that nothing in this clause shall impair, diminish or otherwise affect the Issuer’s obligations under the Agreement or, except as otherwise provided in this Bond Indenture, impose any such obligations on the Bond Trustee; and
C.� Amounts on deposit from time to time in the Bond Fund, Reserve Fund and Construction Fund, but excluding the Rebate Fund (all as defined in the Agreement), subject to the provisions of this Bond Indenture permitting the application thereof for the purposes and on the terms and conditions set forth herein; and
D.� Any and all property of every kind or description which may from time to time hereafter be sold, transferred, conveyed, assigned, hypothecated, endorsed, deposited, pledged, mortgaged, granted or delivered to, or deposited with the Bond Trustee as additional security by the Issuer or anyone on its part or with its written consent, or which pursuant to any of the provisions hereof or of the Agreement or any Note may come into the possession of or control of the Bond Trustee or a receiver appointed pursuant to Article VIII hereof, as such additional security (except amounts held in the Rebate Fund); and the Bond Trustee is hereby authorized to receive any and all such property as and for additional security for the payment of the Bonds, and to hold and apply all such property subject to the terms hereof.
TO HAVE AND TO HOLD the same with all privileges and appurtenances hereby conveyed and assigned, or agreed or intended to be, to the Bond Trustee and its successors in said trust and assigns forever;
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IN TRUST, NEVERTHELESS, upon the terms herein set forth for the equal and proportionate benefit, security, and protection of all owners of the Bonds issued under and secured by this Bond Indenture without privilege, priority, or distinction as to the lien or otherwise of any of the Bonds over any other of the Bonds;
PROVIDED, HOWEVER, that if the Issuer, its successors or assigns, shall pay, or cause to be paid, the principal of the Bonds and the premium, if any, and the interest due or to become due thereon, at the times and in the manner mentioned in the Bonds according to the true intent and meaning thereof, and shall cause the payments to be made into the Bond Fund as hereinafter required or shall provide, as permitted hereby, for the payment thereof by depositing with the Bond Trustee the entire amount due or to become due hereon, or certain securities as herein permitted and shall keep, perform, and observe all the covenants and conditions pursuant to the terms of this Bond Indenture to be kept, performed, and observed by it, and shall pay or cause to be paid to the Bond Trustee all sums of money due or to become due to it in accordance with the terms and provisions hereof, then upon such final payments this Bond Indenture and the rights hereby granted shall cease, determine, and be void; otherwise this Bond Indenture to be and remain in full force and effect.
THIS BOND INDENTURE FURTHER WITNESSETH and it is expressly declared that all Bonds issued and secured hereunder are to be issued, authenticated, and delivered and all said rights hereby pledged and assigned are to be dealt with and disposed of under, upon, and subject to the terms, conditions, stipulations, covenants, agreements, trusts, uses, and purposes as hereinafter expressed, and the Issuer has agreed and covenanted, and does hereby agree and covenant, with the Bond Trustee and with the respective owners from time to time of the Bonds as follows:
ARTICLE I DEFINITIONS
Section 1.01.� Definitions. All defined words and phrases used in this Bond Indenture shall have the meaning given and ascribed to such words and phrases in Article I of the Agreement.
Section 1.02.� Recital Incorporation. The recitals set forth in the beginning of this Indenture are hereby incorporated herein.
ARTICLE II AUTHORIZATION, TERMS, EXECUTION AND ISSUANCE OF BONDS
Section 2.01.� Authorized Amount of Series 2017 Bonds. No Series 2017 Bonds may be issued under this Bond Indenture except in accordance with this Article. The total original principal amount of Series 2017 Bonds that may be issued hereunder is hereby expressly limited to $44,035,000, except as provided in Section 2.06 hereof.
Section 2.02.� All Bonds Equally and Ratably Secured; Bonds Not an Obligation of Issuer. All Bonds issued under this Bond Indenture and at any time Outstanding shall in all respects be equally and ratably secured hereby, without preference, priority, or distinction on account of the date or dates or the actual time or times of the issuance or maturity of the Bonds,
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so that all Bonds at any time issued and Outstanding hereunder shall have the same right, lien, and preference under and by virtue of this Bond Indenture, and shall all be equally and ratably secured hereby. The Bonds shall be payable solely out of the revenues and other security pledged hereby and shall not constitute an indebtedness of the Issuer within the meaning of any state constitutional provision or statutory limitation and shall never constitute nor give rise to a pecuniary liability of the Issuer.
Section 2.03.� Authorization of Series 2017 Bonds.
(a)� There is hereby authorized to be issued hereunder and secured hereby an issue of bonds designated as the “City of Miami, Florida Health Facilities Authority Health Facilities Revenue and Revenue Refunding Bonds (Miami Jewish Health Systems, Inc. Project), Series 2017.” The Series 2017 Bonds shall be numbered consecutively upward from R-1.
(b)� The Series 2017 Bonds shall bear interest from the most recent interest payment date for which interest has been paid or provided for, or, if no interest has been paid, from the Delivery Date of the Series 2017 Bond. The Series 2017 Bonds shall bear interest on the basis of a 360 day year composed of twelve 30 day months payable each January 1 and each July 1, beginning July 1, 2017, at the rates per annum and shall mature on July 1 in the years and principal amounts as follows:
Year Principal Amount Interest Rate
2017 $ 385,000 1.500% 2018 895,000 2.250 2019 920,000 2.500 2020 940,000 5.000 2021 990,000 5.000 2022 1,035,000 5.000 2023 1,090,000 5.000 2024 1,145,000 5.000 2025 1,200,000 5.000 2026 1,260,000 5.000 2027 1,000,000 5.000 2027 325,000 4.000 2028 1,385,000 5.000 2029 1,455,000 5.000 2030 1,530,000 5.000 2031 1,605,000 5.000 2032 1,685,000 5.000 2038* 8,695,000 5.125 2046* 16,495,000 5.125
*Term bond.
(c)� Series 2017 Bonds shall be issued in Authorized Denominations and shall be dated the Delivery Date.
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The Series 2017 Bonds are subject to prior redemption as herein set forth and shall be substantially in the form and tenor hereinabove recited with appropriate variations, omissions, and insertions as are permitted or required by this Bond Indenture.
(d)� The principal of and premium, if any, on the Series 2017 Bonds shall be payable at the Payment Office of the Bond Trustee, or at the designated corporate trust office of its successor, upon presentation and surrender of the Series 2017 Bonds. Payment of interest on any Series 2017 Bond shall be made to the person who is the registered owner thereof at the close of business on the Regular Record Date for such Interest Payment Date by check mailed by the Bond Trustee on such Interest Payment Date to such registered owner at his or her address as it appears on the registration records kept by the Bond Trustee or by wire transfer of same day funds upon receipt by the Bond Trustee prior to the Regular Record Date of a written request by a registered owner of $1,000,000 or more in aggregate principal amount of Bonds. The CUSIP number and appropriate dollar amounts for each CUSIP number shall accompany all payments of principal, premium, if any, and interest on the Series 2017 Bonds. Any such interest not so timely paid or duly provided for shall cease to be payable to the person who is the registered owner of such Series 2017 Bond at the close of business on the Regular Record Date and shall be payable to the person who is the registered owner thereof at the close of business on a Special Record Date for the payment of any such defaulted interest. Such Special Record Date shall be fixed by the Bond Trustee whenever moneys become available for payment of the defaulted interest, and notice of the Special Record Date shall be given to the registered owners of the Series 2017 Bonds not less than ten (10) days prior thereto by first class postage prepaid mail to each such registered owner as shown on the registration records, stating the date of the Special Record Date and the date fixed for the payment of such defaulted interest. Alternative means of payment of interest may be used if mutually agreed upon between the owners of any Series 2017 Bonds and the Bond Trustee. All such payments shall be made in lawful money of the United States of America.
Notwithstanding the foregoing, payments of the principal of and interest on any Bonds that are subject to the book entry system as provided in Article II of this Bond Indenture shall be made in accordance with the rules, regulations and procedures established by the securities depository in connection with the book entry system.
Section 2.04.� Execution of Bonds, Signatures. The Bonds shall be executed on behalf of the Issuer by the manual or facsimile signature of its Chair or Vice Chair and its seal, or a facsimile thereof, shall be thereunto affixed or imprinted and attested by its Secretary or Assistant Secretary. In case any officer who shall have signed any of the Bonds shall cease to hold such office and any of such Bonds shall have been authenticated by the Bond Trustee or delivered or sold, such Bonds with the signatures thereto affixed may, nevertheless, be authenticated by the Bond Trustee, and delivered, and may be sold by the Issuer, as though the person or persons who signed such Bonds had remained in office.
Section 2.05.� Registration and Exchange of Bonds; Persons Treated as Owners. The Issuer shall cause books for the registration and for the transfer of the Bonds as provided in this Bond Indenture to be kept by the Bond Trustee which is hereby appointed the bond registrar
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of the Issuer for the Series 2017 Bonds. Upon surrender for transfer of any fully registered Bond at the Payment Office of the Bond Trustee, duly endorsed for transfer or accomplished by an assignment duly executed by the registered owner or his attorney duly authorized in writing, the Issuer shall execute and the Bond Trustee shall authenticate and deliver in the name of the transferee or transferees a new fully registered Bond or Bonds of a like Aggregate Principal Amount for a like principal amount and maturity.
The Issuer shall execute and the Bond Trustee shall authenticate and deliver Bonds which the Bondholder making the exchange is entitled to receive, bearing numbers not contemporaneously Outstanding. The execution by the Issuer of any fully registered Bond of any denomination shall constitute full and due authorization of such denomination and the Bond Trustee shall thereby be authorized to authenticate and deliver such Bond.
The Bond Trustee shall not be required to transfer or exchange any Bond after the mailing of notice calling such Bond or any portion thereof for redemption has been given as herein provided, nor during the period beginning at the opening of business fifteen days before the day of mailing by the Bond Trustee of a notice of prior redemption and ending at the close of business on the day of such mailing except for Bondholders of $1,000,000 or more in aggregate principal amount of the Series 2017 Bonds.
As to any Bond, the Person in whose name the same shall be registered shall be deemed and regarded as the absolute owner thereof for all purposes, and payment of principal of or interest on any Bond shall be made only to or upon the written order of the registered owner thereof or his legal representative, but such registration may be changed as hereinabove provided. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Bond to the extent of the sum or sums paid.
The Bond Trustee shall require the payment by any Bondholder requesting exchange or transfer of any tax or other governmental charge required to be paid with respect to such exchange or transfer.
Section 2.06.� Lost, Stolen, Destroyed, and Mutilated Bonds. Upon receipt by the Bond Trustee of evidence satisfactory to it of the ownership of and the loss, theft, destruction, or mutilation of any Bond and, in the case of a lost, stolen, or destroyed Bond, of indemnity satisfactory to it, and upon surrender and cancellation of the Bond if mutilated, (i) the Issuer shall execute, and the Bond Trustee shall authenticate and deliver, a new Bond of the same series, date and maturity as the lost, stolen, destroyed or mutilated Bond in lieu of such lost, stolen, destroyed, or mutilated Bond or (ii) if such lost, stolen, destroyed, or mutilated Bond shall have matured or have been called for redemption, in lieu of executing and delivering a new Bond as aforesaid, the Issuer may pay such Bond. Any such new Bond shall bear a number not contemporaneously Outstanding. The applicant for any such new Bond may be required to pay all expenses and charges of the Issuer and of the Bond Trustee in connection with the issue of such new Bond. All Bonds shall be held and owned upon the express condition that, to the extent permitted by law, the foregoing conditions are exclusive with respect to the replacement and payment of mutilated, destroyed, lost, or stolen Bonds, negotiable instruments, or other securities. If, after the delivery of such new Bond, a bona fide purchaser of the original Bond in lieu of which such duplicate Bond was issued presents for payment such original Bond, MJHS or
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the Bond Trustee shall be entitled to recover upon such new Bond from the person to whom it was delivered or any person taking therefrom, except a bona fide purchaser, and shall be entitled to recover upon the security or indemnity provided therefor to the extent of any loss, damage, cost or expense (including attorneys’ fees, costs and expenses) incurred by MJHS or the Bond Trustee in connection therewith.
Section 2.07.� Delivery of Series 2017 Bonds. Upon the execution and delivery of this Bond Indenture, the Issuer shall execute and deliver to the Bond Trustee and the Bond Trustee shall authenticate the Series 2017 Bonds and deliver them to the initial purchasers thereof as directed by the Issuer and as hereinafter in this Section provided.
Prior to the delivery by the Bond Trustee of any of the Series 2017 Bonds there shall be filed with and delivered to the Bond Trustee at least:
(a)� A certified copy of a Resolution of the Issuer authorizing the execution and delivery of the Agreement and this Bond Indenture and the issuance of the Series 2017 Bonds.
(b)� Original executed counterparts of the Agreement, this Bond Indenture and the Supplemental Indenture.
(c)� The Series 2017 Note, duly executed and authenticated and duly assigned and payable to the Bond Trustee.
(d)� An executed copy of the Master Indenture.
(e)� A request and authorization to the Bond Trustee on behalf of the Issuer and signed by its Chair or Vice Chair to authenticate and deliver the Series 2017 Bonds to the purchasers therein identified upon payment to the Bond Trustee but for the account of the Issuer, together with instructions (which may be in the form of a separate certificate) as to the disposition of the proceeds of the Series 2017 Bonds.
(f)� An Opinion of Bond Counsel to the effect that the Series 2017 Bonds have been duly and validly authorized, issued and delivered and constitute valid and binding obligations of the Issuer, enforceable against the Issuer in accordance with their terms and that the interest payable on the Series 2017 Bonds is excludable from gross income for federal income tax purposes.
Section 2.08.� Bond Trustee’s Authentication Certificate. The Bond Trustee’s authentication certificate upon the Bonds shall be substantially in the form and tenor hereinbefore provided. No Bond shall be secured hereby or entitled to the benefit hereof, or shall be valid or obligatory for any purpose, unless (i) the certificate of authentication, substantially in such form, has been duly executed by the Bond Trustee or (ii) a manually signed Comptroller’s Registration Certificate has been attached thereto; and such certificate of the Bond Trustee upon any Bond shall be conclusive evidence and the only competent evidence that such Bond has been authenticated and delivered hereunder. The Bond Trustee’s certificate of authentication shall be deemed to have been duly executed by it if manually signed by an authorized signatory of the
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Bond Trustee, but it shall not be necessary that the same person sign the certificate of authentication on all of the Bonds issued hereunder.
Section 2.09.� Issuance of Additional Bonds. Additional Bonds are hereby authorized to be issued hereunder for the purposes set forth in Section 4.01 of the Agreement. If MJHS requests the issuance of any Additional Bonds, it shall file with the Issuer and the Bond Trustee a certificate specifying the amount of Additional Bonds to be issued and the purpose for such issuance.
Thereupon, the Issuer may request the authentication and delivery of such Additional Bonds; provided that MJHS and the Issuer shall have entered into an amendment to the Agreement to provide, among other things, that the Project shall include the additional facilities, if any, being financed by the Additional Bonds, for delivery of a Note or Notes entitled to the benefit and security of the Master Indenture in an amount at least sufficient to pay principal of, premium, if any, and interest on the Additional Bonds when due, for a deposit into a separate account in the Reserve Fund relating to such Additional Bonds of additional Reserve Fund Obligations which, together with amounts then contained in the other accounts in the Reserve Fund will equal the Reserve Fund Requirement on all Bonds Outstanding at the date of issuance of such series of Additional Bonds and for such additional covenants and conditions as the Issuer and MJHS deem desirable. All Additional Bonds shall be secured in the same manner as and rank on a parity with the Series 2017 Bonds, but shall bear such date or dates, bear such interest rate or rates, have such maturity dates, redemption dates, options and premiums, and be issued at such prices as shall be approved in writing by the Issuer and MJHS. Upon the execution and delivery of appropriate supplements to this Bond Indenture and the Master Indenture and amendments to the Agreement, the Issuer may execute and deliver to the Bond Trustee, and the Bond Trustee shall authenticate, such Additional Bonds and deliver them to the initial purchasers thereof as directed by the Issuer.
Section 2.10.� Requirements for Authentication and Delivery of Additional Bonds. Whenever requesting the authentication and delivery under this Article II of any Additional Bonds the Issuer shall furnish the Bond Trustee the following:
(a)� MJHS’s Certificate. A certificate of MJHS stating (i) that no default exists under the Agreement, the Master Indenture or this Bond Indenture, (ii) that MJHS approves the issuance and delivery of such Additional Bonds and (iii) any other matters to be approved by MJHS pursuant to Section 4.01 of the Agreement and this Section 2.10.
(b)� Certified Resolution. A certified copy of a Resolution of the Issuer authorizing the issuance of the Additional Bonds and the execution and delivery of the amendment to the Agreement and a supplement to this Bond Indenture.
(c)� Amendment to the Agreement. An original executed counterpart of the amendment to the Agreement.
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(d)� Supplemental Bond Indenture. An indenture supplemental hereto, designating the new series to be created and prescribing expressly or by reference with respect to the Bonds of such series:
(1)� the principal amount of the Bonds of such series,
(2)� the text of the Bonds of such series,
(3)� the maturity date or dates thereof,
(4)� the place or places where principal, premium, if any, and interest are to be paid and where the Bonds are to be registerable, transferable, or exchangeable.
(5)� the rate or rates of interest and the date from which, and the date or dates on which, interest is payable,
(6)� provisions as to redemption,
(7)� provisions (if any) as to exchangeability,
(8)� any other provisions necessary to describe and define such series within the provisions and limitations of this Bond Indenture, and
(9)� any other provisions and agreements in respect thereof provided, or not prohibited, by this Bond Indenture.
(e)� Supplement to Master Indenture. Original executed counterparts of a supplement to the Master Indenture authorizing the execution and delivery of an additional Note or Notes.
(f)� Additional Notes. A Note or Notes executed by MJHS which shall:
(1)� require payment or payments of principal of, premium, if any, and interest in amounts and at times sufficient, together with any other funds available therefor, to permit the payments of principal of, premium, if any, and interest on the Additional Bonds, taking into account any mandatory sinking fund requirements (pursuant to the Bond Indenture) which are required in respect of the related bonds, and
(2)� require each payment on the Note to be made on the due date for the corresponding payment to be made on the related bonds of the Issuer.
(g)� Reserve Fund. For deposit into a separate account in the Reserve Fund relating to such Additional Bonds, Reserve Fund Obligations which, together with the amounts then on deposit in the other accounts in the Reserve Fund, will equal the Reserve Fund Requirement on Bonds to be Outstanding upon the issuance of the Additional Bonds.
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(h)� Opinion as to Instruments Furnished Bond Trustee, Etc. Opinion or Opinions of Counsel acceptable to the Bond Trustee that:
(1)� all instruments furnished the Bond Trustee conform to the requirements of this Bond Indenture and constitute sufficient authority hereunder for the Bond Trustee to authenticate and deliver the Additional Bonds then applied for,
(2)� all laws and requirements with respect to the form and execution by the Issuer of the supplement to the Bond Indenture, the amendment to the Agreement, and the execution and delivery by the Issuer of the Additional Bonds then applied for have been complied with,
(3)� the Issuer has power to issue such Additional Bonds and has taken all necessary action for that purpose,
(4)� the Additional Bonds are valid and binding in accordance with their terms and are secured by the lien of this Bond Indenture, equally and ratably with all other Bonds theretofore issued and then Outstanding hereunder,
(5)� the extent to which the interest on the Outstanding Bonds is excludable from the gross income of the recipients thereof under the Code will not be impaired by the issuance of the Additional Bonds then applied for, and
(6)� the additional Note referred to in paragraph (f) of this Section and the supplement to the Master Indenture are valid and binding in accordance with their terms and the additional Note is entitled to the benefits of the Master Indenture.
Section 2.11.� Cancellation and Destruction of Bonds By the Bond Trustee. Whenever any Outstanding Bonds shall be delivered to the Bond Trustee for the cancellation thereof pursuant to this Bond Indenture, upon payment of the principal amount or interest represented thereby or for replacement pursuant to Section 2.06 hereof, such Bonds shall be promptly cancelled and treated in accordance with the Bond Trustee’s standard retention policies. In the event of destruction of the Bonds by the Bond Trustee, a certificate of destruction evidencing such destruction shall be furnished by the Bond Trustee to the Issuer and MJHS upon written request.
Section 2.12.� Book Entry Only System. The Bonds shall be initially issued in the form of a single fully registered Bond for each maturity of the Bonds registered in the name of Cede & Co., as nominee of DTC, and except as provided in Section 2.13 hereof, all of the outstanding Bonds shall be registered in the name of Cede & Co., as nominee of DTC.
With respect to Bonds registered in the name of Cede & Co., as nominee of DTC, the Issuer and the Bond Trustee shall have no responsibility or obligation to any participant in DTC (a “DTC Participant”) or to any person on behalf of whom such a DTC Participant holds an interest in the Bonds, except as provided in this Indenture. Without limiting the immediately preceding sentence, the Issuer and the Bond Trustee shall have no responsibility or obligation with respect to (i) the accuracy of the records of DTC, Cede & Co. or any DTC Participant with respect to any ownership interest in the Bonds, (ii) the delivery to any DTC Participant or any
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other person, other than a Bondholder, as shown on the registration books, of any notice with respect to the Bonds, including any notice of redemption, or (iii) the payment to any DTC Participant or any other person, other than a Bondholder as shown in the registration books, of any amount with respect to principal of, premium, if any, or interest on, the Bonds. Notwithstanding any other provision of this Bond Indenture to the contrary, the Issuer and the Bond Trustee shall be entitled to treat and consider the person in whose name each Bond is registered in the registration books as the absolute owner of such Bond for the purpose of payment of principal, premium, if any, and interest with respect to such Bond, for the purpose of giving notices of redemption and other matters with respect to such Bond, for the purpose of registering transfers with respect to such Bond, and for all other purposes whatsoever. The Bond Trustee shall pay all principal of, premium, if any, and interest on the Bonds only to or upon the order of the respective owners, as shown in the registration books as provided in this Bond Indenture, or their respective attorneys duly authorized in writing, and all such payments shall be valid and effective to fully satisfy and discharge the Issuer’s obligations with respect to payment of principal of, premium, if any, and interest on, the Bonds to the extent of the sum or sums so paid. No person other than an owner, as shown in the registration books, shall receive a Bond certificate evidencing the obligation of the Issuer to make payments of principal, premium, if any, and interest, pursuant to this Bond Indenture. Upon delivery by DTC to the Bond Trustee of written notice to the effect that DTC has determined to substitute a new nominee in place of Cede & Co., and subject to the provisions in this Bond Indenture with respect to payment of interest to the registered owner at the close of business on the Record Date, the word “Cede & Co.” in this Bond Indenture shall refer to such new nominee of DTC.
Section 2.13.� Successor Securities Depository; Transfers Outside Book Entry Only System.
(a)� In the event that MJHS determines that DTC is incapable of discharging its responsibilities described herein and in the representation letter of the Issuer to DTC (the “DTC Letter”) and that it is in the best interest of the beneficial owners of the Bonds that they be able to obtain certificated Bonds, the Issuer, at the direction of MJHS, shall (i) appoint a successor securities depository, qualified to act as such under Section 17(a) of the Securities Exchange Act of 1934, as amended, notify DTC and DTC Participants, identified by DTC, of the appointment of such successor securities depository and transfer one or more separate Bonds to such successor securities depository or (ii) notify DTC and DTC Participants, identified by DTC, of the availability through DTC of Bonds and transfer one or more separate Bonds to DTC Participants, identified by DTC, having Bonds credited to their DTC accounts. In such event, the Bonds shall no longer be restricted to being registered in the registration books in the name of Cede & Co., as nominee of DTC, but may be registered in the name of the successor securities depository, or its nominee, or in whatever name or names Bondholders transferring or exchanging Bonds shall designate, in accordance with the provisions of this Bond Indenture.
(b)� Upon the written consent of 100% of the beneficial owners of the Bonds, the Bond Trustee, in accordance with the DTC Letter, shall withdraw the Bonds from DTC, and authenticate and deliver Bonds fully registered to the assignees of DTC or its nominee. If the request for such withdrawal is not the result of any Issuer action or
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inaction, such withdrawal, authentication and delivery shall be at the cost and expense (including costs of printing, preparing and delivering such Bonds) of the Persons requesting such withdrawal, authentication and delivery.
Section 2.14.� Payments to Cede & Co. Notwithstanding any other provision of this Bond Indenture to the contrary, so long as any Bond is registered in the name of Cede & Co., as nominee of DTC, all payments with respect to principal of, premium, if any, and interest on, such Bond and all notices, transfers and deliveries with respect to such Bond shall be made and given, respectively, in the manner provided in the DTC Letter.
ARTICLE III REVENUES AND FUNDS
Section 3.01.� Application of Proceeds of Series 2017 Bonds.
(a)� The Issuer will sell and cause to be delivered to the initial purchasers thereto the Series 2017 Bonds and will deliver the proceeds thereof to the Bond Trustee for disposal as follows:
(i)� Deposit, into the Reserve Fund, the amount specified in the request and authorization to the Bond Trustee described in Section 2.07(e).
(ii)� Deposit, into to the Cost of Issuance Fund, the amount specified in the request and authorization to the Bond Trustee described in Section 2.07(e).
(iii)� Deposit, with the Refunded Bonds Trustee in its capacity as trustee under the Refunded Bonds Indenture, the amount specified in the request and authorization to the Bond Trustee described in Section 2.07(e).
(iv)� Deposit, with SunTrust Bank, the amount specified in the request and authorization to the Bond Trustee described in Section 2.07(e) relating to the repayment of the SunTrust Bank Loan.
(v)� Deposit, with SunTrust Bank, the amount specified in the request and authorization to the Bond Trustee described in Section 2.07(e) relating to the payment of the Swap Termination Payment.
(vi)� Deposit to the Construction Fund the balance of the proceeds of the Series 2017 Bonds.
(b)� The Issuer agrees to authorize the issuance of Additional Bonds upon the terms and conditions provided herein and in Sections 2.09 and 2.10. Additional Bonds may be issued to provide funds (i) to pay the Costs of financing and refinancing Expansions, (ii) to pay the Cost of financing, refinancing, acquiring, providing, constructing, enlarging, remodeling, renovating, improving, furnishing or equipping and refinancing the acquiring, constructing, equipping or completing any Project, (iii) to the extent permitted by law, to refund any Bonds theretofore issued and then Outstanding under the Bond Indenture or (iii) for any combination of such purposes. In the event of
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the issuance of Additional Bonds for any such purposes, the amount of Additional Bonds issued may include the costs of the issuance and sale of the Additional Bonds, capitalized interest for such period allowed by law, reserve funds and such other costs reasonably related to the financing as shall be agreed upon by MJHS and the Issuer.
(c)� If MJHS is not in default hereunder, the Issuer agrees, on request of MJHS, from time to time, to use its reasonable efforts to issue the amount of Additional Bonds specified by MJHS; provided that the terms of such Additional Bonds, the purchase price to be paid therefor and the manner in which the proceeds thereof are to be disbursed shall have been approved in writing by MJHS, and provided further that (1) MJHS and the Issuer shall have entered into an amendment to this Agreement to provide, among other things, that the Project shall include the facilities, if any, being financed by the Additional Bonds, for additional loan payments in an amount at least sufficient to pay principal of, premium, if any, and interest on the Additional Bonds when due, and for a deposit into the Reserve Fund of additional Reserve Fund Obligations which, together with amounts at that time contained in the Reserve Fund, will equal the Maximum Annual Debt Service on all Bonds Outstanding at the date of issuance of such series of Additional Bonds, and (2) MJHS and the Master Trustee shall have entered into a supplement to the Master Indenture whereby MJHS shall issue a Note securing payment of the principal of, premium, if any, and interest on the Additional Bonds. The Issuer agrees to comply with Sections 2.09 and 2.10 with respect to the issuance of Additional Bonds.
Section 3.02.� Creation of the Bond Fund. There is hereby created by the Issuer and ordered established with the Bond Trustee a trust fund to be designated as the “City of Miami, Florida Health Facilities Authority Health Facilities Revenue and Revenue Refunding Bonds (Miami Jewish Health Systems, Inc. Project) Bond Fund” (the “Bond Fund”). There are hereby created by the Issuer and ordered established with the Bond Trustee two separate accounts within the Bond Fund to be designated as the Principal Account and the Interest Account, respectively. Moneys on deposit in the Principal Account shall be used to pay the principal of and premium, if any, on the Bonds, when due and payable. Moneys on deposit in the Interest Account shall be used to pay the interest on the Bonds.
Section 3.03.� Payments into the Bond Fund. There shall be deposited into the Interest Account all accrued interest received from the sale of the Bonds to the initial purchasers thereof. In addition, there shall also be deposited into the Principal Account or the Interest Account, as and when received, (i) all payments on the Notes, (ii) all moneys transferred to the Bond Fund from the Reserve Fund pursuant to Section 3.10 hereof, (iii) all other moneys required to be deposited therein pursuant to the Agreement, and (iv) all other moneys received by the Bond Trustee when accompanied by written directions that such moneys are to be paid into the Principal Account or the Interest Account. There also shall be retained or deposited in the Principal Account or the Interest Account all interest and other income received on investments or moneys required to be transferred thereto, in accordance with Section 6.02 hereof. The Issuer hereby covenants and agrees that so long as any of the Bonds are Outstanding it will deposit, or cause to be deposited, into the Principal Account or the Interest Account for its account sufficient sums from revenues and receipts derived from the Agreement promptly to meet and pay the principal of, premium, if any, and interest on the Bonds as the same become due and payable.
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Section 3.04.� Use of Moneys in the Principal Account and the Interest Account. The amounts deposited into the Interest Account pursuant to Section 3.01 hereof shall be used to pay accrued interest on the appropriate series of Bonds on the first Interest Payment Date. Except as provided in Sections 3.15 and 8.05 hereof, moneys in the Principal Account or the Interest Account shall be used solely for the payment of the principal of, premium, if any, and interest on the Bonds on a pro rata basis.
Section 3.05.� Custody of the Bond Fund. The Bond Fund shall be in the custody of the Bond Trustee but in the name of the Issuer, and the Issuer hereby authorizes and directs the Bond Trustee to withdraw sufficient funds from the Principal Account or the Interest Account of the Bond Fund to pay the principal of, premium, if any, and interest on the Bonds as the same come due and payable, which authorization and direction the Bond Trustee hereby accepts.
Section 3.06.� Construction Fund.
(a)� There is hereby created and established with the Bond Trustee a trust fund designated as the “City of Miami, Florida Health Facilities Authority Health Facilities Revenue and Revenue Refunding Bonds (Miami Jewish Health Systems, Inc. Project) Construction Fund” (the “Construction Fund”). Moneys shall be deposited in the Construction Fund or the accounts therein for that portion of the Proceeds of the Series 2017 Bonds used to finance costs of the Project in accordance with Section 3.01 and thereafter only in the event that Additional Bonds are issued hereunder to finance a Project or Projects. Moneys in the Construction Fund shall be used to pay Costs of a Project or as hereinafter provided. Under no circumstances shall moneys in the Construction Fund be used to pay Cost of Issuance.
(b)� The Bond Trustee shall disburse moneys in the Construction Fund as provided in Article IV of the Agreement. All Surplus Construction Fund Money remaining in the Construction Fund after the Completion Certificate is filed with the Bond Trustee and payment of all other costs then due and payable shall be transferred to the Bond Fund and shall be used to pay debt service on the Bonds or such other purpose as permitted in an Opinion of Bond Counsel.
(c)� Payments from the Construction Fund shall be made in accordance with this Article III and Article IV of the Agreement. Upon receipt of the required requisition, the Bond Trustee shall pay the amount requested to the extent that MJHS is entitled to payment pursuant to the Agreement.
(d)� If an Event of Default occurs under this Bond Indenture, and the Bond Trustee declares the principal of all Bonds and the interest accrued thereon to be due and payable, no moneys may be paid out of the Construction Fund by the Bond Trustee during the continuance of such an Event of Default; provided, however, that if such an Event of Default shall be waived and such declaration shall be rescinded by the Bond Trustee or the holders and owners of the Bonds pursuant to the terms of this Bond Indenture, the full amount of any such remaining moneys in the Construction Fund may again be disbursed by the Bond Trustee in accordance with the provisions of the Agreement and this Bond Indenture.
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Section 3.07.� Completion Certificate. At such time as MJHS determines that construction of a Project has been completed in substantial compliance with the final plans and specifications for the Project or has determined to terminate any further construction of such Project, it shall deliver the Completion Certificate to the Bond Trustee.
Section 3.08.� Creation of the Reserve Fund.
(a)� There is hereby created and established with the Bond Trustee a trust fund designated as the “City of Miami, Florida Health Facilities Authority Health Facilities Revenue and Revenue Refunding Bonds (Miami Jewish Health Systems, Inc. Project) Debt Service Reserve Fund” (the “Reserve Fund”).
(b)� Moneys on deposit in the Reserve Fund shall be used to provide a reserve for the payment of the principal of and interest on the Bonds.
Section 3.09.� Payments Into the Reserve Fund. In addition to the deposits required by Section 3.01 hereof, there shall be deposited into the Reserve Fund any Reserve Fund Obligations delivered by MJHS to the Bond Trustee pursuant to Section 5.06 of the Agreement. In addition, there shall be deposited into the Reserve Fund all moneys required to be transferred thereto pursuant to Section 6.02 hereof, and all other moneys received by the Bond Trustee when accompanied by written directions that such moneys are to be paid into the Reserve Fund. There shall also be retained in the Reserve Fund all interest and other income received on investments of Reserve Fund moneys to the extent provided in Section 6.02 hereof.
Section 3.10.� Use of Moneys in the Reserve Fund.
(a)� Except as provided herein and in Section 3.15 hereof, moneys in the Reserve Fund shall be used solely for the payment of the principal of and interest on the Bonds in the event moneys in the Bond Fund is insufficient to make such payments when due, whether on an interest payment date, redemption date, maturity date, acceleration date or otherwise.
(b)� Upon the occurrence of an Event of Default of which the Bond Trustee is deemed to have notice hereunder and the election by the Bond Trustee of the remedy specified in Section 8.02(a) hereof, any Reserve Fund Obligations in the Reserve Fund shall, subject to the provisions of Section 3.16 hereof, be transferred by the Bond Trustee to the Principal Account and applied in accordance with Section 8.05 hereof. In the event of the redemption of any series of Bonds, any Reserve Fund Obligations on deposit in the Reserve Fund in excess of the Reserve Fund Requirement immediately after such redemption may, subject to the provisions of Section 3.16 hereof, be transferred to the Principal Account and applied to the payment of the principal of the series of Bonds to be redeemed. On January 1 and July 1 in each year, any earnings on the Reserve Fund Obligations on deposit in the Reserve Fund that are in excess of the Reserve Fund Requirement shall be transferred into the Interest Account of the Bond Fund.
(c)� On the final maturity date of any series of Bonds, any Reserve Fund Obligations in the Reserve Fund in excess of the Reserve Fund Requirement after giving
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effect to such maturity may, upon the written direction of MJHS, be used to pay the principal of and interest on such series of Bonds on such final maturity date.
(d)� If at any time moneys in the Reserve Fund are sufficient to pay the principal or redemption price of all Bonds, the Bond Trustee may use the moneys on deposit in the Reserve Fund to pay such principal or redemption price of such Bonds.
Section 3.11.� Custody of the Reserve Fund. The Reserve Fund shall be in the custody of the Bond Trustee but in the name of the Issuer, and the Issuer hereby authorizes and directs the Bond Trustee to transfer sufficient moneys from the Reserve Fund to the Bond Trustee for deposit to the Bond Fund to pay the principal of and interest on the Bonds for the purposes herein described, which authorization and direction the Bond Trustee hereby accepts. In the event there shall be a deficiency in the Principal Account or the Interest Account on any payment date for any series of Bonds, the Bond Trustee shall promptly make up such deficiency from the Reserve Fund.
Section 3.12.� Nonpresentment of Bonds. In the event that any Bonds shall not be presented for payment when the principal thereof or interest thereon becomes due, either at maturity, the date fixed for redemption thereof, or otherwise, if funds sufficient for the payment thereof shall have been deposited into the Bond Fund or otherwise made available to the Bond Trustee for deposit therein as provided in Section 3.03 hereof, all liability of the Issuer to the owner or owners thereof for the payment of such Bonds shall forthwith cease, determine and be completely discharged, and thereupon it shall be the duty of the Bond Trustee to hold such fund or funds, without liability for interest thereon, for the benefit of the owner or owners of such Bonds, who shall thereafter be restricted exclusively to such fund or funds for any claim of whatever nature on his or their part under this Bond Indenture or on, or with respect to, said Bond, and all such funds shall remain uninvested. If any Bond shall not be presented for payment within the period of two years following the date of final maturity of such Bond, the Bond Trustee shall, upon request in writing by MJHS, return such funds to MJHS free of any trust or lien and such Bond shall, subject to the defense of any applicable statute of limitation, thereafter be an unsecured obligation of MJHS. In either event, the Bond Trustee shall have no further responsibility with respect to such moneys or payment of such Bonds. Thereafter, the Bondholders shall be entitled to look only to MJHS for payment, and then only to the extent of the amount so repaid by the Bond Trustee. MJHS shall not be liable for any interest on any sums paid to it.
Section 3.13.� Bond Trustee’s and Paying Agents’ Fees, Charges, and Expenses. Pursuant to the provisions of the Agreement, MJHS has agreed to pay to the Bond Trustee and to each Paying Agent, commencing with the effective date of the Agreement and continuing until the principal of, premium, if any, and interest on the Bonds shall have been fully paid or provision for the payment thereof shall have been made in accordance with the provisions of this Bond Indenture, the reasonable and necessary fees and expenses (including reasonable attorneys’ fees, costs and expenses) of the Bond Trustee and each Paying Agent, as and when the same become due, upon the submission by the Bond Trustee and each Paying Agent of a statement therefor.
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Section 3.14.� Moneys to be Held in Trust. All moneys required to be deposited with or paid to the Bond Trustee under any provision of this Bond Indenture (except moneys in the Rebate Fund) shall be held by the Bond Trustee in trust for the purposes specified in this Bond Indenture, and except for moneys deposited with or paid to the Bond Trustee for the redemption of Bonds for which the notice of redemption has been duly given, shall, while held by the Bond Trustee, constitute part of the Trust Estate and be subject to the lien hereof.
Section 3.15.� Repayment to MJHS from the Funds. Any amounts remaining in the Bond Fund, Reserve Fund or Construction Fund after payment in full of the Bonds (or after making provision for such payment), the fees and expenses of the Bond Trustee and the Paying Agents (including attorneys’ fees, costs and expenses, if any), the Administration Expenses, and all other amounts required to be paid hereunder and under the Agreement shall be paid to MJHS upon the termination of the Agreement.
Section 3.16.� Creation of Rebate Fund; Duties of Bond Trustee; Amounts Held in Rebate Fund.
(a)� There is hereby created and established with the Bond Trustee a trust fund to be held in trust to be designated “City of Miami, Florida Health Facilities Authority Health Facilities Revenue and Revenue Refunding Bonds (Miami Jewish Health Systems, Inc. Project) Rebate Fund.”
(b)� As described in Section 4.18 of the Tax Compliance Agreement (“Obligations Regarding Rebate”), Section 148(f) of the Code, as implemented by Sections 1.148-1 to 1.148-11 of the Income Tax Regulations requires that, among other requirements and with certain exceptions, the Issuer pay to the United States of America the Rebate Amount (as defined in the Tax Compliance Agreement). The provisions concerning the calculation and payment of the required Rebate Amount are set forth in the Tax Compliance Agreement. The Issuer and MJHS hereby covenant to comply with the Obligations Regarding Rebate.
The Bond Trustee shall cooperate with MJHS in complying with the requirements of this Section and in Section 4.18 of the Tax Compliance Agreement and shall promptly provide to MJHS, upon its written request, any information in the possession of the Bond Trustee concerning the investment of Gross Proceeds (as defined in the Tax Compliance Agreement) of the Bonds and all other information in the possession of the Bond Trustee of benefit to MJHS in complying with the requirements of this Section.
Notwithstanding any other provisions of this Indenture, including in particular Article VII of this Bond Indenture, the obligation to pay the Rebate Amount to the United States and to comply with all other requirements of this Section 3.16 shall survive the defeasance or payment in full of the applicable Bonds.
All funds and accounts created hereunder shall be impressed with a lien to secure prompt payment of the Rebate Amount which shall be prior to the lien created hereunder for the benefit of the Owners and further by a lien to reimburse the Bond Trustee for any expense (including
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reasonable attorneys’ fees, costs and expenses) incurred by it pursuant to this Section, which lien shall also be prior to the lien created hereunder for the benefit of the Owners.
(c)� Any moneys remaining in the Rebate Fund after redemption and payment of all of the Tax Exempt Bonds and payment and satisfaction of any rebatable arbitrage and all amounts owing by MJHS under the Agreement shall be withdrawn and paid to MJHS upon its written request.
Section 3.17.� Cost of Issuance Fund. There is hereby created and established with the Bond Trustee a trust fund designated as the “City of Miami, Florida Health Facilities Authority Health Facilities Revenue and Revenue Refunding Bonds (Miami Jewish Health Systems, Inc. Project) Cost of Issuance Fund” (the “Cost of Issuance Fund”). The Bond Trustee shall disburse moneys in the Cost of Issuance Fund as provided in Article IV of the Agreement. Moneys in the Cost of Issuance Fund may be used only for payment of the Cost of Issuance. On June 30, 2017, any moneys remaining in the Cost of Issuance Fund shall be transferred to the Construction Fund, and thereafter no such moneys shall be used to pay Cost of Issuance.
ARTICLE IV COVENANTS OF THE ISSUER
Section 4.01.� Performance of Covenants: Authority. The Issuer covenants that it will faithfully perform at all times any and all covenants, undertakings, stipulations, and provisions contained in this Bond Indenture, in any and every Bond and in all proceedings of the Issuer pertaining hereto; provided, however, that except for the covenant of the Issuer set forth in Section 4.02 hereof relating to payment of the Bonds, the Issuer shall not be obligated to take any action or execute any instrument pursuant to any provision hereof until it shall have been requested to do so by MJHS or by the Bond Trustee, or shall have received the instrument to be executed and at the option of the Issuer shall have received from the party requesting such execution assurance satisfactory to the Issuer that the Issuer shall be reimbursed for its reasonable expenses incurred or to be incurred in connection with taking such action or executing such instrument. The Issuer covenants that it is duly authorized under the laws of the State of Florida, including particularly and without limitation the Act, to issue the Series 2017 Bonds and to execute this Bond Indenture, and to pledge the revenues and receipts hereby pledged, and to assign its rights under and pursuant to the Agreement and the Series 2017 Note in the manner and to the extent herein set forth, that all action on its part and to the extent herein set forth, that all action on its part for the issuance of the Series 2017 Bonds and the execution and delivery of this Bond Indenture has been duly and effectively taken and will be duly taken as provided herein, and that the Series 2017 Bonds in the hands of the owners thereof are and will be valid and enforceable limited obligations of the Issuer according to the import hereof, except as enforcement thereof and hereof may be limited by bankruptcy, insolvency, moratorium, reorganization and other similar laws affecting the rights of creditors and by the application of general principles of equity, if such remedies are pursued.
Section 4.02.� Payments of Principal, Premium, If Any, and Interest. The Issuer will promptly pay or cause to be paid the principal of, premium, if any, and interest on all Bonds issued hereunder according to the terms hereof. The principal, premium, if any, and interest payments are payable solely from revenues and other amounts derived from the Notes, and from
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the other security pledged hereby, which revenues and security are hereby specifically pledged to the payment thereof in the manner and to the extent herein specified. Nothing in the Bonds or in this Bond Indenture shall be considered or construed as pledging any funds or assets of the Issuer other than those pledged hereby.
Section 4.03.� Supplemental Indentures; Recordation of Bond Indenture and Supplemental Indentures. The Issuer will execute and deliver all indentures supplemental hereto, and will cause this Bond Indenture, the Agreement, and all supplements hereto and thereto, as well as all security instruments and financing statements relating thereto, to be filed in each office required by law in order to publish notice of the liens created by this Bond Indenture and the Agreement. Notwithstanding anything to the contrary contained herein, the Bond Trustee shall not be responsible for any initial filings of any financing statements or the information contained therein (including the exhibits thereto), the perfection of any such security interests, or the accuracy or sufficiency of any description of collateral in such initial filings or for filing any modifications or amendments to the initial filings required by any amendments to Article 9 of the Uniform Commercial Code. In addition, unless the Bond Trustee shall have been notified in writing by the Issuer or MJHS that any such initial filing or description of collateral was or has become defective, the Bond Trustee shall be fully protected in (i) conclusively relying on such initial filing and descriptions in filing any financing or continuation statements or modifications thereto and (ii) filing any continuation statements in the same filing offices as the initial filings were made. The Bond Trustee shall cause to be filed a continuation statement with respect to each Uniform Commercial Code financing statement relating to the Bonds which was filed at the time of the issuance thereof, in such manner and in such places as the initial filings were made, provided that a copy of the filed original financing statement is timely delivered to the Bond Trustee. MJHS shall be responsible for the reasonable costs incurred by the Bond Trustee in the preparation and filing of all continuation statements hereunder, including but, not limited to, attorney’s fees, costs and expenses.
Section 4.04.� Lien of Bond Indenture. The Issuer hereby agrees not to create any lien having priority or preference over the lien of this Bond Indenture upon the Trust Estate or any part thereof, other than the security interest granted by it to the Bond Trustee, except as otherwise specifically provided in Article VIII hereof. The Issuer agrees that no obligations the payment of which is secured by payments or other moneys or amounts derived from the Agreement and the other sources provided herein will be issued by it except in accordance with Sections 2.09 and 2.10 of this Bond Indenture.
Section 4.05.� Rights Under the Agreement. The Issuer will observe all of the obligations, terms and conditions required on its part to be observed or performed under the Agreement. The Issuer agrees that wherever in the Agreement it is stated that the Issuer will notify the Bond Trustee, give the Bond Trustee some right or privilege, or in any way attempts to confer upon the Bond Trustee the ability for the Bond Trustee to protect the security for payment of the Bonds, that such part of the Agreement shall be as though it were set out in this Bond Indenture in full.
The Issuer agrees that the Bond Trustee as assignee of the Agreement may enforce, in its name or in the name of the Issuer, all rights of the Issuer (except those rights to indemnification and payment under Sections 5.07, 7.05 and 9.05 thereof) and all obligations of MJHS under and
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pursuant to the Agreement for and on behalf of the Bondholders, whether or not the Issuer is in default hereunder.
Section 4.06.� Tax Covenants. The Issuer (to the extent within its power or direction) shall not knowingly and intentionally use or permit the use of any proceeds of Tax Exempt Bonds or any other funds of the Issuer, directly or indirectly, in any manner, and shall not knowingly and intentionally take or permit to be taken, or fail to take, any other action or actions, which would adversely affect the exclusion of the interest on any Tax Exempt Bond from gross income for federal income tax purposes.
If MJHS shall fail to perform its obligations as described in Section 3.16 and in Section 4.18 of the Tax Compliance Agreement, the Bond Trustee from time to time may cause a firm of attorneys, consultants or independent accountants or an investment banking firm to supply the Bond Trustee, on behalf of the Issuer and MJHS, with such information as the Bond Trustee, on behalf of the Issuer, may reasonably request in order to perform the obligations described in Section 3.16 and Section 4.18 of the Tax Compliance Agreement. Payment for costs and expenses incurred in connection with supplying the foregoing information shall be paid by MJHS.
Notwithstanding any provision of this Section, if MJHS provides to the Bond Trustee and the Issuer an Opinion of Bond Counsel to the effect that any action required under this Section is no longer required, or to the effect that some further action is required, to maintain the exclusion of interest on the Tax Exempt Bonds from federal gross income, the Bond Trustee and the Issuer may conclusively rely on such opinion in complying with the provisions of this Bond Indenture, and the covenants under this Bond Indenture may be deemed to be modified to that extent.
Notwithstanding any other provision of this Bond Indenture, so long as is necessary to maintain the exclusion of the interest on the Tax Exempt Bonds from gross income for federal income tax purposes, the covenants in this Section shall survive the payment of the Tax Exempt Bonds, including the defeasance thereof.
Section 4.07.� Change in Law. To the extent that published rulings of the Internal Revenue Service, or amendments to the Code or the Regulations modify the covenants of the Issuer that are set forth in this Bond Indenture or that are necessary for interest on any issue of the Tax Exempt Bonds to be excludable from gross income for federal income tax purposes, the Issuer, upon receiving the written Opinion of Bond Counsel to such effect, will comply, at the expense of MJHS, with such modifications and direct the Bond Trustee in writing to take such action as may be required to comply with such modifications.
ARTICLE V REDEMPTION OF BONDS
Section 5.01.� Optional Redemption of Series 2017 Bonds. The Series 2017 Bonds maturing on or after July 1, 2028 are subject to optional redemption prior to maturity by the Issuer, at the written direction of MJHS, on or after July 1, 2027, at any time as a whole or in part by lot, at a redemption price equal to 100% of the principal amount of the Series 2017
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Bonds to be redeemed, without redemption premium, plus accrued interest to the redemption date.
Bonds other than the Series 2017 Bonds shall be subject to optional redemption prior to maturity as provided in the Supplemental Indenture authorizing such Bonds.
Section 5.02.� Sinking Fund Redemption.
(a)� The Series 2017 Bonds maturing on July 1, 2038 are subject to mandatory sinking fund redemption at a redemption price equal to the principal amount thereof plus accrued interest to the redemption date. As and for a sinking fund for the redemption of Series 2017 Bonds maturing on July 1, 2038, the Issuer shall cause to be deposited into the Principal Account of the Bond Fund a sum which is sufficient to redeem on July 1 of each of the following years (after credit as provided below) the following principal amounts of Series 2017 Bonds maturing on July 1, 2038, plus accrued interest to the redemption date:
Year Amount
2033 $1,275,000 2034 1,340,000 2035 1,410,000 2036 1,480,000 2037 1,555,000 2038* 1,635,000
_________________ *Maturity
The Series 2017 Bonds maturing on July 1, 2046 are subject to mandatory sinking fund redemption at a redemption price equal to the principal amount thereof plus accrued interest to the redemption date. As and for a sinking fund for the redemption of Series 2017 Bonds maturing on July 1, 2046, the Issuer shall cause to be deposited into the Principal Account of the Bond Fund a sum which is sufficient to redeem on July 1 of each of the following years (after credit as provided below) the following principal amounts of Series 2017 Bonds maturing on July 1, 2046, plus accrued interest to the redemption date:
Year Amount
2039 $1,720,000 2040 1,810,000 2041 1,900,000 2042 2,000,000 2043 2,100,000 2044 2,205,000 2045 2,320,000 2046* 2,440,000
_________________ *Maturity
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(b)� On or before the thirtieth day prior to each sinking fund payment date, the Bond Trustee shall proceed to select for redemption (by lot in such manner as the Bond Trustee may determine) from all Series 2017 Bonds Outstanding maturing on July 1, 2038, or July 1, 2046, as the case may be, a principal amount of such Series 2017 Bonds equal to the Aggregate Principal Amount of such Series 2017 Bonds redeemable with the required sinking fund payment, and shall call such Series 2017 Bonds or portions thereof ($5,000 or any integral multiple thereof) for redemption from the sinking fund on the next July 1, and give notice of such call. At the option of MJHS to be exercised by delivery of a written certificate to the Bond Trustee on or before the forty fifth day next preceding any sinking fund redemption date, it may (i) deliver to the Bond Trustee for cancellation Series 2017 Bonds or portions thereof maturing on July 1, 2038, or July 1, 2046, as the case may be, in an Aggregate Principal Amount desired by MJHS or (ii) specify a principal amount of Series 2017 Bonds or portions thereof maturing on July 1, 2038, or July 1, 2046, as the case may be, which prior to said date have been redeemed (otherwise than through the operation of the sinking fund) and canceled by the Bond Trustee at the request of the Issuer and not theretofore applied as a credit against any sinking fund redemption obligation. Each such Series 2017 Bond or portion thereof so delivered or previously redeemed shall be credited by the Bond Trustee at 100% of the principal amount thereof against the obligation of the Issuer to redeem Series 2017 Bonds on such sinking fund redemption date. Any excess shall be credited against the next sinking fund redemption obligation to redeem Series 2017 Bonds. In the event that MJHS shall avail itself of the provisions of clause (i) of the second sentence of this paragraph, the certificate required by the second sentence of this paragraph shall be accompanied by the Series 2017 Bonds or portions thereof to be canceled.
(c)� Additional Bonds may be subject to mandatory sinking fund redemption pursuant to the terms of the Supplemental Indenture authorizing such Bonds.
Section 5.03.� Method of Selection of Bonds in Case of Partial Redemption.
(a)� In the event that less than all of the Outstanding Series 2017 Bonds are to be redeemed as provided in Sections 5.01 or 5.08 hereof, MJHS may select the particular maturities to be redeemed. If less than all Series 2017 Bonds or portions thereof of a single maturity are to be redeemed, they shall be selected by the Securities Depository or by lot in such manner as the Bond Trustee may determine.
(b)� If a Series 2017 Bond is of a denomination larger than the minimum Authorized Denomination, a portion of such Series 2017 Bond may be redeemed, but Series 2017 Bonds shall be redeemed only in the principal amount of an Authorized Denomination and no Series 2017 Bond may be redeemed in part if the principal amount to be Outstanding following such partial redemption is not an Authorized Denomination.
(c)� Selection of Additional Bonds for redemption shall be made as provided in the Supplemental Indenture authorizing such Bonds.
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Section 5.04.� Notice of Redemption.
(a)� Series 2017 Bonds shall be called for redemption by the Bond Trustee as herein provided upon receipt by the Bond Trustee at least 45 days prior to the redemption date of a certificate of MJHS specifying the principal amount of Series 2017 Bonds to be called for redemption, the applicable redemption price or prices and the provision or provisions of this Bond Indenture pursuant to which such Series 2017 Bonds are to be called for redemption. The provisions of the preceding sentence shall not apply to the redemption of Series 2017 Bonds pursuant to the sinking fund provided in Section 5.02 hereof, and such Series 2017 Bonds shall be called for redemption by the Bond Trustee without the necessity of any action by MJHS or the Issuer. In case of every redemption, the Bond Trustee shall cause notice of such redemption to be given electronically or by mailing by first class mail, postage prepaid, a copy of the redemption notice to the owners of the Series 2017 Bonds designated for redemption in whole or in part, at their addresses as the same shall last appear upon the registration books, in each case not more than 60 nor less than 30 days prior to the redemption date. In addition, notice of redemption shall be sent by first class or registered mail, return receipt requested, or by overnight delivery service (1) contemporaneously with such mailing to any owner of $1,000,000 or more in principal amount of Series 2017 Bonds, and (2) to any securities depository registered as such pursuant to the Securities Exchange Act of 1934, as amended, that is an owner of Series 2017 Bonds to be redeemed so that such notice is received at least two days prior to such mailing date; provided, however, the failure to give such aforementioned notice shall not affect the validity of any proceedings for the redemption of such Series 2017 Bonds if notice is given in accordance with the prior sentence.
All notices of redemption shall state:
(1)� the redemption date,
(2)� the redemption price,
(3)� the identification, including complete designation (including series) and issue date of the Series 2017 Bonds and the CUSIP number (and in the case of partial redemption, certificate number and the respective principal amounts, interest rates and maturity dates) of the Series 2017 Bonds to be redeemed,
(4)� that on the redemption date the redemption price will become due and payable upon each such Series 2017 Bonds, and that interest thereon shall cease to accrue from and after said date,
(5)� the name and address of the Bond Trustee and any paying agent for such Series 2017 Bonds, including the place where such Series 2017 Bonds are to be surrendered for payment of the redemption price and the name and phone number of a contact person at such address.
Provided, however, any defect in such notice, shall not affect the validity of any proceedings for the redemption of such Series 2017 Bonds.
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(b)� Notice of redemption of Additional Bonds shall be given in accordance with the terms of the Supplemental Indenture pursuant to which such Bonds have been issued.
(c)� Notwithstanding the foregoing or any other provision hereof, notice of optional redemption pursuant to this Section 5.04 may, upon direction of MJHS to the Issuer, be conditioned upon the occurrence or non-occurrence of such event or events as shall be specified in such notice of optional redemption and may also be subject to rescission by the Issuer upon written direction of MJHS to the Trustee if expressly set forth in such notice.
Section 5.05.� Bonds Due and Payable on Redemption Date; Interest Ceases to Accrue. On or before the business day prior to the redemption date specified in the notice of redemption, an amount of money sufficient to redeem all Series 2017 Bonds called for redemption at the appropriate redemption price, including accrued interest to the date fixed for redemption, shall be deposited with the Bond Trustee. On the redemption date the principal amount of each Series 2017 Bond to be redeemed, together with the accrued interest thereon to such date and redemption premium, if any, shall become due and payable; and from and after such date, notice having been given and deposit having been made in accordance with the provisions of this Article V, then, notwithstanding that any Series 2017 Bonds called for redemption shall not have been surrendered, no further interest shall accrue on any such Series 2017 Bonds. From and after such date of redemption (such notice having been given and such deposit having been made), the Series 2017 Bonds to be redeemed shall not be deemed to be Outstanding hereunder, and the Issuer shall be under no further liability in respect thereof.
Section 5.06.� Cancellation. All Bonds which have been redeemed shall be cancelled by the Bond Trustee and treated as provided in Section 2.11 hereof.
Section 5.07.� Partial Redemption of Fully Registered Bonds. Upon surrender of any fully registered Bond for redemption in part only, the Issuer shall execute and the Bond Trustee shall authenticate and deliver to the owner thereof, at the expense of MJHS, a new Bond or Bonds of the same series and of the same maturity of Authorized Denominations in an Aggregate Principal Amount equal to the unredeemed portion of the Bond surrendered.
Section 5.08.� Extraordinary Optional Redemption. The Bonds shall be subject to optional redemption by the Issuer at the written direction of MJHS prior to their scheduled maturities, in whole or in part (proportionally among each Series) at a redemption price equal to the principal amount thereof plus accrued interest from the most recent interest payment date to the redemption date on any date following the occurrence of any of the following events:
(1)� in case of damage or destruction to, or condemnation of, any property, plant, and equipment of any Obligated Group Member, to the extent that the net proceeds of insurance or condemnation award exceed the Threshold Amount (as defined in the Master Indenture) and MJHS has determined not to use such net proceeds or award to repair, rebuild or replace such property, plant, and equipment; or
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(2)� as a result of any changes in the Constitution or laws of the State of Florida or of the United States of America or of any legislative, executive, or administrative action (whether state or federal) or of any final decree, judgment, or order of any court or administrative body (whether state or federal), the obligations of MJHS under the Agreement have become, as established by an Opinion of Counsel, void or unenforceable in each case in any material respect in accordance with the intent and purpose of the parties as expressed in the Agreement.
ARTICLE VI INVESTMENTS
Section 6.01.� Investment of Bond Fund, Construction Fund and Reserve Fund Moneys. Any moneys held as part of the Bond Fund, Construction Fund or Reserve Fund shall be invested or reinvested by the Bond Trustee at the written request and direction of MJHS (upon which the Bond Trustee is entitled to conclusively rely) in Permitted Investments. All Permitted Investments shall be either subject to redemption at any time at a fixed value at the option of the owner thereof or shall mature or be marketable not later than the business day prior to the date on which the proceeds are expected to be expended. For the purpose of any investment or replacement under this Section, the Permitted Investments shall be deemed to mature at the earliest date on which MJHS is, on demand, obligated to pay a fixed sum in discharge of the whole of such obligation. The Bond Trustee may make any and all investments permitted by the provisions of this Section through its trust department or that of its affiliates or subsidiaries, and may charge its ordinary and customary fees for such trades. In order to comply with the directions of MJHS, the Bond Trustee may sell, at the best price obtainable, or present for redemption, or may otherwise cause liquidation prior to their maturities, any of the obligations in which funds have been invested, and the Bond Trustee shall not be liable for any loss or penalty of any nature resulting therefrom. In order to avoid loss in the event of any need for funds, MJHS may instruct the Bond Trustee in writing, in lieu of a liquidation or redemption of investments in the fund or account needing funds, to exchange such investment for investments in another fund or account that may be liquidated at no, or at reduced, loss. The Bond Trustee shall be under no liability for interest on any moneys received hereunder unless specifically agreed to in writing. The Bond Trustee shall conclusively rely upon MJHS’s written instructions as to both the suitability and legality of all directed investments. Ratings of investments shall be determined at the time of purchase of such investments and without regard to ratings subcategories. The Bond Trustee shall have no responsibility to monitor the ratings of investments after the initial purchase of such investments. In the absence of written investment instructions from MJHS, the Bond Trustee shall not be responsible or liable for keeping the moneys held by it hereunder fully invested. The Bond Trustee shall not be liable for any losses from any directed investments. Although the Issuer and MJHS each recognizes that it may obtain a broker confirmation or written statement containing comparable information at no additional cost, the Issuer and MJHS hereby agree that broker confirmations of investments are not required to be issued by the Bond Trustee for each month in which a monthly statement is rendered by the Bond Trustee.
Section 6.02.� Allocation and Transfers of Investment Income. Any investments in any Fund shall be held by or under the control of the Bond Trustee and shall be deemed at all times a part of the Fund from which the investment was made. Any loss resulting from such
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investments shall be charged to such Fund. The Bond Trustee shall not be liable for any loss or penalty resulting from any such investment made in accordance with any permitted direction by MJHS or for the Tax Exempt Bonds becoming “arbitrage bonds” by reason of any such investment. Any interest or other gain from any fund from any investment or reinvestment pursuant to Section 6.01 hereof shall be allocated and transferred as follows:
(a)� Any interest or other gain realized as a result of any investments or reinvestments of moneys in the Construction Fund shall be credited to the Construction Fund until the Construction Fund expires, and thereafter, to the Interest Account of the Bond Fund.
(b)� Any interest or other gain realized as a result of any investments or reinvestments of moneys in the Principal Account and the Interest Account of the Bond Fund shall be credited at least semiannually to the Interest Account unless a deficiency exists in the Reserve Fund, in which case such interest or other gain shall be paid into the Reserve Fund forthwith.
(c)� Any interest or other gain realized as a result of any investments or reinvestments of moneys in the Reserve Fund shall be credited to the Reserve Fund if a deficiency exists therein at that time. If a deficiency does not exist in the Reserve Fund at that time, such interest or other gain on other amounts paid into such Reserve Fund shall be paid during the construction period for any Project for deposit into the Construction Fund created in connection with the issuance of Bonds for such Project or if after the completion of such construction period, for deposit into the Interest Account of the Bond Fund, in each case at least semiannually.
The Bond Trustee shall sell and reduce to cash a sufficient portion of such investments whenever the cash balance in any fund is insufficient for the purposes of such fund.
Section 6.03.� Valuation of Permitted Investments. Accounting and valuation of Permitted Investments in any Fund or Account will be performed as follows:
(a)� On a monthly basis the Bond Trustee shall furnish to MJHS a full and complete statement of all receipts and disbursements of Permitted Investments in any Fund and Account covering such period.
(b)� The Bond Trustee shall also furnish on December 31 and June 30 of each year a statement of the assets contained in each Fund and Account. Assets will be valued at market value as of December 31 and June 30, respectively, by the Bond Trustee in such statement in accordance with the normal valuation procedures of the Bond Trustee.
ARTICLE VII DISCHARGE OF BOND INDENTURE
Section 7.01.� Discharge of the Bond Indenture. If, when the Bonds secured hereby shall become due and payable in accordance with their terms or otherwise as provided in this Bond Indenture and the whole amount of the principal of, premium, if any, and interest due and payable upon all of the Bonds shall be paid, or provision shall have been made for the payment
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of the same, together with all other sums payable hereunder (including but not limited to the fees and expenses of the Bond Trustee and any Paying Agent, in accordance with Section 3.13 hereof), then the right, title and interest of the Bond Trustee in and to the Trust Estate and all covenants, agreements and other obligations of the Issuer to the Bondholders shall thereupon cease, terminate and become void and be discharged and satisfied. In such event, upon the written request of the Issuer or of MJHS, and upon receipt of an Opinion of Counsel to the effect that all conditions precedent herein provided relating to the satisfaction and discharge of this Bond Indenture have been complied with, the Bond Trustee shall execute such documents as may be reasonably required by the Issuer and shall turn over to MJHS any surplus in the Bond Fund, Reserve Fund and Construction Fund.
All Outstanding Bonds of any one or more series shall prior to the maturity or redemption date thereof be deemed to have been paid within the meaning and with the effect expressed in this Section if (i) in case said Bonds are to be redeemed on any date prior to their maturity, MJHS shall have given to the Bond Trustee in form satisfactory to it irrevocable written instructions to give on a date in accordance with the provisions of Section 5.04 hereof notice of redemption of such Bonds on said redemption date, such notice to be given in accordance with the provisions of Section 5.04 hereof, (ii) there shall have been deposited with the Bond Trustee (or another Paying Agent) either moneys in an amount which shall be sufficient, or Government Obligations which shall not contain provisions permitting the redemption thereof at the option of the issuer, or any other Person other than the holder thereof, the principal of and the interest on which when due, and without any reinvestment thereof, will provide moneys which, together with the moneys, if any, deposited with or held by the Bond Trustee or any Paying Agent at the same time (including the Bond Fund and the Reserve Fund), shall be sufficient, in the opinion of an independent certified public accountant, to pay when due the principal of, premium, if any, and interest due and to become due on said Bonds on or prior to the redemption date or maturity date thereof, as the case may be, and (iii) in the event that said Bonds are not by their terms subject to redemption within the next 45 days, MJHS shall have given the Bond Trustee in form satisfactory to it irrevocable written instructions to give, as soon as practicable in the same manner as the notice of redemption is given pursuant to Section 5.04 hereof, a notice to the owners of such Bonds that the deposit required by subclause (ii) above has been made with the Bond Trustee (or another depository) and that said Bonds are deemed to have been paid in accordance with this Section and stating such maturity or redemption date upon which moneys are to be available for the payment of the principal of, premium, if any, and interest on said Bonds. Neither the Government Obligations nor moneys deposited with the Bond Trustee pursuant to this Section nor principal or interest payments on any such Government Obligations shall be withdrawn or used for any purpose other than, and shall be held in trust for, the payment of the principal of, premium, if any, and interest on said Bonds; provided any such cash received from such principal or interest payments on such Government Obligations deposited with the Bond Trustee, if not then needed for such purpose, shall, at the written direction of MJHS, either (1) be reinvested, to the extent practicable, in Government Obligations of the type described in clause (ii) of this paragraph maturing at the times and in amounts sufficient to pay when due the principal of, premium, if any, and interest to become due on said Bonds on or prior to such redemption date or maturity date thereof, as the case may be or (2) be used to pay principal and/or interest on the Bonds. At such time as any Bond shall be deemed paid as aforesaid, it shall no longer be secured by or entitled to the benefits of this Bond Indenture, except for the
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purpose of any payment from such moneys or Government Obligations deposited with the Bond Trustee and the purpose of transfer and exchange pursuant to Section 2.05 hereof.
The release of the obligations of the Issuer under this Section shall be without prejudice to the rights of the Bond Trustee to be paid reasonable compensation for all services rendered by it hereunder and all its reasonable and necessary expenses, charges and other disbursements incurred on or about the administration of the trust hereby created and the performance of its powers and duties hereunder.
ARTICLE VIII DEFAULTS AND REMEDIES
Section 8.01.� Events of Default. If any of the following events occur, it is hereby defined as and shall be deemed an “Event of Default”:
(a)� Default in the payment of the principal of or premium, if any, on any Bond when the same shall become due and payable, whether at the stated maturity thereof, or upon proceedings for redemption or as required by the sinking fund provisions hereof or otherwise.
(b)� Default in the payment of any installment of interest on any Bond when the same shall become due and payable.
(c)� Declaration under the Master Indenture that the principal of, and accrued interest on, any Obligation issued thereunder is immediately due and payable.
(d)� Failure by the Issuer in the performance or observance of any other of the covenants, agreements or conditions in its part in this Bond Indenture or in the Bonds contained, which failure shall continue for a period of 60 days after written notice specifying such failure and requesting that it be remedied, is given to the Issuer and MJHS by the Bond Trustee or to the Issuer, MJHS and to the Bond Trustee by the owners of not less than 25% in principal amount of the Bonds Outstanding; provided that such failure is the result of the failure of MJHS to perform its obligations under the Agreement.
Section 8.02.� Remedies on Events of Default. Upon the occurrence of an Event of Default, the Bond Trustee shall have the following rights and remedies:
(a)� The Bond Trustee shall, in the event that the payment of the principal of and accrued interest on any Note has been declared due and payable immediately by the Master Trustee, by notice in writing given to the Issuer and MJHS, declare the principal amount of all Bonds then Outstanding and the interest accrued thereon to be immediately due and payable and said principal and interest shall thereupon become immediately due and payable. Upon any declaration of acceleration hereunder, the Bond Trustee shall give notice to the Bondholders in the same manner as a notice of redemption under Article V hereof, stating the date upon which the Notes and the Bonds shall be payable.
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The provisions of the preceding paragraph, however, are subject to the condition that if, after the payment of the principal of, and accrued interest on, the Notes and the Bonds has been declared due and payable immediately, the declaration of the acceleration of the Notes shall be annulled in accordance with the provisions of the Master Indenture, the declaration of the acceleration of the Bonds shall be automatically annulled, and the Bond Trustee shall promptly give written notice of such annulment to the Issuer and MJHS and notice to Bondholders in the same manner as a notice of redemption under Article V hereof; but no such annulment shall extend to or affect any subsequent Event of Default or impair any right or remedy consequent thereon;
(b)� The Bond Trustee may, by mandamus, or other suit, action or proceeding at law or in equity, enforce the rights of the Bondholders, and require the Issuer or MJHS or both of them to carry out the agreements with or for the benefit of the Bondholders and to perform its or their duties under the Act, the Agreement and this Bond Indenture.
(c)� The Bond Trustee may, by action or suit in equity, require the Issuer to account as if it were the trustee of an express trust for the Bondholders but any such judgment against the Issuer shall be enforceable only against the funds and accounts hereunder in the hands of the Bond Trustee.
(d)� The Bond Trustee may, by action or suit in equity, enjoin any acts or things which may be unlawful or in violation of the rights of the Bondholders.
(e)� The Bond Trustee may, upon the filing of a suit or other commencement of judicial proceedings to enforce the rights of the Bond Trustee and the Bondholders, have appointed a receiver or receivers of the Trust Estate upon a showing of good cause with such powers as the court making such appointment may confer.
No right or remedy is intended to be exclusive of any other right or remedy, but each and every such right or remedy shall be cumulative and in addition to any other remedy given hereunder or now or hereafter existing at law or in equity or by statute.
If any Event of Default shall have occurred and if requested by the owners of at least 25% in Aggregate Principal Amount of Bonds then Outstanding and indemnified as provided in Section 9.01(m) hereof (except the remedy under Section 8.02(a) above, for which no indemnity may be required), the Bond Trustee shall be obligated to exercise such one or more of the rights and powers conferred by this Section as it, being advised by counsel, shall deem most expedient in the interests of such Bondholders. In the event the Bond Trustee shall receive inconsistent or conflicting requests and indemnity from two or more groups of owners of Outstanding Bonds, each representing less than a majority of the aggregate principal amount of the Outstanding Bonds, the Bond Trustee, in its sole discretion, may determine what action, if any, shall be taken.
Section 8.03.� Majority of Bondholders May Control Proceedings. Anything in this Bond Indenture to the contrary notwithstanding the owners of at least a majority in Aggregate Principal Amount of the Bonds then Outstanding shall have the right, at any time, to the extent permitted by law, by an instrument or instruments in writing executed and delivered to the Bond Trustee, to direct the time, method, and place of conducting all proceedings, to be taken in
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connection with the enforcement of the terms and conditions of this Bond Indenture, or for the appointment of a receiver, and any other proceedings hereunder; provided that such direction shall not be otherwise than in accordance with the provisions hereof and provided, further, that notwithstanding anything to the contrary in this Bond Indenture, the Issuer shall have the sole ability to direct the method and place of conducting all proceedings to be taken in connection with the enforcement of Section 4.10 of the Agreement. The Bond Trustee shall not be required to act on any direction given to it pursuant to this Section until indemnity as set forth in Section 9.01(m) hereof is provided to it by such Bondholders.
Section 8.04.� Rights and Remedies of Bondholders. No owner of any Bond shall have any right to institute any suit, action, or proceeding in equity or at law for the enforcement of this Bond Indenture or for the execution of any trust hereof or for the appointment of a receiver or any other applicable remedy hereunder, unless a default has occurred of which the Bond Trustee has been notified as provided in Section 9.01 hereof, or of which by said Section it is deemed to have notice, nor unless such default shall have become an Event of Default and the owners of at least a majority in Aggregate Principal Amount of Bonds then Outstanding shall have made written request to the Bond Trustee and shall have offered reasonable opportunity either to proceed to exercise the powers hereinbefore granted or to institute such action, suit, or proceeding in their own names, nor unless they have also offered to the Bond Trustee indemnity as provided in Section 9.01(m) hereof, nor unless the Bond Trustee shall thereafter fail or refuse to exercise the powers hereinbefore granted, or to institute such action, suit, or proceeding in its own name; and such notification, request, and offer of indemnity are hereby declared in every case at the option of the Bond Trustee to be conditions precedent to the execution of the powers and trusts of this Bond Indenture, and to any action or cause of action for the enforcement of this Bond Indenture, or for the appointment of a receiver or for any other remedy hereunder; it being understood and intended that no one or more owners of the Bonds shall have the right in any manner whatsoever to affect, disturb, or prejudice the lien of this Bond Indenture by his, her, its, or their action or to enforce any right hereunder except in the manner herein provided and that all proceedings at law or in equity shall be instituted, had, and maintained in the manner herein provided and for the equal benefit of the owners of all Bonds then Outstanding. Nothing in this Bond Indenture contained shall, however, affect or impair the right of any owner of Bonds to enforce the payment of the principal of, premium, if any, or interest on any Bond at and after the maturity thereof, or the obligation of the Issuer to pay the principal of, premium, if any, and interest on each of the Bonds to the respective owners of the Bonds at the time and place, from the source and in the manner herein, and in the Bonds expressed.
Section 8.05.� Application of Moneys.
(a)� Subject to the provisions of subparagraph (c) hereof, all moneys received by the Bond Trustee pursuant to any right given or action taken under the provisions of this Article shall, after payment of the costs and expenses of the proceedings resulting in the collection of such moneys and the expenses, liabilities, and advances incurred or made by the Bond Trustee (including, but not limited to, attorneys’ fees, costs and expenses), be deposited into the Bond Fund, and all moneys so deposited into the Bond Fund and all moneys held in or deposited into the Bond Fund during the continuance of an Event of Default and available for payment of the Bonds under the provisions of
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Section 3.04 hereof shall (after payment of the fees and expenses of the Bond Trustee) be applied as follows:
(i)� Unless the principal of all of the Bonds shall have become or shall have been declared due and payable, all such moneys shall be applied:
First: To the payment to the Persons entitled thereto of all installments of interest then due on the Bonds in the order of the maturity of the installments of such interest and, if the amount available shall not be sufficient to pay in full any particular installment, then to the payment ratably, according to the amounts due on such installment, to the Persons entitled thereto, without any discrimination or privilege; and
Second: To the payment to the Persons entitled thereto of the unpaid principal of any of the Bonds which shall have become due (other than Bonds called for redemption for the payment of which moneys are held pursuant to the provisions of this Bond Indenture), in the order of their due dates, with interest on such Bonds from the respective dates upon which they become due at the rate of interest borne by such Bonds and, if the amount available shall not be sufficient to pay in full Bonds due on any particular date, together with such interest, then to the payment ratably, according to the amount of principal due on such date, to the persons entitled thereto, without any discrimination or privilege.
(ii)� If the principal of all the Bonds shall have become due or shall have been declared due and payable, all such moneys shall be applied to the payment of the principal and interest then due and unpaid upon all of the Bonds (together with interest on overdue installments of principal at the rate of interest borne by each Bond), without preference or priority of principal over interest, any other installment of interest, or of any Bond over any other Bond, or of any series of Bonds over any other series of Bonds ratably, according to the amounts due respectively for principal and interest, to the Persons entitled thereto without any discrimination or privilege.
(iii)� If the principal of all the Bonds shall have been declared due and payable, and if such declaration shall thereafter have been rescinded and annulled under the provisions of this Article then, subject to the provisions of paragraph (ii) of this Section in the event that the principal of all the Bonds shall later become due or be declared due and payable, the moneys shall be applied in accordance with the provisions of the foregoing paragraph (i) of this Section.
(b)� Whenever moneys are to be applied pursuant to the provisions of this Section, such moneys shall be applied at such times, and from time to time, as the Bond Trustee shall determine, having due regard to the amount of such moneys available for application and the likelihood of additional moneys becoming available for such application in the future. Whenever the Bond Trustee shall apply such moneys, it shall fix the date (which shall be an Interest Payment Date unless it shall deem another date more suitable) upon which such application is to be made and upon such date interest on
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the amounts of principal to be paid on such date shall cease to accrue. The Bond Trustee shall give such notice as it may deem appropriate of the deposit of any such moneys and of the fixing of any such date, and shall not be required to make payment to the owner of any unpaid Bond until such unpaid Bond shall be presented to the Bond Trustee for appropriate endorsement or for cancellation if fully paid.
(c)� Whenever all of the Bonds and interest thereon have been paid under the provisions of this Section and all expenses and fees of the Bond Trustee and the Paying Agents and all Administration Expenses have been paid, any balance remaining in any funds shall be paid to MJHS as provided in Section 3.15 hereof.
Section 8.06.� Bond Trustee May Enforce Rights Without Bonds. All rights of action and claims under this Bond Indenture or any of the Bonds Outstanding hereunder may be enforced by the Bond Trustee without the possession of any of the Bonds or the production thereof in any trial or proceedings relative thereto; and any suit or proceeding instituted by the Bond Trustee shall be brought in its name as Bond Trustee, without the necessity of joining as plaintiffs or defendants any owners of the Bonds and any recovery of judgment shall be for the ratable benefit of the owners of the Bonds, subject to the provisions of this Bond Indenture.
Section 8.07.� Bond Trustee to File Proofs of Claim in Receivership, Etc. In the case of any receivership, insolvency, bankruptcy, reorganization, arrangement, adjustment, composition, or other judicial proceedings affecting MJHS, the Bond Trustee shall, to the extent permitted by law, be entitled to file such proofs of claims and other documents as may be necessary or advisable in order to have claims of the Bond Trustee and of the Bondholders allowed in such proceedings for the entire amount due and payable by the Issuer under the Bond Indenture or by MJHS at the date of the institution of such proceedings and for any additional amounts which may become due and payable by it after such date, without prejudice, however, to the right of any Bondholder to file a claim in his, her or its own behalf.
No provision of this Bond Indenture empowers the Bond Trustee to authorize, consent to, accept or adopt on behalf of any Bondholder any plan or reorganization, arrangement, adjustment or composition affecting any of the rights of any Bondholders, or authorizes the Bond Trustee to vote in respect of the claim in any proceeding described in this Section.
In the event the Bond Trustee incurs expenses or renders services in any proceedings affecting MJHS and described in this Section, the expenses so incurred and compensation for services so rendered are intended to constitute expenses of administration under the United States Bankruptcy Code or equivalent law.
Section 8.08.� Delay or Omission No Waiver. No delay or omission of the Bond Trustee or of any Bondholder to exercise any right or power accruing upon any default or Event of Default shall exhaust or impair any such right or power or shall be construed to be a waiver of any such default or Event of Default, or acquiescence therein; and every power and remedy given by this Bond Indenture may be exercised from time to time and as often as may be deemed expedient.
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Section 8.09.� Discontinuance of Proceedings on Default, Position of Parties Restored. In case the Bond Trustee shall have proceeded to enforce any right under this Bond Indenture, and such proceedings shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Bond Trustee, then and in every such case the Issuer and the Bond Trustee shall be restored to their former positions and rights hereunder with respect to the Trust Estate, and all rights, remedies, and powers of the Bond Trustee shall continue as if no such proceedings had been taken.
Section 8.10.� Enforcement of Rights. The Bond Trustee, as pledgee and assignee for security purposes of all the right, title, and interest of the Issuer in and to the Agreement (except those rights under Section 5.07, 7.05, and 9.05 thereof) and the Notes shall, upon compliance with applicable requirements of law and except as otherwise set forth in this Article VIII, be the sole real party in interest in respect of, and shall have standing, exclusive of owners of Bonds to enforce each and every right granted to the Issuer under the Agreement and under the Notes. The Issuer and the Bond Trustee hereby agree, without in any way limiting the effect and scope thereof, that the pledge and assignment hereunder to the Bond Trustee of any and all rights of the Issuer in and to the Notes and the Agreement shall constitute an agency appointment coupled with an interest on the part of the Bond Trustee which, for all purposes of this Bond Indenture, shall be irrevocable and shall survive and continue in full force and effect notwithstanding the bankruptcy or insolvency of the Issuer or its default hereunder or on the Bonds. Subject to Section 9.01 hereof, in exercising such right and the rights given the Bond Trustee under this Article VIII, the Bond Trustee shall take such action as, in the judgment of the Bond Trustee, would best serve the interests of the Bondholders, taking into account the provisions of the Master Indenture, together with the security and remedies afforded to owners of Notes.
Section 8.11.� Undertaking for Costs. All parties to this Indenture agree, and each Holder of any Bond by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Bond Indenture, or in any suit against the Bond Trustee for any action taken or omitted by it as Bond Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion access reasonable costs, including reasonable attorneys’ fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall not apply to any suit instituted by the Bond Trustee, to any suit instituted by any Bondholder, or group of Bondholders, holding in aggregate more than 10% in principal amount of the Outstanding Bonds, or to any suit instituted by a Bondholder for the enforcement of the payment of the principal of (or premium, if any) or interest on any Bond on or after the respective maturities thereof expressed in such Bond (or, in the case of redemption, on or after the redemption date).
Section 8.12.� Waiver of Events of Default. The Bond Trustee may in its discretion waive any Event of Default hereunder and its consequences, and shall do so upon the written request of the Owners of a majority in aggregate principal amount of the Bonds then Outstanding; provided, however, that the Bond Trustee may not waive an Event of Default described in subparagraph (a) of Section 8.01 hereof without the written consent of the registered owners of all Bonds then Outstanding; and provided, further, that notwithstanding anything to the contrary in this Bond Indenture, the Issuer shall have the sole ability to waive any Event of
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Default in connection with the covenants and obligations of MJHS under Section 4.10 of the Agreement.
ARTICLE IX CONCERNING THE BOND TRUSTEE AND PAYING AGENTS
Section 9.01.� Duties of the Bond Trustee. The Bond Trustee hereby accepts the trust imposed upon it by this Bond Indenture and agrees to perform said trusts, but only upon and subject to the following express terms and conditions, and no implied covenants or obligations shall be read into this Bond Indenture against the Bond Trustee:
(a)� The Bond Trustee, prior to the occurrence of an Event of Default and after the curing of all Events of Default which may have occurred, undertakes to perform such duties and only such duties as are specifically set forth in this Bond Indenture. In case an Event of Default has occurred (which has not been cured) the Bond Trustee shall exercise such of the rights and powers vested in it by this Bond Indenture and use the same degree of care and skill in its exercise as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs.
(b)� The Bond Trustee may execute any of the trusts or powers hereof and perform any of its duties hereunder, either directly or by or through attorneys, agents, receivers, or employees, and the Bond Trustee shall not be responsible for any misconduct or negligence on the part of any receiver, agent or attorney appointed with due care by it hereunder, and shall be entitled to act upon an Opinion of Counsel concerning all matters of trust hereof and the duties hereunder, and may in all cases pay such reasonable compensation to all such attorneys, agents, receivers, and employees as may reasonably be employed in connection with the trust hereof. The Bond Trustee may act upon an Opinion of Counsel and shall not be responsible for any loss or damage resulting from any action or nonaction taken by or omitted to be taken in good faith in reliance upon such Opinion of Counsel.
(c)� The Bond Trustee shall not be responsible for any recital herein or in the Bonds (except in respect to the certificate of authentication by the Bond Trustee endorsed on the Bonds and the acceptance of the trusts hereunder).
(d)� The Bond Trustee shall not be accountable for the use of any Bonds authenticated or delivered hereunder or the proceeds thereof, or for any moneys disbursed by the Bond Trustee in accordance with this Bond Indenture. The Bond Trustee makes no representations as to the validity or sufficiency of this Bond Indenture or the Bonds. The Bond Trustee is not a party to, is not responsible for, and makes no representations with respect to matters set forth in any preliminary official statement, or similar document prepared and distributed in connection with the sale of the Bonds. The Bond Trustee may become the owner of the Bonds with the same rights which it would have if not Bond Trustee.
(e)� The Bond Trustee shall conclusively rely upon and shall be fully protected in acting upon any notice, request, consent, certificate, order, affidavit, letter, telegram,
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teletransmission or other paper or document reasonably believed to be genuine and correct and to have been signed or sent by the proper person or persons. Any request or direction of the Issuer or MJHS mentioned herein shall be sufficiently evidenced by a written request, order, or consent signed in the name of the Issuer or MJHS, by the Issuer Representative, or MJHS, as the case may be. Any action taken by the Bond Trustee pursuant to this Bond Indenture upon the request or authority or consent of any person who at the time of making such request or giving such authority or consent is the owner of any Bonds shall be conclusive and binding upon all future owners of the same Bond and upon Bonds issued in place thereof.
(f)� As to the existence or nonexistence of any fact or matter or as to the sufficiency or validity of any instrument, paper, or proceeding, the Bond Trustee shall be entitled to conclusively rely and shall be fully protected in acting or refraining to act upon a certificate signed on behalf of the Issuer or MJHS by the Issuer Representative or MJHS or such other person as may be designated for such purpose by a Resolution of the Issuer as sufficient evidence of the facts therein contained, and prior to the occurrence of a default of which the Bond Trustee has been notified as provided in subsection (h) of this Section, or of which by said subsection it is deemed to have notice, shall also be at liberty to accept a similar certificate to the effect that any particular dealing, transaction, or action is necessary or expedient, but may at its discretion secure such further evidence deemed necessary or advisable, but shall in no case be bound to secure the same.
(g)� The permissive right of the Bond Trustee to do things enumerated in this Bond Indenture shall not be construed as a duty (except as otherwise herein provided) and the Bond Trustee shall not be answerable for other than its own negligence or willful misconduct, except that:
(1)� the Bond Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it shall be proved that the Bond Trustee was negligent in ascertaining the pertinent facts;
(2)� the Bond Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Bondholders of at least a majority in Aggregate Principal Amount of the Outstanding Bonds relating to the time, method, and place of conducting any proceeding for any remedy available to the Bond Trustee, or exercising any trust or power conferred upon the Bond Trustee, under this Bond Indenture; and
(3)� the Bond Trustee shall not be liable if the Bond Trustee reasonably relies in good faith upon an Officer’s Certificate delivered pursuant to this Bond Indenture or an Opinion of Counsel.
(h)� The Bond Trustee shall not be required to take notice or be deemed to have notice of any default hereunder except failure by the Issuer to cause to be made any of the payments to the Bond Trustee required to be made by Article III hereof unless a Responsible Officer of the Bond Trustee shall be specifically notified in writing of such default by the Issuer or by the owners of at least a majority in Aggregate Principal
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Amount of Bonds then Outstanding and all notices or other instruments required by this Bond Indenture to be delivered to the Bond Trustee, must, in order to be effective, be delivered to a Responsible Officer at the designated corporate trust office of the Bond Trustee, and in the absence of such notice so delivered, the Bond Trustee may conclusively assume there is no default except as aforesaid.
(i)� All moneys received by the Bond Trustee shall, until used or applied or invested as herein provided, be held in trust in the manner and for the purposes for which they were received, but need not be segregated from other funds except to the extent required by this Bond Indenture or law.
(j)� At any and all reasonable times the Bond Trustee and its duly authorized agents, attorneys, experts, engineers, accountants, and representatives shall have the right, but shall not be required, to inspect any Project, including all books, papers, and records of the Issuer and MJHS pertaining to any Project and the Bonds.
(k)� The Bond Trustee shall not be required to give any bond or surety in respect of the execution of the said trusts and powers or otherwise in respect of the premises, and no provision of this Bond Indenture shall require the Bond Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have grounds for believing that repayment of such funds or indemnity satisfactory against such risk or liability is not assured to it.
(l)� Notwithstanding anything in this Bond Indenture contained, the Bond Trustee shall have the right, but shall not be required, to demand in respect of the authentication of any Bonds, the withdrawal of any cash, or any action whatsoever within the purview of this Bond Indenture, any showings, certificates, opinion, appraisals, or other information, or corporate action or evidence thereof, in addition to that by the terms hereof required, as a condition of such action by the Bond Trustee deemed desirable for the purpose of establishing the right of the Issuer to the authentication of any Bonds, the withdrawal of any cash, or the taking of any other action by the Bond Trustee.
(m)� Before taking any action under this Section or Article VIII hereof, the Bond Trustee may require that indemnity reasonably satisfactory to it be furnished to it for the reimbursement of its fees, costs, liabilities and all expenses (including attorneys’ fees, costs and expenses) which it may incur and to protect it against all liability, except liability which may result from its negligence or willful misconduct, by reason of any action so taken.
(n)� Except as provided in Section 9.01(a) above, it shall not be the duty of the Bond Trustee, except as expressly provided herein, to see that any duties or obligations imposed herein or in the Agreement upon the Issuer, MJHS, or other Persons are performed, and the Bond Trustee shall not be liable or responsible because of the failure of the Issuer, MJHS, or other Persons to perform any act required of them pursuant to the terms of this Bond Indenture.
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(o)� In acting or omitting to act pursuant to the provisions of the Agreement, the Bond Trustee shall be entitled to and be protected by the rights and immunities accorded to it by the terms of this Bond Indenture.
(p)� In the event the Bond Trustee receives inconsistent or conflicting requests and indemnity from two or more groups of holders of Bonds, each representing less than a majority in aggregate principal amount of the Bonds Outstanding, the Bond Trustee, in its sole discretion, may determine what action, if any, shall be taken.
(q)� The Bond Trustee’s immunities and protections from liability in connection with the performance of its duties under this Bond Indenture shall extend to the Bond Trustee’s officers, directors, agents and employees. Such immunities and protections, together with the Bond Trustee’s right to compensation, shall survive the Bond Trustee’s resignation or removal and final payment of the Bonds.
(r)� The Bond Trustee shall have no responsibility with respect to any information, statement or recital in any official statement, offering memorandum or any other disclosure material prepared or distributed with respect to the Bonds and shall have no responsibility for compliance with any state or federal securities laws in connection with the Bonds.
(s)� The Bond Trustee shall not be responsible or liable for any failure or delay in the performance of its obligations under this Indenture arising out of or caused, directly or indirectly, by circumstances beyond its reasonable control, including, without limitation, acts of God, earthquakes, fire, flood, hurricanes or other storms, wars, terrorism, similar military disturbances, sabotage, epidemic, pandemic, riots, interruptions, loss or malfunctions of utilities, computer (hardware or software) or communications services, accidents, labor disputes, acts of civil or military authority or governmental action; it being understood that the Bond Trustee shall use commercially reasonable efforts which are consistent with accepted practices in the banking industry to resume performance as soon as reasonably practicable under the circumstances.
(t)� The Bond Trustee shall have the right to accept and act upon directions or instructions given pursuant to this Bond Indenture, the Agreement or any other document reasonably relating to the Bonds and delivered using Electronic Means (defined below); provided, however, that the Issuer or MJHS, as the case may be, shall provide to the Bond Trustee an incumbency certificate listing Authorized Officers with the authority to provide such directions or instructions (each an “Authorized Officer”) and containing specimen signatures of such Authorized Officers, which incumbency certificate shall be amended whenever a person is to be added or deleted from the listing. If the Issuer or MJHS elects to give the Bond Trustee directions or instructions using Electronic Means and the Bond Trustee in its discretion elects to act upon such directions or instructions, the Bond Trustee’s understanding of such directions or instructions shall be deemed controlling. The Issuer and MJHS each understands and agrees that the Bond Trustee cannot determine the identity of the actual sender of such directions or instructions and that the Bond Trustee shall conclusively presume that directions or instructions that purport to have been sent by an Authorized Officer listed on the incumbency certificate
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provided to the Bond Trustee have been sent by such Authorized Officer. The Issuer and MJHS, as the case may be, shall each be responsible for ensuring that only Authorized Officers transmit such directions or instructions to the Bond Trustee and that all Authorized Officers treat applicable user and authorization codes, passwords and/or authentication keys as confidential and with extreme care. The Bond Trustee shall not be liable for any losses, costs or expenses arising directly or indirectly from the Bond Trustee’s reliance upon and compliance with such directions or instructions notwithstanding such directions or instructions conflict or are inconsistent with a subsequent written direction or written instruction. Each of the Issuer and MJHS agree: (i) to assume all risks arising out of the use of Electronic Means to submit directions or instructions to the Bond Trustee, including without limitation the risk of the Bond Trustee acting on unauthorized directions or instructions, and the risk of interception and misuse by third parties; (ii) that it is fully informed of the protections and risks associated with the various methods of transmitting directions or instructions to the Bond Trustee and that there may be more secure methods of transmitting directions or instructions; (iii) that the security procedures (if any) to be followed in connection with its transmission of directions or instructions provide to it a commercially reasonable degree of protection in light of its particular needs and circumstances; and (iv) to notify the Bond Trustee immediately upon learning of any compromise or unauthorized use of the security procedures. “Electronic Means” shall mean the following communications methods: e-mail, facsimile transmission, secure electronic transmission containing applicable authorization codes, passwords and/or authentication keys, or another method or system specified by the Bond Trustee as available for use in connection with its services hereunder.
Section 9.02.� Fees and Expenses of Bond Trustee and Paying Agent. The Issuer agrees, but solely from any funds received from MJHS pursuant to the Agreement,
(a)� to pay to the Bond Trustee, each Paying Agent and all other agents their reasonable and necessary fees for services rendered hereunder as and when the same become due and all expenses (including attorneys’ fees, costs and expenses) reasonably and necessarily made or incurred by the Bond Trustee, such Paying Agent or such other agent in connection with such services as and when the same become due as provided in Section 3.13 hereof; and
(b)� to reimburse the Bond Trustee upon its request for all reasonable expenses, disbursements, and advances incurred or made by the Bond Trustee in accordance with any provisions of this Bond Indenture (including the reasonable compensation, expenses, and disbursements of its agents and counsel), except any such expense, disbursement, or advance as may be attributable to the negligence or willful misconduct of the Bond Trustee.
As security for the performance of the obligations of the Issuer under this Section, the Bond Trustee shall be secured under this Bond Indenture by a lien subject and subordinate to the Bonds, in the case of money held for the credit of the Construction Fund or the Reserve Fund, and otherwise prior to the Bonds, and for the payment of the expenses and reimbursements due
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hereunder, the Bond Trustee shall have the right to use and apply any trust funds held by it hereunder, unless held or required to be held in the Construction Fund or the Reserve Fund.
Section 9.03.� Resignation or Replacement of Bond Trustee. The present or any future Bond Trustee may resign by giving to the Issuer, MJHS and each Bondholder thirty days’ notice of such resignation. Such resignation shall not be effective until such time as a successor Bond Trustee shall have accepted its appointment. The present or any future Bond Trustee may be removed upon thirty (30) days written notice (a) at any time by an instrument in writing executed by the owners of at least a majority in Aggregate Principal Amount of Bonds Outstanding or (b) if an Event of Default hereunder has not occurred and is continuing, by an instrument in writing executed by MJHS.
In case the present or any future Bond Trustee shall at any time resign or be removed or otherwise become incapable of acting, a successor may be appointed by the owners of at least a majority in Aggregate Principal Amount of the Bonds Outstanding by an instrument or concurrent instruments signed by such Bondholders, or their attorneys in fact duly appointed; provided that the Issuer may, by an instrument executed by order of the Issuer, appoint a successor until a new successor shall be appointed by the Bondholders as herein authorized. The Issuer upon making such appointment shall forthwith give notice thereof to each Bondholder and to MJHS, which notice may be given concurrently with the notice of resignation given by any resigning Bond Trustee. Any successor so appointed by the Issuer shall immediately and without further act be superceded by a successor appointed in the manner above provided by the owners of at least a majority in Aggregate Principal Amount of the Bonds Outstanding. In the event that the Issuer does not so act within thirty days after notice of resignation, the Bond Trustee shall have the right to petition a court of competent jurisdiction to appoint a successor Bond Trustee.
Every successor Bond Trustee shall always be a bank, banking corporation or trust company duly organized under the laws of the United States of America or any state or territory thereof, with trust powers in good standing, qualified to act hereunder, and having a combined capital and surplus of not less than $50,000,000. Any successor appointed hereunder shall execute, acknowledge, and deliver to the Issuer and the predecessor Bond Trustee an instrument accepting such appointment hereunder and thereupon such successor shall, without any further act, deed, or conveyance, become vested with all the estates, properties, rights, powers, and trusts of its predecessor in the trust hereunder with like effect as if originally named as Bond Trustee herein; but the Bond Trustee retiring shall, nevertheless, on the reasonable written demand of its successor, execute and deliver an instrument conveying and transferring to such successor, upon the trusts herein expressed, all the estates, properties, rights, powers, and trusts of the predecessor, who shall, upon payment of the expenses, charges and other disbursements which are due and owing to it pursuant to Sections 3.13 and 9.02 hereof, duly assign, transfer and deliver to the successor all properties and moneys held by it under this Bond Indenture. Should any instrument in writing from the Issuer be required by any successor for more fully and certainly vesting in and confirming to it all of such estates, properties, rights, powers, and trusts, the Issuer shall, on request of such successor, make, execute, acknowledge, and deliver the deeds, conveyances, and necessary instruments in writing.
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The notices herein provided for shall be given by mailing a copy thereof to MJHS and the registered owners of the Bonds at their addresses as the same shall last appear on the registration books. The instruments evidencing the resignation or removal of the Bond Trustee and the appointment of a successor hereunder, together with all other instruments provided for in this Section shall be filed and/or recorded by the successor Bond Trustee in each recording office where this Bond Indenture shall have been filed and/or recorded.
Section 9.04.� Conversion, Consolidation or Merger of Bond Trustee. Any bank, banking corporation or trust company into which the Bond Trustee merges or is consolidated, or to which it (or a receiver on its behalf) may sell or transfer its corporate trust business as a whole, or substantially as a whole, shall be the successor of the Bond Trustee under this Bond Indenture with the same rights, powers, duties, and obligations and subject to the same restrictions, limitations, and liabilities as its predecessor, all without the execution or filing of any papers or any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding. In case any of the Bonds to be issued hereunder shall have authenticated, but not delivered, any successor Bond Trustee may adopt the certificate of any predecessor Bond Trustee, and deliver the same as authenticated; and, in case any of such Bonds shall not have been authenticated, any successor Bond Trustee may authenticate such Bonds in the name of such successor Bond Trustee.
Section 9.05.� Designation and Succession of Paying Agent. The Bond Trustee and any other banks or trust companies, if any, designated as Paying Agent or Paying Agents in any supplemental indenture providing for the issuance of Additional Bonds, shall be the Paying Agent or Paying Agents for the applicable series of Bonds.
Any bank or trust company with or into which any Paying Agent may be merged or consolidated, or to which the assets and business of such Paying Agent may be sold, shall be deemed the successor of such Paying Agent for the purposes of this Bond Indenture. If the position of Paying Agent shall become vacant for any reason, the Issuer shall, within thirty days thereafter, appoint such bank or trust company as shall be specified by MJHS and located in the same city as such Paying Agent to fill such vacancy; provided, however, that if the Issuer shall fail to appoint such Paying Agent within said period, the Bond Trustee shall make such appointment.
The Paying Agents, if any, shall enjoy the same protective provisions in the performance of their duties hereunder as are specified in Section 9.01 hereof with respect to the Bond Trustee insofar as such provisions may be applicable.
ARTICLE X SUPPLEMENTAL INDENTURES AND AMENDMENTS TO THE AGREEMENT
Section 10.01.� Supplemental Indentures Not Requiring Consent of Bondholders. The Issuer and the Bond Trustee may, without the consent of, or notice to, the Bondholders, enter into such indentures or agreements supplemental hereto (which supplemental indentures or agreements shall thereafter form a part hereof) for any one or more or all of the following purposes:
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(a)� To add to the covenants and agreements in this Bond Indenture contained other covenants and agreements thereafter to be observed for the protection or benefit of the Bondholders.
(b)� To cure any ambiguity, or to cure, correct, or supplement any defect or inconsistent provision contained in this Bond Indenture, or to make any provisions with respect to matters arising under this Bond Indenture or for any other purpose if such provisions are necessary or desirable and do not adversely affect the interests of the owners of Bonds.
(c)� To subject to this Bond Indenture additional revenues, properties, or collateral.
(d)� To qualify this Bond Indenture under the Trust Indenture Act of 1939, if such be hereafter required in the Opinion of Counsel.
(e)� To set forth the terms and conditions of Additional Bonds issued pursuant to Sections 2.09 and 2.10 hereof.
(f)� To satisfy any requirements imposed by a rating agency if necessary to maintain the then current rating on the Bonds.
(g)� To maintain the extent to which the interest on the Tax Exempt Bonds is not includable in the gross income of the recipients thereof, if in the opinion of Bond Counsel such supplemental indenture or agreement is necessary.
Section 10.02.� Supplemental Indentures Requiring Consent of Bondholders. Exclusive of supplemental indentures covered by Section 10.01 hereof, the owners of not less than a majority in Aggregate Principal Amount of the Bonds of all series then Outstanding affected thereby, in case one or more but less than all series of Bonds then Outstanding hereunder are so affected, shall have the right, from time to time, to consent to and approve the execution by the Issuer and the Bond Trustee of such indenture or indentures supplemental hereto as shall be deemed necessary or desirable by the Issuer for the purpose of modifying, altering, amending, adding to, or rescinding, in any particular, any of the terms or provisions contained in this Bond Indenture; provided, however, that without the consent of the owners of all the Bonds at the time Outstanding nothing herein contained shall permit, or be construed as permitting any of the following:
(a)� An extension of the maturity of, or a reduction of the principal amount of, or a reduction of the rate of, or extension of the time of payment of interest on, or a reduction of a premium payable upon any redemption of, any Bond.
(b)� The deprivation of the owner of any Bond then Outstanding of the lien created by this Bond Indenture (other than as originally permitted hereby).
(c)� A privilege or priority of any Bond or Bonds, over any other Bond.
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(d)� A reduction in the Aggregate Principal Amount of the Bonds required for consent to any supplemental indenture.
Upon the execution of any supplemental indenture pursuant to the provisions of this Section, this Bond Indenture shall be deemed to be modified and amended in accordance therewith, and the respective rights, duties, and obligations under this Bond Indenture of the Issuer, the Bond Trustee and all owners of Bonds then Outstanding shall thereafter be determined, exercised, and enforced hereunder, subject in all respects to such modifications and amendments.
If at any time the Issuer shall request the Bond Trustee in writing to enter into such supplemental indenture for any of the purposes of this Section, the Bond Trustee shall, upon being satisfactorily indemnified with respect to costs, fees and expenses (including attorneys’ fees, costs and expenses), cause notice of the proposed execution of such supplemental indenture to be mailed to the registered owners of the Bonds at their addresses as the same last appear on the registration books. Such notice shall briefly set forth the nature of the proposed supplemental indenture and shall state that copies thereof are on file at the designated office of the Bond Trustee for inspection by all Bondholders. If, within sixty days or such longer period as shall be prescribed by the Issuer following the giving of such notice, the owners of not less than a majority in Aggregate Principal Amount of the Bonds Outstanding at the time of the execution of any such supplemental indenture shall have consented to and approved the execution thereof as herein provided, no owner of any Bond shall have any right to object to any of the terms and provisions contained therein, or the operation thereof, or in any manner to question the propriety of the execution thereof, or to enjoin or restrain the Bond Trustee or the Issuer from executing the same or from taking any action pursuant to the provisions thereof.
Section 10.03.� Execution of Supplemental Indenture. The Bond Trustee is authorized to join with the Issuer in the execution of any such supplemental indenture and to make further agreements and stipulations which may be contained therein, but the Bond Trustee shall not be obligated to enter into any such supplemental indenture which affects its rights, duties, or immunities under this Bond Indenture. The Bond Trustee shall be entitled to receive, and shall be fully protected in conclusively relying upon, an Opinion of Counsel stating that the execution and delivery of a supplemental indenture is authorized or permitted by this Bond Indenture and has been effected in compliance with the provisions hereof. In connection with a supplemental indenture entered into pursuant to Section 10.01(b) hereof, the Bond Trustee may in its discretion determine whether or not in accordance with such provision the Bondholders would be affected by modification or amendment of this Bond Indenture, and any such determination shall be binding and conclusive upon the Issuer, MJHS, and Bondholders. The Bond Trustee may receive an Opinion of Counsel as conclusive evidence as to whether the Bondholders would be so affected by any such modification or amendment to this Bond Indenture.
Any supplemental indenture executed in accordance with the provisions of this Article shall thereafter form a part of this Bond Indenture; and all the terms and conditions contained in any such supplemental indenture as to any provision authorized to be contained therein shall be deemed to be part of this Bond Indenture for any and all purposes. In case of the execution and delivery of any supplemental indenture, express reference may be made thereto in the text of the Bonds issued thereafter, if any, if deemed necessary or desirable by the Bond Trustee.
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Section 10.04.� Consent of MJHS. Anything herein to the contrary notwithstanding, a supplemental indenture under this Article shall not become effective unless and until MJHS shall have consented in writing to the execution and delivery of such supplemental indenture unless MJHS is in default under the Agreement or an Event of Default described under Section 8.01(a), (b) or (c) hereunder has occurred and is continuing, in which case no consent of MJHS shall be required. The Bond Trustee shall cause notice of the proposed execution of any supplemental indenture together with a copy of the proposed supplemental indenture to be mailed to MJHS at least fifteen days prior to the proposed date of execution of such supplemental indenture.
Section 10.05.� Amendments, Etc., of the Agreement Not Requiring Consent of Bondholders. The Issuer and the Bond Trustee shall, without the consent of or notice to the Bondholders, consent to any amendment, change, or modification of the Agreement as may be required (i) by the provisions of the Agreement and this Bond Indenture, (ii) for the purpose of curing any ambiguity or formal defect or omission, (iii) in connection with the issuance of Additional Bonds as herein provided, (iv) to satisfy any requirements imposed by a rating agency if necessary to maintain the then current rating on the Bonds, (v) to maintain the extent to which the interest on the Bonds is not includable in the gross income of the recipients thereof, if in the opinion of Bond Counsel such amendment is necessary and (vi) in connection with any other change therein which does not adversely affect the Bond Trustee or the owners of the Bonds.
Section 10.06.� Amendments, Etc., of the Agreement Requiring Consent of Bondholders. Except for the amendments, changes, or modifications as provided in Section 10.05 hereof, neither the Issuer nor the Bond Trustee shall consent to any other amendment, change, or modification of the Agreement without the giving of notice to and the written approval or consent of the owners of not less than a majority in Aggregate Principal Amount of the Bonds at the time Outstanding given and procured as provided in Section 10.02 hereof. If at any time the Issuer and MJHS shall request in writing the consent of the Bond Trustee to any such proposed amendment, change, or modification of the Agreement, the Bond Trustee shall, upon being satisfactorily indemnified with respect to expenses (including attorneys’ fees, costs and expenses), cause notice of such proposed amendment, change, or modification to be given in the same manner as provided in Section 10.02 hereof. Such notice shall briefly set forth the nature of such proposed amendment, change, or modification and shall state that copies of the instrument embodying the same are on file at the designated office of the Bond Trustee for inspection by all Bondholders.
In executing any amendment, change or modification of the Agreement, the Bond Trustee shall be entitled to receive, and shall be fully protected in conclusively relying upon, an Opinion of Counsel stating that the execution and delivery of such amendment, change, modification of the Agreement is authorized or permitted by this Bond Indenture and the Agreement and has been effected in compliance with the provisions of this Bond Indenture and the Agreement. The Bond Trustee may, but shall not be obligated to, enter into any such amendment, change, or modification which affects the Bond Trustee’s own rights, duties or immunities. In connection with any amendment, change or modification in connection with Section 10.05(vi), the Bond Trustee may in its discretion determine whether or not in accordance with such provision the Bond Trustee or the Bondholders would be prejudiced by such amendment, change, modification. Any such determination shall be binding and conclusive on the Issuer, MJHS, and the Bondholders. The Bond Trustee may receive an Opinion of Counsel as conclusive evidence
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as to whether the Bondholders would be so affected by any such amendment, change, or modification of the Agreement.
ARTICLE XI MISCELLANEOUS
Section 11.01.� Evidence of Signature of Bondholders and Ownership of Bonds. Any request, consent, or other instrument which the Bond Indenture may require or permit to be signed and executed by the Bondholders may be in one or more instruments of similar tenor, and shall be signed or executed by such Bondholders in person or by their attorneys appointed in writing. Proof of the execution of any such instrument or of an instrument appointing any such attorney, or of the ownership of Bonds shall be sufficient (except as otherwise herein expressly provided) if made in the following manner, but the Bond Trustee may, nevertheless, in its discretion, require further or other proof in cases where it deems the same desirable:
(a)� The fact and date of the execution by any Bondholder or his attorney of such instrument may be proved by the certificate of any officer authorized to take acknowledgments in the jurisdiction in which he purports to act that the person signing such request or other instrument acknowledged to him the execution thereof, or by an affidavit of a witness of such execution, duly sworn to before a notary public.
(b)� The ownership of any fully registered Bond and the amount and numbers of such Bonds and the date of holding the same shall be proved by the registration books of the Issuer kept by the Bond Trustee.
Any request or consent of the owner of any Bond shall bind all future owners of such Bond in respect of anything done or suffered to be done by the Issuer or the Bond Trustee in accordance therewith.
Section 11.02.� No Personal Liability. No recourse under or upon any obligation, covenant or agreement contained in this Bond Indenture, or in any Bond hereby secured, or under any judgment obtained against the Issuer, or by the enforcement of any assessment or by any legal or equitable preceding by virtue of any constitution or statute or otherwise or under any circumstances, under or independent of this Bond Indenture, shall be had against any officer, director, agent or employee, as such, past, present or future, of any of the Issuer, the Bond Trustee or the City of Miami, Florida, either directly or through the Issuer, or otherwise, for the payment for or to the Issuer or any receiver thereof, or for or to the holder of any Bond issued hereunder or otherwise of any sum that may be due and unpaid by the Issuer upon any such Bond. Any and all personal liability of every nature, whether at common law or in equity, or by statute or by constitution or otherwise, of any such person to respond by reason of any act or omission on his part or otherwise, for the payment for or to the Issuer or any receiver thereof or for or to the holder of any Bond issued hereunder or otherwise, of any sum that may remain due and unpaid upon the Bonds hereby secured or any of them, is hereby expressly waived and released as a condition of and consideration for the execution of this Bond Indenture and the issue of such Bonds.
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Section 11.03.� Limited Obligation. Neither the State of Florida, nor the City of Miami, Florida, shall in any event be liable for the payment of the principal of, premium, if any, or interest on any of the Bonds issued hereunder. The Bonds are limited obligations of the Issuer payable solely from the revenues, receipts and resources of the Issuer pledged to their payment and not from any other revenues, funds or assets of the Issuer. None of the Bonds of the Issuer issued hereunder shall be construed or constitute an indebtedness of the Issuer or an indebtedness or obligation (special, moral or general) of the State of Florida or the City of Miami, Florida within the meaning of any constitutional or statutory provision whatsoever.
Section 11.04.� Parties Interested Herein. With the exception of rights herein expressly conferred on MJHS, nothing in this Bond Indenture expressed or implied is intended or shall be construed to confer upon, or to give to, any person other than the Issuer, the Bond Trustee, the Paying Agents, and the owners of the Bonds, any right, remedy, or claim under or by reason of this Bond Indenture, and any covenants, stipulations, promises, and agreements in this Bond Indenture contained by and on behalf of the Issuer shall be for the sole and exclusive benefit of the Issuer, the Bond Trustee, the Paying Agents, and the owners of the Bonds.
Section 11.05.� Titles, Headings, Etc. The titles and headings of the articles, sections, and subdivisions of this Bond Indenture have been inserted for convenience of reference only and shall in no way modify or restrict any of the terms or provisions hereof.
Section 11.06.� Severability. In the event any provision of this Bond Indenture shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof.
Section 11.07.� Governing Law. This Bond Indenture shall be governed and construed in accordance with the laws of the State of Florida, without regard to conflict of law principles.
Section 11.08.� Execution of Counterparts. This Bond Indenture may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.
Section 11.09.� Notices. Any notice, request or other communication under this Agreement shall be given in writing and shall be deemed to have been given by either party to the other party at the addresses shown below upon any of the following dates:
(a)� The date of notice by telefax, telecopy, or similar telecommunications, which is confirmed promptly in writing;
(b)� Three Business Days after the date of the mailing thereof, as shown by the post office receipt if mailed to the other party hereto by registered or certified mail;
(c)� The date of the receipt thereof by such other party if not given pursuant to (a) or (b) above.
The address for notice for each of the parties shall be as follows:
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Issuer: City of Miami, Florida Health Facilities Authority 444 S.W. 2nd Avenue, 6th Floor Miami, Florida 33130 Attention: Director of Finance Telephone: (305) 416-1324 Telecopier: (305) 400-5211
with a copy to:
Office of the City Attorney Miami Riverside Center 444 S.W. 2nd Avenue, 9th Floor Miami, Florida 33130 Telephone: (305) 416-1800 Telecopier: (305) 416-1801
MJHS: Miami Jewish Health Systems, Inc. 5200 N.E. Second Avenue Miami, Florida 33137 Attention: Chief Financial Officer and General Counsel Telephone: (305) 751-8626 Telecopier: (305) 675-8517 (efax)
with a copy to: Greenberg Traurig, P.A. 333 S.E. Second Avenue Miami, Florida 33131 Attention: Robert C. Gang Telephone: (305) 579-0886 Telecopier: (305) 579-0717
Bond Trustee: The Bank of New York Mellon Trust Company, N.A. 10161 Centurion Parkway N. Jacksonville, Florida 32256 Attention: Corporate Trust Services Telephone: (904) 998-4741 Telecopier: (904) 645-1997
Notwithstanding the foregoing, notices to the Bond Trustee shall be effective only upon receipt.
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Section 11.10.� Payments Due on Holidays. If the date for making any payment or the last day for performance of any act or the exercising of any right, as provided in this Bond Indenture, shall be a legal holiday or a day on which banking institutions in the city in which the office of the Bond Trustee from which this Bond Indenture is administered is located, are authorized by law to remain closed, such payment may be made or act performed or right exercised on the next succeeding day not a legal holiday or a day on which such banking institutions are authorized by law to remain closed with the same force and effect as if done on the nominal date provided in this Bond Indenture.
Section 11.11.� Public Records.
(a)� The Issuer and the Bond Trustee understand that the public shall have access, at all reasonable times, to all documents and information constituting public records related to the Bonds, subject to the provisions of Chapter 119, Florida Statutes, and agree to allow access by the City, the Issuer, and their respective public records custodians to all documents subject to disclosure under applicable laws. Failure or refusal by the Bond Trustee to comply with requests by the City, the Issuer, and/or their respective public records custodians for compliance with the provisions of this Section shall result in the immediate actions by the Issuer to accomplish compliance or to cause compliance to be accomplished to the best of their respective abilities.
(b)� If and to the extent applicable and only provided that the Bond Trustee is acting on behalf of the Issuer, the Issuer and the Bond Trustee shall additionally comply with Section 119.0701, Florida Statutes, including without limitation: (1) keep and maintain public records required by the Issuer to perform the services under this Bond Indenture; (2) upon the written request of the Issuer’s custodian of public records, provide the Issuer with a copy of the requested records or allow the records to be inspected or copied within a reasonable time at a cost that does not exceed the cost provided by Chapter 119, Florida Statutes, or as otherwise provided by law; (3) ensure that public records that are exempt or confidential and exempt from public records disclosure requirements are not disclosed except as authorized by law for the duration of the term of this Bond Indenture and following termination of this Bond Indenture if the Bond Trustee does not transfer the public records to the Issuer; (4) upon termination of this Bond Indenture, the Bond Trustee shall transfer, at no cost, to the Issuer all public records in their respective possession of the Bond Trustee or keep and maintain public records required by the public agency to perform the service. If the Bond Trustee transfers all public records to the Issuer upon termination of this Bond Indenture, the Bond Trustee shall destroy any duplicate public records that are exempt or confidential and exempt from public records disclosure requirements; and (5) if the Bond Trustee keeps and maintains public records upon termination of this Bond Indenture, the Bond Trustee shall meet all applicable requirements for retaining public records. All electronically stored public records must be provided to the City on behalf of the Issuer, upon the request of the Issuer’s public records custodian, in a format compatible with the City’s information technology systems. Notwithstanding the foregoing, the Issuer and the Bond Trustee shall be permitted to retain any public records that make up part of their respective work products solely as required for archival purposes, as required by law, or
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to evidence compliance with the terms of this Bond Indenture and with the Loan Agreement.
(c)� Should the Issuer, the Bond Trustee, and/or any other party involved with the issuance of the Bonds and continuing compliance therefor determine to dispute any public access provision required by Florida Statutes, then the disputing entity shall do so at the expense of MJHS and at no cost to the City, the Issuer, and/or the Bond Trustee, as and if applicable, and at no cost to those not disputing such public records access provision.
(d)� Any and all requests by anyone to inspect or copy public records related to this Bond Indenture must be made directly to the Issuer. Should the Bond Trustee receive a request for public records from someone other than the City, the Issuer, or their respective public records custodians, then the Bond Trustee shall forward the request to the Issuer’s public records custodian as set forth in (e) below. If the Issuer does not possess the requested records, the Issuer shall immediately notify the Bond Trustee of the request for such records, and the Bond Trustee shall provide the records to the Issuer or allow the records to be inspected or copied within a reasonable time.
(e)� IF EITHER THE ISSUER OR THE BOND TRUSTEE HAS QUESTIONS REGARDING THE APPLICATION OF CHAPTER 119, FLORIDA STATUTES, TO THEIR RESPECTIVE DUTIES TO PROVIDE PUBLIC RECORDS RELATING TO THIS BOND INDENTURE, PLEASE CONTACT THE CUSTODIAN OF PUBLIC RECORDS AT:
Public Records c/o Office of the City Attorney Telephone: 305-416-1800 E-mail: [email protected] Miami Riverside Center, 9th Floor 444 S.W. 2nd Avenue Miami, Florida 33130
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Bond Indenture to be executed by its duly authorized officers, all as of the date first above written.
CITY OF MIAMI, FLORIDA HEALTH FACILITIES AUTHORITY By: Chair THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Bond Trustee By: Vice President
[THIS PAGE INTENTIONALLY LEFT BLANK]
C-92
�
CITY OF MIAMI, FLORIDA HEALTH FACILITIES AUTHORITY
and
MIAMI JEWISH HEALTH SYSTEMS, INC.
LOAN AGREEMENT
DATED AS OF JANUARY 1, 2017
CITY OF MIAMI, FLORIDA HEALTH FACILITIES AUTHORITY HEALTH FACILITIES REVENUE AND REVENUE REFUNDING BONDS
(MIAMI JEWISH HEALTH SYSTEMS, INC. PROJECT), SERIES 2017
TABLE OF CONTENTS
Page
i
ARTICLE I DEFINITIONS .................................................................................................... 1
Section 1.01. Definitions ............................................................................................... 1
ARTICLE II REPRESENTATIONS ........................................................................................ 9
Section 2.01. Representations by the Issuer .................................................................. 9
Section 2.02. Representations by MJHS ..................................................................... 10
ARTICLE III TERM OF AGREEMENT ................................................................................ 12
Section 3.01. Term of this Agreement ......................................................................... 12
ARTICLE IV ISSUANCE OF THE BONDS AND APPLICATION OF PROCEEDS .......... 12
Section 4.01. Agreement to Issue Bonds, Application of Bond Proceeds .................. 12
Section 4.02. Agreement to Construct Project; Completion Certificate ..................... 13
Section 4.03. Cost of Construction .............................................................................. 14
Section 4.04. Plans; Modifications of the Projects ...................................................... 14
Section 4.05. Compliance with Regulatory Requirements .......................................... 14
Section 4.06. Requests for Disbursements .................................................................. 14
Section 4.07. Intentionally Omitted ............................................................................. 15
Section 4.08. Modification of Disbursements ............................................................. 15
Section 4.09. Covenants as to Use of Bond Proceeds ................................................. 15
Section 4.10. Non-Profit Status ................................................................................... 15
Section 4.11. Disposition of Facility ........................................................................... 15
ARTICLE V LOAN OF BOND PROCEEDS; NOTES; PROVISION FOR PAYMENT ........................................................................................................ 16
Section 5.01. Loan of Bond Proceeds ......................................................................... 16
Section 5.02. Repayment of Loan ............................................................................... 16
Section 5.03. Credits .................................................................................................... 16
Section 5.04. Notes ...................................................................................................... 16
Section 5.05. Payment of Bond Trustee’s and Paying Agent’s Fees and Expenses ................................................................................................ 17
Section 5.06. Reserve Fund ......................................................................................... 17
Section 5.07. Payment of Administration Expenses ................................................... 17
Section 5.08. Payees of Payments ............................................................................... 17
Section 5.09. Obligations of MJHS Hereunder Unconditional ................................... 18
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TABLE OF CONTENTS (continued)
Page
ii
ARTICLE VI MAINTENANCE AND INSURANCE ............................................................ 18
Section 6.01. Maintenance and Modifications by MJHS ............................................ 18
Section 6.02. Insurance ................................................................................................ 18
ARTICLE VII SPECIAL COVENANTS .................................................................................. 19
Section 7.01. No Warranty of Merchantability, Condition or Suitability by the Issuer ...................................................................................................... 19
Section 7.02. Right of Access to Facility .................................................................... 19
Section 7.03. Nonsectarian Use ................................................................................... 19
Section 7.04. Further Assurances ................................................................................ 19
Section 7.05. Indemnification ...................................................................................... 19
Section 7.06. Authority of MJHS ................................................................................ 22
Section 7.07. Authority of Issuer Representative ........................................................ 22
Section 7.08. No Personal Liability ............................................................................. 22
Section 7.09. Fees and Expenses ................................................................................. 22
Section 7.10. Reporting Information to Issuer ............................................................ 23
Section 7.11. Non-Discrimination ............................................................................... 23
Section 7.12. Arbitrage; Preservation of Tax-Exemption ........................................... 23
Section 7.13. Certain Covenants with Respect to Compliance with Arbitrage Requirements for Investments in Nonpurpose Investments and Rebate to the United States of America ................................................ 23
Section 7.14. Obligations Under Indenture ................................................................. 23
ARTICLE VIII ASSIGNMENT AND LEASING ...................................................................... 24
Section 8.01. Assignment and Leasing by MJHS ....................................................... 24
Section 8.02. Assignment and Pledge by Issuer .......................................................... 24
ARTICLE IX FAILURE TO PERFORM COVENANTS AND REMEDIES THEREFOR ...................................................................................................... 25
Section 9.01. Failure to Perform Covenants ................................................................ 25
Section 9.02. Remedies for Failure to Perform ........................................................... 25
Section 9.03. Discontinuance of Proceedings ............................................................. 25
Section 9.04. No Remedy Exclusive ........................................................................... 26
Section 9.05. Agreement to Pay Attorneys’ Fees, Costs and Expenses ...................... 26
TABLE OF CONTENTS (continued)
Page
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Section 9.06. Waivers .................................................................................................. 26
ARTICLE X PREPAYMENT OF NOTES ............................................................................ 26
Section 10.01. General Option to Prepay Notes ............................................................ 26
Section 10.02. Conditions to Exercise of Option .......................................................... 27
ARTICLE XI MISCELLANEOUS .......................................................................................... 27
Section 11.01. Notices ................................................................................................... 27
Section 11.02. Binding Effect ....................................................................................... 28
Section 11.03. Severability ............................................................................................ 28
Section 11.04. Amounts Remaining in Funds ............................................................... 28
Section 11.05. Amendments, Changes, and Modifications ........................................... 29
Section 11.06. Execution in Counterparts ..................................................................... 29
Section 11.07. Payment ................................................................................................. 29
Section 11.08. Governing Law ...................................................................................... 29
Section 11.09. No Pecuniary Liability of Issuer ............................................................ 29
Section 11.10. Payments Due on Holidays ................................................................... 29
Section 11.11. Survival of Covenants ........................................................................... 29
Section 11.12. Public Records ....................................................................................... 30
Exhibit A Description of 2017 Project
Exhibit B Form of Cost of Issuance Disbursement
Exhibit C Form of Requisition
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LOAN AGREEMENT
THIS LOAN AGREEMENT dated as of January 1, 2017, between the CITY OF MIAMI, FLORIDA HEALTH FACILITIES AUTHORITY, a public body corporate and politic created and existing a as public instrumentality under the Constitution and Laws of the State of Florida (the “Issuer”), and MIAMI JEWISH HEALTH SYSTEMS, INC., a nonprofit corporation duly organized and existing under the laws of the State of Florida (“MJHS”),
W I T N E S S E T H:
WHEREAS, the Issuer is a public body corporate and politic created and existing as a public instrumentality under the Constitution and Laws of the State of Florida; and
WHEREAS, the Issuer is authorized under the Act (as hereinafter defined), to enter into loan agreements and to issue its bonds and loan the proceeds thereof to provide for the financing and refinancing of the acquisition, construction or installation of health facilities and health care facilities and the refunding of its outstanding bonds issued for such purposes, all for the public purpose of improving the adequacy, cost and accessibility of health care within the State of Florida; and
WHEREAS, MJHS has requested the Issuer to issue its City of Miami, Florida Health Facilities Authority Health Facilities Revenue and Revenue Refunding Bonds (Miami Jewish Health Systems, Inc. Project), Series 2017 (the “Series 2017 Bonds”) in the Aggregate Principal Amount (as hereinafter defined) of $44,035,000 for the purposes of (i) refunding the Refunded Bonds (as hereinafter defined) and thereby refinancing the obligations of MJHS (formerly known as Miami Jewish Home and Hospital for the Aged, Inc.) under the Refunded Loan Agreement (as hereinafter defined), (ii) refinancing the SunTrust Bank Loan (as hereinafter defined), (iii) paying the Swap Termination Payment (as hereinafter defined), (iv) financing the 2017 Project (as hereinafter defined), (v) funding the Reserve Fund (as hereinafter defined) related to the Series 2017 Bonds, and (iv) paying certain Costs of Issuance (as hereinafter defined) of the Series 2017 Bonds;
NOW, THEREFOR, for and in consideration of the premises and the mutual covenants hereinafter contained, the parties hereto formally covenant, agree and bind themselves as follows:
ARTICLE I DEFINITIONS
Section 1.01.� Definitions. The following terms, except where the context indicates otherwise, shall have the respective meanings set forth below.
“Account” means any account established within a Fund.
“Act” means Part III, Chapter 154, Florida Statutes, as amended, Part II, Chapter 159, Florida Statutes, Ordinance No. 79-93 of the City of Miami, Florida, as amended, and other applicable provisions of law.
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“Additional Bonds” means the one or more series of additional bonds authorized to be issued by the Issuer pursuant to Sections 2.09 and 2.10 of the Bond Indenture.
“Administration Expenses” means the issuance fees of the Issuer and the reasonable and necessary fees and expenses incurred by the Issuer pursuant to this Agreement and the Bond Indenture.
“Aggregate Principal Amount” means the outstanding principal amount including, in the case of a security sold at a discount to the purchaser thereof the accreted value of such discount calculated in accordance with the documents authorizing such security, or if not so defined, generally accepted accounting principles.
“Agreement” or “Loan Agreement” means this Loan Agreement and any amendments and supplements hereto made in conformity herewith and with the Bond Indenture.
“Authorized Denominations” means, with respect to the Series 2017 Bonds, the denomination of $5,000 or any integral multiple thereof and, with respect to any series of Additional Bonds, as provided in the supplemental indenture creating such series of Additional Bonds.
“Bond Counsel” means any attorney at law or firm of attorneys of nationally recognized experience in matters pertaining to the validity of, and exclusion from gross income for federal income tax purposes of interest on, the obligations of states and their political subdivisions as may be selected by MJHS but is reasonably acceptable to the Issuer and is not objected to by the Bond Trustee.
“Bond Fund” means the Bond Fund created in Section 3.02 of the Bond Indenture.
“Bond Indenture” means the Indenture of Trust of even date herewith relating to the Bonds between the Issuer and the Bond Trustee, including any indentures supplemental thereto made in conformity therewith.
“Bondholder,” “Owner” or “owner” of the Bonds mean the registered owner of any fully registered Bond.
“Bonds” means the Series 2017 Bonds and any Additional Bonds issued pursuant to the Bond Indenture.
“Bond Trustee” means The Bank of New York Mellon Trust Company, N.A., being the registrar, a paying agent and the trustee under the Bond Indenture, or any successor corporate trustee.
“Business Day” means any day other than (i) a Saturday, a Sunday or, in the City of New York, New York or in Jacksonville, Florida (or, if different, in the city in which the designated corporate trust office of the Bond Trustee is located), a day on which banking institutions are authorized or required by law or executive order to close, or (ii) a day on which the New York Stock Exchange is closed.
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“Closing Date” means the date on which a series of Bonds is delivered to the purchaser or purchasers thereof and payment is received by the Bond Trustee.
“Code” means the Internal Revenue Code of 1986, as amended from time to time, including, when appropriate, the statutory predecessor thereof, or any applicable corresponding provisions of any future laws of the United States of America relating to federal income taxation, and except as otherwise provided herein or required by the context hereof, includes interpretations thereof contained or set forth in the applicable Regulations of the Department of the Treasury (including applicable final or temporary regulations and also including Regulations issued pursuant to the statutory predecessor of the Code), the applicable rulings of the Internal Revenue Service (including published Revenue Rulings and private letter rulings), and applicable court decisions.
“Completion Certificate” means a certificate of MJHS delivered pursuant to Section 4.02(b) hereof.
“Completion Date” means the date specified in the Completion Certificate as the date of completion or termination.
“Construction Fund” means any construction fund created in connection with an issue of Additional Bonds under Section 2.09 of the Bond Indenture.
“Continuing Disclosure Agreement” means the Continuing Disclosure Agreement dated January 25, 2017, executed by MJHS.
“Cost” or “Costs” as applied to a Project means and includes any and all costs permitted by the Code and the Act.
“Costs of Issuance” means with respect to the Tax Exempt Bonds all costs that are treated as issuance costs within the meaning of Section 1.150-1(b) of the Regulations, including but not limited to, (a) underwriter’s spread (whether realized directly or derived through purchase of the Tax Exempt Bonds at a discount below the price at which they are expected to be sold to the public); (b) counsel fees (including bond counsel, underwriter’s counsel, Issuer’s counsel, Bond Trustee’s counsel and MJHS’s counsel fees that relate to the issuance of the Tax Exempt Bonds, as well as any other certain specialized counsel fees incurred in connection with the issuance of the Tax Exempt Bonds); (c) financial advisory fees incurred in connection with the issuance of the Tax Exempt Bonds; (d) rating agency fees; (e) Bond Trustee fees incurred in connection with the issuance of the Tax Exempt Bonds; (f) paying agent and registrar and authenticating agent fees related to issuance of the Tax Exempt Bonds; (g) accountant fees related to the issuance of the Tax Exempt Bonds; (h) printing costs of the Tax Exempt Bonds and of the preliminary and final offering materials; (i) publication costs associated with the financing proceedings; (j) any fees paid to the Issuer; and (k) costs of engineering and feasibility studies necessary to the issuance of the Tax-Exempt Bonds; provided, that bond insurance premiums and certain credit enhancement fees, to the extent treated as interest expense under applicable income tax regulations, shall not be treated as “Costs of Issuance.”
“Cost of Issuance Fund” means the cost of issuance fund created under Section 3.17 of the Bond Indenture.
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“Delivery Date” means the date the Bonds are delivered to the initial purchasers against payment therefor.
“Event of Default” means those defaults specified in Section 8.01 of the Bond Indenture.
“Expansion” means such additions, improvements, extensions, alterations, relocations, enlargements, expansions, modifications or changes in, on or to any Project permitted as a “health facility” or “health care facility” under the Act as MJHS deems necessary or desirable, provided such Expansion does not materially impair the effective use of such Project.
“Facility” means the land, building and all fixtures and equipment comprising the healthcare facilities owned by the Obligated Group Members including independent living units, assisted living units, a health center including skilled nursing beds located in the City of Miami, Miami-Dade County, Florida.
“Fitch” means Fitch Inc. or any successor thereto maintaining a rating on Bonds.
“Funds” means the Bond Fund, the Reserve Fund, and the Construction Fund.
“Government Obligations” means direct obligations of, or obligations the principal of and interest on which are guaranteed by, the United States of America, including (in the case of direct obligations of the United States of America) evidences of direct ownership of proportionate interests in future interest or principal payments of such obligations. Investments in such proportionate interests must be limited to circumstances wherein (a) a bank or trust company acts as custodian and holds the underlying Government Obligations; (b) the owner of the investment is the real party in interest and has the right to proceed directly and individually against MJHS of the underlying Government Obligations; and (c) the underlying Government Obligations are held in a special account, segregated from the custodian’s general assets, and are not available to satisfy any claim of the custodian, any person claiming through the custodian, or any person to whom the custodian may be obligated.
“Gross Proceeds” shall have the meaning ascribed thereto in Section 3.16 of the Bond Indenture.
“Initial Members” means, collectively, MJHS, Miami Jewish Health Systems Foundation, Inc. and Florida Pace Centers, Inc.
“Interest Account” means the account of such name in the Bond Fund created in Section 3.02 of the Bond Indenture.
“Interest Payment Date” means (i) as to the Series 2017 Bonds, each January 1 and July 1, commencing July 1, 2017, or, if such day is not a business day, the immediately succeeding business day in the years during which a series of the Series 2017 Bonds are Outstanding under the provisions of the Bond Indenture, and (ii) as to Additional Bonds, the dates specified in the applicable supplemental indenture on which interest on such Additional Bonds is to be paid.
“Issuer” means City of Miami, Florida Health Facilities Authority, or any public entity succeeding to its rights and obligations under this Agreement.
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“Issuer Representative” means the Chair or Vice Chair of the Issuer or such other person at the time, and from time to time, designated by written certificate of the Issuer furnished to MJHS and the Bond Trustee containing the specimen signature of such person and signed on behalf of the Issuer by its Chair or Vice Chair. Such certificate shall designate an alternate or alternates, any of whom may act at any time as Issuer Representative.
“Master Indenture” means the Master Trust Indenture dated as of January 1, 2017, among the Initial Members and the Master Trustee, including any supplements or amendments thereto and modifications thereof.
“Master Trustee” means The Bank of New York Mellon Trust Company, N.A., as trustee under the Master Indenture, and its successors as trustee thereunder.
“Maximum Annual Debt Service” means an amount equal to the maximum principal and interest requirements (taking into account all mandatory sinking fund payments) due in any calendar year on the Series 2017 Bonds; provided, however, that principal of the Series 2017 Bonds in its final year shall be excluded from the determination of Maximum Annual Debt Service to the extent of the moneys on deposit as of the date of calculation in the Reserve Fund.
“MJHS” means Miami Jewish Health Systems, Inc., a Florida nonprofit corporation, and any and all successors thereto in accordance with the Indenture.
“MJHS Documents” means this Agreement, the Master Indenture, the Supplemental Indenture, the Series 2017 Note, the Continuing Disclosure Agreement and the Tax Compliance Agreement.
“Moody’s” means Moody’s Investors Service, or any successor thereto maintaining a rating on Bonds.
“Notes” means the Series 2017 Note and any other Obligation (as defined in the Master Indenture) payable to the Issuer issued under the Master Indenture pursuant to this Agreement.
“Obligated Group Members” has the meaning given such term in the Master Indenture.
“Obligated Group Representative” means (i) MJHS, (ii) any surviving, resulting or transferee corporation of MJHS, or (iii) any other entity or organization appointed as the Obligated Group Representative under the Master Trust Indenture.
“Opinion of Bond Counsel” shall mean an opinion in writing signed and delivered by Bond Counsel.
“Opinion of Counsel” means an opinion in writing signed by an attorney or firm of attorneys, acceptable to the Bond Trustee, who may be counsel to MJHS or other counsel.
“Outstanding” means, as of any particular time, all Bonds which have been duly authenticated and delivered by the Bond Trustee under the Bond Indenture, except:
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(a) Bonds theretofore cancelled by the Bond Trustee or delivered to the Bond Trustee for cancellation after purchase in the open market or because of payment at or redemption prior to maturity;
(b) Bonds for the payment or redemption of which cash funds (or Government Obligations to the extent permitted in Section 7.01 of the Bond Indenture) shall have been theretofore deposited with the Bond Trustee (whether upon or prior to the maturity or redemption date of any such Bonds); provided that if such Bonds are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given or arrangements satisfactory to the Bond Trustee shall have been made therefor, or waiver of such notice satisfactory in form to the Bond Trustee, shall have been filed with the Bond Trustee and provided further that prior to such payment or redemption, the Bonds to be paid or redeemed shall be deemed to be Outstanding for the purpose of transfers and exchanges under Section 2.05 of the Bond Indenture; and
(c) Bonds in lieu of which other Bonds have been authenticated under Section 2.06 of the Bond Indenture.
“Paying Agent” means any bank or trust company, including the Bond Trustee, designated pursuant to the Bond Indenture to serve as a paying agency or place of payment for the Bonds, and any successor designated pursuant to the Bond Indenture.
“Payment Office” with respect to the Bond Trustee or other Paying Agent means the office maintained by the Bond Trustee or any affiliate of the Bond Trustee or of another Paying Agent for the payment of interest and principal on the Bonds.
“Permitted Investments” has the meaning assigned to such term in the Master Indenture.
“Person” means an individual, association, unincorporated organization, corporation, limited liability company, partnership, joint venture, business trust or a government or an agency or a political subdivision thereof, or any other entity.
“Principal Account” means the account of such name in the Bond Fund created in Section 3.02 of the Bond Indenture.
“Project” means any “health facility” or “health care facility” or portion thereof permitted by the Act to be financed or refinanced by Bonds. Each Project shall, upon completion, be deemed to be part of the Facility.
“Rating Agency” means Fitch, Inc., Moody’s or Standard & Poor’s, and any successor thereto.
“Rebate Amount” means the excess of the future value, as of a computation date, of all receipts on non-purpose investments (as defined in Section 1.148-3 of the Income Tax Regulations) over the future value, as of that date, of all payments on nonpurpose investments, all as provided by the Regulations implementing Section 148 of the Code.
“Rebate Fund” means that special fund established in the name of the Issuer with the Bond Trustee pursuant to Section 3.16 of the Bond Indenture.
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“Refunded Bonds” means the Issuer’s outstanding Health Facilities Revenue Refunding Bonds (Miami Jewish Home and Hospital for the Aged, Inc. Project), Series 2005.
“Refunded Bonds Indenture” means the Indenture of Trust dated as of August 1, 2005, between the Issuer and the Refunded Bonds Trustee, related to the Refunded Bonds.
“Refunded Bonds Trustee” means The Bank of New York Mellon Trust Company, N.A. (successor in interest to J.P. Morgan Trust Company, National Association), as trustee under the Refunded Bonds Indenture.
“Refunded Project” means that portion of the Facility that was financed or refinanced with proceeds of the Refunded Bonds.
“Refunded Loan Agreement” means the Loan Agreement dated as of August 1, 2005, between the Issuer and MJHS (formerly known as Miami Jewish Home and Hospital for the Aged, Inc.) related to the Refunded Bonds.
“Registered Owner” or “Owners” means the person or persons in whose name or names a Bond shall be registered on books of the Issuer kept by the Bond Trustee for that purpose in accordance with the terms of the Bond Indenture.
“Regular Record Date” means for the Series 2017 Bonds the last day of the month preceding each regularly scheduled interest payment date therefor, and for Additional Bonds shall be the day established by the supplement to the Bond Indenture relating to such Additional Bonds.
“Regulations” means the applicable proposed, temporary or final Income Tax Regulations promulgated under the Code or, to the extent applicable to the Code, under the Internal Revenue Code of 1954, as such regulations may be amended or supplemented from time to time.
“Reserve Fund” means the Reserve Fund created in Section 3.08 of the Bond Indenture.
“Reserve Fund Obligations” means cash and Permitted Investments.
“Reserve Fund Requirement” means an amount equal to the lesser of (a) 125% of the average annual debt service requirement for the Bonds, (b) 10% of the aggregate stated original principal amount of the Bonds, or (c) the Maximum Annual Debt Service on the Bonds.
“Responsible Officer” when used with respect to the Bond Trustee means an officer in the corporate trust department of the Bond Trustee having direct responsibility for administration of the Bond Indenture.
“Securities Depository” means The Depository Trust Company, New York, New York, and any successor thereto as permitted by the Bond Indenture.
8
“Series 2017 Bonds” means City of Miami, Florida Health Facilities Authority Health Facilities Revenue and Revenue Refunding Bonds (Miami Jewish Health Systems, Inc. Project), Series 2017 issued pursuant to the Bond Indenture.
“Series 2017 Note” means the Note issued by MJHS, as Obligated Group Representative, pursuant to the Supplemental Indenture relating to the Series 2017 Bonds.
“Short term” means, as to any investment, maturing within one year from the date of such investment and not renewable by MJHS for a term greater than one year beyond the date of original issuance.
“Special Record Date” means a special date fixed to determine the names and addresses of owners of Series 2017 Bonds for purposes of paying interest on a special interest payment date for the payment of defaulted interest, all as further provided in Section 2.03 of the Bond Indenture and for Additional Bonds shall be the day established by the supplement to the Bond Indenture relating to such Additional Bonds.
“Standard & Poor’s” shall mean S&P Global Ratings, or any successor thereto maintaining a rating on Bonds.
“State” means the State of Florida.
“Substantially All” means ninety-five percent (95%) or more, unless an Opinion of Bond Counsel is rendered indicating that such term, as used herein, shall have a different meaning.
“SunTrust Bank Loan” means the loan from SunTrust Bank to MJHS in the original principal amount of $8,000,000 pursuant to that certain Loan Agreement dated as of December 20, 2013, currently outstanding in the principal amount of $6,680,000.
“Supplemental Indenture” means the Supplemental Indenture Number 1, dated as of January 1, 2017, among the Initial Members and the Master Trustee, supplemental to the Master Indenture, among other things, providing for the issuance of the Series 2017 Note.
“Surplus Construction Fund Moneys” means all moneys (including moneys earned pursuant to the provisions of Article VI of the Bond Indenture) remaining in the Construction Fund after completion or termination of a Project (as evidenced by a Completion Certificate) and payment of all other costs then due and payable from the Construction Fund.
“Swap Termination Payment” means the termination payment under that certain ISDA Master Agreement and related Schedule and Confirmation each dated June 6, 2005 between SunTrust Bank and MJHS (formerly known as Miami Jewish Home and Hospital for the Aged, Inc.).
“Tax Compliance Agreement” means the Tax Certificate and Agreement dated January 25, 2017, between the Issuer and MJHS.
“Tax Exempt Bonds” means the Series 2017 Bonds.
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“Trust Estate” means the property pledged and assigned to the Bond Trustee pursuant to the granting clauses of the Bond Indenture.
“2017 Project” means that portion of the Project that is being financed or refinanced with proceeds of the Series 2017 Bonds, including the Refunded Project, as more particularly described in Exhibit A.
ARTICLE II REPRESENTATIONS
Section 2.01.� Representations by the Issuer. The Issuer represents that:
(a)� The Issuer is a public body corporate and politic duly organized and validly existing under and pursuant to the laws of the State and has full power and authority under the laws of the State (including, in particular, the Act) to enter into the transactions contemplated by this Agreement and to carry out its obligations hereunder. By proper action the Issuer has duly authorized the execution and delivery of this Agreement, the Series 2017 Bonds and the Bond Indenture and the performance of its obligations under this Agreement and the Bond Indenture.
(b)� Neither the execution and delivery of the Series 2017 Bonds, the Bond Indenture or this Agreement, the consummation of the transactions contemplated thereby and hereby, nor the fulfillment of or compliance with the terms and conditions or provisions of the Series 2017 Bonds, the Bond Indenture or this Agreement conflict with or result in the breach of any of the terms, conditions or provisions of any constitutional provision or statute of the State of Florida or of any agreement or instrument or judgment, order or decree of which the Issuer has notice that it is a party nor constitute a default under any of the foregoing or result in the creation or imposition of any prohibited lien, charge or encumbrance of any nature upon any property or assets of the Issuer under the terms of any instrument or agreement.
(c)� The Issuer proposes to issue the Series 2017 Bonds for the purposes of (i) refunding the Refunded Bonds and thereby refinancing the obligations of MJHS (formerly known as Miami Jewish Home and Hospital for the Aged, Inc.) under the Refunded Loan Agreement, (ii) refinancing the SunTrust Bank Loan, (iii) paying the Swap Termination Payment, (iv) financing the 2017 Project, (v) funding the Reserve Fund related to the Series 2017 Bonds, and (vi) paying certain Costs of Issuance of the Series 2017 Bonds. The Series 2017 Bonds shall be in the principal amount, mature, bear interest, be subject to redemption prior to maturity, be secured, and have such other terms and conditions as are set forth in the Bond Indenture
(d)� The Series 2017 Bonds are to be issued under and secured by the Bond Indenture pursuant to which the Issuer’s interest in this Agreement and in the Series 2017 Note, and the revenues and receipts derived by the Issuer from the Series 2017 Note, will be pledged and assigned to the Bond Trustee as security for payment of the principal of, premium, if any, and interest on the Series 2017 Bonds.
(e)� MJHS has represented to the Issuer that the Facility constitutes a “health facility,” a “health care facility” and a “project” within the meaning of the Act.
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(f)� Except as otherwise permitted by this Agreement, the Issuer covenants that it has not and will not pledge the income and revenues derived from this Agreement other than to secure the Bonds.
Section 2.02.� Representations by MJHS. MJHS represents that:
(a)� MJHS is a nonprofit corporation duly incorporated and in good standing under the laws of the State of Florida, has power to enter into this Agreement, the Master Indenture, the Supplemental Indenture, the Tax Compliance Agreement, the Continuing Disclosure Agreement and the Series 2017 Note, and by proper corporate action has duly authorized the execution and delivery of this Agreement, the Master Indenture, the Supplemental Indenture, the Tax Compliance Agreement, the Continuing Disclosure Agreement and the Series 2017 Note.
(b)� Neither the execution and delivery of this Agreement, the Master Indenture, the Supplemental Indenture, the Tax Compliance Agreement, the Continuing Disclosure Agreement and the Series 2017 Note, the consummation of the transactions contemplated hereby and thereby, nor the fulfillment of or compliance with the terms and conditions of this Agreement, the Master Indenture, the Supplemental Indenture, the Tax Compliance Agreement, the Continuing Disclosure Agreement or the Series 2017 Note, conflict with or result in a breach of any of the terms, conditions or provisions of any corporate restriction or any agreement or instrument to which MJHS is now a party or by which it is bound or constitute a default under any of the foregoing.
(c)� No event of default or any event which, with the giving of notice or the lapse of time, or both, would constitute an event of default under the Master Indenture, has occurred.
(d)� MJHS (i) is an organization described in Section 501(c)(3) of the Code and is not a “private foundation,” as such term is defined under Section 509(a) of the Code, (ii) has received a letter or other notification from the Internal Revenue Service to that effect and such letter or other notification has not been modified, limited or revoked, (iii) is in compliance with all terms, conditions and limitations, if any, contained in such letter or other notification, it being expressly represented that the facts and circumstances which form the basis of such letter or other notification as represented to the Internal Revenue Service continue to exist, and (iv) is exempt from federal income taxes under Section 501(a) of the Code.
(e)� As of the date of delivery hereof, MJHS is an organization (i) organized and operated exclusively for charitable purposes and not for pecuniary profit, and (ii) no part of the net earnings of which inures to the benefit of any Person, private stockholder or individual, all within the meaning of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, respectively.
(f)� The Refunded Project and the 2017 Project consist or will consist entirely of property that is owned by MJHS. None of the Refunded Project or the 2017 Project has or will be used in an “unrelated trade or business” (as such term is used in Section 513(a) of the Code) of MJHS (or any other organization that is exempt from federal income tax under Section 501(c)(3) of the Code that may rent or use any portion of the Refunded Project or the 2017 Project).
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(g)� The Tax Compliance Agreement executed and delivered by MJHS concurrently with the issuance and delivery of the Series 2017 Bonds is true, accurate and complete in all material respects as of the date on which executed and delivered and the representations, covenants and warranties relating to tax matters set forth therein are hereby incorporated herein in their entirety by reference.
(h)� Any information that has been or will be supplied by MJHS that has been or will be relied upon by the Issuer, the Bond Trustee and Bond Counsel with respect to the exclusion from gross income for federal income tax purposes of interest on the Series 2017 Bonds is true and correct.
(i)� MJHS is duly authorized to operate the Facility under the laws, rulings, regulations and ordinances of the State of Florida and the departments, agencies and political subdivisions thereof.
(j)� The Facility, which is being financed and refinanced through the issuance of the Series 2017 Bonds, is a “project,” a “health facility” and a “health care facility” within the meaning of the Act. All proceeds of the Series 2017 Bonds will be used to pay a “cost” within the meaning of the Act.
(k)� MJHS shall perform or cause to be performed all of MJHS’s obligations under the MJHS Documents.
(l)� Neither the execution and delivery of any of the MJHS Documents and the other documents contemplated thereby to which MJHS is a party or the consummation of the transactions contemplated thereby nor the fulfillment of or compliance with the provisions of any of the MJHS Documents and the other documents contemplated thereby, will conflict with or result in a breach of or constitute a default by MJHS under any of the terms, conditions or provisions of any law or ordinance of the State or any applicable political subdivision thereof or of MJHS’s Articles of Incorporation or Bylaws, or any corporate restriction or any agreement or instrument to which MJHS is a party or by which it is bound, or result in the creation or imposition of any lien of any nature upon any of the property of MJHS under the terms of any such law, ordinance, articles of incorporation or bylaws, restriction, agreement or instrument except for Permitted Encumbrances, as defined in the Master Indenture.
(m)� The Facility conforms, and each Project will conform, with all applicable zoning, planning, building and environmental laws, ordinances, rules and regulations of governmental authorities having jurisdiction over the Facility and such Project, as the case may be.
(n)� Each of the MJHS Documents and the other documents contemplated thereby to which MJHS is a party constitutes a legal, valid and binding obligation of MJHS enforceable against MJHS in accordance with its terms, except as enforceability may be subject to and limited by (a) bankruptcy, insolvency, reorganization, moratorium or similar laws, in each case relating to or affecting the enforcement of creditors’ rights, (b) applicable laws or equitable principles that may affect the remedies or injunctive or other equitable relief, and (c) judicial discretion which may be exercised in applicable cases to adversely affect the enforcement of certain rights or remedies.
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(o)� MJHS agrees that it (i) shall not perform any act or enter into any agreement which would adversely affect its federal income tax status and shall conduct its operations in the manner which conforms to the standards necessary to qualify MJHS as a charitable organization within the meaning of Section 501(c)(3) of the Code or any successor provisions of federal income tax law, (ii) shall not perform any act, enter into any agreement or use or permit the Refunded Project or the 2017 Project, or any portion thereof, to be used in any manner, or for any trade or business or other non-exempt use unrelated to the exempt purposes of MJHS, except as otherwise provided for in the Tax Compliance Agreement, and (iii) shall not do or fail to do any act or undertaking which may give rise to unrelated trade or business income with respect to its operations at the Refunded Project or the 2017 Project, except as otherwise provided for in the Tax Compliance Agreement.
(p)� MJHS will use due diligence to cause the Facility to be operated in accordance with the laws, rulings, regulations and ordinances of the State and the departments, agencies and political subdivisions thereof. MJHS has obtained or will cause to be obtained all requisite approvals of the State and of other federal, state, regional and local governmental bodies for the Facility and for any Project.
(q)� MJHS has obtained a certificate of need for all portions of the Facility for which a certificate of need is required under State law and has complied with all conditions and requirements of those certificates and has all other necessary consents, permits, approvals and authorizations for ownership and operation of the Facility.
ARTICLE III TERM OF AGREEMENT
Section 3.01.� Term of this Agreement. Subject to Section 11.11 herein, this Agreement shall remain in full force and effect from the date of delivery hereof until such time as all of the Bonds shall have been fully paid or provision made for such payment pursuant to the Bond Indenture and all reasonable and necessary fees and expenses of the Bond Trustee and the Issuer accrued and to accrue through final payment of the Bonds and all liabilities of MJHS with respect to the Bonds accrued and to accrue through final payment of the Bonds have been paid.
ARTICLE IV ISSUANCE OF THE BONDS AND APPLICATION OF PROCEEDS
Section 4.01.� Agreement to Issue Bonds, Application of Bond Proceeds.
(a)� The Issuer will sell and cause to be delivered to the initial purchasers thereof the Series 2017 Bonds and will deliver the proceeds thereof to the Bond Trustee for disposal as follows:
(i)� Deposit into the Reserve Fund the amount specified in the request and authorization to the Bond Trustee described in Section 2.07(e) of the Bond Indenture.
(ii)� Deposit into the Cost of Issuance Fund the amount specified in the request and authorization to the Bond Trustee described in Section 2.07(e) of the Bond Indenture.
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(iii)� Deposit with the Refunded Bonds Trustee in its capacity as trustee under the Refunded Bonds Indenture the amount specified in the request and authorization to the Bond Trustee described in Section 2.07(e) of the Bond Indenture.
(iv)� Deposit with SunTrust Bank the amount specified in the request and authorization to the Bond Trustee described in Section 2.07(e) of the Bond Indenture relating to the repayment of the SunTrust Bank Loan.
(v)� Deposit with SunTrust Bank the amount specified in the request and authorization to the Bond Trustee described in Section 2.07(e) of the Bond Indenture relating to the payment of the Swap Termination Payment.
(vi)� Deposit to the Construction Fund the balance of the proceeds of the Series 2017 Bonds.
(b)� Additional Bonds may be issued upon the terms and conditions provided herein and in Sections 2.09 and 2.10 of the Bond Indenture to provide funds (i) to pay the Costs of financing and refinancing Expansions, (ii) to pay the Cost of financing, refinancing, acquiring, providing, constructing, enlarging, remodeling, renovating, improving, furnishing or equipping and refinancing the acquiring, constructing, equipping or completing any Project, (iii) to the extent permitted by law, to refund any Bonds theretofore issued and then Outstanding under the Bond Indenture or (iv) for any combination of such purposes. In the event of the issuance of Additional Bonds for any such purposes, the amount of Additional Bonds issued may include the costs of the issuance and sale of the Additional Bonds, capitalized interest for such period allowed by law, reserve funds and such other costs reasonably related to the financing as shall be agreed upon by MJHS and the Issuer.
(c)� If MJHS is not in default hereunder, the Issuer agrees, on request of MJHS, from time to time, to consider the issuance of the amount of Additional Bonds specified by MJHS; provided that the terms of such Additional Bonds, the purchase price to be paid therefor and the manner in which the proceeds thereof are to be disbursed shall have been approved in writing by MJHS, and provided further that (1) MJHS and the Issuer shall have entered into an amendment to this Agreement to provide, among other things, for additional loan payments in an amount at least sufficient to pay the principal of, premium, if any, and interest on the Additional Bonds when due, and for a deposit into the Reserve Fund (including an account or accounts therein) of additional Reserve Fund Obligations which will equal the Reserve Fund Requirement on such Additional Bonds, and (2) MJHS and the Master Trustee shall have entered into a supplement to the Master Indenture whereby MJHS issues a Note securing payment of the principal of, premium, if any, and interest on the Additional Bonds. The Issuer agrees to comply with Sections 2.09 and 2.10 of the Bond Indenture with respect to the issuance of Additional Bonds.
Section 4.02.� Agreement to Construct Project; Completion Certificate.
(a)� MJHS shall cause the 2017 Project to be financed with proceeds of the Series 2017 Bonds and each Project to be acquired, constructed, and improved with the proceeds of Additional Bonds to proceed with due diligence and pursuant to the requirements of the applicable laws of the State of Florida in all material respects.
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(b)� MJHS shall deliver to the Bond Trustee within 90 days after the final completion or termination of the 2017 Project financed with proceeds of the Series 2017 Bonds and each future Project financed with the proceeds of any Additional Bonds a certificate (the “Completion Certificate”) of MJHS to the effect that:
(i)� such Project has been completed substantially in accordance with the plans and specifications, as then amended, and the date of completion;
(ii)� the Cost of such Project has been fully paid for and no claim or claims exist against MJHS or against the Project out of which a lien based on furnishing labor or material exists or might ripen; provided, however, there may be excepted from the foregoing statement any claim or claims out of which a lien exists or might ripen in the event that MJHS intends to contest such claim or claims in accordance with this Loan Agreement, in which event such claim or claims shall be described; provided, further, that it shall be stated that moneys are on deposit in the Project Fund sufficient to make payment of the full amount that might in any event be payable in order to satisfy such claim or claims; provided, further, that there may also be excepted from the foregoing statement any claim that has been insured over pursuant to an endorsement to any title insurance; and
(iii)� all permits, certificates and licenses necessary for the occupancy and use of such Project have been obtained and are in full force and effect.
Section 4.03.� Cost of Construction. MJHS represents and warrants that it will use its best efforts to construct or cause the construction of the 2017 Project financed with proceeds of the Series 2017 Bonds and each future Project financed with the proceeds of any Additional Bonds at a price which will permit completion of such Project within the amount of the funds to be deposited in the Construction Fund and within the amount of other available funds of MJHS.
Section 4.04.� Plans; Modifications of the Projects. MJHS hereby covenants and agrees that no changes or modifications, or substitutions, deletions, or additions shall be made with respect to the 2017 Project financed with proceeds of the Series 2017 Bonds and each future Project financed with the proceeds of any Additional Bonds if such change disqualifies such Project as a “project” under the Act.
Section 4.05.� Compliance with Regulatory Requirements. MJHS agrees that the 2017 Project financed with proceeds of the Series 2017 Bonds and each future Project financed with the proceeds of any Additional Bonds shall be constructed strictly in accordance with all applicable ordinances and statutes, and in accordance with the requirements of all regulatory authorities in all material respects, and any rating or inspection organization, bureau, association, or office having jurisdiction, and it will furnish to the Issuer all information necessary for the Issuer to comply with all of the foregoing and all laws, regulations, orders and other governmental requirements.
Section 4.06.� Requests for Disbursements.
(a)� MJHS shall be entitled to disbursements of moneys in the Construction Fund to pay the Costs related to the 2017 Project financed with proceeds of the Series 2017 Bonds and
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each future Project financed with the proceeds of any Additional Bonds, utilizing the requisition substantially in the form of attached hereto as Exhibit C, signed by MJHS.
(b)� MJHS shall be entitled to disbursement of moneys (a) in the Cost of Issuance Fund for the Series 2017 Bonds to pay the Cost of Issuance of the Series 2017 Bonds and (b) in the Cost of Issuance Fund for any future Additional Bonds to pay Costs of Issuance of any such Additional Bonds. MJHS shall request disbursements from the Cost of Issuance Fund substantially in the form attached hereto as Exhibit B to pay Cost of Issuance, and to reimburse itself for Cost of Issuance paid by MJHS, upon presentation to the Bond Trustee of a request for disbursement signed by MJHS, but in no event more often than four times a month.
(c)� Notwithstanding the foregoing, MJHS shall make no request for disbursement of moneys from the Construction Fund for payment of Costs of Issuance of Additional Bonds.
Section 4.07.� Intentionally Omitted.
Section 4.08.� Modification of Disbursements. The making of any disbursement or any part of a disbursement shall not be deemed an approval or acceptance by the Bond Trustee of the work theretofore done. Upon prior notice to MJHS and in order to satisfy requirements specified in the Master Indenture, the Bond Trustee may deduct from any disbursement to be made under this Agreement any amount necessary for the payment of fees and expenses required to be paid under this Agreement and any insurance premiums, taxes, assessments, water rates, sewer rents and other charges, liens and encumbrances upon the facilities, whether before or after the making of this Agreement, and any amounts necessary for the discharge of mechanic’s liens, and apply such amounts in payment of such fees, expenses, premiums, taxes, assessments, charges, liens and encumbrances. All such sums so applied shall be deemed disbursements under this Agreement, which are incorporated herein in their entirety by reference.
Section 4.09.� Covenants as to Use of Bond Proceeds. MJHS covenants to use the proceeds of the Series 2017 Bonds in accordance with the provisions of the Tax Compliance Agreement.
Section 4.10.� Non-Profit Status. MJHS agrees that it shall not perform any acts, enter into any agreements, carry on or permit to be carried on at the Facility, or any other Facilities, or permit the Facility or such Facilities to be used in or for any trade or business, which shall adversely affect the basis for MJHS’s exemption from federal income taxation pursuant to Sections 501(c)(3) of the Code.
Section 4.11.� Disposition of Facility. Except as provided in Section 8.01 hereof and in the Tax Compliance Agreement, MJHS covenants that the property constituting the Facility will not be sold, leased or otherwise disposed in a transaction resulting in the receipt by MJHS of cash or other compensation, unless MJHS obtains an Opinion of Bond Counsel that such sale or other disposition will not adversely affect the tax-exempt status of the Tax-Exempt Bonds.
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ARTICLE V LOAN OF BOND PROCEEDS; NOTES; PROVISION FOR PAYMENT
Section 5.01.� Loan of Bond Proceeds. The Issuer hereby agrees to loan to MJHS the proceeds of the Series 2017 Bonds and the proceeds of any Additional Bonds issued under the Bond Trust Indenture. MJHS hereby agrees to repay each loan pursuant to the conditions set forth in Section 5.02 hereof.
Section 5.02.� Repayment of Loan. MJHS agrees to pay to the Bond Trustee for the account of the Issuer all payments when due on the Series 2017 Note. If for any reason the amounts paid to the Bond Trustee by MJHS on the Series 2017 Note, together with any other amounts available in the Bond Fund, are not sufficient to pay principal of, premium, if any, and interest on the Bonds when due, MJHS agrees to pay the amount required to make up such deficiency.
Section 5.03.� Credits. Any amount in either account of the Bond Fund at the close of business of the Bond Trustee on the day immediately preceding any payment date on the Notes in excess of the aggregate amount then required to be contained in such account of the Bond Fund pursuant to Section 5.02 hereof shall be credited pro rata against the payments due by MJHS on such next succeeding principal or interest payment date on the Notes.
In the event that all of the Bonds then Outstanding are called for redemption, any amounts contained in the Reserve Fund and the Bond Fund at the close of business of the Bond Trustee on the day immediately preceding such redemption date shall be credited against the payments due by MJHS on the Notes, as provided below.
The principal amount of any Series 2017 Bonds to be applied by the Bond Trustee as a credit against any sinking fund payment pursuant to Section 5.02 of the Bond Indenture shall be credited against the obligation of MJHS with respect to payment of installments of principal of the Series 2017 Note as described in the Supplemental Indenture.
The cancellation by the Bond Trustee of any Series 2017 Bonds purchased by MJHS or of any Series 2017 Bonds redeemed or purchased by the Issuer through funds other than funds received on the Series 2017 Note shall constitute payment of a principal amount of the Series 2017 Note equal to the principal amount of the Series 2017 Bonds so cancelled. Upon receipt of written notice from the Bond Trustee of such cancellation, the Master Trustee shall at the written request of MJHS endorse on the Series 2017 Note such payment of such principal amount thereof.
Section 5.04.� Notes. Concurrently with the sale and delivery by the Issuer of the Series 2017 Bonds, MJHS shall execute and deliver the Series 2017 Note substantially in the form set forth in the Supplemental Indenture. Concurrently with the sale and delivery by the Issuer of any Additional Bonds, the Master Indenture shall be supplemented to reflect the issuance of the additional Notes referred to below, and to make any other changes, amendments or modifications which, in the opinion of the parties thereto, may be necessary or appropriate. Concurrently with the sale and delivery by the Issuer of any Additional Bonds, MJHS shall
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execute and deliver one or more additional Notes payable to the Bond Trustee for the account of the Issuer in substantially the form set forth in the Master Indenture. The additional Notes shall:
(a)� require payment or payments of principal, premium, and interest in amounts and at times sufficient, together with any other funds available therefor, to permit the payments of principal, premium, if any, and interest on the related Additional Bonds, taking into account any mandatory sinking fund requirements (pursuant to the indenture) which are required in respect of the related Additional Bonds, and
(b)� require each payment on the Notes to be made on or before the due date for the corresponding payment to be made on the related Additional Bonds of the Issuer.
Section 5.05.� Payment of Bond Trustee’s and Paying Agent’s Fees and Expenses. MJHS agrees to pay the reasonable and necessary fees and expenses (including attorney’s fees, costs and expenses) of the Bond Trustee and any Paying Agents as and when the same become due, upon submission by the Bond Trustee or any Paying Agent of a statement therefor.
Section 5.06.� Reserve Fund.
(a)� In the event any moneys in the Reserve Fund are transferred to the Bond Trustee for deposit to the Bond Fund pursuant to Section 3.10 or 3.11 of the Bond Indenture, except if such moneys are transferred due to the redemption of all Bonds, MJHS agrees to deposit additional funds or Reserve Fund Obligations in an amount sufficient to satisfy the Reserve Fund Requirement, such amount to be deposited in no more than twelve (12) substantially equal consecutive monthly installments, the first installment to be made on the first day of the seventh month after such transfer.
(b)� In the event the value of the Reserve Fund Obligations (as determined pursuant to the statement of the Bond Trustee furnished in accordance with Section 6.03 of the Bond Indenture and for reasons other than those described in paragraph (a) above) on deposit in the Reserve Fund is less than the Reserve Fund Requirement, MJHS agrees to deposit additional Reserve Fund Obligations in the Reserve Fund in an amount sufficient to satisfy the Reserve Fund Requirement for such Reserve Account, such amount to be deposited in no more than three substantially equal consecutive monthly installments, the first installment to be made within 30 days of such receipt after written notice from the Bond Trustee of a deficiency.
Section 5.07.� Payment of Administration Expenses. In consideration of the agreement of the Issuer to issue Bonds and loan the proceeds thereof to MJHS, MJHS hereby agrees to pay the Administration Expenses, including, without limitation, the issuance fees of the Issuer and any and all costs paid or incurred by the Issuer in connection with the issuance of Bonds, whenever incurred, including out of pocket expenses and compensation in connection with the issuance of Bonds, including, without limitation, reasonable sums for reimbursement of the fees and expenses incurred by the Issuer’s financial advisors, consultants and legal counsel in connection with the issuance of the Bonds. The Administration Expenses will be due and payable immediately upon submission by the Issuer to MJHS of an invoice therefor.
Section 5.08.� Payees of Payments. The payments on the Notes pursuant to Section 5.02 hereof shall be paid in funds immediately available at the Payment Office of the Bond
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Trustee, directly to the Bond Trustee for the account of the Issuer and shall be deposited into the appropriate account of the Bond Fund. The amounts provided for in Section 5.06 hereof shall be paid to the Bond Trustee for the account of the Issuer and shall be deposited into the Reserve Fund. The payments to be made to the Bond Trustee and the Paying Agent under Section 5.05 hereof shall be paid directly to the Bond Trustee and the Paying Agent for their own use. The payments for Administration Expenses under Section 5.07 hereof shall be paid directly to the Issuer for its own use.
Section 5.09.� Obligations of MJHS Hereunder Unconditional. The obligations of MJHS to make the payments required in Section 5.02 hereof shall be absolute and unconditional. MJHS will not suspend or discontinue, or permit the suspension or discontinuance of, any payments provided for in Section 5.02 hereof for any cause including, without limiting the generality of the foregoing, any acts or circumstances that may constitute failure of consideration, eviction or constructive eviction, destruction of or damage to the Facility or any Project, commercial frustration of purpose, any change in the tax or other laws or administrative rulings of or administrative actions by the United States of America or the State of Florida or any political subdivision of either, or any failure of the Issuer to perform and observe any agreement, whether express or implied, or any duty, liability, or obligation arising out of or connected with this Agreement, whether express or implied. Nothing contained in this Section shall be construed to release the Issuer from the performance of any agreements on its part herein contained; and in the event the Issuer shall fail to perform any such agreement, MJHS may institute such action against the Issuer as MJHS may deem necessary to compel performance, provided that no such action shall violate the agreements on the part of MJHS contained herein and the Issuer shall not be required to pay any costs, expenses, damages or any amounts of whatever nature except for amounts received pursuant to this Agreement. Nothing herein shall be construed to impair MJHS’s right to institute an independent action for any claim that it may have against the Issuer, the Bond Trustee, any Bondholder or any other third party. MJHS may, however, at its own cost and expense and in its own name or in the name of the Issuer, prosecute or defend any action or proceedings or take any other action involving third persons which MJHS deems reasonably necessary in order to secure or protect this right of possession, occupancy, and use hereunder, and in such event the Issuer hereby agrees to cooperate fully with MJHS.
ARTICLE VI MAINTENANCE AND INSURANCE
Section 6.01.� Maintenance and Modifications by MJHS. MJHS may, at its own expense, cause to be made from time to time any additions, modifications or improvements to the Facility or any Project provided such additions, modifications or improvements do not impair the character of the Facility and/or such Project as a “health facility,” a “health care facility” and a “project” within the meaning of the Act or impair the extent of the exemption of interest on the Tax Exempt Bonds from Federal income taxation.
Section 6.02.� Insurance. Throughout the term of this Agreement, MJHS will, at its own expense, provide or cause to be provided insurance against loss or damage to the Facility in accordance with the terms of the Master Indenture.
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ARTICLE VII SPECIAL COVENANTS
Section 7.01.� No Warranty of Merchantability, Condition or Suitability by the Issuer. The Issuer makes no warranty, either express or implied, as to the condition of the Facility or any Project or that the Facility or any Project will be suitable for MJHS’s purposes or needs. Without limiting the effect of the preceding sentence, it is expressly agreed that in connection with each loan pursuant to this Agreement (i) the Issuer makes NO WARRANTY OF MERCHANTABILITY and (ii) THERE ARE NO WARRANTIES WHICH EXTEND BEYOND THE DESCRIPTION CONTAINED HEREIN.
Section 7.02.� Right of Access to Facility. MJHS agrees that the Issuer, the Bond Trustee, and any of their duly authorized agents shall have the right at all reasonable times upon reasonable notice to MJHS to examine and inspect the Facility and any Project to determine that MJHS is in compliance with the terms and conditions of this Agreement; provided that any such inspection will be conducted in a manner that will minimize any intrusion on the operations of the Facility and any Project.
Section 7.03.� Nonsectarian Use. MJHS agrees that no proceeds of the Bonds will be used to finance the construction, acquisition or installation of any portion of the Facility or any Project which is intended to be used or which are being used for sectarian purposes.
Section 7.04.� Further Assurances. The Issuer and MJHS agree that they will, from time to time, execute, acknowledge, and deliver, or cause to be executed, acknowledged, and delivered, such supplements hereto and such further instruments as may reasonably be required for carrying out the intention of or facilitating the performance of this Agreement.
Section 7.05.� Indemnification. (a) MJHS AGREES THAT IT WILL AT ALL TIMES INDEMNIFY AND HOLD HARMLESS EACH OF THE INDEMNIFIED PARTIES AGAINST ANY AND ALL LOSSES OR CLAIMS, INCLUDING LOSSES AS A RESULT OF THE NEGLIGENT ACTS OR OMISSIONS OF ANY INDEMNIFIED PARTY, OTHER THAN LOSSES RESULTING FROM FRAUD, WILLFUL MISCONDUCT OR THEFT ON THE PART OF THE INDEMNIFIED PARTY CLAIMING INDEMNIFICATION. MJHS ALSO SHALL INDEMNIFY THE BOND TRUSTEE AND ITS OFFICERS, DIRECTORS AND EMPLOYEES FOR, AND DEFEND AND HOLD IT HARMLESS AGAINST, ANY LOSS, LIABILITY, CLAIMS OR DEMANDS OR EXPENSES (INCLUDING ATTORNEYS FEES) INCURRED WITHOUT NEGLIGENCE OR WILLFUL MISCONDUCT ON ITS PART, ARISING OUT OF OR IN CONNECTION WITH THE ACCEPTANCE OR ADMINISTRATION OF THE TRUST CREATED UNDER THE BOND INDENTURE OR THE PERFORMANCE OF ITS DUTIES UNDER THE BOND INDENTURE, INCLUDING THE COSTS AND EXPENSES OF DEFENDING ITSELF AGAINST ANY CLAIM OR LIABILITY IN CONNECTION WITH THE EXERCISE OR PERFORMANCE OF ANY OF ITS POWERS OR DUTIES UNDER THE BOND INDENTURE. THE BOND TRUSTEE MAY ENFORCE ITS RIGHTS UNDER THE PRECEDING SENTENCE AS A THIRD PARTY BENEFICIARY OF THIS AGREEMENT.
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(b)� NONE OF THE INDEMNIFIED PARTIES SHALL BE LIABLE TO MJHS FOR, AND MJHS HEREBY RELEASES EACH OF THEM FROM, ALL LIABILITY TO MJHS FOR, ALL INJURIES, DAMAGES OR DESTRUCTION TO ALL OR ANY PART OF ANY PROPERTY OWNED OR CLAIMED BY MJHS THAT DIRECTLY OR INDIRECTLY RESULT FROM, ARISE OUT OF OR RELATE TO THE DESIGN, CONSTRUCTION, OPERATION, USE, OCCUPANCY, MAINTENANCE OR OWNERSHIP OF ANY PROJECT OR ANY PART THEREOF, EVEN IF SUCH INJURIES, DAMAGES OR DESTRUCTION DIRECTLY OR INDIRECTLY RESULT FROM, ARISE OUT OF OR RELATE TO, IN WHOLE OR IN PART, ONE OR MORE ACTS OR OMISSIONS, INCLUDING ACTS OR OMISSIONS CONSTITUTING NEGLIGENCE ON THE PART OF ANY INDEMNIFIED PARTY (BUT NOT INCLUDING ACTS OR OMISSIONS CONSTITUTING FRAUD, WILLFUL MISCONDUCT OR THEFT ON THE PART OF THE INDEMNIFIED PARTY CLAIMING RELEASE) IN CONNECTION WITH THE ISSUANCE OF ANY SERIES OF THE BONDS OR IN CONNECTION WITH ANY PROJECT.
(c)� Each Indemnified Person, as appropriate, shall reimburse MJHS for payments made by MJHS pursuant to this Section to the extent of any proceeds, net of all expenses of collection, actually received by it from any other source (but not from the proceeds of any claim against any other Indemnified Person) with respect to any Loss to the extent necessary to prevent a recovery of more than the Loss by such Indemnified Person with respect to such Loss. At the written request and expense of MJHS, each Indemnified Person shall claim or prosecute any such rights of recovery from other sources (other than any claim against another Indemnified Person) and such Indemnified Person shall assign its rights to such rights of recovery from other sources (other than any claim against another Indemnified Person), to the extent of such required reimbursement, to MJHS.
(d)� In case any Claim shall be brought or, to the knowledge of any Indemnified Person, threatened against any Indemnified Person in respect of which indemnity may be sought against MJHS, such Indemnified Person promptly shall notify MJHS in writing; provided, however, that any failure so to notify shall not relieve MJHS of its obligations under this Section.
(e)� MJHS shall have the right to assume the investigation and defense of all Claims, including the employment of counsel and the payment of all expenses. Each Indemnified Person shall have the right to employ separate counsel in any such action and participate in the investigation and defense thereof, but the fees and expenses of such counsel shall be paid by such Indemnified Person unless (i) the employment of such counsel has been specifically authorized by MJHS, in writing, (ii) MJHS has failed after receipt of notice of such Claim to assume the defense and to employ counsel, or (iii) the named parties to any such action (including any impleaded parties) include both an Indemnified Person and MJHS, and the Indemnified Person shall have been advised by counsel that there may be one or more legal defenses available to it which are different from or additional to those available to MJHS (in which case, if such Indemnified Person notifies MJHS in writing that it elects to employ separate counsel at MJHS’s expense, MJHS shall not have the right to assume the defense of the action on behalf of such Indemnified Person; provided, however, that MJHS shall not, in connection with any one action or separate but substantially similar or related actions in the same jurisdiction arising out of the same general allegation or circumstances, be liable for the reasonable fees and
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expenses of more than one separate firm of attorneys for the Indemnified Parties, which firm shall be designated in writing by the Indemnified Parties).
(f)� Each Indemnified Person shall cooperate with MJHS, and MJHS shall cooperate with each Indemnified Person, in the defense of any action or Claim. MJHS shall not be liable for any settlement of any action or Claim without MJHS’s consent but, if any such action or Claim is settled with the consent of MJHS or there be final judgment for the plaintiff in any such action or with respect to any such Claim, MJHS shall indemnify and hold harmless the Indemnified Parties from and against any Loss by reason of such settlement or judgment to the extent provided in Subsection (a).
(g)� The provisions of this Section and the indemnification provided in Section 7.13 shall survive the termination of this Agreement or the sooner resignation or removal of the Bond Trustee, and the obligations of MJHS hereunder shall apply to Losses or Claims under Subsection (a) whether asserted prior to or after the termination of this Loan Agreement. In the event of failure by MJHS to observe the covenants, conditions and agreements contained in this Section, any Indemnified Person may take any action at law or in equity to collect amounts then due and thereafter to become due, or to enforce performance and observance of any obligation, agreement or covenant of MJHS under this Section. The obligations of MJHS under this Section shall not be affected by any assignment or other transfer by the Issuer of its rights, titles or interests under this Loan Agreement to the Bond Trustee pursuant to the Bond Indenture and will continue to inure to the benefit of the Indemnified Parties after any such transfer. The provisions of this Section shall be cumulative with and in addition to any other agreement by MJHS to indemnify any Indemnified Person.
(h)� The following terms have the meanings assigned to them below whenever they are used in this Agreement:
“Claims” shall mean all claims, lawsuits, causes of action and other legal actions and proceedings of whatever nature brought against (whether by way of direct action, counter claim, cross action or impleader) any Indemnified Party, even if groundless, false, or fraudulent, so long as the claim, lawsuit, cause of action or other legal action or proceeding is alleged or determined, directly or indirectly, to arise out of, to result from, to relate to or to be based upon, in whole or in part: (a) the issuance of the Bonds, (b) the duties, activities, acts or omissions (EVEN IF NEGLIGENT) of any Person in connection with the issuance of the Bonds, or the obligations of the various parties arising under the Bond Indenture, this Agreement or the Master Indenture, or (c) the duties, activities, acts or omissions (EVEN IF NEGLIGENT) of any Person in connection with the design, construction, installation, operation, use, occupancy, maintenance or ownership of the Projects or any part thereof.
“Indemnified Party” shall mean one or more of the Issuer, the City of Miami, Florida, and any of their respective officers, directors, commissioners, members, officials, consultants, agents, servants and employees, and any successor to any of such Persons.
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“Indemnified Persons” means the Indemnified Parties and the Bond Trustee.
“Losses” means losses, costs, damages, expenses, judgments, and liabilities of whatever nature (including, but not limited to, reasonable attorney’s, accountant’s and other professional’s fees, costs and expenses, litigation and court costs and expenses, amounts paid in settlement and amounts paid to discharge judgments and amounts payable by an Indemnified Persons to any other Person under any arrangement providing for indemnification of that Person) directly or indirectly resulting from arising out of or relating to one or more Claims.
Section 7.06.� Authority of MJHS. Whenever under the provisions of this Agreement the approval of MJHS is required, or the Issuer or the Bond Trustee are required to take some action at the request of MJHS, such approval or such request shall be made in writing by MJHS unless otherwise specified in this Agreement and the Issuer or the Bond Trustee shall be authorized to act on any such approval or request and MJHS shall have no complaint against the Issuer or the Bond Trustee as a result of any action taken.
Section 7.07.� Authority of Issuer Representative. Whenever under the provisions of this Agreement the approval of the Issuer or the Bond Trustee are required, or MJHS is required to take some action at the request of the Issuer, such approval or such request shall be made in writing by the Issuer Representative unless otherwise specified in this Agreement and MJHS or the Bond Trustee shall be authorized to act on any such approval or request and the Issuer shall have no complaint against MJHS or the Bond Trustee as a result of any such action taken.
Section 7.08.� No Personal Liability. No obligations contained in the Bonds, the Bond Indenture or this Agreement shall be deemed to be the obligations of any officer, director, commissioner, member, trustee, agent, employee or official of the Issuer, the Bond Trustee, MJHS or the City of Miami, Florida, in his or her individual capacity, and neither the Board of Directors, the governing body of MJHS, the Bond Trustee or the City of Miami, Florida, any official of the Issuer or the City of Miami, Florida nor any official of the Issuer executing the Bonds, the Bond Indenture or this Agreement shall be liable personally thereon or be subject to any personal liability or accountability with respect thereto, whether by reason of the execution hereof, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise.
Section 7.09.� Fees and Expenses. MJHS agrees to pay promptly upon demand therefor all costs paid, incurred or charged by the Issuer in connection with the Bonds, including without limitation, (i) all fees required to be paid to the Issuer with respect to the Bonds, (ii) all out of pocket expenses and Cost of Issuance (including reasonable fees and expenses of attorneys employed by the Issuer, including, without limitation, fees of the City Attorney, as counsel to the Issuer, and Bond Counsel) reasonably incurred by the Issuer in connection with the issuance of the Bonds and (iii) all out of pocket expenses (including reasonable fees and expenses of attorneys employed by the Issuer, including, without limitation, fees of the City Attorney, as counsel to the Issuer, and Bond Counsel) reasonably incurred by the Issuer in connection with the enforcement of any of its rights or remedies or the performance of its duties under the Bond Indenture or this Agreement.
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Section 7.10.� Reporting Information to Issuer. For so long as Bonds remain Outstanding under the Bond Indenture, MJHS shall provide to the Issuer and the Finance Department of the City of Miami, Florida no later than November 30 of each year the following information related to the preceding fiscal year of the City of Miami, Florida (currently October 1 of each year through and including September 30 of the following year): (i) the aggregate principal amount of Bonds Outstanding under the Bond Indenture as of October 1 of such fiscal year, (ii) the aggregate principal payments made on the Bonds during such fiscal year, and (iii) the aggregate principal amount of Bonds Outstanding as of September 30 of such fiscal year.
Section 7.11.� Non-Discrimination. MJHS will not discriminate against the residents of the Facility on the basis of race, religion, sex or national origin.
Section 7.12.� Arbitrage; Preservation of Tax-Exemption. Certain representations of MJHS concerning its tax status, eligibility for financing, arbitrage and certain other tax covenants are set forth in the Tax Compliance Agreement. Certain tax representations of the Issuer are also set forth in the Tax Compliance Agreement. MJHS shall comply with its obligations as set forth in the Tax Compliance Agreement. MJHS further agrees and covenants not to take any action, including any change in the Facility, the result of which would cause or be likely to cause the interest payable with respect to the Refunded Bonds and the Bonds not to be excluded from gross income for federal income tax purposes.
Section 7.13.� Certain Covenants with Respect to Compliance with Arbitrage Requirements for Investments in Nonpurpose Investments and Rebate to the United States of America. As described in Section 4.18 of the Tax Compliance Agreement (“Obligations Regarding Rebate”), Section 148(f) of the Code, as implemented by Section 1.148-1 to 1.148-11 of the Regulations (the “Rebate Provisions”), requires that, with certain exceptions, the Issuer pay to the United States of America the Rebate Amount. MJHS hereby assumes and agrees to make all payments for deposit into the Rebate Fund, in accordance with the terms of Section 4.18 of the Tax Compliance Agreement, to pay the Rebate Amount, consents to the payment of the Rebate Amount by the Bond Trustee in accordance with the terms and provisions of Section 4.18 of the Tax Compliance Agreement, and agrees to pay any amounts in addition to the Rebate Amount, including all interest and penalties, if any, related thereto to the extent that funds available therefor held by the Bond Trustee under the Bond Indenture are not sufficient for such purpose with respect to both the Refunded Bonds and the Tax Exempt Bonds. MJHS agrees to indemnify, protect and hold harmless the Issuer and the Bond Trustee with respect to any nonpayment of the Rebate Amount and such interest and penalties, and the Bond Trustee with respect to the unavailability or insufficiency of funds with which to make such payments and with respect to any expenses or costs incurred by the Bond Trustee in complying with the terms of Section 4.18 of the Tax Compliance Agreement. MJHS hereby agrees to fully and timely comply with the requirements of Section 4.18 of the Tax Compliance Agreement.
Section 7.14.� Obligations Under Indenture. MJHS agrees to perform all obligations imposed upon it by the express terms of the Bond Indenture.
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ARTICLE VIII ASSIGNMENT AND LEASING
Section 8.01.� Assignment and Leasing by MJHS. This Agreement may be assigned, and all or any portion of the Facility and/or any Project may be leased by MJHS without the consent of either the Issuer or the Bond Trustee, provided that doing so will not cause MJHS to violate its obligations described in the Tax Compliance Agreement and that each of the following conditions is complied with:
(a)� No assignment or leasing shall relieve MJHS from primary liability for any of its obligations hereunder, and in the event of any such assignment or leasing MJHS shall continue to remain primarily liable for payment of the loan payments and other payments specified in Article V hereof and for performance and observance of the other covenants and agreements contained herein; provided that if MJHS withdraws from the Obligated Group (as defined in the Master Indenture) and is released from its obligations on the Notes by the Master Trustee pursuant to the Master Indenture, MJHS shall, with the written consent of the Issuer, also be released from its liability for its obligations hereunder, including payment of the loan payments and other payments specified in Article V hereof and the performance and observance of the other covenants and agreements contained herein.
(b)� The assignee or lessee shall assume in writing the obligations of MJHS hereunder to the extent of the interest assigned or leased, provided that the provisions of this subsection shall not apply to a lease of a portion of the Facility or an operating contract for the performance by others of services on or in connection with the Facility, or any part thereof.
(c)� MJHS shall, within thirty (30) days after the delivery thereof, furnish or cause to be furnished to the Issuer and the Bond Trustee a true and complete copy of each such assumption of obligations and assignment or lease of the Facility or any Project, as the case may be.
(d)� At least thirty (30) days prior to such assignment or lease, MJHS shall deliver to the Issuer and the Bond Trustee an Opinion of Bond Counsel in form and content acceptable to the Issuer to the effect that such assignment or lease will not adversely affect the tax-exempt status of the Tax-Exempt Bonds, and any such assignment and/ or lease shall be ineffective and invalid until such time as the condition in this Section 8.01(d) is complied with; provided, however, that the foregoing requirement shall not be necessary with respect to any leases to natural persons in their respective capacities as residential tenants or patients of MJHS or clients for services by MJHS.
Section 8.02.� Assignment and Pledge by Issuer. Solely pursuant to the Bond Indenture, the Issuer may assign its interest in and pledge any moneys receivable under the Notes and this Agreement (except in respect of certain rights to indemnification and for Administration Expenses, indemnification and payment of attorneys’ fees, costs and expenses pursuant to Sections 5.07, 7.05 and 9.05 hereof and the right to receive notices) to the Bond Trustee as security for payment of the principal of, premium, if any, and interest on the Bonds. MJHS consents to such assignment and pledge.
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ARTICLE IX FAILURE TO PERFORM COVENANTS AND REMEDIES THEREFOR
Section 9.01.� Failure to Perform Covenants. Upon failure of MJHS to pay when due any required payment (other than failure to make any payment on any Note, which default shall have no grace period) or to observe and perform any covenant, condition or agreement under this Agreement and a written notice specifying such failure and requesting that it be remedied is given to MJHS by the Issuer or the Bond Trustee, after a continuation of such failure for a period of forty-five (45) days after written notice, the Issuer or the Bond Trustee shall have the remedies provided in Section 9.02 hereof; provided that if any such default can be cured by MJHS but cannot be cured within the 45 day curative period described above, it shall not constitute a default within the meaning of this Section 9.01 if corrective action is instituted by MJHS within such forty-five (45) day period and diligently pursued until the default is corrected.
Section 9.02.� Remedies for Failure to Perform. Upon the occurrence of a failure of MJHS to perform as provided in Section 9.01 hereof, the Issuer or the Bond Trustee, as assignee or successor of the Issuer, upon compliance with all applicable law, in its discretion may take any one or more of the following steps:
(a)� If the Bond Trustee has declared the Bonds immediately due and payable pursuant to the terms of the Bond Indenture, by written notice to MJHS, declare an amount equal to all amounts then due and payable on the Bonds, whether by acceleration of maturity (as provided in the Bond Indenture) or otherwise, to be immediately due and payable as liquidated damages under this Agreement and not as a penalty, whereupon the same shall become immediately due and payable;
(b)� By mandamus, or other suit, action or proceeding at law or in equity, enforce all rights of the Issuer, and require MJHS to carry out any agreements with or for the benefit of the Bondholders and to enforce performance and observance of any duty, obligation, agreement or covenant of MJHS under the Act or this Agreement; or
(c)� By action or suit in equity require MJHS to account as if it were the trustee of an express trust for the Issuer; or
(d)� By action or suit in equity enjoin any acts or things which may be unlawful or in violation of the rights of the Issuer; or
(e)� Upon the filing of a suit or other commencement of judicial proceedings to enforce the rights of the Bond Trustee and the Bondholders, have appointed a receiver or receivers of the Trust Estate upon a showing of good cause with such powers as the court making such appointment may confer.
Section 9.03.� Discontinuance of Proceedings. In case any proceeding taken by the Issuer or the Bond Trustee on account of any failure to perform under Section 9.01 shall have been discontinued or abandoned for any reason, or shall have been determined adversely to the Issuer or the Bond Trustee, then and in every case the Issuer and the Bond Trustee shall be restored to their former positions and rights hereunder, respectively, and all rights, remedies and
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powers of the Issuer and the Bond Trustee shall continue as though no such proceeding had been taken.
Section 9.04.� No Remedy Exclusive. No remedy herein conferred upon or reserved to the Issuer or the Bond Trustee is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement or now or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right or power may be exercised from time to time and as often as may be deemed expedient. In order to entitle the Issuer or the Bond Trustee to exercise any remedy reserved to it in this Article, it shall not be necessary to give any notice, other than notice required in Section 9.01 hereof. Such rights and remedies given the Issuer hereunder shall also extend to the Bond Trustee and the holders of the Bonds, subject to the Bond Indenture.
Section 9.05.� Agreement to Pay Attorneys’ Fees, Costs and Expenses. In the event the Issuer or the Bond Trustee should employ attorneys or incur other costs or expenses for the enforcement of performance or observance of any obligation or agreement on the part of MJHS herein or in the Bond Indenture contained, MJHS agrees that it will on demand and receipt of written statements therefor pay to the Issuer or the Bond Trustee, as the case may be, the reasonable fees, costs and expenses of such attorneys and such other reasonable costs and expenses incurred by the Issuer or the Bond Trustee.
Section 9.06.� Waivers. In the event any agreement contained in this Agreement should be breached by either party and thereafter waived by the other party, such waiver shall be limited to the particular breach waived and shall not be deemed to waive any other breach hereunder. In view of the assignment of the Issuer’s rights in and under this Agreement to the Bond Trustee under the Bond Indenture, the Issuer shall have no power to waive any failure to perform under Section 9.01 hereunder without the consent of the Bond Trustee.
ARTICLE X PREPAYMENT OF NOTES
Section 10.01.� General Option to Prepay Notes. MJHS shall have and is hereby granted the option exercisable at any time to prepay all or any portion of its payments due or to become due on any or all of the Notes by depositing with the Bond Trustee for payment into the Bond Fund or any bond fund created with respect to any series of Additional Bonds an amount of money or Government Obligations the principal and interest on which when due, will be equal to an amount sufficient to pay the principal of, premium, if any, and interest on any portion of the Bonds then Outstanding under the Bond Indenture, without penalty. The exercise of the option granted by this Section shall not be cause for redemption of Bonds unless such redemption is permitted at that time under the provisions of the Bond Indenture and MJHS specifies the date for such redemption. In the event MJHS prepays all of its payments due and to become due on all the Notes by exercising the option granted by this Section and upon payment of all reasonable and necessary fees, costs and expenses of the Bond Trustee, the Issuer and any Paying Agent accrued and to accrue through final payment of the Bonds called for redemption as a result of such prepayment and of all Administration Expenses through final payment of the
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Bonds called for redemption as a result of such prepayment, this Agreement shall terminate; provided that no such termination shall occur unless all of the Bonds are no longer Outstanding.
Section 10.02.� Conditions to Exercise of Option. To exercise the option granted in Section 10.01 hereof, MJHS shall give written notice to the Issuer and the Bond Trustee which shall specify therein the date of such redemption, which date shall be not less than 45 days from the date the notice is mailed.
ARTICLE XI MISCELLANEOUS
Section 11.01.� Notices. Any notice, request or other communication under this Agreement shall be given in writing and shall be deemed to have been given by either party to the other party at the addresses shown below upon any of the following dates:
(a)� The date of notice by telefax, telecopy, or similar telecommunications, which is confirmed promptly in writing;
(b)� Three Business Days after the date of the mailing thereof, as shown by the post office receipt if mailed to the other party hereto by registered or certified mail;
(c)� The date of the receipt thereof by such other party if not given pursuant to (a) or (b) above.
The address for notice for each of the parties shall be as follows:
Issuer:
City of Miami, Florida Health Facilities Authority 444 S.W. 2nd Avenue, 6th Floor Miami, Florida 33130 Attention: Director of Finance Telephone: (305) 416-1324 Telecopier: (305) 400-5211
with a copy to:
Office of the City Attorney Miami Riverside Center 444 S.W. 2nd Avenue, 9th Floor Miami, Florida 33130 Telephone: (305) 416-1800 Telecopier: (305) 416-1801
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MJHS:
Miami Jewish Health Systems, Inc. 5200 N.E. Second Avenue Miami, Florida 33137 Attention: Chief Financial Officer and General Counsel Telephone: (305) 751-8626 Telecopier: (305) 675-8517 (efax)
with a copy to:
Greenberg Traurig, P.A. 333 S.E. Second Avenue Miami, Florida 33131 Attention: Robert C. Gang Telephone: (305) 579-0886 Telecopier: (305) 961-5886
Bond Trustee:
The Bank of New York Mellon Trust Company, N.A. 10161 Centurion Parkway N. Jacksonville, Florida 32256 Telephone: (904) 998-4741 Telecopier: (904) 645-1997 Attention: Corporate Trust Services
Notwithstanding the foregoing, notices to the Bond Trustee shall be effective only upon receipt.
Section 11.02.� Binding Effect. This Agreement shall inure to the benefit of and shall be binding upon the Issuer, MJHS, and their respective successors and assigns, subject, however, to the limitations contained in Sections 8.01, 8.02 and 11.09 hereof.
Section 11.03.� Severability. In the event any provision of this Agreement shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof.
Section 11.04.� Amounts Remaining in Funds. It is agreed by the parties hereto that any amounts remaining in the Bond Fund, the Reserve Fund and any Construction Fund upon expiration or sooner termination of this Agreement, after payment in full of all Bonds (or provision for payment thereof having been made in accordance with the provisions of the Bond Indenture), the fees, charges, and expenses of the Bond Trustee, the Issuer and the Paying Agent in accordance with the Bond Indenture, the Administration Expenses and all other amounts required to be paid under this Agreement and the Bond Indenture, shall belong to and be paid to MJHS by the Bond Trustee or the Issuer unless otherwise provided for in the Tax Compliance Agreement.
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Section 11.05.� Amendments, Changes, and Modifications. Except as otherwise provided in this Agreement or in the Bond Indenture, subsequent to the initial issuance of Bonds and prior to their payment in full (or provision for the payment thereof having been made in accordance with the provisions of the Bond Indenture), this Agreement may not be effectively amended, changed, modified, altered, or terminated without the written consent of the Bond Trustee, or to the extent of a change in the rights of the Issuer, the Issuer, including, without limitation, amendments with respect to indemnification and payment of Administrative Expenses and attorney fees, costs and expenses.
Section 11.06.� Execution in Counterparts. This Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.
Section 11.07.� Payment. At such time as the principal of, premium, if any, and interest on all Bonds Outstanding under the Bond Indenture shall have been paid, or shall be deemed to be paid, in accordance with the Bond Indenture, and all other sums payable by MJHS under this Agreement shall have been paid, the Notes shall be deemed to be fully paid and shall be delivered by the Bond Trustee to MJHS.
Section 11.08.� Governing Law. This Agreement shall be governed and construed in accordance with the law of the State, without regard to conflict of law principles.
Section 11.09.� No Pecuniary Liability of Issuer. No provision, covenant, or agreement contained in this Agreement, or any obligations herein imposed upon the Issuer, or the breach thereof, shall constitute an indebtedness of the Issuer within the meaning of any Florida constitutional provision or statutory limitation or shall constitute or give rise to a pecuniary liability of the Issuer or a charge against its general credit. In making the agreements, provisions, and covenants set forth in this Agreement, the Issuer has not obligated itself except with respect to the application of the revenues, income, and all other property therefrom, as hereinabove provided.
Section 11.10.� Payments Due on Holidays. If the date for making any payment or the last date for performance of any act or the exercising of any right, as provided in this Agreement, shall be a legal holiday or a day on which banking institutions in Jacksonville, Florida are authorized by law to remain closed, such payment may be made or act performed or right exercised on the next succeeding day not a legal holiday or a day on which such banking institutions are authorized by law to remain closed with the same force and effect as if done on the nominal date provided in this Agreement.
Section 11.11.� Survival of Covenants. All covenants, agreements, representations and warranties made by MJHS in this Agreement, the Bond Indenture, the Notes and the Bonds, and in any certificates or other documents or instruments delivered pursuant to this Agreement or the Bond Indenture, shall survive the execution and delivery of this Agreement, and the Bond Indenture and the Notes and shall continue in full force and effect until the Bonds and the Notes are paid in full and all of MJHS’s other payment obligations (including without limitation the indemnification obligation under Section 7.05 and the obligations under Sections 5.05, 5.07 and 9.05 hereof) under this Agreement, the Bond Indenture, the Notes and the Bonds are satisfied.
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All such covenants, agreements, representations and warranties shall be binding upon any successor and assigns of MJHS.
Section 11.12.� Public Records.
(a) The Issuer and MJHS understand that the public shall have access, at all reasonable times, to all documents and information pertaining to public records related to the Bonds, subject to the provisions of Chapter 119, Florida Statutes, and agree to allow access by the City of Miami, Florida, the Issuer, and the public to all documents subject to disclosure under applicable laws. Failure or refusal by MJHS to comply with requests by the Issuer for compliance with the provisions of this Section shall result in the immediate actions by the Issuer to accomplish compliance or to cause compliance to be accomplished to the best of its ability.
(b) As and if applicable, the Issuer and MJHS shall additionally comply with Section 119.0701, Florida Statutes.
(c) Should the Issuer or MJHS determine to dispute any public access provision required by Florida Statutes, then the disputing entity shall do so at its own expense and at no cost to the City of Miami, Florida, the Issuer, MJHS, as and if applicable.
(d) IF EITHER THE ISSUER OR MJHS HAS QUESTIONS REGARDING THE APPLICATION OF CHAPTER 119, FLORIDA STATUTES, TO THEIR RESPECTIVE DUTIES TO PROVIDE PUBLIC RECORDS RELATING TO THIS AGREEMENT, PLEASE CONTACT THE CUSTODIAN OF PUBLIC RECORDS AT:
Public Records c/o Office of the City Attorney Telephone: 305-416-1800 E-mail: [email protected] Miami Riverside Center, 9th Floor 444 S.W. 2nd Avenue Miami, Florida 33130
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the Issuer and MJHS have caused this Agreement to be executed in their respective corporate names, all as of the date first above written.
CITY OF MIAMI, FLORIDA HEALTH FACILITIES AUTHORITY
ATTESTED AND COUNTERSIGNED: By:
Chair By: Secretary MIAMI JEWISH HEALTH SYSTEMS, INC. By: President/Chief Executive Officer
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EXHIBIT A
DESCRIPTION OF 2017 PROJECT
The Series 2017 Project consists of (i) the Refunded Project and (ii) the undertaking of the following capital improvements owned or to be owned by MJHS at the main campus of MJHS located at 5200 N.E. 2nd Avenue, Miami, Florida 33137:
�� Three story parking garage
�� Hazel Cypen Tower renovations
�� Chernin Building renovations
�� Chiller replacements
�� Ten air handler units
�� Chernin Building roof replacement
�� Irving Cypen Tower roof replacement
�� Chernin Building nurse call system replacement
�� Ablin Building elevator mechanical refurbishment
�� Meyer Building roof replacement
�� Meyer Building elevator refurbishment
�� Meyer Building fire alarm
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B-1
EXHIBIT B
FORM FOR COST OF ISSUANCE DISBURSEMENT
NO. _______
The Bank of New York Mellon Trust Company, N.A., as Bond Trustee 10161 Centurion Parkway N. Jacksonville, Florida 32256 Attention: Corporate Trust Services
Re: City of Miami, Florida Health Facilities Authority Revenue and Revenue Refunding Bonds (Miami Jewish Health Systems, Inc. Project), Series 2017
Gentlemen:
This request for disbursement is submitted to you pursuant to Section 4.06 of the Loan Agreement (the “Loan Agreement”) dated as of January 1, 2017, between City of Miami, Florida Health Facilities Authority and Miami Jewish Health Systems, Inc. (“MJHS”) relating to the captioned Bonds. You are hereby requested to make the following disbursements from the Cost of Issuance Fund for the payment of Cost of Issuance referred to below, as defined and provided in the Loan Agreement.
(1)� (List payments to be made)
(2)�
(3)�
Date: MIAMI JEWISH HEALTH SYSTEMS, INC. By: Authorized Officer
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EXHIBIT C
REQUISITION NO. _____
Amount Requested:
Total Disbursements to Date:
(1)� Each obligation for which a disbursement is hereby requested is described in reasonable detail in Exhibit A hereto together with the name and address of the person, firm or corporation to whom payment is due.
(2)� The bills, invoices or statements of account for each obligation referenced in Exhibit A are on file with Miami Jewish Health Systems, Inc. (“MJHS”).
(3)� MJHS hereby certifies that:
A.� each obligation mentioned in Exhibit A has been properly incurred, is a proper charge against the Construction Fund and has not been the basis of any previous disbursement;
B.� no part of the disbursement requested hereby will be used to pay for materials not yet incorporated into the Project or for services not yet performed in connection therewith;
C.� no Event of Default under the Bond Indenture has occurred and is continuing and there exists no event or condition which, with the giving of notice or the passage of time would constitute an Event of Default under the Bond Indenture; and
D.� no item in Exhibit A represents any portion of an obligation which MJHS is, as of the date hereof, entitled to retain under any retained percentage agreement;
E.� all sums previously advanced by the Bond Trustee have been used solely for purposes permitted by the Bond Indenture and the specific items which are the subject of this requisition will be so used;
F.� there has not been served upon MJHS any lien, notice of any lien, right to lien or attachment upon or claim affecting the right to receive payment of, any moneys payable to any of the persons or firms named in this requisition, which has not been released or will not be released simultaneously with the payment of such obligation;
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G.� after payment of such disbursement, sufficient amounts will remain in the Construction Fund, taking into account investment earnings thereon, to pay all remaining unpaid costs of the Project;
This ____ day of ___________, 20__.
MIAMI JEWISH HEALTH SYSTEMS, INC. By: Authorized Officer
[THIS PAGE INTENTIONALLY LEFT BLANK]
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___________________ No Florida intangible taxes or documentary stamp taxes are due hereon pursuant to Section 159.31, Florida Statutes and Section 154.2331, Florida Statutes.
This instrument prepared by and return to: Gavin Loughlin, Esq. Greenberg Traurig, P.A. 44th Floor 333 S.E. 2nd Avenue Miami, Florida 33131-3238
MORTGAGE, FIXTURE FILING AND SECURITY AGREEMENT
This is a Mortgage, Fixture Filing and Security Agreement dated as of January 1, 2017, executed by MIAMI JEWISH HEALTH SYSTEMS, INC., a Florida not-for-profit corporation (the "Mortgagor") located at 5200 N.E. Second Avenue, Miami, Florida 33137, as Mortgagor, and delivered to THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., a national banking association, located at 10161 Centurion Parkway, Jacksonville, Florida 32256, in its capacity as Master Trustee under the Master Indenture (as hereinafter defined), as Mortgagee (together with its successors and assigns, the "Mortgagee").
1. Definitions. The Mortgagor and the Mortgagee agree that, unless the context otherwise specifies or requires, the following terms shall have the meanings herein specified, such definitions to be applicable equally to the singular and the plural forms of such terms. Unless defined herein, all terms used herein in capitalized form shall have the meanings ascribed to those terms by the Master Indenture, as that term is hereinafter defined.
"Code" means the Florida Uniform Commercial Code.
"Master Indenture" means that certain Master Trust Indenture, dated as of January 1, 2017, by and between the Mortgagor and the Master Trustee, as the same may be hereafter amended and supplemented.
"Maximum Principal Indebtedness" means an aggregate principal amount of Obligations now or hereafter issued and Outstanding under the Master Indenture in an amount not to exceed the aggregate principal sum of $250,000,000.
"Mortgage" means this Mortgage, Fixture Filing and Security Agreement as amended or modified from time to time in accordance with the terms hereof.
"Mortgaged Property" means the Mortgagor's interest in the property described in Section 2 hereof, and all rents, receipts, issues, profits, proceeds
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(including insurance proceeds and condemnation awards) and products thereof, and all substitutions therefor or renewals or replacements thereof.
"Premises" means the real property described in Exhibit "A" attached hereto, together with all appurtenances, easements and rights of way pertaining thereto, including, without limitation, all appurtenant easements, whether now existing or hereafter granted or created, and including, without limitation, easements for access and utilities.
"Secured Indebtedness" means the obligations secured by this Mortgage consisting of (i) the principal amount of, and all interest, redemption premiums, if any, and other amounts due on or with respect to, all Obligations of the Obligated Group now or hereafter issued and Outstanding pursuant to the terms of the Master Indenture, and (ii) all other amounts due and owing under the Master Indenture.
2. Mortgage. In consideration of ten dollars and other valuable consideration received by the Mortgagor, the receipt and sufficiency of which is hereby acknowledged, and in order to secure the Secured Indebtedness and the performance and observance of all of the provisions of the Master Indenture and this Mortgage, the Mortgagor hereby mortgages, grants, bargains, sells, liens, remises, releases, conveys, assigns, transfers, hypothecates, pledges, delivers, sets over, warrants and confirms to the Mortgagee, and grants the Mortgagee a security interest in, the Mortgagor's interest in the following described real and personal property, rights, titles, interests and estates:
(a) All Gross Revenues of the Obligated Group Members; and
(b) The Premises, including, without limitation, all buildings, structures, fixtures, additions, enlargements, extensions, improvements, modifications or repairs now or hereafter located thereon or therein and with the tenements, hereditaments, servitudes, appurtenances, rights, privileges and immunities thereunto belonging or appertaining which may from time to time be owned by the Obligated Group Members, and all claims or expectancy, of, in and to the Premises, it being the intention of the parties hereto that, so far as may be permitted by law, all property of the character hereinabove described, which is now owned or is hereafter acquired by the Obligated Group Members or any thereof, and is affixed or attached or annexed to the Premises, shall be and remain or become and constitute a portion of the Premises, and the security covered by and subject to the lien of this Mortgage; and
(c) All of the rights, titles, interests and estates, now owned or hereafter acquired by the Obligated Group Members or any thereof in and to any and all accounts, chattel paper, goods, documents, instruments, general intangibles, deposit accounts, investment property, equipment, furniture, furnishings, machinery, inventory, fixtures, and any and all other personal property of any kind
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or character defined in and subject to the provisions of the Code, including the supporting obligations thereof, proceeds and products of and from any and all of such personal property used in connection with or arising out of the operation and use of the improvements located on the Premises and any substitutions or replacements therefor; and
(d) Any amounts on deposit with or paid over to the Mortgagee under the Master Indenture, subject to the provisions of the Master Indenture permitting the application thereof for the purposes and on the terms and conditions set forth therein; and
(e) Any and all property that may, from time to time hereinafter, by delivery or by writing of any kind, be subjected to the lien and security interest hereof by the Obligated Group Members or by anyone on their behalf (and the Mortgagee is hereby authorized to receive the same at any time as additional security hereunder), which subject to the lien and security interest hereof of any such property as additional security may be made subject to any reservations, limitations, or conditions which shall be set forth in a written instrument executed by the grantor or the person so acting in its behalf or by the Mortgagee respecting the use and disposition of such property or the proceeds thereof; and
(f) All the appurtenances, rents, issues, products and profits appertaining to or arising from any of the foregoing.
3. Secured Indebtedness; Future Advances; Maximum Amount and Time. As specified above, this Mortgage shall secure the Secured Indebtedness, including, without limitation, future advances hereafter constituting Secured Indebtedness, whether such future advances are obligatory or are to be made at the option of the Mortgagee, or otherwise, as are made within twenty (20) years from the date hereof, to the same extent as if such future advances were made on the date of execution of this Mortgage. The total principal amount of Secured Indebtedness secured hereby may decrease or increase from time to time, but the total unpaid principal amount so secured at any one time shall not exceed the Maximum Principal Indebtedness, plus (i) interest, redemption premium, if any, and other amounts (without duplication) due thereon, (ii) any disbursements made for the payment of taxes, levies or insurance on the Mortgaged Property, (iii) payments made for maintenance, repair, protection and preservation of the Mortgaged Property, (iv) any amounts owed to the Mortgagee under Section 8.07 of the Master Indenture, and (v) interest on all such disbursements, all as provided in this Mortgage and the Master Indenture. This Mortgage shall not secure any future advances constituting Secured Indebtedness made more than twenty (20) years from the date hereof.
4. Payment of Secured Indebtedness. The Mortgagor shall pay all Secured Indebtedness and perform all obligations secured hereby promptly when due and shall perform all obligations hereunder and under the Master Indenture at the times and in the manner herein and therein required.
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5. Security Agreement. This Mortgage shall be a security agreement between Mortgagor, as the debtor, and Mortgagee, as the secured party, covering the Mortgaged Property constituting personal property or fixtures governed by the Code, and Mortgagor grants to Mortgagee a security interest in such portion of the Mortgaged Property. In addition to Mortgagee's other rights hereunder, Mortgagee shall have all rights of a secured party under the Code. Mortgagor shall execute and deliver to Mortgagee all financing statements that may be required by Mortgagee to establish and maintain the validity and priority of Mortgagee's security interest. Some of the items of the Mortgaged Property described herein may be goods that are or are to become fixtures related to the real property described in Exhibit "A", and it is intended that, as to those goods, this Mortgage shall be effective as a financing statement filed as a fixture filing from the date this Mortgage is recorded in the Public Records of Miami-Dade County, Florida.
6. Title Covenants. The Mortgagor covenants that the Mortgaged Property is free from all encumbrances, other than Permitted Encumbrances, that lawful seisin of and good right to encumber the Mortgaged Property are vested in the Mortgagor, and that the Mortgagor hereby fully warrants the title to the Mortgaged Property and will defend the same against the lawful claims of all persons whomsoever. The mortgage and security interest granted to Mortgagee herein is senior to all obligations except Permitted Encumbrances.
7. Conditions to Changes in Mortgaged Property. The right of the Mortgagor to make any changes to the Mortgaged Property or other property placed on the Premises in the manner hereinafter provided is expressly subject to the condition that such changes will not materially impair the structural soundness, usefulness or market value of the Mortgaged Property or significantly alter the character or purpose or significantly detract from the operating efficiency of the Mortgaged Property, materially impair its revenue-producing capacity, or otherwise materially adversely affect its operation or otherwise materially adversely affect the purposes of this Mortgage and, to the extent that such changes will modify the nature, scope or purpose of any portion of the Mortgaged Property financed or refinanced with the proceeds of Tax Exempt Bonds, the Mortgagor must deliver an Opinion of Bond Counsel addressed to the Master Trustee and any issuer of such Tax Exempt Bonds confirming that such changes, in and of themselves, will not adversely affect the exclusion from gross income for federal income tax purposes of the interest on such Tax Exempt Bonds.
8. After-Acquired Property. All buildings, structures, improvements, furnishings, fixtures, machinery, equipment, inventory or other property now located or hereafter acquired, constructed, placed, installed or located on the Premises, and all substitutions and replacements of or for and accessions to such property, are subject to the terms and conditions of this Mortgage and the security interest created hereby.
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9. Removal with Notice; Replacements and Substitutions Subject to Mortgage. If the Mortgagor in its sole discretion determines that any personal property constituting a part of the Mortgaged Property has become inadequate, obsolete, worn out, unsuitable, undesirable or unnecessary, and if the conditions of Section 7 hereof and the applicable provisions of the Master Indenture are complied with, then the Mortgagor, without Mortgagee’s prior written consent, may remove such property from the Mortgaged Property and may, to the extent permitted by law, sell, trade in, exchange or otherwise dispose of same, in whole or in part. The Mortgagee shall, at the Mortgagor's written request, join in the execution of any instruments necessary to release the lien on such property created by this Mortgage on property permitted to be released by this Section.
10. Covenant Against Unauthorized Removal. Except as otherwise provided above or as permitted by the Master Indenture, the Mortgagor shall not remove, sell, transfer, convey, lease or otherwise dispose of any of the Mortgaged Property or any part thereof.
11. No Abatement of Obligations. The sale, demolition, substitution or removal of any of the Mortgaged Property shall not result in any abatement or diminution of the Secured Indebtedness secured by this Mortgage. The Mortgagor shall pay all costs incurred or damages resulting from any sale, demolition, substitution or removal of any property pursuant to the provisions of this Mortgage.
12. Further Assurances. The Mortgagor shall, at its expense, promptly and duly execute, acknowledge and deliver to the Mortgagee such further documents, instruments, financing and similar statements and assurances and take such further action as may from time to time be reasonably required or requested by the Mortgagee in order to more effectively carry out the intent and purposes of this Mortgage and the Master Indenture and the other instruments contemplated hereby or thereby. The Mortgagor shall deliver to the Mortgagee copies of all material documents, notices and other communications received by it relating to the Mortgaged Property. The Mortgagee, upon reasonable notice, may enter upon and inspect the Mortgaged Property at all reasonable times.
13. Taxes, Attorneys' Fees, Expenses. The Mortgagor shall maintain the Mortgaged Property, pay all lawful taxes, assessments and charges thereon and pay any reasonable attorneys' fees and expenses required pursuant to this Mortgage and the Master Indenture. Mortgagor shall reimburse and hold harmless the Mortgagee for and on account of all excise taxes, sales and use taxes, documentary stamp taxes and other similar taxes or impositions (including any penalties and interest for failure to pay such taxes or impositions) levied against the Mortgagee with respect to this Mortgage and/or the Master Indenture, or the amounts payable by the Mortgagor hereunder or thereunder or any assignment of the rights of any such persons. This provision shall survive payment in full of the Secured Indebtedness and termination of this Mortgage.
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14. Maintenance and Repair. The Mortgagor agrees that until payment of the Secured Indebtedness due and payable shall have been made, it will, at its own expense, keep or cause to be kept the Mortgaged Property (i) in safe operating condition and (ii) in good repair and in good operating condition, and make from time to time all necessary repairs thereto and renewals and replacements thereof. The Mortgagor shall not permit or suffer others to commit a nuisance in or about the Mortgaged Property or itself commit a nuisance in connection with its use or occupancy thereof.
15. Taxes, Other Governmental Charges and Utility Charges. The Mortgagor shall pay or cause to be paid, as the same shall become due, all fees, taxes, charges, assessments and governmental charges of any kind whatsoever that may at any time be lawfully assessed or levied against the Mortgaged Property or against the Mortgagor with respect to the Mortgaged Property or any portion thereof, including without limiting the generality of the foregoing, any taxes levied against the Mortgagor upon or with respect to the income or profits of the Mortgagor from the Mortgaged Property, and including all ad valorem taxes lawfully assessed upon the Mortgaged Property, all utility and other charges incurred in the operation, maintenance, use, occupancy and upkeep of the Mortgaged Property, all assessments and charges lawfully made by any governmental body against the Mortgagor for or on account of the Mortgaged Property; provided, however, that, to the extent permitted by the terms of the Master Indenture, nothing in this Section 15 shall require the payment thereof, so long as the validity thereof shall be contested in good faith by the Mortgagor by appropriate legal proceedings in accordance with the terms set forth below unless such payment shall be otherwise required by the terms of the Master Indenture; and further provided that, with respect to special assessments or other governmental charges that may lawfully be paid in installments over a period of years, the Mortgagor shall be obligated to pay only such installments as are required to be paid during the term hereof.
The Mortgagor represents and warrants that, as of the date of execution of this Mortgage, there exists no lien, charge or encumbrance other than the Permitted Encumbrances, upon the Mortgaged Property, prior to the security interest of the Mortgagee. Except as otherwise permitted or required by the provisions of this Mortgage or the Master Indenture, the Mortgagor will not create or suffer to be created any lien, encumbrance or charge upon the Mortgaged Property, other than the Permitted Encumbrances, and subject to the provisions of this section relating to permitted contests, the Mortgagor will satisfy or cause to be discharged, or will make adequate provision to satisfy and discharge, within sixty (60) days after the Mortgagor is notified or becomes aware of the same (or such shorter time, if any, required under the Master Indenture), all lawful claims and demands for labor, materials, supplies or other items which, if not satisfied, might by law become a lien upon the Mortgaged Property. If any such lien shall be filed or asserted against the Mortgaged Property by reason of work, labor, services or materials supplied or claimed to have been supplied the Mortgagor shall, subject to
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the provisions of this section relating to permitted contests, within thirty (30) days after the Mortgagor receives notice of the filing thereof or the assertion thereof (or such shorter time, if any, required under the Master Indenture), cause the same to be discharged of record, or effectively prevent the enforcement or foreclosure thereof against the Mortgagor by contest, payment, deposit, bond, order of court or otherwise.
Except to the extent otherwise required by the terms of the Master Indenture, the Mortgagor shall not be required to pay any tax, charge, assessment or imposition referred to in this section so long as the Mortgagor shall contest, or there shall be contested on the Mortgagor's behalf, in good faith and at the Mortgagor's own cost and expense, the amount or validity thereof, in an appropriate manner or by appropriate proceedings which shall operate during the pendency thereof to prevent the collection of or other realization upon the tax, assessment, levy, fee, rent, charge, lien or encumbrance so contested, and the sale, forfeiture, or loss of the Mortgaged Property or any part thereof or interest therein, to satisfy the same; provided, that no such contest shall subject the Mortgagee to the risk of any liability. Each such contest shall be promptly prosecuted to final conclusion (subject to the right of the Mortgagor to settle any such contest), and in any event the Mortgagor will save the Mortgagee harmless against all losses, judgments, decrees and costs (including attorneys' fees and expenses in connection therewith) and will, promptly after the final determination of such contest or settlement thereof, pay and discharge the amounts which shall be levied, assessed or imposed or determined to be payable therein, together with all penalties, fines, interest, costs and expenses thereon or in connection therewith. The Mortgagor shall give the Mortgagee prompt written notice of any such contest.
If the Mortgagee shall notify the Mortgagor that, in Mortgagee's reasonable determination (which may be based upon advice of counsel), by nonpayment of any of the foregoing items, the Mortgaged Property, or any substantial part thereof, will be materially endangered, subjected to imminent loss or forfeiture or the obligations of the Mortgagor under this Mortgage or the Master Indenture shall be materially impaired, then the Mortgagor shall promptly pay all such unpaid items or otherwise cause them to be satisfied and discharged and not be liens or encumbrances upon the Mortgaged Property.
The Mortgagor shall furnish the Mortgagee, upon request, with proof of payment of any taxes, governmental charges, insurance premiums or other charges required to be paid by the Mortgagor under this Mortgage.
16. Insurance. The Mortgagor shall during the term of this Mortgage keep the Mortgaged Property continuously insured against such risks as are customarily insured against in connection with the operation of similar facilities of like size, type and location, paying as the same become due and payable all premiums with respect thereto. Such insurance shall include, without intending to limit the foregoing, all such insurance required to be maintained pursuant to the terms of the
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Master Indenture. All property and casualty insurance policies carried pursuant to the foregoing shall name the Mortgagee as an additional named insured thereunder as the interest of such party may appear, and proceeds thereunder shall be made payable and shall be applied as provided in Section 17 below. Each property and casualty insurance policy required by this Section shall prohibit termination, expiration, or cancellation (for reasons other than non-payment of premiums), without at least thirty (30) days prior written notice to the Mortgagee or cancellation (for reason of non-payment of premiums) without at least ten (10) days prior written notice to the Mortgagee. A certificate of, or copies of, each such policy shall be filed with the Mortgagee.
The Mortgagor shall pay all premiums (either up front or in agreed installments) and charges for the maintenance and renewal of the insurance and, upon written notice or demand from the Mortgagee, shall promptly furnish the Mortgagee with receipts and proofs thereof. If the Mortgagor fails to provide the receipts and proofs so requested, then the Mortgagee, without waiving the option to foreclose or exercise any other remedy hereunder, may (but shall not be required to), after written notice to the Mortgagor, obtain such insurance for the protection of the Mortgagee, and any expenses reasonably incurred by the Mortgagee in so doing shall become part of the Secured Indebtedness secured hereby, shall become immediately due and payable, and shall bear interest at the maximum lawful rate. In the event of foreclosure of this Mortgage or transfer of the Mortgaged Property in full or partial satisfaction of the Secured Indebtedness secured hereby, all interest of the Mortgagor in the policy or policies of insurance (including any claim to proceeds attributable to losses theretofore occurring but not yet paid to Mortgagor) shall pass to the purchaser, grantee or transferee, subject, however, to the terms and provisions of this Mortgage and the Master Indenture. If a policy shall provide that the insurance benefits thereunder shall be payable through any period of grace beyond the stated expiration date, for purposes of this Mortgage, such policy's expiration date shall be deemed to be the last day of such grace period.
The Mortgagor shall provide to its insurers all reports or notices of change in value of the Mortgaged Property so as to maintain the insurance coverage required by the terms of this Section 16. Nothing in the preceding sentence requires the Mortgagor to obtain market value appraisals on the Mortgaged Property (or any part thereof) unless required by an insurer or such insurers insurance policy.
17. Insurance Proceeds and Condemnation Awards. If, prior to the payment in full or satisfaction of the Secured Indebtedness (or provision for payment thereof having been made in accordance with the provisions of the Master Indenture) the Mortgaged Property, or any part or component thereof, shall be damaged, lost or destroyed, by whatever cause, or if any public authority or entity, in the exercise of its power of eminent domain, takes or damages the Mortgaged Property, or any part or component thereof, there shall be no abatement or reduction in the Secured Indebtedness payable by the Mortgagor under the Master Indenture or hereunder, and all of the insurance proceeds (whether payable from
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the policies of insurance described in Section 16 above or from other policies of insurance carried by the Mortgagor or third parties), and any award or compensation resulting from such taking or damage by condemnation shall be applied as provided in the Master Indenture, the terms of which are incorporated herein by reference.
This Mortgage extends to and shall encumber any insurance proceeds payable on account of or related to the Mortgaged Property and the operations thereof and any judgments, awards, damages and settlements hereafter rendered or paid and resulting from condemnation proceedings with respect to the Mortgaged Property, or any portion thereof, or the taking of the Mortgaged Property, or any portion thereof, under the power of eminent domain. Any sums payable to the Mortgagor and arising out of the power of eminent domain with respect to the property and any proceeds of casualty insurance on the Mortgaged Property shall be applied as provided in the Master Indenture.
18. Notices of Damage, Etc. Except to the extent permitted by Sections 7 and 9 of this Mortgage or by the terms of the Master Indenture, upon the occurrence of any event which would materially adversely affect Mortgagor's rights in the Mortgaged Property or to the extent required by the terms of the Master Indenture in connection with the damage, destruction, taking or condemnation of any of the Mortgaged Property, the Mortgagor shall give prompt written notice thereof to the Mortgagee. In case of a taking or proposed taking of all or any part of the Mortgaged Property or any right therein by eminent domain, the party upon which notice of such taking is served shall give prompt notice to the other party to this Mortgage. Each such notice shall describe generally the nature and extent of such damage, destruction, taking, loss, proceedings or negotiations.
19. Non-Disturbance. From the date hereof and throughout the term of this Mortgage, the parties hereto agree that, so long as the Mortgagor is not in default hereunder, the Mortgagor shall possess, occupy, use, enjoy and operate the Mortgaged Property. Such possession, occupation, use, enjoyment and operation of the Mortgaged Property shall be exclusive, and the Mortgagee agrees that, so long as no event of default has occurred hereunder which is not cured within any applicable grace period or notice period or both, it will permit no other use of the Mortgaged Property by anyone other than the Mortgagor during the term of this Mortgage without the written consent of the Mortgagor.
20. Acceleration Upon Transfer of Mortgaged Property. Except to the extent permitted by Section 9 of this Mortgage or by the terms of the Master Indenture, if all or any material part of the Mortgaged Property or an interest therein is sold or transferred by Mortgagor in any manner whatsoever without Mortgagee's prior written consent, Mortgagee may, at Mortgagee's option, declare all of the sums secured by this Mortgage to be accelerated and immediately due and payable. Mortgagee's right to accelerate this Mortgage upon any such sale or transfer of the Mortgaged Property or any interest therein is included in this
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Mortgage as a material inducement to the extension of the credit secured hereby and has been relied upon by Mortgagee in establishing the terms and conditions thereof; accordingly, the limitations contained in this paragraph shall be strictly construed against the Mortgagor and Mortgagor's successor(s) in interest and in favor of Mortgagee.
21. Inspection. Mortgagee and Mortgagee's representatives may enter upon the Mortgaged Property for inspection at all reasonable times, on advance reasonable notice and in a reasonable manner, both before and after default.
22. Events of Default. Each of the following events is hereby declared an "event of default" hereunder; provided, however, that in any case in which such event of default shall be occasioned by the action or inaction of the Master Trustee, such action or inaction may be cured by the Mortgagor within the time and in the manner as contemplated by the provisions of this Mortgage and the Master Indenture:
(a) The Mortgagor shall fail to make full and punctual payment or to fully perform any of its obligations in a manner constituting an "Event of Default" as defined in Section 7.01 of the Master Indenture; or
(b) The Mortgagor shall fail to make full and punctual payment of any sum due under this Mortgage when due, or to fully perform any of its other obligations under this Mortgage and such failure to perform its other obligations shall continue for thirty (30) days after written notice specifying such default and requiring the same to be remedied shall have been given to the Mortgagor and by the Mortgagee; or
(c) This Mortgage shall cease to be a first priority mortgage and/or security agreement with respect to the Mortgaged Property, or any thereof, subject only to Permitted Encumbrances, or shall be invalid or unenforceable in any material respect.
Before the entry of final judgment or decree in any suit, action or proceeding instituted by the Mortgagee under the provisions of this Mortgage or the Master Indenture or before the completion of the enforcement of any other remedy under this Mortgage or the Master Indenture, the Mortgagee shall be permitted (with the consent of the Holders of Outstanding Obligations if and to the extent required under the Master Indenture) to discontinue such suit, action, proceeding or enforcement of any remedy if, in its opinion, any default forming the basis of such suit, action, proceeding or enforcement of any remedy shall have been remedied.
23. Remedies on Default. In the event any of the Secured Indebtedness shall at the time be outstanding and unpaid and provision for the payment thereof shall not have been made in accordance with the provisions of the Master
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Indenture, whenever any event of default referred to in Section 22 above shall have occurred and be continuing, the Mortgagee may, subject to the terms and provisions of the Master Indenture (including, without limitation, the provisions set forth in the Master Indenture concerning the Master Trustee's exercise of remedies), take any one or more of the following remedial steps:
(a) Declare all Secured Indebtedness and other amounts payable under the Master Indenture for the remainder of the term thereof and of this Mortgage to be immediately due and payable, whereupon the same shall become immediately due and payable;
(b) Foreclose on this Mortgage, enter into possession of the Mortgaged Property or any part thereof without notice or demand and sell or lease the Mortgaged Property or any part thereof for the account of the Mortgagor, holding the Mortgagor liable for the difference between the amounts received and the Secured Indebtedness and other amounts payable by the Mortgagor hereunder;
(c) Collect and apply to the Secured Indebtedness all rents and profits from the Mortgaged Property in the manner provided in the Master Indenture;
(d) Inspect, examine and make copies of the books and records and any and all accounts and data of the Mortgagor relating to the use and operation of the Mortgaged Property;
(e) Take such steps to protect and enforce its rights whether by action, suit or proceeding in equity or at law for the specific performance of any covenant, condition or agreement in the Master Indenture or in this Mortgage, or in aid of the execution of any power herein granted, or for any foreclosure hereunder, or for the enforcement of any other appropriate legal or equitable remedy or otherwise as the Mortgagee shall elect;
(f) Apply, on motion to any court of competent jurisdiction, for the appointment of a receiver to take charge of, manage, preserve, protect, complete construction of and operate the Mortgaged Property; to collect the rents, issues, profits and income therefrom; to make all necessary and needed repairs to the Mortgaged Property; to pay all taxes and assessments against the Mortgaged Property and insurance premiums for insurance thereon; and after the payment of the expense of the receivership, including reasonable attorney's fees to the Mortgagee's attorney, and after compensation to the receiver for management and completion of the Mortgaged Property, to apply the net proceeds derived therefrom in reduction of the Secured Indebtedness secured hereby or in such manner as such court shall
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direct. The appointment of such receiver shall be a matter of strict right to the Mortgagee, regardless of the value of the security for the Secured Indebtedness secured hereby or of the solvency of any party bound for the payment of such Secured Indebtedness. All expenses, fees and compensation incurred pursuant to a receivership approved by any such court shall be secured by the lien of this Mortgage until paid. The receiver and the receiver's agents shall be entitled to enter upon and take possession of any and all of the Mortgaged Property, together with any and all business assets used in conjunction therewith or thereon, or any part or parts thereof, and operate and conduct such business or businesses to the same extent and in the same manner as any owner of such property might lawfully do. The receiver, personally or through his agents, may exclude any parties entitled thereto pursuant to the Master Indenture wholly from the Mortgaged Property, and have, hold, use, operate, manage and control the same and each and every part thereof, and may, in the name of the Mortgagor exercise all of the Mortgagor's rights and powers and maintain, restore, insure and keep insured, the Mortgaged Property as the receiver may deem judicious. Such receivership shall, at the option of the Mortgagee, continue until full payment of all sums secured hereby, or until title to the Mortgaged Property shall have passed by foreclosure sale under this Mortgage;
(g) Take or exercise all rights and remedies granted a secured party by the Code; and
(h) Take all other actions and pursue all other remedies available under any other contract or agreement or otherwise by statute, at law or in equity, whether or not inconsistent with the foregoing, that may appear necessary or appropriate to collect the sums then due and thereafter to become due from the Mortgagor by reason of this Mortgage or the Master Indenture, or to enforce specific performance and observance of any obligation, agreement or covenant of the Mortgagor thereunder.
24. Power and Authority. In order to further and more fully secure the payment of the principal of and interest on the Secured Indebtedness upon the happening of any event of default as herein provided, the Mortgagor hereby authorizes and permits the Mortgagee for and on its behalf and on behalf of and in the name of the Holders of Outstanding Obligations, to foreclose the Mortgagor's interest in the Mortgaged Property by foreclosure in the manner provided by the Florida Statutes, which remedy shall be in addition to the other remedies provided in any other applicable provisions of this Mortgage and the Master Indenture. The Mortgagee shall have full power and authority to deal in and with the Mortgaged Property, including the power and authority to protect, conserve and to sell or to
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lease or to encumber or otherwise to manage and dispose of the Mortgaged Property.
25. Rights Cumulative and Continuing. The rights of the Mortgagee granted and arising under this Mortgage and the Master Indenture, or any other instrument or agreement existing between the Mortgagor and the Mortgagee shall be separate, distinct, and cumulative of other powers and rights herein granted and of all other rights which the Mortgagee may have in law or equity, and the exercise of any one or more of them shall not be construed as an election to proceed under any one provision herein, or under the Master Indenture, or under any such other instrument or agreement, to the exclusion of any other provisions, or an election of remedies to the bar of any other remedy allowed in law or equity. No waiver of any obligation hereunder or of any obligation secured hereby shall at any time thereafter be held to be a waiver of the terms hereof or of the terms of any other instrument or agreement. No delay or omission by the Mortgagee to exercise any right, power or remedy accruing upon any default shall exhaust or impair any such right, power or remedy or shall be construed to be a waiver of any such default or acquiescence therein. Every right, power and remedy given by this Mortgage to the Mortgagee may be exercised from time to time and as often as may be deemed expedient by the Mortgagee. Each and every right, power and remedy shall be in addition to any other right, power or remedy given hereunder or now or hereafter existing at law or in equity or by statute. Every right and remedy given hereunder shall extend fully to the Mortgagee, and the Holders of the Obligations issued and Outstanding under the Master Indenture shall be deemed third party beneficiaries of all covenants and agreements herein contained, the enforcement of which is subject, however, to all of the terms and conditions set forth in this Mortgage and the Master Indenture. In the event any agreement contained in this Mortgage should be breached by either party and thereafter waived by the other party, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other breach hereunder.
26. Agreement to Pay Attorneys' Fees and Expenses. If the Mortgagor defaults under any of the provisions of this Mortgage and the Mortgagee should employ attorneys or incur other fees or expenses for the collection of the Secured Indebtedness or the enforcement of performance or observance of any obligation or agreement of the Mortgagor herein contained (including fees and expenses on appeal and in connection with any bankruptcy proceedings), or enforcement of the Mortgagee's rights hereunder (including foreclosure or other litigation expenses), the amount thereof shall become part of the Secured Indebtedness secured hereby, shall become immediately due and payable, and shall bear interest at the maximum lawful rate, and the Mortgagor agrees that it will on demand therefor pay the same to the Mortgagee.
27. Extension, Leniencies and Releases. Subject to the terms of the Master Indenture, the Mortgagee may grant extensions of time for payment and other leniencies with respect to any Secured Indebtedness secured hereby, and may
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waive or fail to enforce any of the Mortgagee's rights hereunder, and may release a portion or portions of the Mortgaged Property from the lien hereof, without releasing or diminishing the obligation or liability of the Mortgagor; provided, however, that any such extension or other leniencies or waivers or release shall not materially impair the security of this Mortgage.
28. Curing of Defaults by Mortgagee. The Mortgagee shall, after giving written notice to the Mortgagor at least five (5) days prior to taking any action under this provision (unless under the circumstances, delay caused by the requirement of such notice could result in the Mortgaged Property or any substantial part thereof, being materially endangered or subject to loss or forfeiture), have the right to pay, or cause to be paid, any sums required to be paid and to take, or cause to be taken, any other action deemed by the Mortgagee to be necessary or convenient to cure any Event of Default of the Mortgagor under the Master Indenture or any event of default hereunder. Any and all sums expended or expenses incurred by the Mortgagee in so curing such an Event of Default or event of default shall become immediately due and payable by the Mortgagor to the Mortgagee and, together with interest from date of disbursement, shall be secured by the lien of this Mortgage. The Mortgagee shall be subrogated to the interest of any lien holder paid out of sums secured by this Mortgage. No payment by the Mortgagee under this section or any other provisions contained herein or in the Master Indenture shall be deemed to cure or waive any Event of Default.
29. Subrogation. The Mortgagee shall be subrogated to the lien (notwithstanding its release of record) of any vendor, mortgagee or other lienholder paid or discharged by the proceeds of any loan or advance made by the Mortgagee to the Mortgagor and secured hereby.
30. Application of Moneys. Anything in this Mortgage to the contrary notwithstanding, the moneys realized by the Mortgagee in the enforcement of this Mortgage shall be applied by the Mortgagee in the following order and manner:
A. To the Mortgagee to be applied in the manner set forth in the Master Indenture, including, without limitation, Section 7.08 thereof.
B. To the payment of the reasonable costs and expenses of any enforcement of this Mortgage or the Secured Indebtedness, including any sale of the Mortgaged Property, including reasonable compensation to the Mortgagee, its agents and counsel, and of any judicial proceedings wherein the same may be made, and of all expenses, liabilities and advances made or incurred by the Mortgagee under the Master Indenture or this Mortgage, including reasonable attorneys' fees and expenses and reasonable fees for paralegal services and expert witnesses through any appeal and any bankruptcy or insolvency proceedings, together with all taxes or assessments, except any taxes, assessments or other charges subject to which the Mortgaged Property shall have been sold.
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C. To the payment of any other Secured Indebtedness not otherwise paid pursuant the foregoing clauses, including any sums required to be paid by the Mortgagor pursuant to any provision of the Master Indenture or this Mortgage.
31. Release or Satisfaction. Whenever there is no outstanding obligation secured hereby (including, without limitation, any contingent or unmatured obligation or any other amount due or to become due from the Obligated Group under the Master Indenture) and no commitment to make advances secured hereby, the Mortgagee shall, on written demand by the Mortgagor, give a release or satisfaction hereof in recordable form.
32. Notice. Every provision for notice and demand or request hereunder shall be deemed fulfilled by written notice and demand or request if the same is mailed by depositing it in any United States post office station or letter box, enclosed in a postpaid envelope registered or certified mail, return receipt requested, addressed as provided below and shall be deemed effective when received:
If to the Mortgagor: Miami Jewish Health Systems, Inc. 5200 N.E. Second Avenue Miami, Florida 33137 Attention: President/Chief Executive Officer
If to the Mortgagee: The Bank of New York Mellon Trust Company, N.A. 10161 Centurion Parkway Jacksonville, Florida 32256 Attention: Corporate Trust Services
A duplicate copy of each notice, certificate or communication given hereunder by either the Mortgagor or the Mortgagee to the other shall also be given to the Master Trustee. The Mortgagor and the Mortgagee may, by notice given hereunder, designate any further or different addresses to which subsequent notices, certificates or other communications shall be sent.
33. Severability. If any provision of this Mortgage or the Master Indenture, or of any other instrument or agreement existing between the Mortgagor and the Mortgagee, shall to any extent be finally found by a court of competent jurisdiction to be invalid or unenforceable, neither the remainder of the instrument in which such provision is contained, nor the application of the provision to other persons, entities, or circumstances nor any other instrument referred to herein, shall be affected thereby, but instead shall be enforced to the maximum extent permitted in law or equity.
34. Modifications. The rights of the Mortgagee may not be changed, waived, discharged or terminated orally, but only by an instrument in writing
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executed by the Mortgagor and the Mortgagee, as permitted by the terms of the Master Indenture. Any agreement hereafter made by the Mortgagee and Mortgagor relating to this Mortgage shall be superior to the rights of the holder of any intervening lien or encumbrance affecting the Mortgaged Property.
35. General Provisions. The singular shall include the plural and any gender shall be applicable to all genders when the context permits or implies. If the Mortgagor sells or transfers the Mortgaged Property, then without prejudice to the remedies afforded under this Mortgage, the Mortgagee may deal with the successor or successors in interest without in any way discharging or reducing the Mortgagor's liability for the Mortgagor's obligations secured hereby. The terms Mortgagor and Mortgagee shall extend to and include their respective legal representatives, successors and assigns. Any agreement hereafter made by the Mortgagor and the Mortgagee pursuant to this Mortgage shall be superior to the rights of the holder of any intervening lien or encumbrance. Time is of the essence.
36. No Illegal Interest to be Charged. All agreements between the Mortgagor and the Mortgagee under this Mortgage or the Master Indenture are expressly limited so that in no contingency or event whatsoever shall the amount paid or agreed to be paid to the Mortgagee or its successors or assigns for the use, forbearance or detention of the money to be advanced to the Mortgagor exceed the highest rate permissible under law applicable thereto by a court of competent jurisdiction. If, from any circumstances whatever, fulfillment of any provisions of this Mortgage or the Master Indenture or of any other agreement existing between the Mortgagor and the Mortgagee, at the time performance of such provision shall be due, shall involve payment of interest at a rate which exceeds the highest lawful rate as so determined, then ipso facto the obligation to be fulfilled shall be reduced to such highest lawful rate. If from any circumstances whatsoever, the Mortgagee or its successors or assigns shall ever receive interest, the amount of which would exceed such highest lawful rate, the portion thereof which would be excessive interest shall be reimbursed to the Mortgagor by the party receiving such excess, and if required by law, together with interest on such excess at the highest lawful rate of interest (or 25% if there is then no maximum lawful rate). Provided, however, that nothing contained herein or in the Master Indenture shall be deemed to create a defense, contractual or otherwise, to any sums due or to become due or coming due under this Mortgage or the Master Indenture secured hereby or under any other agreement existing between the Mortgagor and the Mortgagee where no such defense exists at law, as for example, where corporations are barred from asserting the defense of usury or in a case wherein no limit exists upon the rate of interest which may be charged.
37. Headings. Caption headings are for convenience of reference only and in no way limit the scope or intent of any provision or section of this Mortgage.
38. Governing Law. The terms and provisions of this Mortgage are to be governed by the laws of the State of Florida.
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39. Waiver of Jury Trial. THE MORTGAGOR AND THE MORTGAGEE HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS MORTGAGE AND ANY AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE PARTIES. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES CARRYING OUT THE TRANSACTIONS CONTEMPLATED HEREBY.
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IN WITNESS WHEREOF, the Mortgagor has executed this Mortgage as of the 1st day of January, 2017.
MORTGAGOR:
MIAMI JEWISH HEALTH SYSTEMS, INC.,
TWO WITNESSES: By: Name: Jeffrey P. Freimark Title:President/Chief Executive Officer
Address: 5200 N.E. Second Avenue Name: Miami, Florida 33137 Name:
STATE OF FLORIDA
COUNTY OF MIAMI-DADE
The foregoing instrument was acknowledged before me this ____ day of January, 2017, by Jeffrey P. Freimark, as President and Chief Executive Officer of Miami Jewish Health Systems, Inc., a Florida not-for-profit corporation, on behalf of the corporation. He is personally known to me or has produced a driver’s license as identification.
(SEAL)
Typed Name: Notary Public-State of Florida Commission Number:
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EXHIBIT "A"
Premises
PARCEL I: TRACTS B, C, D, E, AND F, "DOUGLAS GARDENS SOUTH REVISED" ACCORDING TO THE PLAT THEREOF AS RECORDED IN PLAT BOOK 146 AT PAGE 63 OF THE PUBLIC RECORDS OF MIAMI-DADE COUNTY FLORIDA, TOGETHER WITH TRACT A, "DOUGLAS GARDENS WEST", ACCORDING TO THE PLAT THEREOF AS RECORDED IN PLAT BOOK 140 AT PAGE 52 OF THE PUBLIC RECORDS OF MIAMI-DADE COUNTY FLORIDA AND THAT PORTION OF TRACT B, OF THE SAID PLAT OF "DOUGLAS GARDENS WEST" LYING NORTHERLY OF THE NORTH LINE OF TRACT "F" OF THE SAID PLAT OF "DOUGLAS GARDENS SOUTH REVISED"; TOGETHER WITH TRACTS 'E' AND 'F', "DOUGLAS GARDENS REVISED" ACCORDING TO THE PLAT THEREOF, AS RECORDED IN PLAT BOOK 123 AT PAGE 49 OF THE PUBLIC RECORDS OF MIAMI-DADE COUNTY FLORIDA AND TRACT 'A' OF THE SAID PLAT OF "DOUGLAS GARDENS REVISED", LESS THAT PORTION OF TRACT 'B' OF THE SAID PLAT OF "DOUGLAS GARDENS WEST" THAT LIES NORTHERLY OF THE NORTH LINE OF TRACT 'F' OF THE SAID PLAT OF "DOUGLAS GARDENS SOUTH REVISED" TOGETHER WITH LOTS 11 AND 12 LESS THE EAST 10 FEET THEREOF, BLOCK 6, "CORRECTED PLAT OF ALTA VISTA", ACCORDING TO THE PLAT THEREOF, AS RECORDED IN PLAT BOOK 6 AT PAGE 4 OF THE PUBLIC RECORDS OF MIAMI-DADE COUNTY, FLORIDA, AND LOTS 6 AND 7, BLOCK 2, "ORCHARD VILLA TRACT THIRD SECTION" ACCORDING TO THE PLAT THEREOF, AS RECORDED IN PLAT BOOK 9 AT PAGE 30 OF THE PUBLIC RECORDS OF MIAMI-DADE COUNTY, FLORIDA. ALL LYING AND BEING IN MIAMI-DADE COUNTY FLORIDA.
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LESS AND EXCEPT THE FOLLOWING DESCRIBED PROPERTY: A PORTION OF TRACT 'C', DOUGLAS GARDENS SOUTH REVISED, ACCORDING TO THE PLAT THEREOF, RECORDED IN PLAT BOOK 146, PAGE 63 OF THE PUBLIC RECORDS OF MIAMI-DADE COUNTY, FLORIDA, ALSO BEING A PORTION OF TRACT 'B', DOUGLAS GARDENS REVISED, ACCORDING TO THE PLAT THEREOF, RECORDED IN PLAT BOOK 123, PAGE 49 OF THE PUBLIC RECORDS OF MIAMI-DADE COUNTY, FLORIDA AND BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS: TRACT 'B', DOUGLAS GARDENS REVISED, ACCORDING TO THE PLAT THEREOF, RECORDED IN PLAT BOOK 123, AT PAGE 49 OF THE PUBLIC RECORDS OF MIAMI-DADE COUNTY, FLORIDA, LESS AND EXCEPT THE HEREIN DESCRIBED PARCEL OF LAND: COMMENCE AT THE SOUTHEAST CORNER OF SAID TRACT 'C', DOUGLAS GARDENS SOUTH REVISED, THENCE RUN NORTH 00°23'00" WEST, ALONG THE EAST LINE OF SAID TRACT 'C', FOR A DISTANCE OF 180.57 FEET; THENCE CONTINUE NORTH 00°23'00" WEST, ALONG THE EAST LINE OF SAID TRACT 'C', SAID LINE BEING COINCIDENT WITH THE EAST LINE OF SAID TRACT 'B', DOUGLAS GARDENS REVISED, FOR A DISTANCE OF 234.60 FEET; THENCE RUN NORTH 89°28'15" WEST, ALONG THE NORTH LINE OF SAID TRACT 'B', FOR A DISTANCE OF 155.00 FEET; THENCE RUN SOUTH 52°17'07" WEST FOR A DISTANCE OF 77.49; THENCE RUN SOUTH 00°31'45" WEST, ALONG THE WEST LINE OF SAID TRACT 'B', FOR A DISTANCE OF 123.26 FEET TO THE POINT OF BEGINNING OF THE HEREINAFTER DESCRIBED PARCEL OF LAND; THENCE CONTINUE SOUTH 00°31'45" WEST ALONG SAID WEST LINE, FOR A DISTANCE OF 88.74 FEET TO THE SOUTHWEST CORNER OF SAID TRACT 'B'; THENCE RUN SOUTH 89°28'15" EAST, ALONG THE SOUTH LINE OF SAID TRACT 'B', FOR A DISTANCE OF 172.71 FEET; THENCE RUN NORTH 00°32'19" EAST FOR A DISTANCE OF 19.11 FEET; THENCE RUN NORTH 89°27'41" WEST, AT RIGHT ANGLES TO THE PREVIOUS COURSE, FOR A DISTANCE OF 66.40 FEET; THENCE RUN NORTH 00°32'19" EAST, AT RIGHT ANGLES TO THE PREVIOUS COURSE FOR A DISTANCE OF 32.80 FEET; THENCE RUN NORTH 89°27'41" WEST AT RIGHT ANGLES TO THE PREVIOUS COURSE, FOR A DISTANCE OF 38.80 FEET; THENCE RUN NORTH 00°32'19" EAST, AT RIGHT ANGLES TO THE PREVIOUS COURSE, FOR A DISTANCE OF 36.80 FEET; THENCE RUN NORTH 89°27'41" WEST, AT RIGHT ANGLES TO THE PREVIOUS COURSE, FOR A DISTANCE OF 67.52 FEET TO A POINT ON THE WEST LINE OF SAID TRACT 'B' AND THE POINT OF BEGINNING.
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PARCEL II: A PORTION OF TRACT 'C', DOUGLAS GARDENS SOUTH REVISED, ACCORDING TO THE PLAT THEREOF, RECORDED IN PLAT BOOK 146, PAGE 63 OF THE PUBLIC RECORDS OF MIAMI-DADE COUNTY, FLORIDA, ALSO BEING A PORTION OF TRACT 'B', DOUGLAS GARDENS REVISED, ACCORDING TO THE PLAT THEREOF, RECORDED IN PLAT BOOK 123, PAGE 49 OF THE PUBLIC RECORDS OF MIAMI-DADE COUNTY, FLORIDA AND BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS: TRACT 'B', DOUGLAS GARDENS REVISED, ACCORDING TO THE PLAT THEREOF, RECORDED IN PLAT BOOK 123, AT PAGE 49 OF THE PUBLIC RECORDS OF MIAMI-DADE COUNTY, FLORIDA; LESS AND EXCEPT THE HEREIN DESCRIBED PARCEL OF LAND: COMMENCE AT THE SOUTHEAST CORNER OF SAID TRACT 'C', DOUGLAS GARDENS SOUTH REVISED, THENCE RUN NORTH 00°23'00" WEST, ALONG THE EAST LINE OF SAID TRACT 'C', FOR A DISTANCE OF 180.57 FEET; THENCE CONTINUE NORTH 00°23'00" WEST, ALONG THE EAST LINE OF SAID TRACT 'C', SAID LINE BEING COINCIDENT WITH THE EAST LINE OF SAID TRACT 'B', DOUGLAS GARDENS REVISED, FOR A DISTANCE OF 234.60 FEET; THENCE RUN NORTH 89°28'15" WEST, ALONG THE NORTH LINE OF SAID TRACT 'B', FOR A DISTANCE OF 155.00 FEET; THENCE RUN SOUTH 52°17'07" WEST FOR A DISTANCE OF 77.49; THENCE RUN SOUTH 00°31'45" WEST, ALONG THE WEST LINE OF SAID TRACT 'B', FOR A DISTANCE OF 123.26 FEET TO THE POINT OF BEGINNING OF THE HEREINAFTER DESCRIBED PARCEL OF LAND; THENCE CONTINUE SOUTH 00°31'45" WEST ALONG SAID WEST LINE, FOR A DISTANCE OF 88.74 FEET TO THE SOUTHWEST CORNER OF SAID TRACT 'B'; THENCE RUN SOUTH 89°28'15" EAST, ALONG THE SOUTH LINE OF SAID TRACT 'B', FOR A DISTANCE OF 172.71 FEET; THENCE RUN NORTH 00°32'19" EAST FOR A DISTANCE OF 19.11 FEET; THENCE RUN NORTH 89°27'41" WEST, AT RIGHT ANGLES TO THE PREVIOUS COURSE, FOR A DISTANCE OF 66.40 FEET; THENCE RUN NORTH 00°32'19" EAST, AT RIGHT ANGLES TO THE PREVIOUS COURSE FOR A DISTANCE OF 32.80 FEET; THENCE RUN NORTH 89°27'41" WEST AT RIGHT ANGLES TO THE PREVIOUS COURSE, FOR A DISTANCE OF 38.80 FEET; THENCE RUN NORTH 00°32'19" EAST, AT RIGHT ANGLES TO THE PREVIOUS COURSE, FOR A DISTANCE OF 36.80 FEET; THENCE RUN NORTH 89°27'41" WEST, AT RIGHT ANGLES TO THE PREVIOUS COURSE, FOR A DISTANCE OF 67.52 FEET TO A POINT ON THE WEST LINE OF SAID TRACT 'B' AND THE POINT OF BEGINNING.
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PARCEL III: LOTS 5 THRU 16 INCLUSIVE, BLOCK 1, ORCHARD VILLA TRACT THIRD SECTION, ACCORDING TO THE PLAT THEREOF, AS RECORDED IN PLAT BOOK 9, PAGE 30 OF THE PUBLIC RECORDS OF MIAMI-DADE COUNTY, FLORIDA; LESS THE FOLLOWING DESCRIBED PORTIONS: THE WEST 10 FEET OF LOTS 10 AND 11; THE NORTH 5 FEET OF LOTS 5, 6, 7, 8 AND 9, AND THE SOUTH 5 FEET OF LOTS 12, 13, 14, 15 AND 16; A PORTION OF LOT 11, BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS: BEGIN AT THE SOUTHEAST CORNER OF SAID LOT 11; THENCE NORTHERLY ALONG THE EAST LINE OF SAID LOT 11 FOR 5 FEET; THENCE WESTERLY ALONG A LINE 5 FEET PARALLEL TO THE SOUTH LINE OF SAID LOT 11 FOR 40.18 FEET TO A POINT OF CURVATURE; THENCE NORTHWESTERLY ALONG THE ARC OF A CURVE CONCAVE TO THE NORTHEAST WITH A RADIUS OF 25.00 FEET A DISTANCE OF 39.09 FEET TO A POINT OF TANGENCY; THENCE SOUTH ALONG THE TANGENT OF SAID CURVE AND THE EAST RIGHT OF WAY LINE OF NORTH MIAMI AVENUE AS IT NOW EXIST FOR 5.00 FEET TO A POINT OF CURVATURE; THENCE SOUTHEASTERLY ALONG THE ARC OF A CURVE CONCAVE TO THE NORTHEAST WITH A RADIUS OF 25.00 FEET A DISTANCE OF 39.09 FEET TO A POINT OF TANGENCY; THENCE EAST ALONG THE SOUTH LINE OF SAID LOT 11 A DISTANCE OF 40.18 FEET TO THE POINT OF BEGINNING; AND LESS A PORTION OF LOT 10, BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS: COMMENCING AT THE INTERSECTION OF THE CENTERLINES OF NORTH MIAMI AVENUE AND N.E. 53RD STREET (AS THEY NOW EXIST); THENCE S89°57'58"E, ALONG THE CENTERLINE OF SAID N.E. 53RD STREET, FOR 50.32 FEET; THENCE S00°02'02"E, FOR 20.00 FEET TO A POINT ON THE SOUTH RIGHT-OF-WAY LINE OF SAID N.E. 53RD STREET AND THE POINT OF BEGINNING; THENCE S89°57'58"E, ALONG SAID SOUTH RIGHT-OF-WAY LINE OF SAID N.E. 53RD STREET, FOR 49.82 FEET; THENCE S00°22'21"E, ALONG A PORTION OF THE EAST LINE OF SAID LOT 10, FOR 5.00 FEET; THENCE N89°57'58"W, FOR 39.82 FEET TO A POINT OF CURVATURE OF A CIRCULAR CURVE TO THE LEFT HAVING A RADIUS OF 25.00 FEET; THENCE SOUTHWESTERLY ALONG THE ARC OF SAID CURVE HAVING A CENTRAL ANGLE OF 90°24'23", FOR AN ARC LENGTH OF 39.45 FEET TO A POINT OF CUSP, SAID POINT ALSO BEING A POINT ON THE EAST RIGHT-OF-WAY LINE OF SAID NORTH MIAMI AVENUE; THENCE N00°22'21"W,
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ALONG SAID EAST RIGHT- OF-WAY LINE OF SAID NORTH MIAMI AVENUE, FOR 25.07 FEET TO A POINT ON THE ARC OF A CIRCULAR CURVE TO THE RIGHT HAVING A RADIUS OF 25.00 FEET; THENCE NORTHEASTERLY ALONG THE ARC OF SAID CURVE HAVING A CENTRAL ANGLE OF 37°16'35", FOR AN ARC LENGTH OF 16.26 FEET TO THE POINT OF BEGINNING; ALL IN SAID BLOCK 1. AND FURTHER LESS AND EXCEPT THAT PORTION OF LOT 11 IN BLOCK 1 OF ORCHARD VILLA TRACT THIRD SECTION, ACCORDING TO THE PLAT THEREOF RECORDED IN PLAT BOOK 9, AT PAGE 30, AND DESCRIBED IN FINAL JUDGMENT AS TO PARCEL NO. 51 PURSUANT TO EMINENT DOMAIN PROCEEDINGS (CIRCUIT COURT CASE NO. 67-11163) RECORDED IN OFFICIAL RECORDS BOOK 5903, PAGE 684, AND BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS: THAT PART OF SAID LOT 11 WHICH LIES WITHIN THE EXTERNAL AREA FORMED BY A 25.00 RADIUS ARC, CONCAVE TO THE NORTHEAST, TANGENT TO THE SOUTH LINE OF SAID LOT 11, AND TANGENT TO A LINE THAT IS 10.00 FEET EAST OF AND PARALLEL TO THE WEST LINE OF SAID LOT 11.
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APPENDIX�D�
FORM�OF�OPINION�OF�BOND�COUNSEL�
___________, 2017
To: City of Miami, Florida Health Facilities Authority Miami, Florida
We have served as bond counsel to our client the City of Miami, Florida Health Facilities Authority (the “Issuer”) in connection with the issuance by the Issuer of its $44,035,000 aggregate principal amount of City of Miami, Florida Health Facilities Authority Health Facilities Revenue and Revenue Refunding Bonds (Miami Jewish Health Systems, Inc. Project), Series 2017 (the “Bonds”), dated the date of this letter.
The Bonds are issued pursuant to the Indenture of Trust, dated as of January 1, 2017 (the “Bond Indenture”), between the Issuer and The Bank of New York Mellon Trust Company, N.A., as trustee.
In our capacity as bond counsel, we have examined the transcript of proceedings relating to the issuance of the Bonds, a copy of the signed and authenticated Bond of the first maturity, the Bond Indenture, the Loan Agreement, dated as of January 1, 2017 (the “Loan Agreement”), between the Issuer and Miami Jewish Health Systems, Inc., a Florida nonprofit corporation (“MJHS”), and such other documents, matters and law as we deem necessary to render the opinions set forth in this letter. Capitalized terms not otherwise defined in this letter are used as defined in the Loan Agreement.
Based on that examination and subject to the limitations stated below, we are of the opinion that under existing law:
1.� The Bonds, the Bond Indenture and the Loan Agreement are valid and binding obligations of the Issuer, enforceable in accordance with their respective terms.
2.� The Bonds constitute limited obligations of the Issuer, and the principal of, premium, if any, and interest on (collectively, “debt service”) the Bonds are payable solely from the revenues and other money assigned by the Bond Indenture to pay debt service. Those revenues and other money include the payments required to be made by MJHS under the Loan Agreement and the Series 2017 Note. The Bonds and the payment of debt service thereon are not secured by an obligation or pledge of any moneys raised by taxation, and the Bonds do not represent or constitute a general obligation, a debt or pledge of the faith and credit or taxing power of the Issuer, the City of Miami, Florida, the State of Florida, or any political subdivision thereof. The Issuer has no taxing power.
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3.� Interest on the Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986, as amended (the “Code”), and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; however, portions of the interest on the Bonds earned by certain corporations may be subject to a corporate alternative minimum tax. The Bonds and the income thereon are exempt from taxation under the laws of the State of Florida, except estate taxes imposed by Chapter 198, Florida Statutes, as amended, and net income and franchise taxes imposed by Chapter 220, Florida Statutes, as amended. We express no opinion as to any other tax consequences regarding the Bonds.
The opinions stated above are based on an analysis of existing laws, regulations, rulings and court decisions and cover certain matters not directly addressed by such authorities. In rendering all such opinions, we assume, without independent verification, and rely upon (i) the accuracy of the factual matters represented, warranted or certified in the proceedings and documents we have examined, (ii) the due and legal authorization, execution and delivery of those documents by, and the valid, binding and enforceable nature of those documents upon, any parties other than the Issuer, and (iii) the correctness of the legal conclusions contained in the legal opinion letter of Greenberg Traurig, P.A., counsel to MJHS, delivered in connection with this matter.
In rendering those opinions with respect to the treatment of the interest on the Bonds under the federal tax laws, we further assume and rely upon compliance with the covenants in the proceedings and documents we have examined, including those of the Issuer and MJHS. Failure to comply with certain of those covenants subsequent to issuance of the Bonds may cause interest on the Bonds to be included in gross income for federal income tax purposes retroactively to their date of issuance.
In rendering those opinions with respect to the treatment of the interest on the Bonds under the federal tax laws, we also further assume the correctness of, and rely on the opinion of, Greenberg Traurig, P.A., counsel to MJHS, regarding the qualification of MJHS as an organization described in Section 501(c)(3) of the Code and the use of the facilities financed with the Bonds in activities that are not considered “unrelated trade or business” activities of MJHS, as defined in Section 513(a) of the Code, which opinion is subject to a number of qualifications and limitations. We have not given any opinion or assurance concerning Section 513(a) of the Code or the effect of any future activities of the Issuer or MJHS. Failure of MJHS to maintain its qualification as an organization described in Section 501(c)(3) of the Code, or to use the facilities financed by the Bonds in a manner that is substantially related to MJHS’s charitable purpose under Section 513(a) of the Code, may cause interest on the Bonds to be included in gross income retroactively to the date of the issuance of the Bonds.
The rights of the owners of the Bonds and the enforceability of the Bonds, the Bond Indenture and the Loan Agreement are subject to bankruptcy, insolvency, arrangement, fraudulent conveyance or transfer, reorganization, moratorium and other laws relating to or
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affecting creditors’ rights, to the application of equitable principles, to the exercise of judicial discretion, and to limitations on legal remedies against public entities.
We express no opinion with respect to any indemnification, contribution, penalty, choice of law, choice of forum, choice of venue, waiver or severability provisions contained in the Bonds, the Bond Indenture or the Loan Agreement.
The opinions rendered in this letter are stated only as of this date, and no other opinion shall be implied or inferred as a result of anything contained in or omitted from this letter. Our engagement as bond counsel with respect to the Bonds has concluded on this date.
Respectfully submitted,
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