Exhibit 10.5

SUBORDINATION, ASSIGNMENT AND SECURITY AGREEMENT

THIS SUBORDINATION, ASSIGNMENT AND SECURITY AGREEMENT (this “Assignment”) is
made and entered into as of             , 2012 by and among (i) AMBER GLEN
LANDLORD, LLC, a                      limited liability company (the
“Borrower”), (ii) FANNIE MAE, a corporation duly organized under the Federal
National Mortgage Association Charter Act, as amended, 12 U.S.C. Section 1716 et
seq. and duly organized and existing under the laws of the United States (the
“Lender”), (iii) AMBER GLEN TRS, LLC, a                      limited liability
company (the “Operator”), and (iv) JERRY ERWIN ASSOCIATES, INC., a Washington
corporation d/b/a JEA Senior Living (the “Manager”).

Recitals

 

A. Borrower is the owner of a Seniors Housing Facility known as Amber Glen
Alzheimer’s Special Care Center and located in Urbana, Champaign County,
Illinois (the “Mortgaged Property”). A legal description of the Mortgaged
Property is attached hereto as Exhibit A.

 

B. Operator is the managing operator of the Mortgaged Property pursuant to that
certain [Operating Lease] dated             , 2012, between Borrower and
Operator (as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time, the “Operating Lease”) and is the holder
of all of the Licenses required to operate the Mortgaged Property as a Seniors
Housing Facility.

 

C. Manager is the manager of the Mortgaged Property pursuant to that certain
[Management Agreement] dated             , 2012, between Operator and Manager
(as the same may be amended, restated, replaced, supplemented or otherwise
modified from time to time, the “Management Agreement”).

 

D. Lender is the holder of that certain Multifamily Note, dated as of May 15,
2009 (as the same may be amended, restated, replaced, supplemented or otherwise
modified from time to time, the “Note”), originally made by Urbana Care Group
LLC, an Illinois limited liability company (“Transferor”), which evidences a
mortgage loan (the “Loan”) secured by that certain Multifamily Mortgage,
Assignment of Rents and Security Agreement, dated as of May 15, 2009, and
recorded on June 8, 2009 as instrument number 2009R16315 in the land records of
Champaign County, Illinois (as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time, the “Instrument”), thereby
encumbering the Mortgaged Property.

 

E. Borrower has requested, and Lender has agreed, to (i) consent to the transfer
of the Mortgaged Property by Transferor to Borrower (the “Transfer”) described
in that certain Assumption and Release Agreement, dated of even date herewith,
by and among Borrower, Lender, Transferor and other parties (the “Assumption
Agreement”), and (ii) approve the Operating Lease and the Management Agreement.

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F. Lender requires and Operator is willing to subordinate its right, title and
interest to and under the Operating Lease to the Instrument and to assign all
Leases, Rents, Equipment, Inventory, Contracts and Accounts to Lender as
additional security for the Loan.

 

G. Lender requires and Manager is willing to subordinate its right, title and
interest to and under the Management Agreement to the Instrument and to assign
all of Manager’s interest in any Leases, Rents, Contracts and Accounts to Lender
as additional security for the Loan.

 

H. Operator is willing to attorn to Lender upon a default by Borrower under the
Loan Documents, to perform its obligations under the Operating Lease and this
Assignment for Lender, or its successors and assigns in interest, and to permit
Lender to terminate the Operating Lease without liability.

 

I. Manager is willing to attorn to Lender upon a default by Borrower under the
Loan Documents, to perform its obligations under the Management Agreement and
this Assignment for Lender, or its successors and assigns in interest, and to
permit Lender to terminate the Management Agreement without liability.

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

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

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

(b) “Contracts” means any contract or other agreement for the provision of goods
or services at or otherwise in connection with the operation, use or management
of the Mortgaged Property, including cash deposited to secure performance by
parties of their obligations.

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

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(d) “Event of Default” means the occurrence of any event listed in Section 22 of
the Instrument or a default by Borrower, Operator or Manager of any
representation, warranty or covenant under this Assignment, the Operating Lease
or the Management Agreement.

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

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

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

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

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

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

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

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

(m) “Loan Documents” means the Note, the Instrument, the Assumption Agreement
(and the “Loan Documents” described therein), this Assignment, all guaranties
and any other documents now or in the future executed by Borrower, Operator,
Manager or any other person or entity in connection with the Loan, as such
documents may be amended from time to time.

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(n) “Management Agreement” shall have the meaning as defined in Recital C above.

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

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

(q) “Operating Lease” shall have the meaning as defined in Recital B above.

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

(s) “Taxes” shall have the meaning as defined in Section 1(y) of the Instrument.

2. UNIFORM COMMERCIAL CODE SECURITY AGREEMENT.

(a) This Assignment is also a security agreement under the Uniform Commercial
Code for any of the Contracts, Accounts, Equipment, Inventory, Leases and Rents
which, under applicable law, may be subject to a security interest under the
Uniform Commercial Code, whether acquired now or in the future and all products
and cash and non-cash proceeds thereof (collectively, “UCC Collateral”), and
Operator and Manager, hereby assign and grant to Lender a security interest in
the UCC Collateral, to the extent each of Operator and Manager have an interest
in the UCC Collateral. Operator and Manager hereby authorize Lender to file
financing statements, continuation statements and financing statement amendments
in such form as Lender may require to perfect or continue the perfection of this
security interest and Operator and Manager agree, if Lender so requests, to
execute and deliver to Lender such financing statements, continuation statements
and amendments. Borrower shall pay all filing costs and all costs and expenses
of any record searches for financing statements that Lender may require. Without
the prior written consent of Lender, neither Operator nor Manager shall create
or permit to exist any other lien or security interest in any of the UCC
Collateral.

(b) If an Event of Default has occurred and is continuing, Lender shall have the
remedies of a secured party under the Uniform Commercial Code, in addition to
all remedies

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provided by this Assignment or existing under applicable law. In exercising any
remedies, Lender may exercise its remedies against the UCC Collateral separately
or together, and in any order, without in any way affecting the availability of
Lender’s other remedies.

(c) Upon an Event of Default, Lender or its designee may (in Lender’s sole
discretion) terminate Operator’s and Manager’s authority to collect Accounts and
notify the residents and account debtors that the Accounts have been assigned to
Lender or of Lender’s security interest therein and, either in its own name or
that of Operator or Manager, demand, collect (including, without limitation,
through any lockbox arrangement prescribed by Lender), receive, receipt for, sue
for or give acquittance for any or all amounts due or to become due in respect
of the Accounts, and may also, in its discretion, file any claim, institute any
proceeding or take any other action that Lender may deem necessary or
appropriate to protect and realize upon the security interest of Lender in the
Accounts. All of Lender’s collection expenses shall be charged to the Borrower’s
account and added to the Indebtedness. If Lender is collecting the Accounts as
above provided, Lender shall have the right to receive, endorse, assign and
deliver in Lender’s name, Operator’s name or Manager’s name any and all checks,
drafts and other instruments for the payment of money relating to the Accounts,
and Operator and Manager hereby waive notice of presentment, protest and
non-payment of any instrument so endorsed. If Lender is collecting the Accounts
directly as above provided, Operator and Manager hereby constitute Lender or
Lender’s designee as Operator’s and Manager’s attorney-in-fact with power with
respect to the Accounts to: (1) endorse Operator’s or Manager’s name upon all
notes, acceptances, checks, drafts, money orders or other evidences of payment
that may come into Lender’s possession; (2) notify the Post Office to change the
address for delivery of mail addressed to Operator or Manager for the Mortgaged
Property to such address as Lender may designate; and (3) receive, open, and
dispose of all such mail addressed to Operator or Manager.

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

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

(a) As consideration for the material financial benefit to be derived by
Operator from Lender’s approval of the Operating Lease and consenting to the
Transfer, and by Manager from Lender’s approval of the Management Agreement and
consenting to the Transfer, to the extent permitted by applicable law, Operator
and Manager absolutely and unconditionally assign and transfer to Lender all of
Operator’s and Manager’s respective right, title and interest in and to any
Rents. To the extent permitted by applicable law, it is the intention of
Operator and Manager to establish a present, absolute and irrevocable transfer
and assignment to Lender of all of Operator’s and Manager’s respective right,
title and interest in and to any Rents and to authorize and empower Lender to
collect and receive all Rents without the necessity of further action on the
part of Operator or Manager. Promptly upon request by Lender, Operator and
Manager agree to execute and deliver such further assignments as Lender may from
time to time require. To the extent permitted by applicable law, Operator,
Manager and Lender intend this assignment of Rents to be immediately effective
and to constitute an absolute present assignment and not an assignment for
additional security only. However, if this present, absolute and unconditional
assignment of Rents is not enforceable by its terms under the laws of the
Property Jurisdiction (as that term is defined in Section 30[a] of the
Instrument), then it is the intention of Operator and Manager that in this
circumstance this Assignment create and perfect a lien on Rents in favor of
Lender, which lien shall be effective as of the date of this Assignment.

(b) After the occurrence of an Event of Default, Operator and Manager authorize
Lender to collect, sue for and compromise Rents and direct each resident and
tenant of the Mortgaged Property to pay all Rents to, or as directed by, Lender.
However, until the occurrence of an Event of Default, Lender hereby grants to
Operator and Manager a revocable license to collect and receive all Rents, to
hold all Rents in trust for the benefit of Lender and subject to the terms of
the Operating Lease and Management Agreement, to apply all Rents to pay the
installments of interest and principal then due and payable under the Note and
the other amounts then due and payable under the other Loan Documents, including
Imposition Deposits, and to pay the current costs and expenses of managing,
operating and maintaining the Mortgaged Property, including utilities, Taxes and
insurance premiums (to the extent not included in Imposition Deposits), resident
and tenant improvements and other capital expenditures. So long as no Event of
Default has occurred and is continuing, and subject to the terms of the
Operating Lease and Management Agreement, the Rents remaining after application
pursuant to the preceding sentence may be retained by Operator or Manager, as
applicable, free and clear of, and released from, Lender’s rights with respect
to Rents under this Assignment. From and after the occurrence of an Event of
Default, and without the necessity of Lender entering upon and taking and
maintaining control of the Mortgaged Property directly, or by a receiver,
Operator’s and Manager’s license to collect Rents shall automatically terminate
and Lender shall without notice be entitled to all Rents as they become due and
payable, including Rents then due and unpaid. Operator and Manager shall pay to
Lender upon demand all Rents to which Lender is entitled. At any time on or
after the date of Lender’s demand for Rents, Lender may give, and Operator and
Manager hereby irrevocably authorize Lender to give, notice to all residents and
tenants of the Mortgaged Property instructing them to pay all Rents to Lender.
No resident or tenant shall be obligated to inquire further as to the occurrence
or continuance of an Event of Default, and no resident or tenant shall be
obligated to pay to Operator or Manager any amounts which are actually paid to
Lender in response to such a notice. Any such notice by Lender shall be
delivered to each resident and tenant personally, by mail or by delivering such
demand to each rental unit. Neither Operator nor Manager shall interfere with
Lender’s collection of such Rents

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and both Operator and Manager shall cooperate with Lender’s collection of such
Rents. After an Event of Default, Lender is further authorized to give notice to
all Third Party Payment payors (other than governmental entities) at Lender’s
option, instructing them to pay all Third Party Payments which would be
otherwise paid to Operator or Manager to Lender, to the extent permitted by law.

(c) Operator and Manager represent and warrant to Lender that neither Operator
nor Manager has executed any prior assignment of Rents that Operator or Manager,
respectively, have not performed, and Operator and Manager covenant and agree
that they will not perform any acts and have not executed, and shall not
execute, any instrument which would prevent Lender from exercising its rights
under this Section 3, and that at the time of execution of this Assignment there
has been no anticipation or prepayment of any Rents for more than two months
prior to the due dates of such Rents. Neither Operator nor Manager shall collect
or accept payment of any Rents more than two months prior to the due dates of
such Rents.

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

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

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

(g) Any entering upon and taking of control of the Mortgaged Property by Lender
or the receiver, as the case may be, and any application of Rents as provided in
this Assignment shall not cure or waive any Event of Default or invalidate any
other right or remedy of Lender under applicable law or provided for in this
Assignment or in the Instrument.

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

(a) As consideration for the material financial benefit to be derived by
Operator from Lender’s approval of the Operating Lease and consenting to the
Transfer, and by Manager from Lender’s approval of the Management Agreement and
consenting to the Transfer, to the extent permitted by applicable law, Operator
and Manager absolutely and unconditionally assign and transfer to Lender all of
Operator’s and Manager’s respective right, title and interest in, to and under
the Leases, including Operator’s and Manager’s respective right, power and
authority to modify the terms of any such Lease, or extend or terminate any such
Lease. To the extent permitted by applicable law, it is the intention of
Operator and Manager to establish a present, absolute and irrevocable transfer
and assignment to Lender of all of Operator’s and Manager’s respective right,
title and interest in, to and under the Leases. To the extent permitted by
applicable law, Operator, Manager and Lender intend this assignment of the
Leases to be immediately effective and to constitute an absolute present
assignment and not an assignment for additional security only. However, if this
present, absolute and unconditional assignment of the Leases is not enforceable
by its terms under the laws of the Property Jurisdiction, then it is the
intention of Operator and Manager that in this circumstance this Assignment
create and perfect a lien on the Leases in favor of Lender, which lien shall be
effective as of the date of this Assignment.

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

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(c) Operator and Manager acknowledge and agree that the exercise by Lender,
either directly or by a receiver, of any of the rights conferred under this
Section 4 shall not be construed to make Lender a mortgagee-in-possession of the
Mortgaged Property so long as Lender has not itself entered into actual
possession of the Land and the Improvements. The acceptance by Lender of the
assignment of the Leases pursuant to Section 4(a) shall not at any time or in
any event obligate Lender to take any action under this Assignment or to expend
any money or to incur any expenses. Lender shall not be liable in any way for
any injury or damage to person or property sustained by any person or persons,
firm or corporation in or about the Mortgaged Property. Prior to Lender’s actual
entry into and taking possession of the Mortgaged Property, Lender shall not
(i) be obligated to perform any of the terms, covenants and conditions contained
in any Lease (or otherwise have any obligation with respect to any Lease);
(ii) be obligated to appear in or defend any action or proceeding relating to
any Lease or the Mortgaged Property; or (iii) be responsible for the operation,
control, care, management or repair of the Mortgaged Property or any portion of
the Mortgaged Property. The execution of this Assignment by Operator and Manager
shall constitute conclusive evidence that all responsibility for the operation,
control, care, management and repair of the Mortgaged Property is and shall be
that of Operator and Manager, as applicable, prior to such actual entry and
taking of possession.

(d) Upon delivery of notice by Lender to Operator or Manager of Lender’s
exercise of Lender’s rights under this Section 4 at any time after the
occurrence of an Event of Default, and without the necessity of Lender entering
upon and taking and maintaining control of the Mortgaged Property directly, by a
receiver, or by any other manner or proceeding permitted by the laws of the
Property Jurisdiction, Lender immediately shall have, to the extent permitted by
applicable law, all rights, powers and authority granted to Operator and/or
Manager under any Lease, including the right, power and authority to modify the
terms of any such Lease, or extend or terminate any such Lease.

(e) Operator and Manager shall, promptly upon Lender’s request, deliver to
Lender an executed copy of each residential Lease then in effect. All Leases for
residential dwelling units shall be on forms approved by Lender, shall be on
initial terms of at least six (6) months and not more than two years, and shall
not include options to purchase. If customary in the applicable market,
residential Leases with a month-to-month term or with terms of less than six
months shall be permitted with Lender’s prior written consent.

(f) Neither Operator nor Manager shall lease any portion of the Mortgaged
Property for non-residential use except with the prior written consent and
approval of Lender with the exception of the Operating Lease which has
previously been approved by Lender. Neither Operator nor Manager shall modify
the terms of, extend or terminate, any Lease for non-residential use (including
any Lease in existence on the date of this Assignment) without the prior written
consent of Lender. Operator and Manager shall, without request by Lender,
deliver an executed copy of each non-residential Lease to Lender promptly after
such Lease is signed. All non-residential Leases (including, without limitation,
the Operating Lease) and renewals or extensions of existing Leases, shall
specifically provide that (1) such Leases are subordinate to the lien of the
Instrument (unless waived in writing by Lender); (2) the resident or tenant
shall

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attorn to Lender and any purchaser at a foreclosure sale, such attornment to be
self-executing and effective upon acquisition of title to the Mortgaged Property
by any purchaser at a foreclosure sale or by Lender in any manner; (3) the
resident or tenant agrees to execute such further evidences of attornment as
Lender or any purchaser at a foreclosure sale may from time to time request;
(4) the Lease shall not be terminated by foreclosure or any other transfer of
the Mortgaged Property; (5) after a foreclosure sale of the Mortgaged Property,
Lender or any other purchaser at such foreclosure sale may, at Lender’s or such
purchaser’s option, accept or terminate such Lease; and (6) the resident or
tenant shall, upon receipt after the occurrence of an Event of Default of a
written request from Lender, pay all Rents payable under the Lease to Lender.

(g) Neither Operator nor Manager shall receive or accept Rent under any Lease
(whether residential or non-residential) for more than two months in advance.

5. ASSIGNMENT OF CONTRACTS; CONTRACTS AFFECTING THE MORTGAGED PROPERTY.

(a) Operator and Manager, in the name of or on behalf of Operator, have entered
into the Contracts identified on Exhibit B for the provision of goods or
services, at or otherwise in connection with the operation, use or management of
the Mortgaged Property. Operator and Manager, in the name of or on behalf of
Operator, may in the future enter into Contracts for the provision of additional
goods or services at or otherwise in connection with the operation, use or
management of the Mortgaged Property.

(b) As consideration for the material financial benefit to be derived by
Operator from Lender’s approval of the Operating Lease and consenting to the
Transfer, and by Manager from Lender’s approval of the Management Agreement and
consenting to the Transfer, to the extent permitted by applicable law, Operator
and Manager absolutely and unconditionally assign and transfer to Lender all of
Operator’s and Manager’s respective right, title and interest in, to and under
the Contracts, including Operator’s and Manager’s respective right, power and
authority to modify the terms of, extend or terminate any such Contract. To the
extent permitted by applicable law, it is the intention of Operator and Manager
to establish a present, absolute and irrevocable transfer and assignment to
Lender of all of Operator’s and Manager’s respective right, title and interest
in, to and under the Contracts. To the extent permitted by applicable law,
Operator, Manager and Lender intend this assignment of the Contracts to be
immediately effective and to constitute an absolute present assignment and not
an assignment for additional security only. However, if this present, absolute
and unconditional assignment of the Contracts is not enforceable by its terms
under the laws of the Property Jurisdiction, then it is the intention of
Operator and Manager that in this circumstance this Assignment create and
perfect a lien on the Contracts in favor of Lender, which lien shall be
effective as of the date of this Assignment. The acceptance by Lender of this
assignment of the Contracts shall not at any time or in any event obligate
Lender to take any action under this Assignment or to expend any money or to
incur any expenses.

(c) Until Lender gives notice to Operator or Manager of Lender’s exercise of its
rights under this Section 5, Operator and Manager shall have all rights, power
and authority granted to Operator and Manager, respectively, under any Contract
(except as otherwise limited

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by this Section or any other provision of this Assignment), including the right,
power and authority to modify the terms of any Contract or extend or terminate
any Contract, with the exception of the Operating Lease and Management
Agreement. Upon the occurrence of an Event of Default and at the option of
Lender, the permission given to Operator and Manager pursuant to the preceding
sentence to exercise all rights, power and authority under Contracts shall
terminate.

(d) Upon Lender’s delivery of notice to Operator or Manager of an Event of
Default, Lender shall immediately have all rights, powers and authority granted
to Operator and Manager under any Contract, including the right, power and
authority to modify the terms of, extend or terminate any such Contract.

(e) Operator and Manager hereby represent and warrant and agree with Lender
that: (1) the Contracts are assignable and no previous assignment of Operator’s
interest nor Manager’s interest in the Contracts has been made other than the
assignment of the existing Contracts by Transferor to Borrower on the date
hereof; (2) the Contracts are in full force and effect in accordance with their
respective terms and there are no defaults thereunder; (3) Operator and Manager
shall fully perform all of their respective obligations under the Contracts, and
Operator and Manager agree not to amend, modify, assign, sell, pledge, transfer,
mortgage or otherwise encumber their respective interests in any of the
Contracts so long as this Assignment is in effect, or consent to any transfer,
assignment or other disposition thereof without the written approval of Lender;
and (4) each Contract entered into by Operator or Manager subsequent to the date
hereof, the average annual consideration of which, directly or indirectly, is at
least $20,000, shall provide: (i) that it shall be terminable for cause; and
(ii) that it shall be terminable, at Lender’s option, upon the occurrence of an
Event of Default.

6. ASSIGNMENT; BORROWER, OPERATOR AND MANAGER REPRESENTATIONS, WARRANTIES AND
AGREEMENTS.

(a) Operator and Manager hereby transfer, assign and set over to Lender, its
successors and assigns, all their right, title and interest in and to the
Management Agreement. The foregoing assignment is being made by Operator and
Manager to Lender as collateral security for the full payment and performance by
Borrower of all of its obligations under the Loan Documents. However, until the
occurrence of an Event of Default (as such term is defined in the Loan
Documents), Operator may exercise all rights as operator of the Mortgaged
Property under the Management Agreement and Manager may exercise all rights as
manager of the Mortgaged Property under the Management Agreement, except as
otherwise provided in this Assignment. The foregoing assignment shall remain in
effect as long as the Loan, or any part thereof, remains unpaid, but shall
automatically terminate upon the release of the Instrument as a lien on the
Mortgaged Property.

(b) Borrower, Operator and Manager represent and warrant to Lender that
(i) Borrower, Operator and/or Manager will have sufficient working capital,
including cash flow from the Mortgaged Property or other assets, to adequately
own and/or maintain the Mortgaged Property and pay all outstanding debts
associated with the Mortgaged Property as they become due, (ii) the Operating
Lease and Management Agreement are unmodified and are in full force and effect,
(iii) the Operating Lease and Management Agreement are valid and binding

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agreements enforceable against the parties in accordance with their terms, and
(iv) no party is in default in performing any of their obligations under the
Operating Lease or Management Agreement. Borrower, Operator and Manager hereby
agree that any default by Borrower, Operator or Manager under this Assignment,
the Operating Lease or the Management Agreement which continues beyond any
applicable cure period shall at Lender’s option, constitute an Event of Default
under the Instrument.

7. BORROWER AND OPERATOR COVENANTS.

(a) Borrower hereby covenants with Lender that during the term of this
Assignment: (i) Borrower shall not transfer the responsibility for the operation
of the Mortgaged Property from Operator to any other person or entity without
the prior written consent of Lender; (ii) Borrower shall not terminate or amend
any of the terms or provisions of the Operating Lease nor shall Borrower assign
its rights under the Operating Lease without the prior written consent of
Lender; (iii) within 5 days of Borrower’s receipt, Borrower shall give Lender
written notice of any notice or information that Borrower receives which
indicates that either Borrower or Operator is in default under the terms of the
Operating Lease, Operator is terminating the Operating Lease or that Operator is
otherwise discontinuing its operation of the Mortgaged Property; and
(iv) Borrower agrees that after Borrower receives notice (or otherwise has
actual knowledge) of an Event of Default under the Instrument, it will not make
any payment of fees under or pursuant to the Operating Lease without Lender’s
prior written consent.

(b) Operator hereby covenants with Lender that during the term of this
Assignment: (i) Operator shall not transfer the responsibility for the
management of the Mortgaged Property from Manager to any other person or entity
without the prior written consent of Lender; (ii) Operator shall not terminate
or amend any of the terms or provisions of the Management Agreement nor shall
Operator assign its rights under the Management Agreement without the prior
written consent of Lender; (iii) within 5 days of Operator’s receipt, Operator
shall give Lender written notice of any notice or information that Operator
receives which indicates that either Operator or Manager is in default under the
terms of the Management Agreement, Manager is terminating the Management
Agreement or that Manager is otherwise discontinuing its management of the
Mortgaged Property; and (iv) Operator agrees that after Operator receives notice
(or otherwise has actual knowledge) of an Event of Default under the Instrument,
it will not make any payment of fees under or pursuant to the Management
Agreement without Lender’s prior written consent.

8. EVENT OF DEFAULT. Upon receipt by Operator or Manager of written notice from
Lender that an Event of Default has occurred and is continuing, Lender shall
have the right to exercise all rights as owner of the Mortgaged Property under
the Operating Lease and operator of the Mortgaged Property under the Management
Agreement and Operator shall pay to Lender directly all Rents and other sums due
under the Operating Lease and Manager shall pay to Lender directly all sums due
under the Management Agreement. Lender shall be entitled to mandate the use of a
lockbox bank account or other depositary account, to be maintained under the
control and supervision of Lender, for all income of the Mortgaged Property,
including but not limited to Rents, service charges, insurance payments and
Third Party Payments. In order to induce Lender to lend funds hereunder,
Borrower, Operator and Manager hereby agree, that, upon the occurrence of an
Event of Default and at the option of Lender, Operator and Manager

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shall continue to provide all necessary services required under any applicable
licensing or regulatory requirements and shall fully cooperate with Lender and
any receiver as may be appointed by a court, in performing these services until
such time as Lender has arranged for a replacement operator or manager, and in
arranging an orderly transition to a replacement operator, manager or provider
of the necessary services. Borrower, Operator and Manager agree to cooperate
with Lender in arranging an orderly transfer to a replacement operator of all
Licenses and governmental approvals necessary or reasonably required to operate
the Mortgaged Property as a Seniors Housing Facility, and to execute promptly
all applications, assignments, consents and documents requested by Lender to
facilitate such transition.

9. OPERATING LEASE AND MANAGEMENT AGREEMENT TERMINATION. After the occurrence of
an Event of Default, Lender shall have the right any time thereafter to
terminate the Operating Lease and/or Management Agreement, without cause and
without liability, by giving written notice to Operator or Manager, as
applicable, of its election to do so. Lender’s notice shall specify the date of
termination, which shall not be less than 30 days after the date of such notice,
except such lesser notice as Lender deems to be appropriate in the event of an
emergency.

10. TURNOVER OF BOOKS AND RECORDS. On the effective date of termination of the
Operating Lease or Management Agreement, Operator or Manager, as applicable,
shall turn over to Lender all books and records relating to the Mortgaged
Property and the residents and tenants (copies of which may be retained by
Operator or Manager, at Operator’s or Manager’s expense), together with such
authorizations and letters of direction addressed to residents, tenants,
suppliers, employees, banks and other parties as Lender may reasonably require.
Operator and Manager shall cooperate with Lender in the transfer of operating
and management responsibilities to Lender, any receiver, or their designees. A
final accounting of unpaid fees (if any) due to Operator under the Operating
Lease or Manager under the Management Agreement shall be made within 60 days
after the effective date of termination, but Lender shall not have any liability
or obligation to Operator or Manager for unpaid fees or other amounts payable
under the Operating Lease or Management Agreement which accrue before Lender
acquires title to the Mortgaged Property, or before Lender becomes a mortgagee
in possession.

11. NOTICE. Operator’s address for notice is                     . Manager’s
address for notice is 3715 SW 29th Street, Topeka, Kansas 66614. Borrower’s
address for notice is 12115 NE 99th Street, Suite 1800, Vancouver, Washington
98682. Lender’s address for notice is c/o Red Mortgage Capital, LLC, Two
Miranova Place, 12th Floor, Columbus, Ohio 43215.

All notices to be given by Lender to Operator or Manager shall be given in the
same manner as notices to Borrower pursuant to the notice provisions contained
in the Instrument.

12. NO ASSUMPTION OF OBLIGATIONS. The Borrower, Operator and Manager, by
executing this Assignment, agree that Lender does not assume any obligations or
duties of the Borrower and Operator concerning the Operating Lease nor any
obligations or duties of the Operator and Manager concerning the Management
Agreement until and unless Lender shall exercise its rights hereunder.

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13. POWER OF ATTORNEY. Borrower, Operator and Manager hereby irrevocably
constitute and appoint Lender as Borrower’s, Operator’s and Manager’s
attorney-in-fact to demand, receive and enforce their rights with respect to the
provisions set forth in this Assignment, to give appropriate receipts, releases
and satisfactions for and on Borrower’s, Operator’s and Manager’s behalf and to
do any and all acts in Borrower’s, Operator’s and Manager’s names or in the name
of Lender with the same force and effect as Borrower, Operator or Manager could
do if this Assignment had not been made. The foregoing appointment shall be
deemed to be coupled with an interest and irrevocable.

14. OPERATOR AND MANAGER REPRESENTATIONS AND OBLIGATIONS. Operator and Manager
represent, warrant and agree to the following:

(a) Operator and Manager will use their best efforts to cooperate with Lender,
including attendance at any meetings requested by Lender (after reasonable prior
notice) furnishing financial statements of Operator and Manager and operating
statements for the Mortgaged Property, and allowing Lender to undertake
inspections of the Mortgaged Property. In addition, Operator and Manager
acknowledge that each have received from Borrower and reviewed a fully executed
copy of the Instrument and covenants therein and agree to comply with all
provisions and covenants therein applicable to the use and operation of the
Mortgaged Property (the “Operating Covenants”), including without limitation,
arranging for the escrow of Taxes and insurance with Lender and, if necessary,
providing insurance coverage in accordance with Lender’s requirements. In the
event Operator or Manager fails to so use and operate the Mortgaged Property,
Lender shall have the right to enforce the Operating Covenants directly against
Operator and Manager upon Borrower’s failure to do so, in accordance with the
provisions of the Instrument and this Assignment. Operator’s or Manager’s
failure to comply with these obligations shall constitute a default under the
Operating Lease and Management Agreement, as applicable, a default under this
Assignment, and an Event of Default under the Loan Documents. Operator and
Manager agree to comply with all of their respective obligations under the
Operating Lease and Management Agreement pertaining to their payment and
performance of any repairs and capital improvements at the Mortgaged Property;

(b) the Operating Lease and Management Agreement are and shall be subject and
subordinate in all respects to the liens, terms, covenants and conditions of the
Instrument and the other Loan Documents, and to all renewals, modifications,
consolidations, replacements and extensions thereof, and to all advances
heretofore made or which may hereafter be made pursuant to the Instrument
(including all sums advanced for the purposes of (x) protecting or further
securing the lien of the Instrument, curing defaults by Borrower under the Loan
Documents or for any other purposes expressly permitted by the Instrument, or
(y) constructing, renovating, repairing, furnishing, fixturing or equipping the
Mortgaged Property);

(c) any fees payable to Operator by Borrower pursuant to the Operating Lease or
to Manager by Operator pursuant to the Management Agreement are and shall be
subordinated in right of payment to the prior payment in full of the
Indebtedness;

(d) if, by reason of its exercise of any other right or remedy under the
Operating Lease, Operator acquires by right of subrogation or otherwise a lien
on the Mortgaged Property which (but for this subsection) would be senior to the
lien of the Instrument or if, by

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reason of its exercise of any other right or remedy under the Management
Agreement, Manager acquires by right of subrogation or otherwise a lien on the
Mortgaged Property which (but for this subsection) would be senior to the lien
of the Instrument, then, in either event, such lien shall be subject and
subordinate to the lien of the Instrument;

(e) until Operator, Manager or Borrower receives notice (or otherwise acquires
actual knowledge) of an Event of Default, Operator shall be entitled to retain
for its own account all payments made under or pursuant to the Operating Lease,
subject to the terms of this Assignment and Manager shall be entitled to retain
for its own account all payments made under or pursuant to the Management
Agreement, subject to the terms of this Assignment;

(f) after Operator or Borrower receives notice (or otherwise acquires actual
knowledge) of an Event of Default, Operator will not accept or retain any
payment of fees under or pursuant to the Operating Lease, without Lender’s prior
written consent;

(g) after Manager or Borrower receives notice (or otherwise acquires actual
knowledge) of an Event of Default, Manager will not accept or retain any payment
of fees under or pursuant to the Management Agreement, without Lender’s prior
written consent;

(h) if, after Operator, Manager or Borrower receives notice (or otherwise
acquires actual knowledge) of an Event of Default, Operator receives any payment
of fees under the Operating Lease other than from Lender, Operator receives any
other payment or distribution of any kind from Borrower or from any other person
or entity other than from Lender in connection with the Operating Lease which
Operator is not permitted by this Assignment to retain for its own account,
Manager receives any payment of fees under the Management Agreement other than
from Lender, Manager receives any other payment or distribution of any kind from
Borrower or from any other person or entity other than from Lender in connection
with the Management Agreement which Manager is not permitted by this Assignment
to retain for its own account, such payment or other distribution will be
received and held in trust for Lender and unless Lender otherwise notifies
Operator or Manager, will be promptly remitted, in cash or readily available
funds, to Lender, properly endorsed to Lender, to be applied to the principal
of, interest on and other amounts due under the Loan Documents in such order and
in such manner as Lender shall determine in its sole and absolute discretion.
Operator and Manager hereby irrevocably designate, make, constitute and appoint
Lender (and all persons or entities designated by Lender) as Operator’s and
Manager’s true and lawful attorney in fact with power to endorse the name of
Operator and Manager upon any checks representing payments referred to in this
subsection;

(i) during the term of this Assignment, neither Operator nor Manager will
commence, or join with any other creditor in commencing any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings with respect
to Borrower, without Lender’s prior written consent, and neither Operator nor
Manager has filed or is subject to any filing for bankruptcy or reorganization
under any applicable bankruptcy or insolvency laws;

(j) Operator will deliver to Lender at the address indicated above and at the
same time as such notice is given to Borrower, any notice of default under the
Operating Lease;

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(k) Manager will deliver to Lender at the address indicated above and at the
same time as such notice is given to Operator, any notice of default under the
Management Agreement;

(l) Operator has not assigned or sublet and is now the sole owner of the
interest or leasehold estate created by the Operating Lease, and shall not
hereafter transfer the Operating Lease except as permitted by the terms thereof
and with Lender’s prior written approval;

(m) Manager has not assigned and is now the sole owner of the interest created
by the Management Agreement, and shall not hereafter transfer the Management
Agreement except as permitted by the terms thereof and with Lender’s prior
written approval;

(n) Operator will not seek to terminate the Operating Lease by reason of any
default of Borrower without prior written notice thereof to Lender and the lapse
thereafter of such time as under the Operating Lease was offered to Borrower in
which to remedy the default, and the lapse of 30 days after the expiration of
such time as Borrower was permitted to cure such default; provided, however,
that with respect to any default of Borrower under the Operating Lease which
cannot be remedied within such time, if Lender commences to cure such default
within such time and thereafter diligently proceeds with such efforts and
pursues the same to completion, Lender shall have such time as is reasonably
necessary to complete curing such default. Notwithstanding the foregoing, in the
event either Lender or Borrower do not cure or commence curing such default
within the time provided to Borrower under the Operating Lease and the nature of
the default threatens Operator’s ability to conduct its daily business or
threatens to materially or adversely damage its property located on the
Mortgaged Property, Operator shall be permitted to exercise its rights under the
Operating Lease;

(o) Manager will not seek to terminate the Management Agreement by reason of any
default of Operator without prior written notice thereof to Lender and the lapse
thereafter of such time as under the Management Agreement was offered to
Operator in which to remedy the default, and the lapse of 30 days after the
expiration of such time as Operator was permitted to cure such default;
provided, however, that with respect to any default of Operator under the
Management Agreement which cannot be remedied within such time, if Lender
commences to cure such default within such time and thereafter diligently
proceeds with such efforts and pursues the same to completion, Lender shall have
such time as is reasonably necessary to complete curing such default.
Notwithstanding the foregoing, in the event either Lender or Operator do not
cure or commence curing such default within the time provided to Operator under
the Management Agreement and the nature of the default threatens Manager’s
ability to conduct its daily business or threatens to materially or adversely
damage its property located on the Mortgaged Property, Manager shall be
permitted to exercise its rights under the Management Agreement. Manager further
covenants with Lender that during the term of this Assignment, within 5 days of
Manager’s receipt, Manager shall give Lender written notice of any notice or
information that Manager receives which indicates that either Operator or
Manager is in default under the terms of the Management Agreement, that Operator
is terminating the Management Agreement or that Manager is otherwise
discontinuing its management of the Mortgaged Property;

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(p) Operator will not pay any rent, fees or other sums due or to become due
under the Operating Lease (“Rent”) more than 30 days in advance of the date on
which the same are due or to become due under the Operating Lease;

(q) Operator will certify promptly in writing to Lender in connection with any
proposed assignment of the Instrument, whether or not any default on the part of
Borrower then exists under the Operating Lease, and will execute such estoppel
certificates and subordination agreements as Lender shall reasonably require;
and

(r) Manager will certify promptly in writing to Lender in connection with any
proposed assignment of the Instrument, whether or not any default on the part of
Operator then exists under the Management Agreement, and will execute such
estoppel certificates and subordination agreements as Lender shall reasonably
require

15. OPERATOR CERTIFICATIONS. Operator certifies as follows:

(a) Operator has unconditionally accepted delivery of the Mortgaged Property
pursuant to the terms of the Operating Lease and is operating the Mortgaged
Property as a Seniors Housing Facility;

(b) The Operating Lease does not provide for free Rent, partial Rent, Rent
concessions of any kind, for the advance payment of Rent other than as set forth
in Section 14(p) above, Rent abatement or offsetting of Rent, and no Rent has
been paid for more than 30 days in advance;

(c) Operator has fully inspected the Mortgaged Property and found the same to be
as required by the Operating Lease in good order and repair, and all conditions
and duties of an inducement nature under the Operating Lease to be performed by
the Borrower have been satisfied, including but not limited to payment to
Operator of any Borrower contributions for Improvements, completion by Borrower
of the construction of any Improvements to be constructed by the Borrower, and
payment to Operator of any consulting fees;

(d) the primary term of the Operating Lease commenced on             , 2012 and
continues to                      and contains                      renewal
options of              year(s) each. Operator has no rights or options of
purchase or first refusal under the Operating Lease or with respect to the
Mortgaged Property or any part thereof;

(e) payment of monthly rent under the Operating Lease commenced on             ,
2012 and is paid through             , 2012;

(f) as of the date of this Assignment, to the best of Operator’s knowledge,
neither the Borrower nor Operator is in default under any of the terms,
conditions, provisions or agreements of the Operating Lease and Operator has no
offsets, claims or defenses against the Borrower with respect to the Operating
Lease;

(g) Operator has paid a security or other deposit to Borrower, pursuant to the
terms of the Operating Lease;

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(h) Operator does not, has not and will not use the Mortgaged Property for the
storage, treatment, manufacturing, generation, disposal or release into the
environment of any petroleum product or substance which is classified as a
hazardous substance, pollutant or contaminant under the Federal Comprehensive
Environmental Response, Compensation and Liability Act (“CERCLA”) or other
applicable federal, state and local laws and regulations except for the safe and
lawful use and storage of quantities of pre-packaged supplies, cleaning
materials and petroleum products customarily used in the operation and
maintenance of comparable Senior Housing Facilities;

(i) Operator shall not look to Lender, any mortgagee in possession, or successor
in title to the Mortgaged Property for accountability for any security deposit
or other deposit held by Borrower;

(j) Operator currently holds the Licenses identified on Exhibit C with regard to
the Mortgaged Property, and is unaware of any other Licenses required to
lawfully operate the Mortgaged Property as an Assisted Living Facility. Each of
the items listed on Exhibit C have been lawfully issued to Operator and are in
full force and effect. There is no legal action pending or to the best of
Manager’s or Operator’s knowledge threatened which would adversely affect the
Licenses or the operations at the Mortgaged Property. Operator is not currently
operating under a consent order or decree, or any other agreement or decree
mandated by the courts or a governmental entity that restricts or otherwise
affects the operation of the Mortgaged Property;

(k) the Mortgaged Property is operated as an Assisted Living Facility pursuant
to its Certificate of Occupancy and pursuant to its Licenses. The Certificate of
Occupancy and Licenses are current and there are no violations of record. The
operations at the Mortgaged Property comply with the terms and conditions of the
Certificate of Occupancy and the Licenses. The Certificate of Occupancy has no
termination date. The Licenses are valid until                     . The
Licenses must be renewed every year;

(l) renewal of the Licenses must be applied for no later than      days prior to
the expiration of the Licenses;

(m) foreclosure of the Mortgaged Property by Lender or any other transfer of the
Mortgaged Property as a result of an Event of Default by Borrower under the
Instrument will result in a revocation, suspension or limitation of the
Licenses; and

(n) to the best of Operator’s knowledge, there currently exist no grounds for
the revocation, suspension or limitation of the Certificate of Occupancy or any
of the Licenses for the Mortgaged Property.

16. MANAGER CERTIFICATIONS. Manager certifies as follows:

(a) Manager is managing the Mortgaged Property as a Seniors Housing Facility;

(b) The primary term of the Management Agreement commenced on             , 2012
and contains                     renewal option of             year(s) each.
Manager has no rights or options of purchase or first refusal under the
Management Agreement or with respect to the Mortgaged Property or any part
thereof;

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(c) as of the date of this Assignment, to the best of Manager’s knowledge,
neither the Operator nor Manager is in default under any of the terms,
conditions, provisions or agreements of the Management Agreement and Manager has
no offsets, claims or defenses against the Operator with respect to the
Management Agreement; and

(d) Manager does not, has not and will not use the Mortgaged Property for the
storage, treatment, manufacturing, generation, disposal or release into the
environment of any petroleum product or substance which is classified as a
hazardous substance, pollutant or contaminant under the Federal Comprehensive
Environmental Response, Compensation and Liability Act (“CERCLA”) or other
applicable federal, state and local laws and regulations except for the safe and
lawful use and storage of quantities of pre-packaged supplies, cleaning
materials and petroleum products customarily used in the operation and
maintenance of comparable Senior Housing Facilities.

17. INTENTIONALLY DELETED.

18. CONSIDERATION. The Borrower, Operator and Manager acknowledge that Operator
and Manager are owned by parties who directly or indirectly have an ownership
interest in the Borrower, are under common management and control and that the
Borrower and Operator and Manager will benefit from the Loan. Accordingly, the
Borrower, Operator and Manager each acknowledge receipt of good and valuable
consideration for Operator’s, Manager’s and Borrower’s entry into this
Assignment.

19. COLLECTIONS. Operator and Manager agree that all monies collected on behalf
of the Borrower shall be deposited in one or more bank accounts in the name of
Operator and Operator and Manager hereby pledge a security interest in the bank
accounts to Lender, so that such bank accounts are security for the Loan and
shall be subject to the terms of the Instrument and other Loan Documents.

20. MODIFICATIONS TO LOAN DOCUMENTS. Any amendments heretofore or hereafter made
to any of the Loan Documents, other than this Assignment, shall not require the
consent of Operator or Manager.

21. LENDER REQUESTS. Within 10 days of written request of Lender, Operator and
Manager will promptly furnish to Lender copies of all Leases, Contracts,
Licenses, books, records, monthly reports, statements of account, budgets, third
party payment documentation including but not limited to reimbursement
agreements, surveys, statements of deficiencies and plans of correction, and
cost reports related to any payments or the right to receive payments from
federal, state or local programs, boards, bureaus or agencies, and other items
which Operator or Manager is required to maintain or otherwise maintains under
the Operating Lease or Management Agreement, respectively, or which Operator or
Manager maintains for its own purposes with respect to the Mortgaged Property.
Upon an Event of Default under the Instrument, Operator and Manager will furnish
promptly to Lender evidence of deposits and withdrawals from any account held or
controlled by Operator or Manager relating to the Mortgaged Property.

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22. OPERATOR AND MANAGER ASSIGNMENT. As additional collateral security for the
Loan and the observance and performance by Borrower of the terms, covenants and
conditions of the Loan Documents, Operator and Manager, to the extent
permissible under applicable law and regulations, hereby transfer, set over and
assign to Lender all of Operator’s and Manager’s respective right, title and
interest in and to all Licenses and any other agreements or permits of any
nature whatsoever now or hereafter obtained or entered into by Operator or
Manager with respect to the occupancy, use, operation, maintenance and
administration of the Mortgaged Property as a Seniors Housing Facility.

23. COUNTERPARTS. This Assignment may be executed in any number of counterparts,
each of which shall be considered an original for all purposes; provided,
however, that all such counterparts shall constitute one and the same
instrument.

24. GOVERNING LAW.

(a) This Assignment shall be governed by and construed in accordance with the
laws of the Property Jurisdiction, and applicable federal law.

(b) Operator and Manager agree that any controversy arising under or in relation
to this Assignment shall be litigated exclusively in the Property Jurisdiction,
and Operator, Manager and Borrower irrevocably consent to service, jurisdiction,
and venue of such course for any such litigation and waive any other venue to
which Operator, Manager or Borrower might be entitled by virtue of domicile,
habitual residence or otherwise.

25. SUCCESSORS AND ASSIGNS. This Assignment shall be binding upon Borrower,
Operator, Manager and Lender and their respective successors, transferees and
assigns, and shall inure to the benefit of and may be enforced by Lender and its
successors, transferees and assigns. Borrower, Operator or Manager shall not
assign any of their respective rights and obligations under this Assignment
without the prior written consent of Lender.

26. ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS. This Assignment contains the
complete and entire understanding of the parties as to its subject matter. No
amendment to this Assignment will be valid unless it is made in writing and
executed by the parties to this Assignment. No specific waiver or forbearance
for any breach of any of the terms of this Assignment shall be considered as a
general waiver of that or any other term of this Assignment.

27. RELATIONSHIP OF PARTIES. Nothing contained in this Assignment shall
constitute Lender as a joint venturer, partner or agent of Borrower, Operator or
Manager, or render Lender liable for any debts, obligations, acts, omissions or
representations of Borrower, Operator or Manager except as provided herein.

28. ENFORCEABILITY. The determination of invalidity, illegality, or
unenforceability of any provision of this Assignment, pursuant to judicial
decree, shall not affect the validity or enforceability of any other provision
of this Assignment, each of which shall remain in full force and effect.

[SIGNATURES APPEAR ON THE FOLLOWING PAGES]

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IN WITNESS WHEREOF, Borrower, Lender, Operator and Manager have executed this
Assignment under seal as of the day and year first above written.

 

BORROWER:

AMBER GLEN LANDLORD, LLC,

a                      limited liability company

By:                                                             (SEAL) Name:  
Title:  

 

STATE OF                                                                    )   
) ss: COUNTY of                                                                 
)

I,                     , a Notary Public in and for the said County, in the
State aforesaid, DO HEREBY CERTIFY that Jerry Erwin personally known to me to be
the                     of AMBER GLEN LANDLORD, LLC, a
                    limited liability company, and personally known to me to be
the same person whose name is subscribed to the foregoing instrument, appeared
before me this day in person, and severally acknowledged that as such
                    , he signed and delivered the said instrument, pursuant to
authority, given by the                     of said company as its free and
voluntary act, and as the free and voluntary act and deed of said
                    , for the uses and purposes therein set forth.

Given under my hand and official seal, this      day of             , 2012.

 

   Notary Public

Commission expires                     

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LENDER:

AMBER GLEN LANDLORD, LLC,

a                     limited liability company

By:                                                         (SEAL) Name:  
Title:  

 

STATE OF                                                                       
   )    ) ss: COUNTY of                           
                                           )

I,                     , a Notary Public in and for the said County, in the
State aforesaid, DO HEREBY CERTIFY that Jerry Erwin personally known to me to be
the                     of AMBER GLEN LANDLORD, LLC, a
                    limited liability company, and personally known to me to be
the same person whose name is subscribed to the foregoing instrument, appeared
before me this day in person, and severally acknowledged that as such
                    , he signed and delivered the said instrument, pursuant to
authority, given by the                     of said company as its free and
voluntary act, and as the free and voluntary act and deed of said
                    , for the uses and purposes therein set forth.

Given under my hand and official seal, this      day of             , 2012.

 

   Notary Public

Commission expires             

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OPERATOR: AMBER GLEN TRS, LLC, a                      limited liability company
By:                                                             (SEAL) Name:  
Title:  

 

STATE OF                                                                       
   )    ) ss: COUNTY of                           
                                            )

I,                     , a Notary Public in and for the said County, in the
State aforesaid, DO HEREBY CERTIFY that Jerry Erwin personally known to me to be
the                     of AMBER GLEN TRS, LLC, a                     limited
liability company, and personally known to me to be the same person whose name
is subscribed to the foregoing instrument, appeared before me this day in
person, and severally acknowledged that as such                     , he signed
and delivered the said instrument, pursuant to authority, given by the
                    of said company as its free and voluntary act, and as the
free and voluntary act and deed of said                     , for the uses and
purposes therein set forth.

Given under my hand and official seal, this      day of             , 2012.

 

 

Notary Public

Commission expires

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MANAGER:

JERRY ERWIN ASSOCIATES, INC.,

a Washington corporation,

d/b/a JEA Senior Living

By:  

 

Name:   Title:  

 

STATE OF                                                                  )    )
ss: COUNTY of                                                               )

I,                     , a Notary Public in and for the said County, in the
State aforesaid, DO HEREBY CERTIFY that                      personally known to
me to be the                     of JERRY ERWIN ASSOCIATES, INC., a Washington
corporation, and personally known to me to be the same person whose name is
subscribed to the foregoing instrument, appeared before me this day in person,
and severally acknowledged that as such                     , he signed and
delivered the said instrument, pursuant to authority, given by the
                    of said corporation as its free and voluntary act, and as
the free and voluntary act and deed of said corporation, for the uses and
purposes therein set forth.

Given under my hand and official seal, this      day of             , 2012.

 

   Notary Public

Commission expires             

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EXHIBIT A

Legal Description

[See Attached]

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EXHIBIT B

Contracts

[list Contracts that currently serve the Mortgaged Property]

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EXHIBIT C

Licenses

 

1. [Describe new Assisted Living Facility License issued to the Operator].